EXHIBIT 1.2
EXHIBIT "B"
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED FOR RESALE UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT AS TO SUCH
SECURITIES FILED UNDER THE ACT, OR AN EXEMPTION FROM REGISTRATION, AND
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS. THE ISSUER MAY REQUIRE AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER HEREOF THAT SUCH REGISTRATION IS
NOT REQUIRED AND THAT SUCH LAWS ARE COMPLIED WITH. THIS WARRANT MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED PRIOR TO ____________, 2004 AND THE REGISTERED HOLDER OF
THIS WARRANT, BY ITS/HIS/HER ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL,
TRANSFER OR ASSIGN THIS WARRANT PRIOR TO THAT DATE.
VOID AFTER 5:00 P.M., BOULDER, COLORADO TIME, ON __________________ , 0000
Xxxxxxx to subscribe for and purchase ________________________ shares of Common
Stock, $0.01par value, of
CAPSOURCE FINANCIAL, INC.
This is to Certify That,
FOR ONE HUNDRED DOLLARS ($100) AND OTHER VALUE RECEIVED, PUBLIC SECURITIES,
INC., a Washington Corporation, (the "Holder") is entitled to purchase, subject
to the provisions of this Warrant, from CAPSOURCE FINANCIAL, INC, a Colorado
Corporation ("Company"), at any time on or after , 2004, and not later than 5:00
p.m., Boulder, Colorado Time, on ____________, 2007, a total of XXXXX shares of
Common Stock of the Company ("Securities") exercisable at a purchase price of
$2.45 for the Securities . The number of Securities to be received upon the
exercise of this Warrant and the price to be paid for the Securities may be
adjusted from time to time as hereinafter set forth. The purchase price of a
Security in effect at any time and as adjusted from time to time is hereinafter
sometimes referred to as the "Exercise Price." This Warrant is or may be one of
a series of Warrants identical in form issued by the Company to purchase an
aggregate of _______Shares of Common Stock. The Securities, as adjusted from
time to time, underlying the Warrants are hereinafter sometimes referred to as
"Warrant Securities". The Company has granted this Warrant pursuant to the terms
and conditions of the Underwriting Agreement entered into between the Company
and Holder as of February , 2003 relating to the initial public offering of
the Company's Common Stock pursuant to a Registration Statement on Form SB-2
under the Securities Act of 1933 declared effective on December 30, 2002 (the
"Registration Statement").
(1.) Exercise of Warrant. Subject to the provisions of Section (7) hereof,
this Warrant may be exercised in whole or in part at anytime or from
time to time on or after , 2004, but not later than 5:00
p.m., Boulder, Colorado Time
on __________________, 2007, or if __________________, 2007 is a day on
which banking institutions are authorized by law to close, then on the
next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company or at the office of its stock transfer
agent, if any, with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of shares
of Securities as specified in such Form, together with all federal and
state taxes applicable upon such exercise. During the term of this
Warrant, the Company agrees that the Holder shall be entitled to
participate in any tender offer being made for the Securities and to so
notify the Holder within a reasonable time of such tender offer no
later than the third business day after the day the Company becomes
aware that any tender offer is being made for the Securities. If this
Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the right of the Holder to purchase the balance of
the Securities purchasable hereunder not purchased. Upon receipt by the
Company of this Warrant at the office of the Company or at the office
of the Company's stock transfer agent, in proper form for exercise and
accompanied by the total Exercise Price, the Holder shall be deemed to
be the holder of record of the Securities issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then
be closed or that certificates representing such Securities shall not
then be actually delivered to the Holder.
(2.) Reservation of Securities. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of
this Warrant such number of shares of Securities as shall be required
for issuance or delivery upon exercise of this Warrant. The Company
covenants and agrees that, upon exercise of this Warrant and payment of
the Exercise Price therefor, all 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.
(3.) Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.
