INFINITE TECHNOLOGY GROUP LTD.
AND
XXXXXXXX, XXXXXX & XXXXXXXXXX, INC.
UNDERWRITER'S
WARRANT AGREEMENT
Dated as of ______ ____, 1999
UNDERWRITER'S WARRANT AGREEMENT dated as of ____ ____, 1999, between
INFINITE TECHNOLOGY GROUP LTD., a New York corporation (the "Company"), and
XXXXXXXX, XXXXXX & XXXXXXXXXX, INC. and its assignees or designees (each
hereinafter referred to variously as a "Holder" or "Xxxxxxxx").
W I T N E S S E T H :
WHEREAS, Xxxxxxxx has agreed pursuant to the underwriting agreement
(the "Underwriting Agreement") between the Company and Xxxxxxxx to act as
underwriter (the "Underwriter") in connection with the Company's proposed public
offering of 2,000,000 shares of common stock of the Company, $.01 par value,
(the "Common Stock"), at a public offering price of $_____ per share (the
"Public Offering").
WHEREAS, pursuant to the Underwriting Agreement, the Company proposes
to issue warrants to the Underwriter to purchase up to an aggregate of 140,000
shares of Common Stock (the "Underwriter's Warrants").
WHEREAS, the Underwriter's 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 Underwriter in consideration for,
and as part of the Underwriter's compensation in connection with, the
Underwriter acting as the underwriter 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 Forty Dollars
($140.00), 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. Xxxxxxxx is hereby granted the right to purchase, at any time
from _____ ___, 2000 until 5:30 p.m., New York time, on _____ ___, 2004 (5 years
from the effective date (the "Effective Date") of the registration statement and
any supplement thereto, on Form S-1, No.333- (the "Registration Statement")), at
which time the Underwriter's Warrants expire, up to an aggregate 140,000 shares
of Common stock (subject to adjustment as provided in Section 8 hereof), at an
initial exercise price (subject to adjustment as provided in Section 11 hereof)
of $_____ (125% of the public offering price) (the "Exercise Price").
2. Underwriter's Warrant Certificates. The Underwriter's 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. Registration of Warrant. The Underwriter's Warrants shall be
numbered and shall be registered on the books of the Company when issued.
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4. Exercise of Underwriter's Warrant.
4.1 Method of Exercise. The Underwriter's Warrants initially
are exercisable at the Exercise Price (subject to adjustment as provided in
Section 11 hereof) per Underwriter's Warrant set forth in Section 8 hereof
payable by certified or official bank check in New York Clearing House funds.
Upon surrender of a Underwriter's Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the Exercise Price
for the shares of Common Stock purchased at the Company's principal offices in
New York (currently located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 10038) the
registered Holder of a Underwriter's 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 Underwriter's
Warrant Certificate are exercisable at the option of the Holder thereof, in
whole or in part (but not as to fractional shares of Common Stock underlying the
Underwriter's Warrants). In the case of the purchase of less than all of the
shares of Common Stock purchasable under any Underwriter's Warrant Certificate,
the Company shall cancel said Underwriter's Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Underwriter's Warrant
Certificate of like tenor for the balance of the shares of Common stock
purchasable thereunder.
4.2 Exercise by Surrender of Underwriter's Warrant. In
addition to the method of payment set forth in Section 4.1 and in lieu of any
cash payment required thereunder, the Holder(s) of the Underwriter's Warrants
shall have the right at any time and from time to time to exercise the
Underwriter's Warrants in full or in part by surrendering the Warrant
Certificate in the manner specified in Section 4.1 in exchange for the number of
shares of Common Stock equal to the product of (x) the number of shares of
Common Stock as to which the Underwriter's Warrants are being exercised,
multiplied by (y) a fraction, the numerator of which is the Market Price (as
defined in Section 9.3 (e) hereof) of the shares of Common Stock minus the
Exercise Price of the shares of Common Stock and the denominator of which is the
Market Price per share of Common Stock. Solely for the purposes of this Section
4.2, Market Price shall be calculated either (i) on the date on which the form
of election attached hereto is deemed to have been sent to the Company pursuant
to Section 15 hereof ("Notice Date") or (ii) as the average of the Market Price
for each of the five trading days immediately preceding the Notice Date,
whichever of (i) or (ii) results in a greater Market Price.
