Warrant Agreement
WARRANT
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") AND MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT
UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii) THE
SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION
RULE 144.
WARRANT TO PURCHASE COMMON STOCK OF ModaCAD, Inc.
(Subject to Adjustment)
NO. __ November 13, 1997
THIS CERTIFIES THAT, for the consideration received pursuant to Sections 4.2 and
4.3 of that certain Development Agreement as such term is defined below, Intel
Corporation, or its permitted registered assigns ("Holder"), is entitled,
subject to the terms and conditions of this Warrant, at any time or from time to
time after the issuance date of this Warrant (the "Effective Date"), and before
5:00 p.m. Pacific Time on the fifth anniversary of the Effective Date (the
"Expiration Date"), to: (1) purchase from ModaCAD, Inc., a California
corporation (the "Company"), One Hundred Twenty-Six Thousand, Three-Hundred
Sixteen (126,316) shares of Common Stock of the Company at a price per share of
** (the "Purchase Price"); and (2), on the first business day which is one
year after the first customer shipment of the Company's product code named "New
York" (the "Purchase Date"), purchase from the Company a number of shares, X,
computed using the following formula:
X = ((2.75 multiplied by A) - B)) / C
Where A = **, the sum of the value of the services as stated in Sections
4.2 and 4.3 of that certain Development Agreement between Company and Holder
effective November 13, 1997 (the "Development Agreement").
B = the total amount of royalties the Company has paid to Holder, pursuant to
the terms of the Development Agreement, as of 10 days prior to the Purchase
Date, and
C = the lower of the Purchase Price or the Fair Market Value (as defined in
Section 2 below) of the Company's Common Stock 10 days prior to the Purchase
Date.
(a) Both the number of shares of Common Stock purchasable upon exercise of
this Warrant and the Purchase Price are subject to adjustment and change as
provided herein.
2. CERTAIN DEFINITIONS. As used in this Warrant the following
terms shall have the following respective meanings:
2.1. "Fair Market Value" of a share of Common Stock as of a particular date
shall mean:
(a) If traded on a securities exchange or the Nasdaq National Market, the
Fair Market Value shall be deemed to be the average of the closing prices of
the Common Stock of the Company on such exchange or market over the five (5)
trading days ending immediately prior to the applicable date of valuation;
(b) If actively traded over-the-counter, the Fair Market Value shall be
deemed to be the average of the closing bid prices over the thirty (30)-day
period ending immediately prior to the applicable date of valuation; and
(c) If there is no active public market, the Fair Market Value shall be
the value thereof, as agreed upon by the Company and the Holder; provided,
however, that if the Company and the Holder cannot agree on such value, such
value shall be determined by an independent valuation firm experienced in
valuing businesses such as the Company and jointly selected in good faith by
the Company and the Holder. Fees and expenses of the valuation firm shall
be paid for by the Company.
2.2. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
2.3. "Warrant" as used herein, shall include this Warrant and any warrant
delivered in substitution or exchange therefor as provided herein.
2.4. "Common Stock" shall mean the Common Stock of the Company and any other
securities at any time receivable or issuable upon exercise of this Warrant.
3. EXERCISE OF WARRANT
3.1. Payment. Subject to compliance with the terms and conditions of this
Warrant and applicable securities laws, this Warrant may be exercised, in
whole or in part at any time or from time to time, from and after the Effective
Date and on or before the Expiration Date, by surrendering this Warrant at the
principal office of the Company together with:
(a) the form of Notice of Exercise attached hereto as Exhibit 1 (the "Notice
of Exercise") duly executed by the Holder, and
(b) payment, (i) in cash (by check) or by wire transfer, (ii) by
cancellation by the Holder of indebtedness of the Company to the Holder; or
(iii) by a combination of (i) and (ii), of an amount equal to the product
obtained by multiplying the number of shares of Common Stock being purchased
upon such exercise by the then effective Purchase Price (the "Exercise
Amount"), except that if Holder is subject to HSR Act Restrictions (as
defined in Section 3.4 below), the Exercise Amount shall be paid to the Company
within five (5) business days following the termination of all HSR Act
Restrictions.
3.2. Net Issue Exercise. In lieu of the payment methods set forth in Section
3.1((b)) above, the Holder may elect to exchange all or some of this Warrant for
shares of Common Stock equal to the value of the amount of the Warrant being
exchanged on the date of exchange. If Holder elects to exchange this Warrant
as provided in this Section 3.2, Holder shall tender to the Company the
Warrant for the amount being exchanged, along with written notice of Holder's
election to exchange some or all of the Warrant, and the Company shall issue to
Holder the number of shares of the Common Stock computed using the following
formula1:
X = Y (A-B)
-------------
A
Where X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under
the amount of the Warrant being exchanged (as adjusted to
the date of such calculation).