With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the current market value of such fractional
share, determined as follows:
(a) If the Securities are listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange,
the current value shall be the last reported sale price of the
Common Stock on such exchange on the last business day prior
to the date of exercise of this Warrant or if no such sale is
made on such day, the average of the closing bid and asked
prices for such day on such exchange; or,
(b) If the Securities are not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the
last reported bid
and asked prices reported by the National Association of
Securities Dealers Automated Quotation System (or, if not so
quoted on NASDAQ or quoted by the National Quotation Bureau,
Inc.) on the last business day prior to the date of the
exercise of this Warrant; or (c) If the Securities are not so
listed or admitted to unlisted trading privileges and bid and
asked prices are not so reported, the current value shall be
an amount, not less than book value, determined in such
reasonable manner as may be prescribed by the Board of
Directors of the Company, such determination to be final and
binding on the Holder.
(4.) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling
the Holder thereof to purchase (under the same terms and conditions as
provided by this Warrant) in the aggregate the same number of
Securities purchasable hereunder. This Warrant may not be sold,
transferred, assigned, or hypothecated until after one year from the
effective date of the Registration Statement except that it may be (i)
assigned in whole or in part to the officers of the "Underwriter(s)",
and (ii) transferred to any successor to the business of the
"Underwriter(s)." Any such assignment shall be made by surrender of
this Warrant to the Company, or at the office of its stock transfer
agent, if any, with the Assignment Form annexed hereto duly executed
and with funds sufficient to pay any transfer tax; whereupon the
Company shall, without charge, execute and deliver a new Warrant in the
name of the assignee named in such instrument of assignment, and this
Warrant shall promptly be canceled. This Warrant may be divided or
combined with other Warrants which carry the same rights upon
presentation hereof at the office of the Company or at the office of
its stock transfer agent, if any, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term "Warrant" as used
herein includes any Warrants issued in substitution for or replacement
of this Warrant, or into which this Warrant may be divided or
exchanged. Until this Warrant is duly transferred on the books of the
Company, the Company may treat the registered holder of this Warrant as
absolute owner hereof for all purposes without being affected by any
notice to the contrary. Each successive holder of this Warrant, or any
portion of the rights represented thereby, shall be bound by the terms
and conditions set forth herein. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company
will execute and deliver a new Warrant of like tenor and date. Any such
new Warrant executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not the
Warrant so lost, stolen, destroyed, or mutilated shall be at any time
enforceable by anyone.
(5.) Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed
in the Warrant and are not enforceable against the Company except to
the extent set forth herein.
(6.) Notices to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised (i) if the Company shall pay any dividend
or make any distribution upon the Common Stock, or (ii) if the Company
shall offer to the holders of Common Stock for subscription or purchase
by them any shares of stock of any class or any other rights, or (iii)
if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company
with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation which is effected in such a manner that the holders of
Common Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall
be effected, then, in any such case, the Company shall cause to be
delivered to the Holder, at least ten (10) days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing
a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or
winding up is to take place and the date, if any, is to be fixed, as of
which the holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for equivalent securities or
other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding
up.
(7.) Adjustment of Exercise Price and Number of Shares of Common Stock
Deliverable.
(A)
(i) Except as hereinafter provided, in the event the
Company shall, at any time or from time to time after
the date hereof, issue any shares of Common Stock as
a stock dividend to the holders of Common Stock, or
subdivide or combine the outstanding shares of Common
Stock into a greater or lesser number of shares (any
such issuance, subdivision or combination being
herein call a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the
Exercise Price of the Common Stock issuable upon the
exercise of the Warrant in effect immediately prior
to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent to the
nearest cent) determined by dividing (i) the sum of
(a) the total number of shares of Common Stock
outstanding immediately prior to such Change of
Shares, multiplied by the Exercise Price in effect
immediately prior to such Change of Shares, and (b)
the consideration, if any, received by the Company
upon such issuance, subdivision or combination by
(ii) the total number of shares of Common Stock
outstanding immediately after such Change of Shares;
provided, however, that in no event shall the
Exercise Price be adjusted pursuant to this
computation to an amount in excess of the Exercise
Price in effect immediately prior to such
computation, except in the case of a combination of
outstanding shares of Common Stock.