5. Issuance of Certificates. Upon the exercise of the Underwriter's
Warrant, the issuance of certificates for shares of Common Stock, properties or
rights underlying such Underwriter's Warrant shall be made forthwith (and in any
event within five (5) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax, other than income taxes, which
may be payable in respect of the issuance thereof, and such certificates shall
(subject to the provisions of Sections 7 and 9 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 such certificates unless or until the person or
persons
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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 Underwriter's Warrant Certificates and the certificates
representing the shares of Common Stock or other securities, property or rights
issued upon exercise of the Underwriter's Warrant shall be executed on behalf of
the Company by the manual or facsimile signature of the then present President
or any 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 any Assistant Secretary of the Company. Underwriter's Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
6. Transfer of Underwriter's Warrant. The Underwriter's Warrant shall
be transferable only on the books of the Company maintained at its principal
office, where its principal office may then be located, upon delivery thereof
duly endorsed by the Holder or by its duly authorized attorney or representative
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any registration transfer, the Company shall execute and deliver
the new Underwriter's Warrant to the person entitled thereto.
7. Restriction On Transfer of Underwriter's Warrant. The Holder of a
Underwriter's Warrant Certificate, by its acceptance thereof, covenants and
agrees that the Underwriter's Warrant is being acquired as an investment and not
with a view to the distribution thereof, and that the Underwriter's Warrant may
not be sold, transferred, assigned, hypothecated or otherwise disposed of, in
whole or in part, for the term of the Underwriter's Warrant, except (i) during
the first year of the term, to officers of the Underwriter and thereafter (ii)
to officers or employees of the Underwriter who are also stockholders of the
Underwriter, or by will, pursuant to the laws of descent and distribution, or by
the operation of law.
8. Exercise Price and Number of Securities. Except as otherwise
provided in Section 10 hereof, each Underwriter's Warrant is exercisable to
purchase one share of Common Stock at an initial exercise price equal to the
Exercise Price. The Exercise Price and the number of shares of Common Stock for
which the Underwriter's Warrant may be exercised shall be the price and the
number of shares of Common Stock which shall result from time to time from any
and all adjustments in accordance with the provisions of Section 11 hereof.
9. Registration Rights.
9.1 Registration Under the Securities Act of 1933. Each
Underwriter's Warrant Certificate and each certificate representing shares of
Common Stock and any of the other securities issuable upon exercise of the
Underwriter's Warrant (collectively, the "Warrant Shares") shall bear the
following legend unless (i) such Underwriter's Warrant or Warrant Shares are
distributed to the public or sold to the underwriters for distribution to the
public pursuant to Section 9 hereof or otherwise pursuant to a registration
statement filed under the Securities Act of 1933, as amended (the "Act"), or
(ii) the Company has received an opinion of counsel, in form and
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substance reasonably satisfactory to counsel for the Company, that such legend
is unnecessary for any such certificate:
THE UNDERWRITER'S WARRANT 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, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE UNDERWRITER'S WARRANT REPRESENTED BY THE
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE UNDERWRITER'S WARRANT AGREEMENT
REFERRED TO HEREIN.
9.2 Piggyback Registration. If, at any time commencing one (1)
year after the Effective Date and expiring five (5) years thereafter, the
Company proposes to register any of its securities under the Act (other than in
connection with a merger or pursuant to Form S-4 or Form S-8 or successor form
thereto) it will give written notice by registered mail, at least thirty (30)
days prior to the filing of each such registration statement, to the Holders of
the Warrant Shares of its intention to do so. If any of the Holders of the
Warrant Shares notify the Company within twenty (20) days after mailing of any
such notice of its or their desire to include any such securities in such
proposed registration statement, the Company shall afford such Holders of the
Warrant Shares the opportunity to have any such Warrant Shares registered under
such registration statement. In the event that the managing underwriter for said
offering advises the Company in writing that in its opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without causing a diminution in the offering
price or otherwise adversely affecting the offering, the Company will include in
such registration (a) first, the securities the Company proposes to sell, (b)
second, the securities held by the entities that made the demand for
registration, (c) third, the Warrant Shares requested to be included in such
registration which in the opinion of such underwriter can be sold, pro rata
among the Holders of Warrant Shares on the basis of the number of Underwriter's
Warrant Shares requested to be registered by such Holders, and (d) fourth, other
securities requested to be included in such registration.
Notwithstanding the provisions of this Section 9.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 9.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement or to withdraw the same after the filing but prior to the
effective date thereof.
