Exhibit 4(iii)
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WARRANT AGREEMENT
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This Warrant Agreement is made as of June 25, 1999, by Xxxx Technology,
Inc., a Delaware corporation (the "Company").
WHEREAS, the Company has determined to issue Warrants (the "Warrants")
entitling the holders of the Warrants to purchase an aggregate of 100,000 Common
Shares of the Company;
WHEREAS, the Company desires to provide for the form and provisions of the
Warrants, the terms upon which they will be issued and may be exercised, and the
respective rights, limitations and immunities of the Company and the holders of
the Warrants; and
WHEREAS, all acts and things necessary have been done and performed to make
the Warrants, when executed on behalf of the Company, as provided in this
Agreement, the valid, binding and legal obligation of the Company, and to
authorize the execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto agree as follows:
ARTICLE I
Execution and Countersignature of Warrants
1.01 Execution of Warrants. Each Warrant, whenever issued, shall be
dated ____________________________, 1999, shall be substantially in the form of
Exhibit A attached hereto and incorporated herein by reference, and shall be
signed by, or bear the facsimile signature of, the President or a Vice President
and of the Secretary or an Assistant Secretary of the Company. If any officer
whose facsimile signature has been placed upon any Warrant ceases to be that
officer before the Warrant is issued, the Warrant may be issued with the same
effect as if the officer had not ceased to be that officer on the date of
issuance.
ARTICLE II
Warrant Price, Duration and Exercise of Warrants
2.01 Warrant Price. Each Warrant, when issued by the Company, shall
entitle the holder of the Warrant, subject to the provisions of this Agreement,
to purchase from the Company the number of Common Shares stated in the Warrant
at the price of $0.50 per share (the "Warrant Price"), subject to the
adjustments provided in Article III of this Agreement. The Warrant Price as used
herein shall refer to the price per share at which Common Shares may be
purchased at the time a Warrant is exercised.
2.02. Duration of Warrants. Warrants may be exercised only on or before
a date that is 48 months after the date of the Warrants (the "Expiration Date")
as described in Article I of this Agreement. Notwithstanding the foregoing, if
notice has been given as provided in Article III hereof
in connection with the liquidation, dissolution or winding up of the Company,
the Warrants shall expire at the close of business on the third full business
day before the date specified in the notice as the record date for determining
holders of stock entitled to receive any distribution upon the liquidation,
dissolution or winding up; provided, however, that such date is at least 5
business days after the date of the notice.
2.03. Exercise of Warrants.
(a) A Warrant may be exercised by surrendering it at the
principal office of the Company in Knoxville, Tennessee, prior to the close of
business of the Company on the Expiration Date or such earlier date as may be
applicable, with the exercise form set forth in the Warrant duly completed and
executed, and by paying in full, in lawful money of the United States, the
Warrant Price for each full Common Share as to which the Warrant is exercised,
and any applicable taxes. Notwithstanding the foregoing, (i) no Warrants may be
exercised for fewer than 500 shares at any one time, unless such holder holds
Warrants for fewer than 500 shares in which case such Warrants must be exercised
for all remaining shares; and (ii) the Company is only required to use
reasonable efforts which will permit the purchase and sale of the Common Shares
underlying the Warrants and is not required to register or qualify the Warrants
or the Common Shares underlying the Warrants under the Securities Act of 1933,
as amended (the "Securities Act") or the securities "blue sky" laws of any
state.
(b) As soon as practicable after the exercise of any Warrant, the
Company shall issue to, or upon the order of, the holder or holders of the
Warrant, in whatever name or names the Warrant holder may direct, a certificate
or certificates for the number of full Common Shares to which the holder or
holders are entitled, registered in the name or names specified by the holder or
holders, and, if the Warrant is not exercised in full (except with respect to a
remaining fraction of a share), a new Warrant for the number of shares
(including fractional shares) as to which the Warrant has not been exercised.
All Warrants surrendered shall be canceled by the Company.