For the purposes of any adjustment to be made in
accordance with this Section (7) the following
provisions shall be applicable:
(I) Shares of Common Stock issuable by way of
dividend or other distribution on any
capital stock of the Company shall be deemed
to have been issued immediately after the
opening of business on the day following the
record date for the determination of
shareholders entitled to receive such
dividend or other distribution and shall be
deemed to have been issued without
consideration.
(II) The number of shares of Common Stock at any
one time outstanding shall not be deemed to
include the number of shares issuable
(subject to readjustment upon the actual
issuance thereof) upon the exercise of
options, rights or warrants and upon the
conversion or exchange of convertible or
exchangeable securities.
(ii) Upon each adjustment of the Exercise Price pursuant
to this Section (7), the number of shares of
Securities purchasable upon the exercise of each
Warrant shall be the number derived by multiplying
the number of shares of Securities purchasable
immediately prior to such adjustment by the Exercise
Price in effect prior to such adjustment and dividing
the product so obtained by the applicable adjusted
Exercise Price.
(B) In case of any reclassification or change of outstanding
Securities issuable upon exercise of the Warrants (other than
a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision
or combination), or in case of any consolidation or merger of
the Company with or into another corporation other than a
merger with a "Subsidiary" (which shall mean any corporation
or corporations, as the case may be, of which capital stock
having ordinary power to elect a majority of the Board of
Directors of such corporation (regardless of whether or not at
the time capital stock of any other class or classes of such
corporation shall have or may have voting power by reason of
the happening of any contingency) is at the
time directly or indirectly owned by the Company or by one or
more Subsidiaries) or by the Company and one or more
Subsidiaries in which merger the Company is the continuing
corporation and which does not result in any reclassification
or change of the then outstanding shares of Common Stock or
other capital stock issuable upon exercise of the Warrants
(other than a change in par value, or from par value to no par
value, or from no par value to par value or as a result of
subdivision or combination) 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, then,
as a condition of such reclassification, change,
consolidation, merger, sale or conveyance, the Company, or
such successor or purchasing corporation, as the case may be,
shall make lawful and adequate provision whereby the Holder of
each Warrant then outstanding shall have the right thereafter
to receive on exercise of such Warrant the kind and amount of
securities and property receivable upon such reclassification,
change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such
Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance and shall forthwith
file at the principal office of the Company a statement signed
on its behalf by its President or a Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an
Assistant Secretary evidencing such provision. Such provisions
shall include provision for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in Section (7)(A). The above provisions of this
Section (7)(B) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(C) Irrespective of any adjustments or changes in the Exercise
Price or the number of Securities purchasable upon exercise of
the Warrants, the Warrant Certificates theretofore and
thereafter issued shall (unless the Company shall exercise its
option to issue new Warrant Certificates pursuant hereto)
continue to express the Exercise Price per share and the
number of shares purchasable thereunder as the Exercise Price
per share and the number of shares purchasable thereunder as
expressed in the Warrant Certificates when the same were
originally issued.
(D) After each adjustment of the Exercise Price pursuant to this
Section (7), the Company will promptly prepare a certificate
signed on its behalf by the President or Vice President, and
by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary, of the Company setting forth: (i) the
Exercise Price as so adjusted, (ii) the number of Securities
purchasable upon exercise of each Warrant, after such
adjustment, and (iii) a brief statement of the facts
accounting for such adjustment. The Company will promptly file
such certificate in the Company's minute books and cause a
brief summary thereof to be sent
by ordinary first class mail to each Holder at his last
address as it shall appear on the registry books of the
Company. No failure to mail such notice nor any defect therein
or in the mailing thereof shall affect the validity thereof
except as to the holder to whom the Company failed to mail
such notice, or except as to the holder whose notice was
defective. The affidavit of an officer or the Secretary or an
Assistant Secretary of the Company that such notice has been
mailed shall, in the absence of fraud, be prima facie evidence
of the facts stated therein.