9.3 Demand Registration. (a) At any time commencing one (1)
year after the Effective Date and expiring five (5) years thereafter, the
Holders of the Underwriter's Warrants and/or Warrant Shares representing a
"Majority" (as hereinafter defined) of the Underwriter's
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Warrants and/or Warrant Shares shall have the right (which right is in addition
to the registration rights under Section 9.2 hereof), exercisable by written
notice to the Company, to have the Company prepare and file with the Securities
and Exchange Commission (the "Commission"), on one occasion, a registration
statement and such other documents, including a prospectus, as maybe necessary
in the opinion of both counsel for the Company and counsel for the Holders, in
order to comply with the provisions of the Act, so as to permit a public
offering and sale by such Holders and any other Holders of the Underwriter's
Warrant and/or Warrant Shares who notify the Company within fifteen (15) days
after the Company mails notice of such request pursuant to Section 9.3(b) hereof
(collectively, the "Requesting Holders") of their respective Warrant Shares for
the earlier of (i) six (6) consecutive months or (ii) until the sale of all of
the Warrant Shares requested to be registered by the Requesting Holders.
(b) The Company covenants and agrees to give written
notice of any registration request under this Section 9.3 by any Holder or
Holders representing a Majority of the Underwriter's Warrants and/or Warrant
Shares to all other registered Holders of the Underwriter's Warrants and the
Warrant Shares within ten (10) days from the date of the receipt of any such
registration request.
(c) 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 9.4(a) hereof
pursuant to the written notice specified in Section 9.3(a) of the Holders of a
Majority of the Underwriter's Warrants and/or Warrant Shares, the Company, at
the option of the Holders of a Majority, will be required to repurchase (i) any
and all Warrant Shares at the higher of the Market Price (as defined in Section
9.3(e)) per share of Common Stock on (x) the date of the notice sent pursuant to
Section 9.3(a) or (y) the expiration of the period specified in Section 9.4(a)
and (ii) any and all Underwriter's Warrants at such Market Price per share of
Common Stock less the Exercise Price of such Underwriter's Warrants. The Holders
of a Majority shall notify the Company in writing of their election to require
such repurchase. Such repurchase shall be in immediately available funds and
shall close within two (2) days after the later of (i) the expiration of the
period specified in Section 9.4(a) or (ii) the delivery of the written notice of
election specified in this Section 9.3(d).
(e) Definition of Market Price. As used herein, the
phrase "Market Price" at any date shall be deemed to be the average of the last
reported sale prices for the last five (5) trading days, as officially reported
by the principal securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average closing sale price as
furnished by the Nasdaq National Market System ("Nasdaq"), or if the Common
Stock is not quoted on Nasdaq, as determined in good faith by resolution of the
Board of Directors of the Company, based on the best information available to
it.
9.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Sections 9.2 or 9.3 hereof, the Company
covenants and agrees as follows:
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(a) The Company shall use its best efforts to file a
registration statement within ninety (90) days of receipt of any demand
therefor, and to have any registration statements declared effective at the
earliest possible time, shall furnish each Holder desiring to sell Warrant
Shares such number of prospectuses as shall reasonably be requested and shall
maintain the effectiveness of such registration statement for a period of at
least twelve (12) months. Notwithstanding the foregoing sentence, the Company
shall be entitled one time only to postpone the filing of any registration
statement otherwise required to be prepared and filed by it pursuant to this
Section 9.4(a) if the Company is (i) publicly committed to a self-tender or
exchange offer and the filing of a registration statement would cause a
violation of Regulation M under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or (ii) involved in negotiating or consummating an
acquisition or merger which would make such registration impracticable, in
either of which cases the filing of the registration statement may be delayed
for a period of up to 60 days. The Company shall promptly deliver to the Holders
a written notice of postponement, which notice shall specifically set forth the
reason for such postponement. Following the delivery of such notice, the Company
shall be required to file the postponed registration statement upon the earlier
of (i) the consummation or termination, as applicable, of the event requiring
such postponement (ii) 60 days after delivery of the aforementioned notice.
(b) The Company shall pay all costs (excluding fees
and expenses of Holder(s)' counsel and any underwriting or selling commissions,
and excluding roadshow expenses if the only shares to be registered in such
Registration Statement are Warrant Shares), fees and expenses in connection with
all registration statements filed pursuant to Sections 9.2 and 9.3(a) hereof
including, without limitation, the Company's legal and accounting fees, printing
expenses, blue sky fees and expenses. The Holder(s) will pay all costs, fees and
expenses (including those of the Company)in connection with the registration
statement filed pursuant to Section 9.3(c).