A = the Fair Market Value of one share of the Common Stock.
B = Purchase Price (as adjusted to the date of such calculation).
.
3.3. "Easy Sale" Exercise. In lieu of the payment methods set forth in Section
3.1((b)) above, when permitted by law and applicable regulations (including
Nasdaq and NASD rules), the Holder may pay the Purchase Price through a
"same day sale" commitment from the Holder (and if applicable a broker-dealer
that is a member of the National Association of Securities Dealers (an "NASD
Dealer")), whereby the Holder irrevocably elects to exercise this Warrant and
to sell a portion of the shares so purchased to pay the Purchase Price and the
Holder (or, if applicable, the NASD Dealer) commits upon sale (or, in the case
of the NASD Dealer, upon receipt) of such shares to forward the Purchase Price
directly to the Company.
3.4. Stock Certificates; Fractional Shares. As soon as practicable on or after
the date of any exercise of this Warrant, the Company shall issue and deliver
to the person or persons entitled to receive the same a certificate or
certificates for the number of whole shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share equal to
such fraction of the current Fair Market Value of one whole share of Common
Stock as of such date of exercise. No fractional shares or scrip representing
fractional shares shall be issued upon an exercise of this Warrant.
3.5. HSR Act. The Company hereby acknowledges that exercise of this Warrant by
Holder may subject the Company and/or the Holder to the filing requirements of
the HSR Act and that Holder may be prevented from exercising this Warrant
until the expiration or early termination of all waiting periods imposed by
the HSR Act ("HSR Act Restrictions"). If on or before the Expiration Date
Holder has sent the Notice of Exercise to Company and Holder has not been able
to complete the exercise of this Warrant prior to the Expiration Date
because of HSR Act Restrictions, the Holder shall be entitled to complete the
process of exercising this Warrant in accordance with the procedures contained
herein notwithstanding the fact that completion of the exercise of this
Warrant would take place after the Expiration Date.
3.6. Partial Exercise; Effective Date of Exercise. In case of any partial
exercise of this Warrant, the Company shall cancel this Warrant upon surrender
hereof and shall execute and deliver a new Warrant of like tenor and date for
the balance of the shares of Common Stock purchasable hereunder. This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above. However,
if Holder is subject to HSR Act filing requirements this Warrant shall be
deemed to have been exercised on the date immediately following the date of the
expiration of all HSR Act Restrictions. The person entitled to receive the
shares of Common Stock issuable upon exercise of this Warrant shall be treated
for all purposes as the holder of record of such shares as of the close of
business on the date the Holder is deemed to have exercised this Warrant.
3.7. Investment Representations. On the written request of the Company, Holder
shall renew the investment representations set forth in Section 11 in writing
prior to exercising the Warrant.
4. VALID ISSUANCE: TAXES. All shares of Common Stock issued upon the exercise
of this Warrant shall be validly issued, fully paid and non-assessable, and the
Company shall pay all taxes and other governmental charges that may be
imposed in respect of the issue or delivery thereof. The Company shall not be
required to pay any tax or other charge imposed in connection with any
transfer involved in the issuance of any certificate for shares of Common
Stock in any name other than that of the Holder of this Warrant, and in such
case the Company shall not be required to issue or deliver any stock certificate
or security until such tax or other charge has been paid, or it has been
established to the Company's reasonable satisfaction that no tax or other
charge is due.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities or property receivable or issuable upon exercise of this
Warrant) and the Purchase Price are subject to adjustment upon occurrence of the
following events:
5.1. Adjustment for Stock Splits, Stock Subdivisions or Combinations of
Shares.The Purchase Price of this Warrant shall be proportionally decreased and
the number of shares of Common Stock issuable upon exercise of this Warrant (or
any shares of stock or other securities at the time issuable upon exercise of
this Warrant) shall be proportionally increased to reflect any stock split or
subdivision of the Company's Common Stock. The Purchase Price of this Warrant
shall be proportionally increased and the number of shares of Common Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Company's Common
Stock.
5.2. Adjustment for Dividends or Distributions of Stock or Other Securities or
Property. In case the Company shall make or issue, or shall fix a record date
for the determination of eligible holders entitled to receive, a dividend or
other distribution with respect to the Common Stock (or any shares of stock or
other securities at the time issuable upon exercise of the Warrant) payable in
(a) securities of the Company or (b) assets (excluding cash dividends paid or
payable solely out of retained earnings), then, in each such case, the Holder of
this Warrant on exercise hereof at any time after the consummation, effective
date or record date of such dividend or other distribution, shall receive, in
addition to the shares of Common Stock (or such other stock or securities)
issuable on such exercise prior to such date, and without the payment of
additional consideration therefor, the securities or such other assets of the
Company to which such Holder would have been entitled upon such date if such
Holder had exercised this Warrant on the date hereof and had thereafter, during
the period from the date hereof to and including the date of such exercise,
retained such shares and all such additional securities or other assets
distributed with respect to such shares as aforesaid during such period giving
effect to all adjustments called for by this Section 5.