(i) Intent of Provisions. Notwithstanding any provision
to the contrary, if any event occurs as to which, in
the opinion of the Board of Directors of the Company,
the other provisions of this Section 7 are not
strictly applicable or if strictly applicable, would
not fairly protect the rights of the Holders' Warrant
in accordance with the essential intent and
principles of such provisions, then such Board of
Directors shall appoint a firm of independent
certified public accountants (which may be the
regular auditors of the Company) which shall give its
opinion upon the adjustment, if any, on a basis
consistent with such essential intent and principles,
necessary to preserve, without dilution, the rights
of the Holders. Upon receipt of such opinion by the
Board of Directors of the Company, the Company shall
forthwith make the adjustments described therein.
(E) No adjustment of the Exercise Price shall be made as a result
of or in connection with the issuance or sale of Securities if
the amount of said adjustment shall be less than $0.10,
provided, however, that in such case, any adjustment that
would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the
next subsequent adjustment that shall amount, together with
any adjustment so carried forward, to at least $.10. In
addition, Holders shall not be entitled to cash dividends paid
by the Company prior to the exercise of any Warrant or
Warrants held by them.
(F) In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend consisting solely
of shares of Common Stock or otherwise distribute to its
stockholders any assets, property, rights, or evidences of
indebtedness, the Holders of the unexercised Warrants shall
thereafter be entitled, in addition to the Securities or other
securities and property receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same
property, assets, rights, or evidences of indebtedness, that
they would have been entitled to receive at the time of such
dividend or distribution as if the Warrants had been exercised
immediately prior to such dividend or distribution. At the
time of any such dividend or distribution, the Company shall
make appropriate reserves to ensure the timely performance of
the provisions of this Section (7).
(G)
(G.1) Right to Exercise on a Net Issuance Basis.
In lieu of exercising this Warrant for cash,
the Holder shall have the right to exercise
this Warrant or any portion thereof (the
"Net Issuance Right") into Common Stock as
provided in this Section G.1 at any time or
from time to time during the period
specified on page one of this Warrant
Agreement, hereof by the surrender of this
Warrant to the Company with a duly executed
and completed Exercise Form marked to
reflect net issuance exercise. Upon exercise
of the Net Issuance Right with respect to a
particular number of shares of the
Securities subject to this Warrant and noted
on the Exercise Form (the "Net Issuance
Warrant Shares"), the Company shall deliver
to the Holder (without payment by the Holder
of any Exercise Price or any cash or other
consideration) (X) that number of shares of
fully paid and nonassessable shares of
Common Stock equal to the quotient obtained
by dividing the value of this Warrant (or
the specified portion hereof) on the Net
Issuance Exercise Date, which value shall be
determined by subtracting (A) the aggregate
Exercise Price of the Net Issuance Warrant
Shares immediately prior to the exercise of
the Net Issuance Right from (B) the
aggregate fair market value of the Net
Issuance Warrant Shares issuable upon
exercise of this Warrant (or the specified
portion hereof) on the Net Issuance Exercise
Date (as herein defined) by (Y) the fair
market value one share of Common Stock on
the Net Issuance Exercise Date (as herein
defined). Expressed as a formula as shown
below, such net issuance exercise shall be
computed as follows: X = B-A / Y Where: X =
the number of shares of Common Stock that
may be issued to the Holder, Y = the fair
market value ("FMV") of one share of Common
Stock as of the Net Issuance Exercise Date,
A = the aggregate Exercise Price (i.e. the
product determined by multiplying the Net
Issuance Warrant Shares by the Exercise
Price) and B = the aggregate FMV (i.e. the
product determined by multiplying the FMV by
the Net Issuance Warrant Shares).