(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 such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s)of the
Warrant Shares to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of 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
each of the Underwriters contained in Section 7 of the Underwriting Agreement.
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(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 in writing 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
7 of the Underwriting Agreement pursuant to which the Underwriter has agreed to
indemnify the Company.
(f) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Underwriter's Warrant
prior to the initial filing of any registration statement or the effectiveness
thereof.
(g) The Company shall not permit the inclusion of any
securities other than the Warrant Shares to be included in any registration
statement filed pursuant to Section 9.3 hereof, or permit any other registration
statement to be or remain effective during the effectiveness of a registration
statement filed pursuant to Section 9.3 hereof (other than registration
statements filed prior to an exercise of registration rights by a Holder of
Underwriter's Warrants and/or Warrant Shares pursuant to Section 9.2 hereof),
without the prior written consent of Xxxxxxxx or as otherwise required by the
terms of any existing registration rights granted prior to the date of this
Agreement by the Company to the holders of any of the Company's securities.
(h) In the event of an underwritten offering, the
Company shall furnish to each Holder participating in the 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 15
months thereafter, make "generally available to
8
its security holders" (within the meaning of Rule 158 funder 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 12 consecutive months beginning after
the effective date of the registration statement.
(j) The Company shall enter into an underwriting
agreement with the managing underwriters (in the case of registration rights
exercised pursuant to Section 9.3 hereof, selected for such underwriting by
Holders holding a Majority of the Warrant Shares requested to be included in
such underwriting, which may be the Representative). Such agreement shall be
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. The Holders shall be parties to
any underwriting agreement relating to an underwritten sale of their Warrant
Shares and may, at their option, require that any or all the representations,
warranties and covenants of the Company to or for the benefit of such
underwriters shall also be made to and for the benefit of such Holders. 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 and their intended methods of distribution.
(k) For purposes of this Agreement, the term
"Majority" in reference to the Underwriter's Warrants or Warrant Shares shall
mean in excess of fifty percent (50%) of the then outstanding Underwriter's
Warrants or Warrant Shares that (i) are not held by the Company, an affiliate,
officer, creditor, employee for 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.
10. Obligations of Holders. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 9 hereof that
each of the selling Holders shall:
(a) Furnish to the Company such information
regarding themselves, the Warrant Shares held by them, the intended method of
sale or other disposition of such securities, the identity of and compensation
to be paid to any underwriters proposed to be employed in connection with such
sale or other disposition, and such other information as may reasonably be
required to effect the registration of their Warrant Shares.
(b) Notify the Company, at any time when a prospectus
relating to the Warrant Shares covered by a registration statement is required
to be delivered under the Act, of the happening of any event with respect to
such selling Holder 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.
11. Adjustments to Exercise Price and Number of Securities. The
Exercise Price in effect at any time and the number and kind of securities
purchased upon the exercise of the
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Underwriter's Warrant shall be subject to adjustment from time to time only upon
the happening of the following events:
11.1 In case the Company shall (i) declare a dividend on its
Common Stock in Common Stock or make a distribution of Common Stock, (ii)
subdivide its outstanding Common Stock, (iii) combine its outstanding Common
Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its Common Stock other securities of the Company (including
any such reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation), the number of Warrant Shares
purchasable upon exercise of each Underwriter's Warrant immediately prior
thereto shall be adjusted so that the Holder of each Underwriter's Warrant shall
be entitled to receive the kind and number of shares of Common Stock or other
securities of the Company which he would have owned or have been entitled to
receive after the happening of any of the events described above, had such
Underwriter's Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made pursuant to
this paragraph 11.1 shall become effective immediately after the effective date
of such event retroactive to immediately after the record date, if any, for such
event.
11.2 In case the Company shall issue rights, options or
warrants to all holders of its Common Stock, without any charge to such holders,
entitling them (for a period expiring within 45 days after the record date
mentioned below in this paragraph 11.2) to subscribe for or to purchase Common
Stock at a price per share that is lower at the record date mentioned below than
the then current market price per share of Common Stock (as defined in paragraph
11.4 below), the number of Warrant Shares thereafter purchasable upon exercise
of each Underwriter's Warrant shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon exercise of each Underwriter's
Warrant by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares which the aggregate offering price of the
total number of shares of Common Stock so offered would purchase at the then
current market price per shares of Common Stock. Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become effective
retroactively to immediately after the record date for the determination of
stockholders entitled to receive such rights, options or warrants.