(c) If the same holder of one or more Warrants exercises the purchase
rights under the Warrants in the same transaction in a manner that leaves the
right to purchase a fraction of a share unexercised, the Company shall pay a
cash adjustment with respect to that final fraction in an amount equal to the
same fraction of the current market price of one Common Share on the business
day that next precedes the day of exercise reduced by the same fraction of the
Warrant Price of one Common Share on that day. For this purpose, the current
market price shall be the price of one Common Share on the principal stock
exchange on which the Common Shares is traded at the close of the market on the
next preceding business day, or, if the Common Shares are not then listed on a
stock exchange, the average of the reported bid and asked prices on that day in
the over-the-counter market. If no sales take place on the next preceding day,
the price or the average of the bid and asked prices, whichever is applicable,
shall be determined as of the preceding business day on which shares were traded
closest in time to the date of exercise, provided that such day is no more than
5 business days prior to the date of exercise.
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(d) All Common Shares issued upon the exercise of a Warrant
shall be duly and validly issued, fully paid and nonassessable, and the Company
shall pay all taxes in connection with the issuance of such shares. The Company
shall not be required to pay any tax imposed in connection with any transfer
involved in the issuance of a certificate for Common Shares in any name other
than that of the holder or holders of the Warrant surrendered in connection with
the purchase of the shares. In this case the Company shall not be required to
issue or deliver any stock certificate until the tax has been paid.
(e) Each person in whose name any certificate for Common Shares
is issued shall be deemed to have become the holder of record of the shares on
the date on which the Warrant was surrendered and payment of the Warrant Price
and any applicable taxes was made, irrespective of the date of delivery of the
certificate, except that, if the date of surrender and payment is a date when
the stock transfer books of the Company are closed, a person shall be deemed to
have become the holder of shares at the close of business on the next succeeding
date on which the stock transfer books are open. Except as otherwise provided in
Article III, each person holding any shares received upon exercise of Warrants
shall be entitled to receive only dividends or distributions which are payable
to holders of record on or after the date on which the person is deemed to
become the holder of record of such shares.
ARTICLE III
Adjustments
3.01. Stock Dividends - Split-Ups. If after the date of this Agreement,
and subject to the provisions of Section 3.07 hereof, the number of outstanding
Common Shares of the Company is increased by a stock dividend payable in Common
Shares or by a split-up of Common Shares, then, on the day following the date
fixed for the determination of holders of Common Shares entitled to receive the
stock dividend or split-up, the number of shares issuable on exercise of each
Warrant shall be increased in proportion to the increase in outstanding shares
and the then applicable Warrant Price shall be correspondingly decreased.
3.02. Aggregation of Shares. If after the date of this Agreement, and
subject to the provisions of Section 3.07 hereof, the number of outstanding
Common Shares of the Company is decreased by a combination or reclassification
of Common Shares, then, after the effective date of the combination or
reclassification, the number of Common Shares issuable on exercise of each
Warrant shall be decreased in proportion to the decrease in outstanding Common
Shares and the then applicable Warrant Price shall be correspondingly increased.
3.03. Special Stock Dividends. If after the date of this Agreement, and
subject to the provisions of Section 3.07 hereof, shares of any class of stock
of the Company (other than Common Shares) are issued by way of a stock dividend
on outstanding Common Shares, then, commencing with the day following the date
fixed for the determination of holders of Common Shares entitled to receive the
stock dividend, in addition to any Common Shares receivable upon exercise of the
Warrants, the Warrant holders upon exercise of the Warrants shall be entitled to
receive, as nearly as practicable, the same number of shares of dividend stock,
plus any shares issued upon any
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subsequent change, replacement, subdivision or combination of the stock
dividend, to which the holders would have been entitled if their Warrants would
have been exercised immediately prior to the stock dividend. No adjustment in
the Warrant Price shall be made merely by virtue of the happening of any event
specified in this Section 3.03.
