Exhibit 10.9
THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM
REGISTRATION, UNDER SAID ACT AND LAWS.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
PROVANT, INC.
Expires November 21, 2012
No. W-_ (Tranche 1)
November 21, 2002
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, PROVANT, INC., a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that
________
or its registered assigns is entitled to subscribe for and purchase, during the
period specified in this Warrant, _____________________________________________
______________________ shares of Common Stock (the "Warrant Number") (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an initial exercise
price of $.01 per share, subject, however, to the provisions and upon the terms
and conditions hereinafter set forth. Capitalized terms used in this Warrant and
not otherwise defined herein shall have the respective meanings specified in
Section 8 hereof.
Background. On November 21, 2002, the Issuer agreed to issue warrants
pursuant to the Loan Agreement (as defined below) in four tranches, which,
including this Warrant, are exercisable to purchase an aggregate of Five Million
One Hundred Thirty Two Thousand Two Hundred Fifty (5,132,250) shares of Common
Stock, constituting 15% of the Diluted Common Stock of the Issuer. This Warrant
and other warrants of similar tenor in this tranche are exercisable to purchase
up to an aggregate of One Million Twenty Six Thousand Four Hundred Fifty
(1,026,450) shares of Common Stock, (the "Aggregate Tranche Warrant Number"),
constituting 3% of the Diluted Common Stock, after giving effect to the issuance
of all tranches of warrants pursuant to the Loan Agreement.
1. Term. The right to subscribe for and purchase shares of Warrant
Stock represented hereby shall commence on November 21, 2002 and shall expire at
5:00 P.M., Eastern Time, on November 21, 2012 (such period being the "Term");
provided that this Warrant shall terminate and be of no further force and effect
if the Issuer shall have paid to the Holder the Fee in Lieu of Warrant Amount at
any time prior to the issuance of Warrant Stock upon exercise.
2. Method of Exercise; Payment; Issuance of New Warrant; Transfer and
Exchange.
(a) Time of Exercise. The purchase rights represented by this Warrant
may be exercised in whole or in part at any time and from time to time during
the Term.
(b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
whole shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check, or (ii) by surrender to the Issuer for cancellation of a portion of this
Warrant representing that number of unissued shares of Warrant Stock which is
equal to the quotient obtained by dividing (A) the product obtained by
multiplying the Warrant Price by the number of shares of Warrant Stock being
purchased upon such exercise by (B) the Current Market Price per share of
Warrant Stock as of the date of such exercise, or (iii) by a combination of the
foregoing methods of payment selected by the Holder of this Warrant. In any case
where the consideration payable upon such exercise is being paid in whole or in
part pursuant to the provisions of clause (ii) of this Section 2(b), such
exercise shall be accompanied by written notice from the Holder of this Warrant
specifying the manner of payment thereof and containing a calculation showing
the number of shares of Warrant Stock with respect to which rights are being
surrendered thereunder and the net number of shares to be issued after giving
effect to such surrender.
(c) Issuance of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three Business Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof within such
time.
(d) Transferability of Warrant. Subject to the provisions of Section
2(e) hereof, this Warrant may be transferred on the books of the Issuer by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant at the principal office of the Issuer, properly endorsed (by the Holder
executing an assignment in the form attached hereto) and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
This Warrant is exchangeable at the principal office of the Issuer for Warrants
for the purchase of the same aggregate number of shares of Warrant Stock, each
new Warrant to
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represent the right to purchase such number of shares of Warrant Stock as the
Holder hereof shall designate at the time of such exchange. All Warrants issued
on transfers or exchanges shall be dated the Closing Date and shall be identical
with this Warrant except as to the number of shares of Warrant Stock issuable
pursuant hereto.
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, all Warrants
and all certificates representing shares of Warrant Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form:
"THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS
AND MAY NOT BE SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION,
UNDER SAID ACT AND LAWS."
(iii) The restrictions imposed by this Section 2(e) upon the
transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, or (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer (it being understood
that in-house counsel to the Holder shall be deemed to be acceptable
counsel), addressed to the Issuer to the effect that such restrictions
are no longer required to ensure compliance with the Securities Act.
Whenever such restrictions shall cease and terminate as to any such
securities, the Holder thereof shall be entitled to receive from the
Issuer (or its transfer agent and registrar), without expense (other
than applicable transfer taxes, if any), new Warrants (or, in the case
of shares of Warrant Stock, new stock certificates) of like tenor not
bearing the applicable legends required by paragraph (ii) above
relating to the Securities Act and state securities laws.
(f) Continuing Rights of Holder. The Issuer will, at the time of or at
any time after each exercise of this Warrant, upon the request of the Holder
hereof or of any shares of Warrant Stock issued upon such exercise, acknowledge
in writing the extent, if any, of its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided that if any
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such Holder shall fail to make any such request, the failure shall not affect
the continuing obligation of the Issuer to afford such rights to such Holder.
3. Registration Rights.
(a) Registration on Request.
(i) Right to Registration on Request. Commencing on April 15,
2003, upon the written request of the Agent or the Holder or Holders of
thirty percent (30%) or more of the Registrable Securities that the
Issuer effect the registration under the Securities Act in connection
with a sale of such securities in the United States of all or part of
such Holders' Registrable Securities and specifying the intended method
of disposition thereof (including whether or not such disposition is
intended to be effected as an underwritten offering), the Issuer will
promptly give written notice of such requested registration to all
other Holders and thereupon the Issuer will use its best efforts to
effect the registration under the Securities Act of:
(A) the Registrable Securities which the Issuer has
been so requested to register by the Holder or Holders
submitting the request, and
(B) all other Registrable Securities which the Issuer
has been requested to register by the Holder or Holders
thereof by written request given to the Issuer within fifteen
(15) days after the giving of such written notice by the
Issuer (which request shall specify the intended method of
disposition of such Registrable Securities), all to the extent
requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable
Securities so to be registered.