11.3 In case the Company shall distribute to all holders of
its shares of Common Stock securities other than Common Stock or evidences of
its indebtedness or assets (excluding cash dividends payable out of consolidated
earnings or retained earnings and dividends or distributions referred to in
paragraph 11.1 above) or rights, options or warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock (excluding those referred to in paragraph 11.2 above), then in
each case the number of Warrant Shares thereafter issuable upon the exercise of
each Underwriter's Warrant shall be determined by multiplying the number of
Warrant Shares theretofore issuable upon the exercise of each Underwriter's
Warrant, by a fraction, of which the numerator shall be the current market
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price per shares of Common Stock (as defined in paragraph 11.4 below) on the
record date mentioned below in this paragraph 11.3, and of which the denominator
shall be the current market price per shares of Common Stock on such record
date, less the then fair value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the portion of the shares
of stock other than Common Stock or assets or evidences of indebtedness so
distributed or of such subscription rights, options or warrants, or of such
convertible or exchangeable securities applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to immediately after
the record date for the determination of stockholders entitled to receive such
distribution.
11.4 For the purpose of any computation under paragraphs 11.2
and 11.3 of this Section 11, the current market price per share of Common Stock
at any date shall be the average of the daily closing prices for fifteen (15)
consecutive trading days commencing twenty (20) trading days before the date of
such computation. The closing price for each day shall be the last reported sale
price regular way or, in case no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way for such day, in either
case on the principal national securities exchange on which the shares are
listed or admitted to trading, or if they are not listed or admitted to trading
on any national securities exchange, but are traded in the over-the-counter
market, the closing sale price of the Common Stock or, in case no sale is
publicly reported, the average of the representative closing bid and asked
quotations for the Common Stock on Nasdaq or any comparable system, or if the
shares of Common Stock are not listed on Nasdaq or a comparable system, the
closing sale price of the Common Stock or, in case no sale is publicly reported,
the average of the closing bid and asked prices as furnished by two members of
the NASD selected from time to time by the Company for that purpose.
11.5 No adjustment in the number of Warrant Shares purchasable
hereunder or the Exercise price thereof shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the number
of Warrant Shares purchasable upon the exercise of each Underwriter's Warrant;
provided, however, that any adjustments which by reason of this paragraph 11.5
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment, but not later than three years after the happening of
the specified event or events. All calculations shall be made to the nearest one
thousandth of a share. Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled, but shall not be required, to
make such changes in the number of Warrant Shares purchasable upon the exercise
of each Underwriter's Warrant, in addition to those required by this Section 11,
as it in its discretion shall determine to be advisable in order that any
dividend or distribution in shares of Common Stock, subdivision,
reclassification or combination of shares of Common Stock, issuance of rights,
warrants or options to purchase Common Stock, or distribution of shares of stock
other than Common Stock, evidences of indebtedness or assets (other than
distributions of cash out of consolidated earnings or retained earnings) or
convertible or exchangeable securities hereafter made by the Company to the
holders of its shares of Common Stock shall not result in any tax to the holders
of its Common Stock or securities convertible into Common Stock.
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11.6 Whenever the number of Warrant Shares purchasable upon
the exercise of each Underwriter's Warrant is adjusted, as herein provided, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of Warrant Shares purchasable upon the exercise of each
Underwriter's Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Warrant Shares so purchasable immediately
thereafter.
11.7 For the purpose of this Section 11, the term "Common
Stock" shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement or (ii) any other class of stock resulting
from successive changes or reclassifications of such shares consisting solely of
changes in par value, or from no par value to par value, or from par value to no
par value. In the event that at any time, as a result of an adjustment made
pursuant to paragraph 11.1 above, the Holders shall become entitled to purchase
any shares of capital stock of the Company other than Common Stock, thereafter
the number of such other shares so purchasable upon exercise of each
Underwriter's Warrant and the Exercise Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
paragraphs 11.1 through 11.6, inclusive, and paragraphs 11.8 through 11.13,
inclusive, of this Section 11, and the provisions of Sections 4, 5, 9 and 13,
with respect to the Warrant Shares, shall apply on like terms to any such other
shares.