3.04. Reorganization, Etc. If after the date of this Agreement any
capital reorganization or reclassification of the Common Shares of the Company,
or consolidation or merger of the Company with another corporation, or sale of
all or substantially all of its assets to another corporation is effective,
then, as a condition of the reorganization, reclassification, consolidation,
merger or sale, lawful and fair provision shall be made whereby the Warrant
holders after the transaction shall have the right to purchase and receive, upon
the basis and upon the terms and conditions specified in the Warrants and in
lieu of the Common Shares of the Company purchasable and receivable immediately
prior to the transaction upon the exercise of the rights represented by the
Warrants, the shares of stock, securities or assets that may be issued or
payable with respect to or in exchange for a number of outstanding Common Shares
equal to the number of Common Shares purchasable and receivable immediately
prior to the transaction upon the exercise of the rights represented by the
Warrants if the reorganization, reclassification, consolidation, merger or sale
had not taken place. Appropriate provisions shall be made in connection with a
reorganization, reclassification, consolidation, merger or sale with respect to
the rights and interests of the Warrant holders to the end that the provision of
this Agreement (including, without limitation, provisions for adjustments of the
Warrant Price and of the number of shares purchasable upon exercise of the
Warrants) shall immediately after the transaction be applicable as nearly as
possible to any shares of stock, securities or assets deliverable immediately
after the transaction upon the exercise of the Warrants. The Company shall not
effect any consolidation, merger or sale unless, prior to the consummation of
the transaction, the successor corporation (if other than the Company) resulting
from the consolidation or merger, or the corporation purchasing the assets,
assumes by written instrument executed and delivered to the Warrant Agent the
obligation to deliver to the Warrant holders the shares of stock, securities or
assets in accordance with the foregoing provisions that the holders may be
entitled to purchase.
3.05. Notice of Change in Warrant. Upon any adjustment of the Warrant
Price or the number of shares issuable on exercise of a Warrant, then and in
each case the Company shall give written notice of the adjustment to the holders
of the Warrants mailed to the address of each such holder registered with the
Company. The notice shall state the Warrant Price resulting from the adjustment
and the increase or decrease, if any, in the number of shares purchasable at
that price upon exercise of a Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which the calculation is based. Failure
to give notice, or any defect in a notice, shall not affect the legality or
validity of the changes or adjustments.
3.06. Other Notices. In case at any time:
(a) the Company pays any dividends payable in stock upon its
Common Shares or makes any distributions (other than regular cash dividends) to
the holders of its Common Shares;
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(b) the Company offers for subscription pro rata to the holders
of its Common Shares any additional shares of stock of any class or any other
rights;
(c) there is a capital reorganization, a classification of the
capital stock of the Company or a consolidation or merger of the Company with,
or a sale of all or substantially all of its assets to, another corporation; or
(d) there is a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of these cases, the Company shall give written notice
in the manner set forth in Section 3.05 of this Agreement of the date on which
(i) the books of the Company close or a record is taken for the dividend,
distribution or subscription rights, or (ii) the reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up takes place. The notice also shall specify the date as of which the
holders of record of Common Shares shall participate in dividend, distribution
or subscription rights, or shall be entitled to exchange their Common Shares for
securities or other property deliverable upon the reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up. The notice shall be given at least 20 days prior to the transaction
in question and not less than 20 days prior to the record date or the date on
which the Company's transfer books are closed with respect to the transaction.
Failure to give the notice, or any defect in the notice, shall not affect the
legality or validity of any transaction covered or to be covered in the notice.
3.07. Limitation on Fractions. Notwithstanding anything in Sections
3.01 or 3.02 hereof to the contrary, cumulative adjustments in the number of
shares issuable upon exercise of Warrants shall be made only to the nearest
multiple of one-tenth of a share, i.e., fractions of less than five-hundredths
of a share shall be disregarded and fractions of five-hundredths of a share or
more shall be treated as being one-tenth of a share.
3.08. Form of Warrant. The form of Warrant need not be changed due to
any change pursuant to this article, and Warrants issued after a change may
state the same Warrant Price and the same number of shares as is stated in the
Warrants initially issued pursuant hereto. However, at any time in its sole
discretion, the Company may make any change in the form of Warrant that it may
deem appropriate and that does not affect the substance of the Warrants. Any
Warrant subsequently issued, whether in exchange or substitution for an
outstanding Warrant or otherwise, may be in the form as so changed.
ARTICLE IV
Other Provisions Relating to Rights of Holders of Warrants
4.01. No Rights as Stockholder Conferred by Warrants. A Warrant does
not entitle its holder to any of the rights of a stockholder of the Company.