(G.1.2) Determination of Fair Market Value. For
purposes of this Section G.1.2, "fair market
value" of a share of Common Stock as of the
Net Issuance Exercise Date shall mean:
(i) if the Net Issuance Right is
exercised in connection with and
contingent upon a Public Offering,
and if the Company's registration
Statement relating to such Public
Offering has been declared
effective by the SEC, then the
initial "Price to Public" specified
in the final Prospectus with
respect to such offering.
(ii) if the Net Issuance Right is not
exercised in connection with and
contingent upon a Public Offering,
then as follows:
(a) If traded on a securities exchange,
the fair market value of the Common
Stock shall be deemed to be the
last reported sale price or if no
reported sale takes place, the
average of the last reported sale
prices for the last three (3)
trading days prior to the Net
Issuance Date;
(b) If traded on the Nasdaq National
Market or the Nasdaq Small Cap
Market, the fair market value of
the Common Stock shall be deemed to
be the average of the last reported
sale price of the common Stock on
such Market over the last three (3)
trading days prior to the Net
Issuance Exercise Date;
(c) If traded over-the-counter other
than on the Nasdaq National market
or the Nasdaq SmallCap Market, the
fair market value of the Common
Stock shall be deemed to be the
average of the midpoint between the
closing bid and ask prices of the
Common Stock over the 3-day trading
period prior to the Net Issuance
Exercise Date; and,
(d) If there is no public market for
the Common Stock, then the fair
market value shall be determined by
mutual agreement of the
Warrantholder and the Company, and
if the Warrantholder and the
Company are unable to so agree, at
the Company's sole expense, by an
investment banker of national
reputation selected by the Company
and reasonably acceptable to the
Warrantholder.
(8.) Piggyback Registration. If, at any time commencing one year from the
effective date of the registration statement and expiring four (4)
years thereafter, the Company proposes to register any of its
securities under the Securities Act of
1933, as amended (the "Act") (other than in connection with a merger or
pursuant to Form X-0, X-0 or other comparable registration statement)
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 and to all other Holders of the Warrants and/or the Warrant
Securities of its intention to do so. If the Holder or other Holders of
the Warrants and/or Warrant Securities notify the Company within twenty
(20) days after receipt of any such notice of its or their desire to
include the resale of any such securities in such proposed registration
statement, the Company shall afford each of the Underwriter and such
Holders of the Warrants and/or Warrant Securities the opportunity to
have the resale of any such Warrant Securities registered under such
registration statement. In the event any underwriter underwriting the
sale of securities registered by such registration statement shall
limit the number of securities includable in such registration by
shareholders of the Company, the number of such securities shall be
allocated pro rata among the holders of Warrants and the holders of
other securities entitled to piggyback registration rights.
Notwithstanding the provisions of this Section, the Company shall have
the right at any time after it shall have given written notice pursuant
to this Section (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.) Demand Registration.
(a) In the event that: (i) counsel satisfactory to the Underwriter
is of the opinion that the Net Issuance Exercise of this
Warrant by the Underwriter as provided in Section 7(G.1) is
not permissible; (ii) the Company is eligible to file a
registration statement on Form S-3 under the Securities Act of
1933, (iii) Company Counsel is unable to furnish the opinion
letter under section 16, and (iv) the Company has received or
will receive the payment of $50,000 of the Exercise Price of
this Common Stock Purchase Warrant in cash, then upon the
demand of the Underwriter at any time commencing at least one
year from the effective date of the Registration Sstatement
and expiring four (4) years thereafter, provided that the
conditions of subparagraphs (i) through (iv) above have been
satisfied, the Holders of the Warrants and/or Warrant
Securities representing a "Majority" (as hereinafter defined)
of such securities (assuming the exercise of all of the
Warrants) shall have the right (which right is in addition to
the registration rights under Section (8) 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 on
Form S-3 and such other documents, including a prospectus, as
may be necessary in the opinion of both counsel for the
Company and counsel for the Underwriter and Holders, in order
to comply with the provisions of the Act, so as to permit a
public offering and sale of their respective Warrant
Securities for nine (9) consecutive months by such Holders and
any other
holders of the Warrants and/or Warrant Securities who notify
the Company within ten (10) days after receiving notice from
the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under Section 9(a) by any Holder or
Holders to all other registered Holders of the Warrants and
the Warrant Securities within ten (10) days from the date of
the receipt of any such registration request.