11.8 Upon the expiration of any rights, options, warrants or
conversion rights or exchange privileges granted pursuant to paragraphs 11.2 and
11.3 above, if any thereof shall not have been exercised, the Exercise Price and
the number of shares of Common Stock purchasable upon the exercise of each
Underwriter's Warrant shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it originally been adjusted (or had
the original adjustment not been required, as the case may be) as if (i) the
only shares of Common Stock so issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such rights, options, warrants or
conversion rights or exchange privileges and (ii) such shares of Common Stock,
if any, were issued or sold for the consideration actually received by the
Company upon such exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all of such rights,
options, warrants or conversion rights or exchange privileges whether or not
exercised; provided, however, that no such readjustment shall have the effect of
increasing the Exercise Price by an amount in excess of the amount of the
adjustment initially made in respect to the issuance, sale or grant of such
rights, options, warrants or conversion rights or exchange privileges.
11.9 The Company may, at its option, at any time during the
term of the Underwriter's Warrants, reduce the then current Exercise Price to
any amount deemed appropriate by the Board of Directors of the Company.
11.10 Whenever the number of Warrant Shares issuable upon the
exercise of each Underwriter's Warrant or the Exercise Price of such Warrant
Shares is adjusted, as herein provided, the Company shall promptly mail by first
class mail postage prepaid, to each Holder
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notice of such adjustment or adjustments. The Company shall retain a firm of
independent public accountants (who may be the regular accountants employed by
the Company) to make any computation required by this Section 11 and shall cause
such accountants to prepare a certificate setting forth the number of Warrant
Shares issuable upon the exercise of each Underwriter's Warrant and the Exercise
Price of such Warrant Shares after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such certificate shall be
conclusive on the correctness of such adjustment and each Holder shall have the
right to inspect such certificate during reasonable business hours.
11.11 Except as provided in this Section 8, no adjustment in
respect of any dividends shall be made during the term of the Underwriter's
Warrants or upon the exercise of the Underwriter's Warrants.
11.12 In case of any consolidation of the Company with, or
merger of, the Company with or into another corporation or in case of any sale
or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation (or an affiliate of such successor or purchasing
corporation), as the case may be, agrees that each Holder shall have the right
thereafter upon payment of the Exercise Price in effect immediately prior to
such action to purchase upon exercise of each Underwriter's Warrant the kind and
amount of shares and other securities and property (including cash) which he
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Underwriter's Warrant been
exercised immediately prior to such action. The provisions of this paragraph
11.12 shall similarly apply to successive consolidations, mergers, sales or
conveyances.
11.13 Notwithstanding any adjustment in the Exercise Price or
the number or kind of shares purchasable upon the exercise of the Underwriter's
Warrants pursuant to this Agreement, certificates for Underwriter's Warrants
issued prior or subsequent to such adjustment may continue to express the same
price and number and kind of Warrant Shares as are initially issuable pursuant
to this Agreement.
11.14 Each Underwriter's 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 Underwriter's 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
Underwriter's Warrant Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to it and reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of the Underwriter's Warrant, if mutilated, the Company will make
and deliver a new Warrant Certificate of like tenor, in lieu thereof.
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12. 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 Underwriter's Warrant, 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 by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.
13. 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 Underwriter's
Warrant, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. Every transfer agent
("Transfer Agent") for the Common Stock and other securities of the Company
issuable upon the exercise of the Underwriter's Warrant will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
of Common Stock and other securities as shall be requisite for such purpose. The
Company will keep a copy of this Agreement on file with every Transfer Agent for
the Common Stock and other securities of the Company issuable upon the exercise
of the Underwriter's Warrant. The Company will supply every such Transfer Agent
with duly executed stock and other certificates, as appropriate, for such
purpose. The Company covenants and agrees that, upon exercise of the
Underwriter's Warrant 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, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Underwriter's Warrant shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Underwriter's Warrant to be
listed (subject to official notice of issuance) on all securities exchanges on
which the Common Stock issued to the public in connection herewith may then be
listed and/or quoted on Nasdaq.
14. Notices to Underwriter's 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 Underwriter's 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 entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; 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
14
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale
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 shall
give written notice of such event at least fifteen (15) days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be. 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, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
15. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have be unduly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) if to the registered Holder of the Underwriter's
Warrant, 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 4 hereof or to such other address as the Company may designate by notice
to the Holders.
16. Supplements; Amendments; Entire Agreement. 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. The Company and the Underwriter may from
time to time supplement or amend this Agreement without the approval of any
holders of Underwriter's Warrant Certificates (other than the Underwriter) 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 Underwriter may deem necessary or desirable and which
the Company and the Underwriter deem shall not adversely affect the interests of
the Holders of Underwriter's Warrant Certificates.