5.3. Reclassification.
If the Company, by reclassification of securities or otherwise, shall change any
of the securities as to which purchase rights under this Warrant exist into the
same or a different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change, and the Purchase
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 5. No adjustment shall be made pursuant
to this Section 5.3 upon any conversion or redemption of the Common Stock which
is the subject of Section 5.5.
5.4. Adjustment for Capital Reorganization, Merger or Consolidation.
In case of any capital reorganization of the capital stock of the Company (other
than a combination, reclassification, exchange or subdivision of shares
otherwise provided for herein), or any merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all the
assets of the Company then, and in each such case, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Purchase Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if
this Warrant had been exercised immediately before such reorganization,
merger, consolidation, sale or transfer, all subject to further adjustment
as provided in this Section 5. The foregoing provisions of this Section 5.4
shall similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any other
corporation that are at the time receivable upon the exercise of this Warrant.
If the per-share consideration payable to the Holder hereof for shares in
connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that
the provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
5.5. Conversion of Common Stock. In case all or any portion of the authorized
and outstanding shares of Common Stock of the Company are redeemed or converted
or reclassified into other securities or property pursuant to the Company's
Certificate of Incorporation or otherwise, or the Common Stock otherwise ceases
to exist, then, in such case, the Holder of this Warrant, upon exercise hereof
at any time after the date on which the Common Stock is so redeemed or
converted, reclassified or ceases to exist (the "Termination Date"), shall
receive, in lieu of the number of shares of Common Stock that would have been
issuable upon such exercise immediately prior to the Termination Date, the
securities or property that would have been received if this Warrant had been
exercised in full and the Common Stock received thereupon had been
simultaneously converted immediately prior to the Termination Date, all subject
to further adjustment as provided in this Warrant. Additionally, the Purchase
Price shall be immediately adjusted to equal the quotient obtained by dividing
(x) the aggregate Purchase Price of the maximum number of shares of Common Stock
for which this Warrant was exercisable immediately prior to the Termination Date
by (y) the number of shares of Common Stock of the Company for which this
Warrant is exercisable immediately after the Termination Date, all subject to
further adjustment as provided herein.
6. CERTIFICATE AS TO ADJUSTMENTS.
In each case of any adjustment in the Purchase Price, or number or type of
shares issuable upon exercise of this Warrant, the Chief Financial Officer or
Controller of the Company shall compute such adjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment
and showing in detail the facts upon which such adjustment is based, including a
statement of the adjusted Purchase Price. The Company shall promptly send (by
facsimile and by either first class mail, postage prepaid or overnight delivery)
a copy of each such certificate to the Holder.
7. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership of and the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation of this Warrant, the Company will
execute and deliver in lieu thereof a new Warrant of like tenor as the lost,
stolen, destroyed or mutilated Warrant.
8. RESERVATION OF COMMON STOCK. The Company hereby covenants that at all times
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of shares of Common Stock or other shares of capital stock of the
Company as are from time to time issuable upon exercise of this Warrant and,
from time to time, will take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock issuable
upon exercise of this Warrant. All such shares shall be duly authorized, and
when issued upon such exercise, shall be validly issued, fully paid and
non-assessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights, except encumbrances or restrictions arising under federal or state
securities laws. Issuance of this Warrant shall constitute full authority to the
Company's Officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Common Stock upon
the exercise of this Warrant.
9. TRANSFER AND EXCHANGE. Subject to the terms and conditions of this Warrant
and compliance with all applicable securities laws, this Warrant and all rights
hereunder may be transferred to any Holder's parent, subsidiary or affiliate, in
whole or in part, on the books of the Company maintained for such purpose at the
principal office of the Company referred to above, by the Holder hereof in
person, or by duly authorized attorney, upon surrender of this Warrant properly
endorsed and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. Upon any permitted partial transfer, the
Company will issue and deliver to the Holder a new Warrant or Warrants with
respect to the shares of Common Stock not so transferred. Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees that when
this Warrant shall have been so endorsed, the person in possession of this
Warrant may be treated by the Company, and all other persons dealing with this
Warrant, as the absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however that until a transfer of this Warrant is duly
registered on the books of the Company, the Company may treat the Holder hereof
as the owner for all purposes.