(ii) Priority in Requested Registrations. If a requested
registration pursuant to this Section 3(a) involves an underwritten
offering, and the managing underwriter shall advise the Issuer in
writing (with a copy to each Holder requesting registration) that, in
its opinion, the number of Registrable Securities and other securities
of the Issuer held by any other party requested to be included in such
registration exceeds the number which can be sold in (or during the
time of) such offering within a price range acceptable to the Holders
of a majority (by number of shares) of the Registrable Securities
requested to be included in such registration, the Issuer will include
in such registration all Registrable Securities requested to be
included in such registration (unless the provisions of the following
sentence apply) and will include in such registration other securities
of the Issuer (including any securities proposed to be issued and sold
by the Issuer) held by any other party only to the extent that the
number of shares which the Issuer is advised can be so sold in (or
during the time of) such offering exceeds the number of Registrable
Securities to be included in such registration. If a requested
registration pursuant to this Section 3 involves an underwritten
offering, and the managing underwriter shall advise the Issuer in
writing (with a copy to each Holder requesting registration) that, in
its opinion, the number of Registrable Securities requested to be
included in such registration exceeds the number which can be sold in
(or during the time of) such offering within a price range acceptable
to the Holders of a
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majority (by number of shares) of the Registrable Securities requested
to be included in such registration, the Issuer will include in such
registration only the number of Registrable Securities that the
managing underwriter advises can be sold in (or during the time of)
such offering. In such event, such Registrable Securities will be
included in such registration only to the extent of the number of
shares which the Issuer is advised can be so sold in (or during the
time of) such offering; the Registrable Securities to be included in
such registration shall be taken up pro rata from the Holders
requesting such registration on the basis of the percentage of
Registrable Securities requested to be included in such registration;
and all shares proposed to be sold by the Issuer or any other party
shall be deleted from such registration prior to effecting any
reduction of Registrable Securities by the Holders thereof under this
Section 3(a).
(iii) Registration Statement Form. Registrations under this
Section 3(a) shall be on such appropriate registration form of the
Commission (i) for which the Issuer qualifies, and which the Issuer's
counsel (after consultation with counsel or counsels for Holders) deem
appropriate, and (ii) as shall permit the disposition of such
Registrable Securities in accordance with the intended method or
methods of disposition specified in the request for such registration.
The Issuer agrees to include in any such registration statement all
information as to the Holders of the Registrable Securities to be
registered which the Holders of the Registrable Securities being
registered shall reasonably request or which shall be required by
applicable law.
(iv) Expenses. The Issuer will pay all Registration Expenses
incurred in connection with any registration requested pursuant to this
Section 3(a) which the Issuer is obligated to effect, whether or not
such registration is effected.
(v) Effected Registration Statement. A registration requested
pursuant to this Section 3(a) shall not be deemed to have been effected
unless a registration statement with respect thereto has become
effective except: (i) if the registration statement is withdrawn prior
to its effectiveness pursuant to the request of all of the Holders who
have requested the inclusion in such registration statement of some or
all of their Registrable Securities, (ii) if, after the registration
statement has become effective, such registration is interfered with by
any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason, unless
such stop order, injunction or other order or requirement results from
any action or inaction of a Holder or Holders, or (iii) if the
conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such
registration are not satisfied due to a failure by a Holder to satisfy
a condition required to be satisfied by such Holder pursuant to the
purchase agreement or underwriting.
(vi) Selection of Underwriter. If a requested registration
pursuant to this Section 3(a) involves an underwritten offering, the
underwriter or underwriters thereof shall be, selected by the Holders
of a majority of the Registrable Securities to be so registered.
(vii) Limitation on Registrations. The Issuer's obligations
under this Section 3(a) shall be limited to effecting three (3)
registrations within the meaning of
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paragraph (v) of this Section 3(a); provided, however, that (i) if all
of the Holders who have requested the inclusion of Registrable
Securities held by them in a registration requested under this Section
3(a) withdraw such request prior to the time the registration statement
has become effective and any or all of such Holders pay all
Registration Expenses relating thereto, such proposed registration
shall not count as one of the registrations provided for by this
Section 3(a); and (ii) if a registration is deemed to be effected
pursuant to paragraph (v) of this Section 3(a) because a condition to
closing specified in the purchase agreement or underwriting agreement
entered into in connection with such registration is not satisfied due
to a failure by a Holder to satisfy a condition required to be
satisfied by such holder pursuant to such agreement and one or more of
the Holders elects to pay (and shall actually have paid) all
Registration Expenses relating thereto, such registration shall not
count as one of the registrations provided for by this Section 3(a).
(b) Incidental Registration.
(i) Right to Incidental Registration. If the Issuer at any
time proposes to register any of its securities under the Securities
Act (other than by a registration on Form S-8 or Form S-4 or any
successor or similar form and other than pursuant to Section 3(a) of
this Warrant), whether or not for sale for its own account, it will
each such time give prompt written notice to all Holders of its
intention to do so and of such Holders' rights under this Section 3(b).
Upon the written request of any such Holder made within fifteen (15)
days after the receipt of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by such Holder
and the intended method of disposition thereof), the Issuer will use
its best efforts to effect the registration under the Securities Act in
connection with a sale of all Registrable Securities which the Issuer
has been so requested to register by the Holders, to the extent
requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be
registered, provided that if, at any time after giving written notice
of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Issuer shall determine for any reason, after
consultation with the Holders which have requested inclusion in such
registration, not to register or to delay such registration, the Issuer
may, at its election, give written notice of such determination to each
Holder and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not
from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any Holder or
Holders entitled to do so to request that such registration be effected
as a registration under Section 3(a) above, and (ii) in the case of a
determination to delay registering, shall be permitted to delay
registering any Registrable Securities for the same period as the delay
in registering such other securities. No registration effected under
this Section 3(b) shall relieve the Issuer of its obligation to effect
any registration upon request under Section 3(a) above. The Issuer will
pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 3(b).
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(ii) Priority in Incidental Registrations. If (i) a
registration pursuant to this Section 3(b) involves an underwritten
offering of the securities so being registered, whether or not for sale
for the account of the Issuer, and (ii) the managing underwriter of
such underwritten offering shall inform the Issuer and the Holders
requesting such registration by letter of its belief that the number of
securities requested to be included in such registration exceeds the
number which can be sold in (or during the time of) such offering, then
(A) in the case of an offering for the account of the Issuer, the
Issuer will include in such registration all Registrable Securities
requested to be included in such registration (allocated among the
Holders pro rata on the basis of the number of Registrable Securities
requested to be included therein by each such Holder) and, thereafter,
such securities registered for sale for the account of the Issuer only
to the extent such managing underwriter believes can be sold in (or
during the time of) such offering without adversely affecting the sale
of the Registrable Securities, and (B) in the case of an offering that
was commenced as a result of the exercise of demand registration rights
by Persons other than the Holders, the Persons commencing such
registration and the Holders shall be entitled to include such other
Person's securities of the Issuer and Registrable Securities in an
amount up to the amount such managing underwriters or underwriters
advise may be included therein, allocated first to the Holders and
thereafter among other Persons commencing such registration.