17. Successors. All of 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.
18. Survival of Representations and Warranties. All statements in any
schedule, exhibit or certificate or other instrument delivered by or on behalf
of the parties hereto, or in connection with the transactions contemplated by
this Agreement, shall be deemed to be representations and warranties hereunder.
Notwithstanding any investigations made by or on
15
behalf of the parties to this Agreement, all representations, warranties and
agreements made by the parties to this Agreement or pursuant hereto shall
survive.
19. Governing Law. This Agreement and each Underwriter's Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of 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.
20. Severability. If any provision of this Agreement shall beheld to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Underwriter and any other registered Holder(s) of the Underwriter's 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 and the Underwriter and any other Holder(s) of the
Underwriter's Warrant Certificates or Warrant Shares.
23. 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.
16
IN WITNESS OF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
ATTEST: INFINITE TECHNOLOGY GROUP LTD.
____________________ By:________________________
Name:
Title:
XXXXXXXX, XXXXXX & XXXXXXXXXX, INC.
By:______________________
Name:
Title:
17
EXHIBIT A
[FORM OF UNDERWRITER'S WARRANT CERTIFICATE]
THE UNDERWRITER'S WARRANT 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, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE UNDERWRITER'S WARRANT 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.
Underwriter's Warrant No.
140,000 Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that _______, or registered assigns, is the
registered holder of Warrants to purchase initially, at any time from ______
___, 2000 until 5:30 p.m., New York time on _____ ___, 2004 ("Expiration Date"),
up to ____ shares of fully-paid and non-assessable common stock, $.01 par value
("Common Stock") of Infinite Technology Group Ltd.., a New York corporation (the
"Company") at the initial exercise price, subject to adjustment in certain
events, of $_____ per share (the "Exercise Price") upon surrender of this
Underwriter's 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 Underwriter's Warrant Agreement dated as of ____ __, 1999 between the
Company and Xxxxxxxx, Xxxxxx & Xxxxxxxxxx, Inc. (the "Warrant Agreement").
Payment of the Exercise Price shall be made either (i) by certified or official
bank check in New York Clearing House funds payable to the order of the Company
or (ii) by surrender of this Warrant Certificate in accordance with the
provisions of Section 4.2 of the Warrant Agreement.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Underwriter's Warrants evidenced hereby,
unless exercised prior thereto, shall thereafter be void. The Underwriter's
Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Underwriter's Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and
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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 Underwriter's Warrant.
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 upon the exercise of the Underwriter's Warrants 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 Underwriter's 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 Underwriter's Warrant 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 Underwriter's Warrants
evidenced by this Certificate, the Company shall forthwith issue to the holder
hereof a new Warrant Certificate representing such numbered unexercised
Underwriter's Warrant.
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.
This Warrant Certificate does not entitle any holder thereof to any of
the rights of a shareholder of the Company.
2
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of ____ __, 1999
ATTEST: INFINITE TECHNOLOGY GROUP LTD.
_________________________ By:__________________________
Name:
Title:
3
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase _____ shares of Common Stock of INFINITE TECHNOLOGY
GROUP LTD. and hereby makes payment of $_________ (at the rate of $____ per
share) in payment of the Exercise Price pursuant thereto. Please issue the
Common Stock as to which this Warrant is exercised in accordance with the
instructions given below.
or
The undersigned hereby elects irrevocably to exercise the
within Warrant and to purchase ___________ shares of Common Stock of INFINITE
TECHNOLOGY GROUP LTD. by surrender of the unexercised portion of the within
Warrant Certificate (with a "Value" of $______________ based on a "Market Price"
of $___________). Please issue the Common Stock in accordance with the
instructions given below.
Dated: _________________
Signature: _____________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Address: _______________________________________
_______________________________________
_______________________________________
(Insert Social Security or Other Identifying Number of Holder)
Signature Guaranteed: ______________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name __________________________________________________
(Print in Block Letters)
Address __________________________________________
4
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to
transfer the Warrant Certificate.)
FOR VALUE RECEIVED ____________________ here sells, assigns and transfers unto
[NAME 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.)
Address: ___________________________________
_______________________________________
_______________________________________
(Insert Social Security or Other Identifying
Number of Holder)
Signature
Guaranteed: ___________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
5