10. RESTRICTIONS ON TRANSFER. The Holder, by acceptance hereof, agrees that,
absent an effective registration statement filed with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"), covering the disposition or sale of this Warrant or the
Common Stock issued or issuable upon exercise hereof, as the case may be, and
registration or qualification under applicable state securities laws, such
Holder will not sell, transfer, pledge, or hypothecate any or all of this
Warrant or such Common Stock, as the case may be, unless either (i) the
Company has received an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such registration is not
required in connection with such disposition or (ii) the sale of such securities
is made pursuant to SEC Rule 144.
11. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder
hereby represents, warrants and covenants that any shares of stock purchased
upon exercise of this Warrant shall be acquired for investment only and not with
a view to, or for sale in connection with, any distribution thereof; that the
Holder has had such opportunity as such Holder has deemed adequate to obtain
from representatives of the Company such information as is necessary to permit
the Holder to evaluate the merits and risks of its investment in the Company;
that the Holder is able to bear the economic risk of holding such shares as may
be acquired pursuant to the exercise of this Warrant for an indefinite period;
that the Holder understands that the shares of stock acquired pursuant to the
exercise of this Warrant will not be registered under the 1933 Act (unless
otherwise required pursuant to exercise by the Holder of the registration
rights, if any, granted to the Holder) and will be "restricted securities"
within the meaning of Rule 144 under the 1933 Act and that the exemption from
registration under Rule 144 will not be available for at least one (1) year from
the date of exercise of this Warrant, subject to any special treatment by the
SEC for exercise of this Warrant pursuant to Section 3.2, and even then will not
be available unless a public market then exists for the stock, adequate
information concerning the Company is then available to the public, and other
terms and conditions of Rule 144 are complied with; and that all stock
certificates representing shares of stock issued to the Holder upon exercise of
this Warrant or upon conversion of such shares may have affixed thereto a legend
substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
12. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company. In
the absence of affirmative action by such Holder to purchase Common Stock by
exercise of this Warrant or Common Stock upon conversion thereof, no provisions
of this Warrant, and no enumeration herein of the rights or privileges of the
Holder hereof shall cause such Holder hereof to be a stockholder of the Company
for any purpose.
13. REGISTRATION RIGHTS. All shares of Common Stock issuable upon exercise of
this Warrant shall be "Registrable Securities" within the meaning given to such
term in Exhibit 3 to this Warrant.
14. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Holder that:
14.1. Due Authorization; Consents. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for (a) the
authorization, execution and delivery of, and the performance of all obligations
of the Company under, this Warrant, and (b) the authorization, issuance,
reservation for issuance and delivery of all of the Common Stock issuable upon
exercise of this Warrant, has been duly taken. This Warrant constitutes a valid
and binding obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
moratorium, reorganization and similar laws affecting creditors' rights
generally and to general equitable principles. All consents, approvals and
authorizations of, and registrations, qualifications and filings with, any
federal or state governmental agency, authority or body, or any third party,
required in connection with the execution, delivery and performance of this
Warrant and the consummation of the transactions contemplated hereby and thereby
have been obtained.
14.2. Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and has
all requisite corporate power to own, lease and operate its property and to
carry on its business as now being conducted and as currently proposed to be
conducted.
14.3. SEC Reports; Financial Statements.
(a) The Company has duly filed with the SEC the Company's annual report on
Form 10-K for the year ended December 31, 1996 and its quarterly reports on
Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997 (collectively,
the "ModaCAD, Inc. SEC Reports"). As of their respective filing dates,
the ModaCAD, Inc. SEC Reports complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended, and none of
the SEC Documents contains any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances in which they were
made, not misleading, except to the extent corrected by a subsequently filed
document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the ModaCAD, Inc. SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted for
by Form 10-Q) and presented fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries as at the respective
dates and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements are
subject to normal and recurring year-end adjustments which are not expected to
be material in amount.
14.4. Capitalization. The authorized capital stock of the Company consists of
15,000,000 shares of Common Stock. As of July 31, 1997: (1) 5,617,304 shares of
common stock of the Company were issued and outstanding, all of which are
validly issue, fully paid and nonassessable; (ii) 750,000 share of Common Stock
of the Company were reserved for issuance under the Company's 1995 Stock Option
Plan, 223,000 shares of which were subject to options outstanding on such date;
(iii) 504,7000 shares of the Common Stock of the Company were reserved for
issuance upon exercise of outstanding warrants. No material change in such
capitalization has occurred between July 31, 1997 and the issuance date of this
Warrant, except that on September 30, 1997, 5,815,574 shares of Common Stock of
the Company were issued and outstanding.
15. INFORMATION RIGHTS. The Company shall deliver to each holder of this Warrant
or any securities issued (directly or indirectly) upon exercise hereof, upon
request, copies of the Company's reports on Forms 10-K, 10-Q, and 8-K and Annual
Reports to Shareholders promptly after such documents are filed with the SEC.