(c) Registration Procedures. If and whenever the Issuer is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 3(a) or 3(b) above, the Issuer
will, as expeditiously as possible:
(i) prepare and (as soon thereafter as possible) file with the
Commission the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such
registration statement to become effective, provided that the Issuer
may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in
Section 3(b)(i) above, its securities which are Registrable Securities)
at any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof as set forth in such registration
statement but in no event for a period which would exceed one hundred
twenty (120) days from the date on which the registration statement
became effective;
(iii) furnish to each seller of Registrable Securities covered
by such registration statement such number of conformed copies of such
registration statement and of each amendment and supplement thereto (in
each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed
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under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such jurisdictions in the United States as each seller thereof shall
reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect,
and take any other action which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Issuer shall not for any such purpose be required to either qualify
generally to do business as a foreign corporation, or subject itself to
taxation or to general service of process in any jurisdiction wherein
it would not, but for the requirements of this clause (iv), be
obligated to be so qualified or subject to taxation or service of
process, other than as to matters and transactions related to such
registration or qualification;
(v) cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other
United States governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition
of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a copy
of each of the following, if any, addressed to the underwriters:
(A) an opinion of counsel for the Issuer, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement)
reasonably satisfactory in form and substance to such seller,
and
(B) a "comfort" letter, dated the effective date of
such registration statement (and, if such registration
includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), signed by the
independent public accountants who have certified the Issuer's
financial statements included in such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein)
and, in the case of the 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 the underwriters in
underwritten public offerings of securities and, in the case
of the accountants' letter, such other financial matters, and,
in the case of the legal opinion, such other legal matters, as
such seller (or the underwriters, if any) may reasonably
request;
(vii) (A) notify each seller of Registrable Securities covered
by such registration statement, their counsel and the managing
underwriters, if any, promptly, and
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(if requested in writing by any such Person), confirm such notice in
writing: (1) when a registration statement or any amendment thereto has
been filed, and, with respect to a registration statement or any
post-effective amendment, when the same has become effective, (2) of
any request by the Commission or any other federal or state
governmental authority for amendments or supplements to a registration
statement or related prospectus or for additional information, (3) of
the issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or the initiation of any
proceedings for that purpose, (4) if at any time the representations
and warranties of the Issuer contained in any agreement (including any
underwriting agreement) contemplated by this Section 3 cease to be true
and correct, (5) of the receipt by the Issuer of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any proceeding for
such purpose, and (6) of the happening of any event that makes any
statement made in such registration statement or related prospectus or
any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of
any changes to such registration statement, prospectus or documents so
that, in the case of the registration statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, not misleading, and that in the case of the prospectus, it
will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (B) at the request of any such seller promptly prepare
and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary
(and a post-effective amendment to such registration statement as may
be necessary in connection therewith) so that, as thereafter delivered
to the purchasers of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made;
(viii) use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction;
(ix) if requested by the managing underwriters, if any, or the
Holders of a majority in interest of the Registrable Securities being
sold in connection with an underwritten offering, promptly include in a
prospectus supplement or post-effective amendment such information as
the managing underwriters, if any, and such Holders may reasonably
request in order to permit the intended method of distribution of such
securities and make all required filings of such prospectus supplement
or such post-effective amendment as soon as practicable after the
Issuer has received such request;
(x) comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as
reasonably practicable, a historical earnings statement covering the
period of at least twelve (12)
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months, but not more than eighteen (18) months, beginning with the
first month of the first full fiscal quarter after the effective date
of such registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act, and will furnish
to each such seller at least five business days prior to the filing
thereof a copy of any amendment or supplement to such registration
statement or prospectus and shall not file any thereof to which any
such seller shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with
the requirements of the Securities Act or the rules or regulations
thereunder;
(xi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement;
(xii) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange or
trading system on which any of the Common Stock is then listed;
(xiii) cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold, which
certificates shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Securities to be
in such denominations and registered in such names as the managing
underwriters, if any, or Holders may request in writing at least two
(2) business days prior to any sale of Registrable Securities; and
(xiv) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation
by any underwriter (including any "qualified independent underwriter"
that is required to be retained in accordance with the rules and
regulations of the NASD).
Each Holder of Registrable Securities as to which any registration is
being effected shall furnish the Issuer such information regarding such Holder
and the distribution of such securities as the Issuer may from time to time
reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the Issuer of
the happening of any event of the kind described in clause (vii)(A) (3) or (6)
of this Section 3(c), such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by clause (vii)(B)
of this Section 3(c) and, if so directed by the Issuer, will deliver to the
Issuer (at the Issuer's expense) all copies, other than permanent file copies,
then in such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
(d) Underwritten Offerings. If requested by the underwriters for any
underwritten offering by Holders pursuant to a registration requested under
Section 3(a) above, the Issuer will enter into an underwriting agreement with
such underwriters for such offering, such agreement to contain such
representations and warranties by the Issuer and such other terms
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as are generally prevailing in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in Section 3(f)
below. The Holders will reasonably cooperate with the Issuer in the negotiation
of the underwriting agreement, provided that nothing herein contained shall
diminish the foregoing obligations of the Issuer. The Holders of Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and any necessary or appropriate custody agreements and
appropriate powers of attorney, and may, at their option, require that any or
all of the representations and warranties by, and the other agreements on the
part of, the Issuer to and for the benefit of such underwriters shall also be
made to and for the benefit of such Holders and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Holders. Any such Holder shall not be required to make any representations or
warranties to or agreements with the Issuer or the underwriters other than
representations, warranties or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method of distribution and any
other representation required by law.
(e) Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Warrant, the Issuer will give the Holders of Registrable
Securities registered under such registration statement, the underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Issuer with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such Holders, and such
underwriters, respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
(f) Indemnification.