(c) In addition to the registration rights under this Section (9)
at any time commencing one year after the effective date of
the registration statement and expiring four (4) years
thereafter, the Holders of Representative's Warrants and/or
Warrant Securities shall have the right, exercisable by
written request to the Company, to have the Company prepare
and file, on one occasion, with the Commission a registration
statement so as to permit a public offering and sale for nine
(9) consecutive months by such Holders of its Warrant
Securities; provided, however, that the provisions of Section
(9)(a) hereof shall not apply to any such registration request
and registration and all costs incident thereto shall be at
the expense of the Holder or Holders making such request.
(10.) Covenants of the Company With Respect to Registration. In connection
with any registration under Section (8) or (9) hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within thirty (30) days of receipt of any demand
therefor, shall use its best efforts to have any registration
statement declared effective at the earliest possible time,
and shall furnish each Holder desiring to sell Warrant
Securities such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs (excluding fees and expenses
of Holder(s)' counsel and any underwriting or selling
commissions), fees and expenses in connection with all
registration statements filed pursuant to Sections 8 and 9(a),
hereof including, without limitation, the Company's legal and
accounting fees, printing expenses, blue sky fees and
expenses. If the Company shall fail to comply with the
provisions of Section (10)(a), the Company shall, in addition
to any other equitable or other relief available to the
Holder(s), extend the Exercise Period by such number of days
as shall equal the delay caused by the Company's failure.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Securities
included in a registration
statement for resale under the securities or blue sky laws of
such states as are reasonably 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
Securities to be resold 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
Securities Exchange Act of 1934, as amended ("Exchange Act"),
from and against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which
any of them may become subject under the Act, the Exchange Act
or otherwise, arising from such registration statement but
only to the same extent and with the same effect as the
provisions pursuant to which the Company has agreed to
indemnify the Underwriter contained in Section 7 of the
Underwriting Agreement relating to the offering.
(e) The Holder(s) of the Warrant Securities to be resold pursuant
to a registration statement, and their successors and assigns,
shall severally, and not jointly, indemnify the Company, its
officers and directors and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which they may become subject
under the Act, the Exchange Act or otherwise, arising from
information furnished by or on behalf of such Holders, or
their successors or assigns, for specific inclusion in such
registration statement to the same extent 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) The Holder(s) may exercise their Warrants 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 Securities to be included in any
registration statement filed pursuant to Section (9) hereof,
or permit any other registration statement to be or remain
effective during the effectiveness of a registration statement
filed pursuant to Section (9) hereof, other than a secondary
offering of equity securities of the Company, without the
prior written consent of the Holders of the Warrants and
Warrant Securities representing a Majority of such securities.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (x)
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 (y)
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 its security
holders" (within the meaning of Rule 158 under the Act) an
earnings statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least 12
consecutive months beginning after the effective date of the
registration statement.
(j)
(k) For purposes of this Agreement, the term "Majority" in
reference to the Holders of Warrants or Warrant Securities,
shall mean in excess of fifty (50%) of the then outstanding
Warrants and Warrant Securities that (i) are not held by the
Company, an affiliate, officer, creditor, employee or agent
thereof or any of their respective affiliates, members of
their family, persons acting as nominees or in conjunction
therewith or (ii) have not been resold to the public pursuant
to a registration statement filed with the Commission under
the Act.
(11.) Buy-Out of Registration Demand. In lieu of carrying out its obligations
to effect a Piggyback Registration or Demand Registration of any
registrable securities pursuant to the Section, the Company may carry
out such obligation by offering to purchase and purchasing such
Registrable Securities requested to be registered in an amount in cash
equal to the difference between (a) 95% of the last sale price of the
Common Stock on the day the request for registration is made and (b)
the Exercise Price in effect on such day; the purchase transaction
closing within three (3) business days; provided however, that the
Holder or Holders may decline such request rather than accept such
offer by the Company.