16. NOTICES. Except as may be otherwise provided herein, all notices and other
communications permitted under this Warrant shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other
party; (b) when received when sent by facsimile to the address and number set
forth below (provided, however, that notices given by facsimile shall not be
effective unless either (i) a duplicate copy of such facsimile notice is
promptly given by one of the other methods described in this Section 16, or (ii)
the receiving party delivers a written confirmation of receipt for such notice
either by facsimile or any other method described in this Section 16); (c) three
business days after deposit in the U.S. mail with first class or certified mail
receipt requested postage prepaid and addressed to the other party as set forth
below; or (d) the next business day after deposit with a national overnight
delivery service, postage prepaid, addressed to the parties as set forth below
with next-business-day delivery guaranteed, provided that the sending party
receives a confirmation of delivery from the delivery service provider.
To Holder: To the Company:
Intel Corporation ModaCAD, Inc.
0000 Xxxxxxx Xxxxxxx Xxxx. 0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Attn: Treasurer
Fax Number: (000) 000-0000
With copies to: With copies to:
Intel Corporation Coudert Brothers
0000 Xxxxxxx Xxxxxxx Xxxx. 0000 Xxxx 0xx Xxxxxx
Xxxxx Xxxxx, XX 00000 20th Floor
Attn: General Counsel Xxx Xxxxxxx, XX 00000
Fax Number: (000) 000-0000 Attn:Xxxx X. St.Clair,Esq.
A party may change or supplement the addresses given above, or designate
additional addresses, for purposes of this Section 16 by giving the other party
written notice of the new address in the manner set forth above.
17. HEADINGS. The headings in this Warrant are for purposes of
convenience in reference only, and shall not be deemed to constitute a
part hereof.
18. LAW GOVERNING. This Warrant shall be construed and enforced in accordance
with, and governed by, the laws of the State of California.
19. NO IMPAIRMENT.The Company will not, by amendment of its Certificate of
Incorporation or bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action,avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock issuable upon the
exercise of this Warrant above the amount payable therefor upon such exercise,
and (b) will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock upon exercise of this Warrant.
20. NOTICES OF RECORD DATE. In case:
20.1. the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time receivable upon the exercise of this
Warrant), for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities or to receive any other right; or
20.2. of any consolidation or merger of the Company with or into another
corporation, any capital reorganization of the Company, any reclassification of
the Capital Stock of the Company, or any conveyance of all or substantially all
of the assets of the Company to another corporation in which holders of the
Company's stock are to receive stock, securities or property of another
corporation; or
20.3.of any voluntary dissolution, liquidation or winding-up of the Company; or
20.4. of any redemption or conversion of all outstanding Common Stock; then, and
in each such case, the Company will mail or cause to be mailed to the Holder of
this Warrant a notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or right,
or (ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation, winding-up, redemption or
conversion is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock or (such stock or securities as at the
time are receivable upon the exercise of this Warrant), shall be entitled to
exchange their shares of Common Stock (or such other stock or securities), for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be delivered at least thirty (30) days prior to
the date therein specified.
21. SEVERABILITY. If any term, provision, covenant or restriction of this
Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
22. COUNTERPARTS. For the convenience of the parties, any number of counterparts
of this Warrant may be executed by the parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
23. NO INCONSISTENT AGREEMENTS. The Company will not on or after the date of
this Warrant enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holders of this Warrant or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to holders of the Company's securities under any other
agreements, except rights that have been waived.
24. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a Saturday,
Sunday or legal holiday, the Expiration Date shall automatically be extended
until 5:00 p.m. the next business day.
25. CONFIDENTIALITY. The Company agrees that, except with the prior written
permission of Holder or as required by law, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Warrant, discussions or negotiations
relating to this Warrant, the performance of its obligations hereunder or the
ownership of Warrant Stock purchased hereunder. The provisions of this Section
25 shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby. Notwithstanding the foregoing, Holder may
disclose the terms of and ownership of the Warrant to third parties or to the
public at its discretion, and the Company shall have the right to disclose to
third parties any such information disclosed by Holder in a press release or
public announcement.