(i) Indemnification by the Issuer. In the event of any
registration of any securities of the Issuer under the Securities Act,
the Issuer will, and hereby does, indemnify and hold harmless the
seller of any Registrable Securities covered by such registration
statement, its directors and officers, each other Person who
participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or
any such underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which
such seller or any such director or officer or underwriter or
controlling Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto,
or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Issuer will reimburse such seller and
each such director, officer, underwriter and controlling Person for any
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legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the Issuer shall not be obligated to
reimburse the sellers for more than one counsel and shall not be liable
in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or omission made in
such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance
upon and in conformity with written information furnished to the Issuer
through an instrument duly executed by such seller specifically stating
that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect, regardless of any investigation made
by or on behalf of such seller or any such director, officer,
underwriter or controlling Person and shall survive the transfer of
such securities by such seller and the termination or expiration of
this Warrant.
(ii) Indemnification by the Sellers. The Issuer may require,
as a condition to including any Registrable Securities in any
registration statement filed pursuant to Section 3(c) above, that the
Issuer shall have received an undertaking reasonably satisfactory to it
from the prospective seller of such securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
subparagraph (i) of this Section 3(f)) the Issuer, each director of the
Issuer, each officer of the Issuer and each other Person, if any, who
controls the Issuer within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Issuer by such
seller specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made
by or on behalf of the Issuer or any such director, officer or
controlling Person and shall survive the transfer of such securities by
such seller and the termination or expiration of this Warrant. The
obligations of any seller under this subparagraph (ii) shall be limited
to the net proceeds to such seller of the Registrable Securities sold
pursuant to the registration statement to which the loss, claim,
damage, judgment, expense or liability relates.
(iii) Contribution. If the indemnification provided for in
subparagraphs (i) and (ii) above for any reason is held by a court of
competent jurisdiction to be unavailable to an indemnified party in
respect of any losses, claims, damages, judgments, expenses or
liabilities referred to therein, then each indemnifying party under
such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
judgments, expenses or liabilities in such proportion as is appropriate
to reflect the relative fault, if any, of the Issuer and the other
selling holders in connection with the statements or omissions which
resulted in such losses, claims, damages, expenses or liabilities, as
well as any other relevant equitable considerations. The relative fault
of the
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Issuer and the selling holders shall be determined by reference to,
among other things, whether the untrue statement or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Issuer or
the selling Holders and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Issuer, the Holders, and the underwriters agree that it
would not be just and equitable if contribution pursuant to this
subparagraph (iii) were determined by pro rata or per capita allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
sentence. The obligations of any seller under this subparagraph (iii)
are several, not joint, and shall be limited to an amount equal to the
net proceeds to such seller of Registrable Securities sold pursuant to
the registration statement to which the loss, claim, damage, judgment
expense or liability relates. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(iv) Notices of Claims and Procedures. Promptly after receipt
by an indemnified Person of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subparagraphs
of this Section 3(f), such indemnified Person will, if a claim in
respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action,
provided that the failure of any indemnified Person to give notice as
provided herein shall not relieve the indemnifying party of his, her or
its obligations under the preceding subparagraphs of this Section 3(f),
except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought
against an indemnified Person, unless in such indemnified Person's
reasonable judgment a conflict of interest between such indemnified
Person and such indemnifying party may exist in respect of such claim,
the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified Person, and after notice
from the indemnifying party to such indemnified Person of its election
so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified Person for any legal or other expenses
subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified Person, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified Person of a release from all liability in
respect to such claim or litigation and otherwise in form and substance
reasonably satisfactory to the indemnified Person. No indemnified
Person shall consent to entry of any judgment or enter into any
settlement without the prior written consent of the indemnifying party.
(v) Indemnification Payments. The indemnification required by
this Section 3(f) shall be made by prompt payments of the amount
thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
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(vi) Not Exclusive. The indemnification and contribution
provisions of this Section 3(f) are in addition to any other rights to
indemnification or contribution that an indemnified party may have
under law or contract.
(g) Adjustments Affecting Registrable Securities. The Issuer will not
effect or permit to occur any combination or subdivision of shares which would
materially adversely affect the ability of the Holders to include such
Registrable Securities in any registration of its securities contemplated by
this Section 3 or the marketability of such Registrable Securities under any
such registration.
(h) Rules 144 and 144A. The Issuer will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, if the Issuer is not
required to file such reports, the Issuer will, upon the request of any Holder,
make publicly available other information) and will take such further action as
any Holder may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rules
144 and 144A under the Securities Act, as such Rules may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the Commission.
Upon the request of any Holder, the Issuer will deliver to such Holder a written
statement as to whether it has complied with such requirements.
(i) Amendments and Waivers. This Warrant may be amended and the Issuer
may take any action herein prohibited or omit to perform any act herein required
to be performed by it, only if the Issuer shall have obtained the written
consent to such amendment, action or omission to act, of the Holder or Holders
of eighty percent (80%) or more of the Registrable Securities at the time
outstanding. Each Holder at the time or thereafter outstanding shall be bound by
a consent authorized by this Section 3.
(j) Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at his, her or its election, be treated as the
holder of such Registrable Securities for purposes of any request or other
action by any holder or Holders pursuant to this Warrant or any determination of
any number or percentage of shares of Registrable Securities held by any holder
or Holders contemplated by this Warrant. If the beneficial owner of any
Registrable Securities so elects, the Issuer may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
(k) Limitation of Subsequent Registration Rights. From and after the
date of this Warrant, the Issuer shall not, without the written consent of the
Holders of a majority of the outstanding Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Issuer
which would allow such holder or prospective holder to include such securities
in any registration filed by the Issuer, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of its securities will
not reduce the amount of Registrable Securities of the Holders which is
included.
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4. Stock Fully Paid; Reservation and Listing of Shares; Covenants. (a)
The Issuer represents, warrants, covenants and agrees that all shares of Warrant
Stock which may be issued upon the exercise of this Warrant or otherwise
hereunder will, upon issuance, be duly authorized, validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
issuance. The Issuer further covenants and agrees that during the period within
which this Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant and, without limiting the foregoing, will take any
actions necessary to effectuate the foregoing, including without limitation
increasing its authorized capital stock.