(12.) Conditions of Company's Obligations. The Company's obligation under
Sections 9 and 10 hereof shall be conditioned as to each such public
offering, upon a timely receipt by the Company in writing of:
information as to the terms of such public offering furnished by or on
behalf of the Holders making a public distribution of their Warrant
Securities.
(13.) Continuing Effect of Agreement. The Company's agreements with respect
to the Warrant Securities in this Warrant will continue in effect
regardless of the exercise or surrender of this Warrant.
(14) Notices. Any notices or certificates by the Company to the Holder and
by the Holder to the Company shall be deemed delivered if in writing
and delivered personally or sent by certified mail, to the Holder,
addressed to him or sent to 000 Xxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000, or, if the Holder has designated, by notice in
writing to the Company, any other address, to such other address, and,
if to the Company, addressed to Xxxx Xxxxxxxxx, President, 0000 Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx, XX 00000. The Company may change its
address by written notice to the Holder.
(15) Limited Transferability. The Warrant may be divided or combined, upon
request to the Company by the Warrant holder, into a certificate or
certificates evidencing the same aggregate number of Warrants. The
Warrant may not be offered, sold, transferred, pledged or hypothecated
in the absence of any effective registration statement as to such
Warrant filed under the Act, or an exemption from the requirement of
such registration, and compliance with the applicable federal and state
securities laws. The Company shall permit the Holder or his duly
authorized attorney, upon written request during ordinary business
hours, to inspect and copy or make extracts from its books showing the
registered holders of Warrants.
(16) Transfer to Comply With the Securities Act of 1933. The Company may
cause the following legend, or one similar thereto, to be set forth on
the Warrants and on each certificate representing Warrant Securities,
or any other security issued or issuable upon exercise of this Warrant
not theretofore distributed to the public or sold to underwriters for
distribution to the public pursuant to Sections (8) or (9) hereof;
unless counsel satisfactory to the Company is of the opinion as to any
such certificate that such legend, or one similar thereto, is
unnecessary: "The warrants represented by this certificate are
restricted securities and may not be offered for sale, sold or
otherwise transferred unless an opinion of counsel satisfactory to the
Company is obtained stating that such offer, sale or transfer is in
compliance with state and federal securities law. With respect to
Warrant Securities that have not theretofore been subject to a
registration statement pursuant to Sections 8 or 9 hereof, upon
request, the Company will arrange at its expense to have an opinion of
counsel satisfactory to the Company issued, which will provide that to
the extent Warrant Securities were acquired through the Net Issuance
Exercise of this Warrant as provided in Section 7(G.1) without the
payment of any cash, the Holder's date of acquisition
of such Warrant Securities will be the date of acquisition of the
Warrant. The issuance of any opinion relating to the transferability of
any Warrant or Warrant Securities will be conditioned upon the Holder
providing evidence satisfactory to such counsel of the proper
acquisition and exercise of this Warrant, the completion and filing of
all forms or other documents required to comply with federal and state
securities laws and the continued applicability of the current
interpretation of Rule 144(d)(3)(ii) as expressed in items 4, 61 and 64
of the Division of Corporation Finance Manual of Publicly Available
Telephone Interpretations. The Company will provide upon request to any
Holder a list of the registered holders of Warrants. Such costs and
expenses of Counsel shall be at its sole cost and expense The Company
represents and warrants, it will not hinder, delay or impede in any
fashion, the assignment and/or exercise of the this Warrant, the
issuance of any underlying securities, and/or the resale of such
underlying securities. To effect such transaction, the Company shall
cause such legal opinions to issue in a timely and professional manner
upon demand by the Underwriter.
(17) Applicable Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Colorado, without giving
effect to conflict of law principles.
(18.) Amendment. This Warrant may not be amended except in a writing signed
by each Holder and the Company.