26. PUBLIC ANNOUNCEMENTS. The Company shall not use Holder's name or refer
to Holder directly or indirectly in connection with this Warrant in any
advertisement, news release or professional or trade publication, or in any
other manner, unless otherwise required by law or with Holder's prior written
consent, which consent will generally not be granted. The parties agree that
there will be no press release or other public statement issued by either
party relating to this Warrant or the transactions contemplated hereby unless
required by law or mutually agreed to, and further agree to keep the terms and
conditions of this Warrant in strictest confidence, it being understood that
this restriction shall not prohibit disclosure to the parties counsel,
accountants and professional advisors. If the Company determines that it is
required by law to disclose the terms and conditions of this Warrant, or to file
this Warrant with the SEC, it shall, a reasonable time before making any such
disclosure or filing, consult with Holder regarding such filing and seek
confidential treatment for such portions of those agreements as may be requested
by Holder. Notwithstanding the above, the Company may disclose the existence of
this Warrant to bonafide potential investors who are under obligations of
nondisclosure, similar to those contained herein and which the Company believes
in good faith are seriously considering investing in the Company.
27. DISPUTE RESOLUTION. The parties agree to negotiate in good faith to resolve
any dispute between them regarding this Warrant. If the negotiations do not
resolve the dispute to the reasonable satisfaction of both parties, then each
party shall nominate one senior officer of the rank of Vice President or higher
as its representative. These representatives shall, within thirty(30) days of a
written request by either party to call such a meeting,meet in person and alone
(exceptfor one assistant for each party) and shall attempt in good faith to
resolve the dispute. If the disputes cannot be resolved by such senior managers
in such meeting, the parties agree that they shall, if requested in writing by
either party, meet within thirty (30) days after such written notification for
one day with an impartial mediator and consider dispute resolution alternatives
other than litigation. If an alternative method of dispute resolution is not
agreed upon within thirty (30) days after the one day mediation, either party
may begin litigation proceedings. This procedure shall be a prerequisite before
taking any additional action hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the
Effective Date.
INTEL CORPORATION ModaCAD, Inc.
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By By
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Printed Name Printed Name
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Title Title
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
ModaCAD, Inc.
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities of ModaCAD, Inc., as provided for therein, and (check the
applicable box):
tenders herewith payment of the exercise price in full in the form of cash or a
certified or official bank check in same-day funds in the amount of
$____________ for _________ such securities. Elects the [Net Issue
Exercise][Easy Sale Exercise] option pursuant to Section 3.2 or 3.3 of the
Warrant, and accordingly requests delivery of a net of ______________ of such
securities. Please issue a certificate or certificates for such securities in
the name of, and pay any cash for any fractional share to (please print name,
address and social security number):
Name:
-------------------------------------------------------------
Address:
-------------------------------------------------------------
Signature:
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Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee appearing in
the assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, hereby sells, assigns and transfers unto
____________________________ the within Warrant Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ____________________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number
of Warrants set forth below, with full power of substitution in the premises:
--------------------------------------- -------------------------------------
Name(s) of Assignee(s) Address # of Warrants
---------------------- ----------------------------- ------------------
---------------------- ----------------------------- ------------------
---------------------- ----------------------------- ------------------
---------------------- ----------------------------- ------------------
And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants registered by said
Warrant Certificate.
--------------------------------------------------------------------------------
Dated:
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Signature:
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Notice: The signature to the foregoing Assignment must correspond to the name as
written upon the face of this security in every particular, without alteration
or any change whatsoever; signature(s) must be guaranteed by an eligible
guarantor institution (banks, stock brokers, savings and loan associations and
credit unions with membership in an approved signature guarantee medallion
program) pursuant to Securities and Exchange Commission Rule 17Ad-15.
EXHIBIT 3
1. REGISTRATION RIGHTS.
1.1 Definitions. For purposes of this Section 1:
(a) Registration. The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended, (the "Securities Act"),
and the declaration or ordering of effectiveness of such registration statement
(b) Registrable Securities. The term "Registrable Securities" means: (1) any
Common Stock of the Company issued or to be issued upon exercise of the Warrant
and (2) any shares of Common Stock of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange
for or in replacement of, any shares of Common Stock described in clause (1)
of this subsection (b). Notwithstanding the foregoing, "Registrable Securities"
shall exclude any Registrable Securities sold by a person in a transaction in
which rights under this Section 1 are not assigned in accordance with this
Agreement or any Registrable Securities sold in a public offering, whether
sold pursuant to Rule 144 promulgated under the Securities Act, or in a
registered offering, or otherwise.
(c) Registrable Securities Then Outstanding. The number of shares of
"Registrable Securities then Outstanding" shall mean the number of shares of
Common Stock of the Company that are Registrable Securities and (l) are then
issued and outstanding or (2) are then issuable pursuant to an exercise of the
Warrant or pursuant to conversion of securities issuable pursuant to an exercise
of the Warrant.
(d) Holder. For purposes of this Section 1, the term "Holder" means any person
owning of record Registrable Securities that have not been sold to the public or
pursuant to Rule 144 promulgated under the Securities Act or any permitted
assignee of record of such Registrable Securities to whom rights under this
Section 1 have been duly assigned in accordance with this Agreement.