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4.02. Lost, Stolen, Mutilated or Destroyed Warrants. If any Warrant is
lost, stolen, mutilated or destroyed, the Company may issue a new Warrant of
like denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such issuance of a new Warrant shall be on whatever terms and
conditions with respect to indemnity or otherwise that the Company may in its
sole discretion impose (which shall, in the case of a mutilated Warrant, include
the surrender of the Warrant).
4.03. Reservation of Common Shares. The Company shall at all times
reserve and keep available the number of its authorized but unissued Common
Shares which is sufficient to permit the exercise in full of all outstanding
Warrants. If at any time the number of authorized but unissued Common Shares is
not sufficient for these purposes, the Company shall take such corporate action
as, in the opinion of counsel, may be necessary to increase its authorized but
unissued shares to the number of shares sufficient for these purposes.
ARTICLE V
Ownership and Transfer of Warrants
5.01. Ownership of Warrants. Warrants issued pursuant to this Agreement
shall be treated as owned only by the holder of record as determined by the
Company.
5.02. Transfer of Warrants.
(a) Neither the Warrants nor the Common Shares issuable upon
exercise of the Warrants have been registered or qualified under the Securities
Act or under the securities or "blue sky" laws of any state. Investors have
represented that the Warrants and the underlying Common Shares were acquired for
investment and not with a view to distribution or resale, and may not be made
subject to a security interest, pledged, hypothecated, or otherwise transferred
except pursuant to an effective registration under federal and state laws or
pursuant to exemptions from registration. Certificates representing the Warrants
and any shares issued thereunder will bear a legend reflecting such restrictions
on transfer. Prior to permitting transfer of any Warrants or underlying shares
on its books, the Company may require an opinion of counsel acceptable to it
that any such transfer complies with applicable laws.
(b) For any transfer that meets the criteria described in
paragraph (a) above, one or more Warrants may be surrendered to the Company for
transfer and, upon their cancellation, the Company shall deliver in exchange one
or more new Warrants, as requested by the holder of the canceled Warrant or
Warrants, for purchase of the same aggregate number of shares as were evidenced
by or applicable to the Warrant or Warrants so canceled.
ARTICLE VI
Other Matters
6.01. Payment of Taxes. The Company shall from time to time promptly
pay all taxes and charges that may be imposed upon the Company in connection
with the issuance or delivery of
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Common Shares upon the exercise of Warrants, but the Company shall not be
required to pay any transfer taxes in connection with the Warrants or shares.
6.02. Modification of Agreement. Without the consent or concurrence of
the holders of the Warrants, the Company may by supplemental agreement or
otherwise make any changes or corrections in this Agreement that it is advised
by counsel (who may be counsel for the Company) are required to cure any
ambiguity or to correct any defective or inconsistent provision or clerical
omission or mistake or manifest error contained herein.
6.03. Notices and Demands to Company and Warrant Agent. Any notice or
demand to be given or made by the Company or by the holder of any Warrant shall
be sufficiently given or made if sent by certified or registered mail, postage
prepaid, addressed to the Company at its principal office or to the holder of
any Warrant at the address registered with the Company.
6.04. Applicable Law. The validity, interpretation and performance of
this Agreement and of the Warrants shall be governed by the laws of the State of
Delaware, without regard to the principles or provisions thereof regarding
conflicts of laws.
6.05. Persons Having Rights Under This Agreement. Nothing expressed in
this Agreement and nothing that may be implied from any of the provisions hereof
is intended, or shall be construed, to confer upon, or give to, any person or
corporation other than the Company and the holders of the Warrants any right,
remedy or claim under or by reason of this Agreement or of any covenant,
conditions, stipulation, promise or agreement contained herein, and all
covenants, conditions, stipulations, promises and agreements contained herein
shall be for the sole and exclusive benefit of the Company and its successors
and assigns and of the holders of the Warrants.
6.06. Examination of Agreement. A copy of this Agreement shall be
available at all reasonable times at the office of the Company for inspection by
the holder of any Warrant. The Company may require the holder seeking inspection
to submit the Warrant for inspection by it.
6.07. Effect of Headings. The article and section headings in this
Agreement are for convenience only and are not part of this Agreement and shall
not affect the interpretation hereof.
WITNESS the signature of an authorized representative of the Company as of
the day first above written.
Xxxx Technology, Inc.
By: /s/
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Title:
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