(b) If any shares of the Common Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its best efforts as expeditiously as possible at its expense to
cause such shares to be duly registered or qualified. If the Issuer shall list
any shares of Common Stock on any securities exchange it will, at its expense,
list thereon, maintain and increase when necessary such listing of, all shares
of Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder, and, to the extent permissible under the
applicable securities exchange rules, all unissued shares of Warrant Stock which
are at any time issuable hereunder, so long as any shares of Common Stock shall
be so listed. The Issuer will also so list on each securities exchange, and will
maintain such listing of, any other securities which the Holder of this Warrant
shall be entitled to receive upon the exercise of this Warrant if at the time
any securities of the same class shall be listed on such securities exchange by
the Issuer.
(c) The Issuer shall not by any action including, without limitation,
amending the Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of the Holder
hereof against impairment. Without limiting the generality of the foregoing, the
Issuer will (i) not permit the par value, if any, of its Common Stock to exceed
the then effective Warrant Price, (ii) not amend or modify any provision of the
Certificate of Incorporation or by-laws of the Issuer in any manner that would
adversely affect in any way the powers, preferences or relative participating,
optional or other special rights of the Common Stock or which would adversely
affect the rights of the Holders of the Warrants, (iii) not, other than pursuant
to the Rights Agreement, dated July 18, 2000, between the Issuer and Fleet
National Bank, as Rights Agent, issue any Capital Stock of any class which is
preferred as to dividends or as to the distribution of assets upon the voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, (iv) take
all such action as may be reasonably necessary in order that the Issuer may
validly and legally issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, claims, encumbrances and restrictions (other than
as provided herein) upon the exercise of this Warrant, and (v) use its best
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body
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having jurisdiction thereof as may be reasonably necessary to enable the Issuer
to perform its obligations under this Warrant.
(d) The Issuer shall not declare, make or pay any dividend or other
distribution, whether in cash, securities or other property, other than Common
Stock of the same class or series (a "Distribution"), with respect to its Common
Stock or any Common Stock Equivalent unless the Issuer concurrently makes a cash
payment to the Holder of this Warrant equal to the product of (1) the amount of
cash plus the fair market value of any property or securities distributed with
respect to each outstanding share of Common Stock or any Common Stock Equivalent
computed as provided in subparagraph (i) of Section 5(f) hereof multiplied by
(2) the Warrant Share Number.
5. Adjustment of Warrant Price and Warrant Share Number. The number and
kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale.
(i) In case the Issuer after the Closing Date shall do any of
the following (each a "Triggering Event") (a) consolidate with or merge
into any other Person and the Issuer shall not be the continuing or
surviving corporation of such consolidation or merger, or (b) permit
any other Person to consolidate with or merge into the Issuer and the
Issuer shall be the continuing or surviving Person but, in connection
with such consolidation or merger, any Capital Stock of the Issuer
shall be changed into or exchanged for securities of any other Person
or cash or any other property, or (c) transfer all or substantially all
of its properties or assets to any other Person, or (d) effect a
capital reorganization or reclassification of its Capital Stock, then,
and in the case of each such Triggering Event, proper provision shall
be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this Warrant shall thereafter
only be entitled (x) upon the exercise hereof at any time after the
consummation of such Triggering Event, to the extent this Warrant is
not exercised prior to such Triggering Event, or is redeemed in
connection with such Triggering Event, to receive in exchange for the
Warrant Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering
Event, the securities, cash and property to which such Holder would
have been entitled upon the consummation of such Triggering Event if
such Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments (subsequent to such
corporate action) as nearly equivalent as possible to the adjustments
provided for in Section 5 hereof or (y) to sell this Warrant (or, at
such Holder's election, a portion hereof) to the Person continuing
after or surviving such Triggering Event, or to the Issuer (if Issuer
is the continuing or surviving Person) at a sales price equal to the
amount, if any, of cash, property and/or securities to which a holder
of the number of shares of Common Stock which would otherwise have been
delivered upon the exercise of this Warrant (the "Event
Consideration"), less the amount or portion of such Event Consideration
having a fair
- 16 -
value equal to the aggregate Warrant Price applicable to this Warrant
or the portion hereof so sold.
(ii) Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event unless, prior
to the consummation thereof, each Person (other than the Issuer) which
may be required to deliver any securities, cash or property upon the
exercise of this Warrant as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory, to the Holder of
this Warrant, (a) the obligations of the Issuer under this Warrant (and
if the Issuer shall survive the consummation of such Triggering Event,
such assumption shall be in addition to, and shall not release the
Issuer from, any continuing obligations of the Issuer under this
Warrant) and (b) the obligation to deliver to such Holder such shares
of securities, cash or property as, in accordance with the foregoing
provisions of this paragraph (a), such Holder shall be entitled to
receive. In addition, such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person (which may be
in-house counsel), which counsel shall be reasonably satisfactory to
such Holder, stating that this Warrant shall thereafter continue in
full force and effect and the terms hereof (including, without
limitation, all of the provisions of this paragraph (a)) shall be
applicable to the securities, cash or property which such Person may be
required to deliver upon any exercise of this Warrant or the exercise
of any rights pursuant hereto.
(iii) In case any Triggering Event shall be proposed to be
effected, the Holder of this Warrant may, and the Issuer agrees that as
a condition to the consummation of any such Triggering Event the Issuer
shall secure the right of such Holder to, sell this Warrant (or, at
such Holder's election, a portion thereof) to the Person continuing
after or surviving such Triggering Event, or the Issuer (if the Issuer
is the continuing or surviving Person), simultaneously with the
effective date or closing of such Triggering Event, as provided in
clause (y) of subparagraph (i) of this Section 5(a). The obligation of
the Issuer to secure such right of the Holder to sell this Warrant
shall be subject to such Holder's cooperation with the Issuer,
including, without limitation, the giving of customary representations
and warranties to the purchaser in connection with any such sale.
(b) Subdivision or Combination of Shares. If the Issuer, at any time
while this Warrant is outstanding, shall subdivide or combine any shares of
Common Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as at the effective date of
such combination or, if the Issuer shall take a record of Holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares of
Common Stock outstanding as a result of such combination.