(e) Form S-3. The term "Form S-3" means such form under the Securities Act as is
in effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
(f) SEC. The term "SEC" or "Commission" means the U.S. Securities and Exchange
Commission.
1.2 [Intentionally Omitted].
1.3 Piggyback Registrations. The Company shall notify all Holders of Registrable
Securities in writing at least thirty (30) days prior to filing any registration
statement under the Securities Act for purposes of effecting a public offering
of securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to any registration under Section 1.4
of this Agreement or to any employee benefit plan or a corporate reorganization)
and will afford each such Holder an opportunity to include in such registration
statement all or any part of the Registrable Securities then held by such
Holder. Each Holder desiring to include in any such registration statement all
or any part of the Registrable Securities held by such Holder shall within
twenty (20) days after receipt of the above-described notice from the Company,
so notify the Company in writing, and in such notice shall inform the Company of
the number of Registrable Securities such Holder wishes to include in such
registration statement. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(a) Underwriting. If a registration statement under which the Company gives
notice under this Section 1.3 isfor an underwritten offering, then the Company
shall so advise the Holders of Registrable Securities. In such event, the
right of any such Holder's Registrable Securities to be included in a
registration pursuant to this Section 1.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriters selected for such underwriting
(including a market stand-off agreement of up to 180 days if required by such
underwriters). Notwithstanding any other provision of this Agreement, if the
managing underwriter(s) determine(s) in good faith that marketing factors
require a limitation of the number of shares to be underwritten, then the
Company shall include in such offering (i) first, all the securities the Company
proposes to register for its own account, and (ii) second, Holder's Registrable
Securities and other shares of Common Stock of the Company requested to be
included by other investors having written registration rights agreements with
the Company respecting such shares ("Other Registrable Securities"), with Holder
and each such investor proposing to sell such shares participating in such
registration on a pro rata basis, such participation to be based upon the number
of shares of Registrable Securities and Other Registrable Securities then held
by Holder and each such investor, respectively; provided, however, that the
right of the underwriters to exclude shares from the registration and
underwriting as described above shall be restricted so that (i) all shares that
are not Registrable Securities or Other Registrable Securities and are held by
any other person, including, without limitation, any person who is an
employee, officer or director of the Company (or any subsidiary of the
Company) shall first be excluded from such registration and underwriting before
any Registrable Securities and Other Registrable Securities are so excluded. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter(s), delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder that is a partnership, the Holder and the partners
and retired partners of such Holder, or the estates and family members of any
such partners and retired partners and any trusts for the benefit of any of the
foregoing persons, and for any Holder that is a corporation, the Holder and all
corporations that are affiliates of such Holder, shall = be deemed to be a
single "Holder," and any pro rata reduction with respect to such "Holder" shall
be based upon the aggregate amount of shares carrying registration rights owned
by all entities and individuals included in such "Holder," as defined in this
sentence.
(b) Expenses. All expenses incurred in connection with a registration pursuant
to this Section 1.3 (excluding underwriters' and brokers' discounts and
commissions relating to shares sold by the Holders and legal fees of counsel for
the Holders), including, without limitation all federal and "blue sky"
registration, filing and qualification fees, printers' and accounting fees, and
fees and disbursements of counsel for the Company, shall be borne by the
Company.
(c) No Limit on Registrations. Except as otherwise provided herein, there shall
be no limit on the number of times the Holders may request registration of
Registrable Securities under this Section 1.3.
1.4 Form S-3 Registration. In case the Company shall at any time after the first
anniversary of the date hereof receive from any Holder or Holders of a majority
of all Registrable Securities then outstanding a written request or requests
that the Company effect a registration on Form S-3 and any related qualification
or compliance with respect to all or a part of the Registrable Securities owned
by such Holder or Holders, then the Company will:
(a) Notice. Promptly give written notice of the proposed registration and the
Holder's or Holders' request therefor, and any related qualification or
compliance, to all other Holders of Registrable Securities; and
(b) Registration. As soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holders or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
twenty (20) days after the Company provides the notice contemplated by Section
1.4(a); provided, however, that the Company shall not be obligated to effect any
such registration, qualification or compliance pursuant to this Section 1.4:
(1) if Form S-3 is not available for such offering by the Holders:
(2) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public of less than $1,000,000;
(3) if the Company has, within the six (6) month period preceding the date of
such request, already effected a registration under the Securities Act other
than a registration from which the Registrable Securities of Holders have been
excluded (with respect to all or any portion of the Registrable Securities the
Holders requested be included in such registration) pursuant to the provisions
of Section 1.3(a); or
(4) in any particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.