(19.) Severability. If any provisions of this Warrant shall be held to be
invalid or unenforceable, such invalidity or enforceability shall not
affect any other provision of this Warrant.
(20.) Survival of Indemnification Provisions. The indemnification provisions
of this Warrant shall survive until , 2013.
(21) Company to Provide Reports. Etc. While this Warrant Certificate remains
outstanding, the Company shall mail to the persons in whose name this
Warrant Certificate is registered copies of all reports and
correspondence which the Company mails to its stockholders.
(22) Representations and Warranties of Holder. The Holder hereby represents
and warrants to the Company:
(a) The Holder understands that this Warrant Certificate and the
Common Shares to be issued herein, HAS NOT BEEN APPROVED OR
DlSAPPROVED BY TME UNITED STATES SECURITIES AND EXCHANGE
COMMISSION, THE STATE OF COLORADO, OR ANY OTHER STATE
SECURITIES AGENCIES.
(b) This Warrant Certificate and the Common Stock to be issued
herein may not be transferred, encumbered, sold, hypothecated,
or otherwise
disposed of to any person, without the express prior written
consent of the Company and the prior opinion of counsel for
the Company, that such disposition will not violate Federal
and/or State Securities Acts. Disposition shall include, but
is not limited to acts of selling, assigning, transferring,
pledging, encumbering, hypothecating, giving, and any form of
conveying, whether voluntary or not.
(c) To the extent that any Federal and/or State Securities laws
shall require, the Holder hereby agrees that any shares
acquired pursuant to this Warrant Certificate shall be without
preference as to dividends, assets, or voting rights and shall
have no greater or lesser rights per share than the securities
issued for cash or its equivalent.
(d) This Warrant is subject in all respects to the terms and
provisions of an Underwriting Agreement between the Company
and Public Securities, Inc., (the Underwriter therein and the
initial Holder hereof), relating to a public offering of the
Common Stock and Warrants of the Company dated , 2003.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officers and to be sealed with the seal of the Company this ____ day
of ___________________, 2003.
CAPSOURCE FINANCIAL, INC, INC.
By ______________________________
Xxxx Xxxxxxxxx, President
Date: ______________________________
Attest:
______________________________
Secretary
PURCHASE FORM
The Undersigned hereby exercises the Warrant Certificate to subscribe for and
purchase shares of Common Stock, $0.01 par value ("Common Shares"), of CAPSOURCE
FINANCIAL, INC, a Colorado Corporation, evidenced by the within the Warrant
Certificate and herewith makes payment of the Exercise Price. Kindly issue
certificates for the Common Shares in accordance with the instructions given
below. The certificate for the unexercised balance, if any, of the within
Warrant Certificate will be registered in the name of the undersigned.
Dated:
_____________________________________________________
(Signature)
Instructions for registration of Common Shares
_____________________________________________________
Name (Please print)
_____________________________________________________
Social Security or Other Identifying Number:
_____________________________________________________
Address:
_____________________________________________________
Street
_____________________________________________________
City, State and Zip Code
HOLDER:
PUBLIC SECURITIES, INC.
By: ____________________________________________
Title: President
Instructions for registration of certificate representing the unexercised
balance of Warrant (if any)
_____________________________________________________
Name (Please print)
_____________________________________________________
Social Security or Other Identifying Number:
_____________________________________________________
Address:
_____________________________________________________
Street
_____________________________________________________
City, State and Zip Code
FORM OF ASSIGNMENT
(to be executed by the registered holder hereof)
FOR VALUE RECEIVED, _____________________ does hereby sell, assign and transfer
unto __________________ the right to purchase shares of the Common Stock of the
Company, $0.01 par value ("Common Shares"), of CAPSOURCE FINANCIAL, INC,
aColorado Corporation, evidenced by the within Warrant, and does hereby
irrevocably constitute and appoint __________________ attomey, to transfer such
right on the books of the Company with full power of substitution in the
premises.
DATED: __________________________ , 200__
_____________________________________________________
(Signature)
_____________________________________________________
(Signature guaranteed)