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(c) Certain Dividends and Distributions. If the Issuer, at any time
while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(ii) Liquidating Dividends, etc. Make a distribution of its
property to the Holders of its Common Stock as a dividend in
liquidation or partial liquidation or by way of return of capital other
than as a dividend payable out of funds legally available for dividends
under the laws of the State of Delaware, the Holder of this Warrant
shall, upon exercise (including without limitation payment of the
Warrant Price), be entitled to receive, in addition to the number of
shares of Warrant Stock receivable thereupon, and without payment of
any additional consideration therefor, a sum equal to the amount of
such property as would have been payable to such Holder had such Holder
been the Holder of record of such Warrant Stock on the record date for
such distribution or if no such record is taken, on the date of such
distribution; and appropriate provision therefor shall be made a part
of any such distribution.
(d) Issuance of Additional Shares of Common Stock. If the Issuer, at
any time while this Warrant is outstanding, shall issue any Additional Shares of
Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 5), the Warrant Price in effect hereunder shall
simultaneously with such issuance or sale be reduced (or, in the event that the
Warrant Price is reduced below the then par value of the Common Stock, deemed
reduced) and the number of shares of Common Stock issuable upon exercise hereof
shall be increased (regardless of whether the Warrant Price was reduced below
the then par value of the Common Stock) so that the percentage of the Diluted
Common Stock of the Issuer represented by the shares of Common Stock issuable
upon exercise of this Warrant is not reduced as a result of such issuance or
sale. The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 5. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 5 or (y) no adjustment was required pursuant to
subsection (e) of this Section 5.
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(e) Issuance of Common Stock Equivalents. If the Issuer, at any time
while this Warrant is outstanding, shall issue any Common Stock Equivalent, then
the Warrant Price upon each such issuance or amendment shall be adjusted as
provided in the first sentence of subsection (d) of this Section 5 on the basis
that the maximum number of Additional Shares of Common Stock issuable pursuant
to all such Common Stock Equivalents shall be deemed to have been issued
(whether or not such Common Stock Equivalents are actually then exercisable,
convertible or exchangeable in whole or in part) as of the earlier of (1) the
date on which the Issuer shall enter into a firm contract for the issuance of
such Common Stock Equivalent, or (2) the date of actual issuance of such Common
Stock Equivalent. No adjustment of the Warrant Price shall be made under this
subsection (e) (i) upon the issuance of any Convertible Security which is issued
pursuant to the exercise of any warrants or other subscription or purchase
rights therefor, if any adjustment shall previously have been made in the
Warrant Price then in effect upon the issuance of such warrants or other rights
pursuant to this subsection (e) or (ii) issuances of Common Stock Equivalents to
purchase up to one hundred fifty thousand (150,000) shares (such number of
shares to be subject to adjustment, as appropriate, to reflect adjustments made
under Sections 5(a), 5(b), and 5(c) of this Warrant).
(f) Other Provisions Applicable to Adjustments Under this Section 5.
The following provisions shall be applicable to the making of adjustments in the
Warrant Price herein before provided in Section 5:
(i) Computation of Consideration. The consideration received
by the Issuer shall be the following: to the extent that any Additional
Shares of Common Stock or any Common Stock Equivalents shall be issued
for cash consideration, the consideration received by the Issuer
therefor, or if such Additional Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription, the
subscription price, or, if such Additional Shares of Common Stock or
Common Stock Equivalents are sold to underwriters or dealers for public
offering without a subscription offering, the public offering price, in
any such case excluding any amounts paid or receivable for accrued
interest or accrued dividends and without deduction of any
compensation, discounts, commissions, or expenses paid or incurred by
the Issuer for or in connection with the underwriting thereof or
otherwise in connection with the issue thereof; to the extent that such
issuance shall be for a consideration other than cash, then, except as
herein otherwise expressly provided, the fair market value of such
consideration at the time of such issuance as determined in good faith
by the Board. The consideration for any Additional Shares of Common
Stock issuable pursuant to any Common Stock Equivalents shall be the
consideration received by the Issuer for issuing such Common Stock
Equivalents, plus the additional consideration payable to the Issuer
upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional
Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividend upon any class of Capital Stock of the
Issuer other than Common Stock, the Issuer shall be deemed to have
received for such Additional Shares of Common Stock or Common Stock
Equivalents a consideration equal to the amount of such dividend so
paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall
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notify the Holder of this Warrant of its good faith determination of
the fair market value of such consideration prior to payment or
accepting receipt thereof. If, within thirty days after receipt of said
notice, the Majority Holders shall notify the Board in writing of their
objection to such determination, a determination of the fair market
value of such consideration shall be made by an Independent Appraiser
selected by the Majority Holders with the approval of the Board (which
approval shall not be unreasonably withheld), whose fees and expenses
shall be paid by the Issuer.
(ii) Readjustment of Warrant Price. Upon the expiration or
termination of the right to convert, exchange or exercise any Common
Stock Equivalent the existence or issuance of which effected an
adjustment in the Warrant Price, if such Common Stock Equivalent shall
not have been converted, exercised or exchanged in its entirety, the
number of shares of Common Stock deemed to be issued and outstanding by
reason of the fact that they were issuable upon conversion, exchange or
exercise of any such Common Stock Equivalent shall no longer be
computed as set forth above, and the Warrant Price shall forthwith be
readjusted and thereafter be the price which it would have been (but
reflecting any other adjustments in the Warrant Price made pursuant to
the provisions of this Section 5 after the issuance of such Common
Stock Equivalent) had the adjustment of the Warrant Price been made in
accordance with the issuance or sale of the number of Additional Shares
of Common Stock actually issued upon conversion, exchange or issuance
of such Common Stock Equivalent and thereupon only the number of
Additional Shares of Common Stock actually so issued shall be deemed to
have been issued.
(iii) Outstanding Common Stock. The number of shares of Common
Stock at any time outstanding shall (a) not include any shares thereof
then directly or indirectly owned or held by or for the account of the
Issuer or any of its Subsidiaries, and (b) shall be deemed to include
all shares of Common Stock then issuable upon conversion, exercise or
exchange of any then outstanding Common Stock Equivalents or any other
evidences of Indebtedness, shares of Capital Stock or other Securities
which are or may be at any time convertible into or exchangeable for
shares of Common Stock or Other Common Stock.
(iv) Par Value. Subject to Section 5(i), this Warrant shall
not be exercisable at a price per share less than the par value per
share of the Common Stock.