(c) Expenses. The Company shall pay all expenses incurred in connection with
each registration requested pursuant to this Section 1.4, (excluding
underwriters' or brokers' discounts and commissions relating to shares sold by
the Holders and legal fees of counsel for the Holders), including without
limitation federal and "blue sky" registration, filing and qualification fees,
printers' and accounting fees, and fees and disbursements of counsel.
(d) Deferral. Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting the filing of a registration statement pursuant to this
Section 1.4, a certificate signed by the President or Chief Executive Officer of
the Company stating that in the good faith judgment of the Board, it would be
materially detrimental to the Company and its stockholders for such registration
statement to be filed, then the Company shall have the right to defer such
filing for a period of not more than ninety (90) days after receipt of the
request of the initiating Holders; provided, however, that the Company may not
utilize this right more than once in any twelve (12) month period.
(e) No Limit on Registrations. Except as otherwise provided herein, the Holder
shall be limited to one request for registration of Registrable Securities under
this Section 1.4.
1.5 Obligations of the Company. Whenever required to effect the registration of
any Registrable Securities under this Agreement the Company shall, as
expeditiously as reasonably possible:
(a) Registration Statement. Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, provided, however,
that the Company shall not be required to keep any such registration statement
effective for more than ninety (90) days.
(b) Amendments and Supplements. Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement, provided, however, that the
Company shall not be required to keep any such amended registration statement
effective for more than ninety (90) days.
(c) Prospectuses. Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by them that
are included in such registration.
(d) Blue Sky. Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) Underwriting. In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notification. Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as 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 a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Opinion and Comfort Letter. Furnish, at the reasonable request of any Holder
requesting registration of Registrable Securities, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, or, if such securities are
not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, an opinion,
dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is reasonably
satisfactory to a majority in interest of the Holders requesting registration,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.6 Furnish Information. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to Sections 1.3 or 1.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as shall be required to timely effect the Registration of their
Registrable Securities.
1.7 Indemnification. In the event any Registrable Securities are included in a
registration statement under Sections 1.3 or 1.4:
(a) By the Company. To the extent permitted by law; the Company will indemnify
and hold harmless each Holder, the partners, officers and directors of
each Holder, any underwriter (as determined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended, (the "1934 Act"), against any losses, claims, damages, or Liabilities
(joint or several) to which they may become subject under the Securities
Act, the 1934 Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of
or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the 1934 Act, any federal or state securities law or any rule or regulation
promulgated under the Securities Act, the 1934 Act or any federal or state
securities law in connection with the offering covered by such registration
statement;vand the Company will reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection 1.7(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(b) By Selling Holders. To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or any person who
controls such Holder within the meaning of the Securities Act or the 1934 Act,
against any losses, claims, damages or liabilities (joint or several) to which
the Company or any such director, officer, controlling person, underwriter or
other such Holder, partner or director, officer or controlling person of such
other Holder may become subject under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, underwriter or other
Holder, partner, officer, director or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action: provided, however, that the indemnity agreement contained
in this subsection 1.7(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; and provided, further, that the total amounts payable in indemnity by
a Holder under this Section 1.7(b) in respect of any Violation shall not exceed
the net proceeds received by such Holder in the registered offering out of which
such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under this Section
1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential conflict of interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall relieve
such indemnifying party of liability to the indemnified party under this Section
1.7 to the extent the indemnifying party is prejudiced as a result thereof, but
the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 1.7.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity agreements of
the Company and Holders are subject to the condition that, insofar as they
relate to any Violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any person if a copy of
the Final Prospectus was timely furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.
(e) Contribution. In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i)
any Holder exercising rights under this Agreement, or any controlling person of
any such Holder, makes a claim for indemnification pursuant to this Section
1.7 but it is judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to appeal orthe
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 1.7 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
1.7; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such Holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and the Company and other
selling Holders are responsible for the remaining portion; provided, however,
that, in any such case: (A) no such Holder will be required to contribute any
amount in excess of the public offering price of all such Registrable Securities
offered and sold by such Holder pursuant to such registration statement; and (B)
no person or entity guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and Holders under this Section 1.7
shall survive until the third anniversary of the completion of any offering of
Registrable Securities in a registration statement, regardless of the expiration
of any statutes of limitation or extensions of such statutes.
1.8 Termination of the Company's Obligations. The Company shall have no
obligations pursuant to Sections 1.3 and 1.4 with respect to any Registrable
Securities proposed to be sold by a Holder in a registration pursuant to Section
1.3 or 1.4 more than seven (7) years after the date of this Agreement, or, if,
in the opinion of counsel to the Company, all such Registrable Securities
proposed to be sold by a Holder may then be sold under Rule 144 in one
transaction without exceeding the volume limitations thereunder.