(g) Other Action Affecting Common Stock. In case after the Closing Date
hereof the Issuer shall take any action affecting its Common Stock, other than
an action described in any of the foregoing subsections (a) through (f) of this
Section 5, inclusive, and the failure to make any adjustment would not fairly
protect the purchase rights represented by this Warrant in accordance with the
essential intent and principle of this Section 5, then the Warrant Price shall
be adjusted in such manner and at such time as the Board may in good faith
determine to be equitable in the circumstances.
(h) Adjustment of Warrant Share Number. Upon each adjustment in the
Warrant Price pursuant to any of the foregoing provisions of this Section 5, to
the extent not
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otherwise adjusted pursuant to the foregoing provisions of this Section 5, the
Warrant Share Number shall be adjusted, to the nearest one hundredth of a whole
share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 4 or Section 5(i) of this
Warrant so that shares issued at the Warrant Price adjusted in accordance with
this Warrant would not be validly issued, (i) the adjustment of the Warrant
Share Number provided for in the foregoing sentence shall nonetheless be made
and the Holder of this Warrant shall be entitled to purchase such greater number
of shares at the lowest price at which such shares may then be validly issued
under applicable law and (ii) the Issuer shall immediately use its best efforts
to recapitalize itself, for instance by reducing the par value of its Common
Stock, to enable exercise of this Warrant at the adjusted Warrant Price and
shall indemnify the Holders against any loss, expense or damages (including
attorney fees) arising out of any failure to complete such recapitalization
timely. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 4 or Section 5(i) of this
Warrant.
(i) Further Assurances. The Issuer will take all action as may
be necessary or appropriate in order that the Issuer may validly and
legally issue fully paid and non-assessable shares of Common Stock upon
the exercise of all Warrants from time to time outstanding. Without
limitation on the foregoing, if the Warrant Price, as adjusted, would
be less than the par value of the Common Stock, the Issuer shall use
its best efforts to amend its Certificate of Incorporation to reduce
such par value to the Warrant Price, and if the Issuer fails to effect
such amendment by the time the Warrant is exercised, the Issuer shall
be obliged to pay to the Holder damages in an amount equal to the
difference between the par value and the Warrant Price upon exercise of
the Warrant.
6. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 5 hereof (for purposes of this
Section 6, each an "adjustment"), the Issuer shall cause the independent
accounting firm then regularly engaged by it to report on its financial
statements to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment.
7. Fractional Shares. Fractional shares of Warrant Stock shall not be
issued in connection with any exercise hereof, and in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Current Market Price then
in effect.
8. Definitions. For the Purposes of this Warrant, the following terms
have the following meanings:
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"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Closing Date, and all shares of
Other Common Stock, if any, issued by the Issuer after the Closing
Date, except the Warrant Stock.
"Board" shall mean the Board of Directors of the Issuer.
"Business Day" means any day except a Saturday, a Sunday or a
legal holiday in New York City.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Closing Date, and as
hereafter from time to time amended, modified, supplemented or restated
in accordance with its terms and pursuant to applicable law.
"Closing Date" means November 21, 2002.
"Common Stock" means the Common Stock, $.01 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security or any
stock appreciation right or other right to receive any payment based
upon the value of the Common Stock.
"Commission" means the Securities and Exchange Commission.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Current Market Price" as in effect on any day means the
average of the daily market prices of the Common Stock for the period
of 15 consecutive trading days ending two trading days preceding such
date. The market price for each such day shall be the last sale price
on such day as reported on the New York Stock Exchange Consolidated
Tape, or, if the Common Stock is not listed on the New York Stock
Exchange, Inc. or reported on such Consolidated Tape, then the last
sale price on such day on the principal domestic stock exchange on
which such Stock is then listed or admitted to trading, or, if no sale
takes place on such day on such exchange, the average of the closing
bid and asked prices on such day as officially quoted on such exchange,
or, if the Common Stock
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is not then listed or admitted to trading on any domestic stock
exchange but is quoted in the National Market System ("NMS/Nasdaq") of
the National Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq"), then the Current Market Price for each
such trading day shall be the last sale price on such day as quoted by
NMS/Nasdaq, or, if no sale takes place on such day or if the Common
Stock is neither listed or admitted to trading on any domestic stock
exchange nor quoted on such NMS/Nasdaq, then the Current Market Price
for each such trading day shall be the average of the reported closing
bid and asked price quotations on such day in the over-the-counter
market, as reported by Nasdaq, or, if not so reported, as furnished by
the National Quotation Bureau, Inc., or if such firm at the time is not
engaged in the business of reporting such prices, as furnished by any
similar firm then engaged in such business as selected by the Issuer,
or if there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc. selected by the Issuer with the
written approval of the Majority Holders. If at any time the Common
Stock is not listed on any domestic exchange or quoted in the domestic
over-the-counter market, the Current Market Price shall be deemed to be
the fair market value per share of Common Stock as determined in good
faith by the Board and agreed to by the Majority Holders. If the
Majority Holders shall notify the Board in writing of their
disagreement as to such fair market value as determined by the Board, a
determination of the fair market value of such Common Stock shall be
made by an Independent Appraiser selected by the Majority Holders and
consented to by the Issuer (which consent shall not be unreasonably
withheld), whose fees and expenses shall be paid by the Issuer. The
determination of fair market value by the Board and such Appraiser
shall be based upon the fair market value of the Issuer determined on a
going concern basis as between a willing buyer and a willing seller and
taking into account all relevant factors determinative of value, and
shall be final and binding on all parties. In determining the fair
market value of any shares of Common Stock, no consideration shall be
given to any restrictions on transfer of the Common Stock imposed by
agreement or by federal or state securities laws, or to the existence
or absence of, or any limitations on, voting rights.
"Diluted Common Stock" means the number of shares of Common
Stock outstanding, (a) not including any shares thereof then directly
or indirectly owned or held by or for the account of the Issuer or any
of its Subsidiaries, and (b) including all shares of Common Stock then
issuable upon conversion, exercise or exchange of the then outstanding
Common Stock Equivalents or other evidences of Indebtedness, shares of
Capital Stock or other Securities which are or may be at any time
convertible into or exchangeable for shares of Common Stock or Other
Common Stock, all of which were issued after the Closing Date.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended, or any similar federal statute then in effect.
"Fee in Lieu of Warrant Amount" shall be the product of (i)
$100,000 and (ii) the Warrant Number divided by the Aggregate Tranche
Warrant Number, subject to a proportionate increase if any of the
Strategic Initiatives are consummated at an amount which results in a
valuation of the Common Stock in excess of $0.15 per share (such
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valuation to be determined by the Holder in its sole discretion, each a
"Valuation Event"). The calculation of the Fee in Lieu of Warrant
Amount shall be made as provided in the Loan Agreement.
"Holders" means the Persons who shall from time to time own
any Warrant. The term "Holder" means one of the Holders.
"Indebtedness" has the meaning provided in the Loan Agreement.
"Independent Appraiser" means a nationally recognized
investment banking firm or other nationally recognized firm that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means Provant, Inc. and its successors.
"Loan Agreement" means the Revolving Credit Agreement, dated
as of April 8, 1998, by and among Provant, Inc., Fleet National Bank,
as Agent ("Agent") and the other lending institutions a party thereto
(collectively, the "Banks") as amended, and as such agreement may from
time to time be further amended, modified or supplemented in accordance
with its terms.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"NASD" means National Association of Securities Dealers, Inc.
"Other Common Stock" means any Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"Person" means an individual, a corporation, a partnership, a
limited liability company, a trust, an unincorporated organization or a
government organization or an agency or political subdivision thereof.
"Registrable Securities" means the Warrants, the Warrant
Stock, any other Securities issuable or issued upon exercise of the
Warrants, any shares of Common Stock or other securities of the Issuer
issued as a dividend or other distribution with respect to, or in
exchange or in replacement of such shares of Common Stock.
"Registration Expenses" means all expenses incident to the
Issuer's performance of or compliance with Section 3 of this Warrant,
including, without limitation, all registration, filing and listing or
Nasdaq fees, all fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, all
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messenger and delivery expenses, the fees and disbursements of counsel
for the Issuer and of its independent public accountants, including
without limitation the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance,
premiums and other costs of policies of insurance, if any, against
liabilities arising out of the public offering of the Registrable
Securities being registered, any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities and the reasonable
fees and disbursements of any counsel and accountants retained by the
Holder or Holders of the Registrable Securities being registered
(provided that the Issuer shall not be required to pay the fees of more
than one counsel and accountant), but excluding underwriting discounts
and commissions, transfer taxes, if any.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Strategic Initiatives" means each of the following: (a) the
sale of certain divisions of the Issuer to Drake Beam and Xxxxx, (b)
the sale of the Government Division (as defined in the Loan Agreement)
of the Issuer, (c) the sale of all of the non-government divisions of
the Issuer to University of Phoenix Apollo Group, or (d) the sale of
all of the non-government divisions of the Issuer to WR Capital, each
as more fully described in the Loan Agreement.
"Valuation Event" shall have the meaning provided in the
definition of Fee in Lieu of Warrant Amount.
"Warrants" means the Warrants issued and sold pursuant to the
Loan Agreement, including, without limitation, this Warrant, and any
other warrants of like tenor issued in substitution or exchange for any
thereof pursuant to the provisions of Section 2(c) or 2(d) hereof or of
any of such other Warrants.
"Warrant Price" means the price per share of Common Stock
specified in the first paragraph of this Warrant and such other prices
as shall result from the adjustments specified in Section 5 hereof.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
to such number made or required to be made under the terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants.
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9. Information. As long as this Warrant is outstanding, the Issuer
shall deliver to the Holder hereof and to each holder of shares of Warrant Stock
the documents and other information required under the Loan Agreement within the
applicable time period specified therein and regardless of whether or not the
Loan Agreement is then in effect.
10. Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
11. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (excluding the
laws applicable to conflicts or choice of law).
12. Notices. All notices and other communications provided for
hereunder shall be in writing and delivered by hand or sent by first class mail
or sent by fax (with such fax to be confirmed promptly in writing sent by first
class mail), and if to the Holder of this Warrant or of Warrant Stock issued
pursuant hereto, addressed to such Holder at its last known address or fax
number appearing on the books of the Issuer maintained for such purposes, and if
to the Issuer, addressed to:
Provant, Inc.
00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: President
Fax No.: (000) 000-0000
or to such other address or addresses or fax number or numbers as any such party
may most recently have designated in writing to the other parties hereto by such
notice. All such communications shall be deemed to have been given or made when
so delivered by hand or sent by fax, or three business days after being so
mailed.
13. Remedies. The Issuer stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.
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15. Modification and Severability. If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Integration. This Warrant replaces all prior agreements, supersedes
all prior negotiations and constitutes the entire agreement of the parties with
respect to the transactions contemplated herein. References to the Loan
Agreement herein shall, to the extent that the obligations thereunder have been
repaid and such Loan Agreement has terminated, mean the Loan Agreement as in
effect immediately prior to its termination.
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17. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
PROVANT, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
Name: Xxxxx Xxxx
Title: Vice President and Chief
Financial Officer
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EXERCISE FORM
Provant, Inc.
The undersigned, ___________________________, pursuant to the provisions of the
within Warrant, hereby elects to purchase _______ shares of Common Stock of
Provant, Inc. covered by the within Warrant.
Dated: _________ Signature: ___________________
Address: ___________________
___________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
_____________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: _________ Signature: ___________________
Address: ___________________
___________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
________________ the right to purchase ____________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint _________________________, attorney, to
transfer that part of the said Warrant on the books of the within named
corporation.
Dated: _________ Signature: ___________________
Address: ___________________
___________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W- ___ canceled (or transferred or exchanged) this ___ day of
_______, 20__, shares of Common Stock issued therefor in the name of
________________, Warrant No. W- ____ issued for ____ shares of Common Stock in
the name of ___________________
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
---------------- ------- -------------
shares
-------------
, and hereby irrevocably constitutes and appoints as agent and attorney-in-fact
to transfer said Warrants on the books of the within named corporation, with
full power of substitution in the premises.
Dated ______________________, _____.
In the presence of
___________________________________
Name:
----------------------------------
Signature:
-----------------------------
Title of Officer or Agent (if any)
Address:
------------------------------
Note: the above signature should
correspond exactly with the name
on the face of the within Warrant
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