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EXHIBIT 4.1
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WARRANT AGREEMENT
BETWEEN
XXXXX.XXX, INC.
AND
GENMAR HOLDINGS, INC.
DATED AS OF APRIL 26, 2000
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TABLE OF CONTENTS
Page
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SECTION 1. Warrant Certificates..........................................................................1
SECTION 2. Execution of Warrant Certificates.............................................................1
SECTION 3. Registration..................................................................................2
SECTION 4. Legend; Exchange..............................................................................2
SECTION 5. Warrants; Exercise of Warrants................................................................4
SECTION 6. Payment of Taxes..............................................................................6
SECTION 7. Mutilated or Missing Warrant Certificates.....................................................6
SECTION 8. Reservation of Warrant Shares; Representations and Warranties; Covenants......................6
(a) Reservation of Warrant Shares..........................................................6
(b) Representations and Warranties of the Company..........................................7
(c) Representations and Warranties of the Holder...........................................7
(d) Covenants of the Company...............................................................8
SECTION 9. Adjustment Provisions.........................................................................8
(a) Stock Dividends........................................................................8
(b) Combination of Stock...................................................................8
(c) Reorganization.........................................................................8
(d) Exercise Price Adjustment..............................................................9
SECTION 10. No Impairment.................................................................................9
SECTION 11. Fractional Interests..........................................................................9
SECTION 12. No Rights as Shareholders....................................................................10
SECTION 13. Registration Rights..........................................................................10
(a) Demand Registration...................................................................10
(b) Piggy-Back Registrations..............................................................11
(c) Registration Procedures...............................................................12
(d) Indemnification.......................................................................14
(e) Certain Definitions...................................................................17
(f) Requirements for Participation in Underwritten Offerings..............................19
SECTION 14. Notices to Company and Holder................................................................19
(i)
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SECTION 15. Board Observer Rights........................................................................19
SECTION 16. Amendments...................................................................................20
SECTION 17. Successors and Assigns.......................................................................20
SECTION 18. Termination..................................................................................20
SECTION 19. Governing Law................................................................................20
SECTION 20. Benefits of This Agreement...................................................................21
SECTION 21. Counterparts.................................................................................21
EXHIBIT A - Form of Warrant Certificate
SCHEDULE I - Partial Tranche B Closing
(ii)
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THIS WARRANT AGREEMENT, dated as of April 26, 2000 (this "AGREEMENT"),
is made by and between Xxxxx.xxx, Inc., a Florida corporation (the "COMPANY"),
and Genmar Holdings, Inc., a Delaware corporation (the "HOLDER").
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated
as of March 2, 2000, among the Company, the Holder and certain other parties
(the "PURCHASE AGREEMENT"), the Holder purchased Series A1 Convertible Preferred
Stock of the Company ("PREFERRED STOCK") and was granted certain registration
rights with respect to such Preferred Stock pursuant to a Registration Rights
Agreement, dated as of March 2, 2000, among the Company and the parties to the
Purchase Agreement (the "REGISTRATION RIGHTS AGREEMENT");
WHEREAS, the Company and the Holder have entered into that certain
Strategic Relationship Agreement, dated of even date herewith (the "STRATEGIC
RELATIONSHIP AGREEMENT"), pursuant to which the Holder will utilize certain
electronic commerce systems developed and operated by the Company;
WHEREAS, in connection with the Strategic Relationship Agreement, from
which the Company derives direct and substantial benefit, the Company proposes
to issue Warrants to the Holder (the "WARRANTS"), to purchase up to a maximum of
2,956,448 shares of Common Stock, par value $.01 per share (the "COMMON STOCK")
of the Company, subject to adjustment as provided herein (the Common Stock
issuable on exercise of the Warrants being referred to herein as the "WARRANT
SHARES") and subject to the terms and conditions herein.
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements, covenants and conditions hereinafter set forth, the parties hereto
mutually agree as follows:
SECTION 1. WARRANT CERTIFICATES. The certificates evidencing the
Warrants the "WARRANT CERTIFICATES") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the form set
forth as EXHIBIT A attached hereto.
SECTION 2. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates
shall be executed on behalf of the Company by its Chairman of the Board or its
Chief Executive Officer or its President or a Vice President and by its Chief
Financial Officer, Secretary or an Assistant Secretary under its corporate seal.
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the present or any future Chairman of the Board, Chief
Executive Officer, President, Vice President, Chief Financial Officer, Secretary
or Assistant Secretary and may be imprinted or otherwise reproduced on the
Warrant Certificates and for this purpose the Company may adopt and use the
facsimile signature of any person who shall have been Chairman of the Board,
Chief Executive Officer, President, Vice President, Chief Financial Officer,
Secretary or Assistant Secretary, notwithstanding the fact that at the time the
Warrant Certificates shall be delivered or disposed of he or she shall have
ceased to hold such office. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
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In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company, and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 3. REGISTRATION. The Company shall number and register the
Warrant Certificates in a register (the "WARRANT REGISTER") as they are issued.
The Company shall act as the registrar for the Warrants. The Company may deem
and treat the registered holder of the Warrant Certificates as the absolute
owner thereof (notwithstanding any notation of ownership or other writing
thereon to the contrary made by anyone), for all purposes, and the Company shall
not be affected by any notice to the contrary.
SECTION 4. LEGEND; EXCHANGE.
(a) Unless the Warrant Shares have been registered under the Securities
Act, upon exercise of the Warrants and the issuance of any Warrant Shares, all
Warrant Certificates and certificates representing such securities shall bear
substantially the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, UNLESS THE COMPANY HAS
RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER
DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS."
The Warrant Shares shall not contain the legend set forth above (or any
other legend) (i) at any time while a registration statement is effective under
the Securities Act covering such security, (ii) if, in the written opinion of
counsel to the Company experienced in the area of United States securities laws,
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission) or (iii) if such Warrant Shares may be sold pursuant to Rule
144. The Company agrees that it will provide Holder, upon request, with a
certificate or certificates representing the Warrant Shares, free from such
legend at such time as such legend is no longer required
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hereunder. If such certificate or certificates had previously been issued with
such a legend or any other legend, the Company shall, upon request and delivery
of such certificate or certificates to the Company by the Holder, reissue to
Holder such certificate or certificates free of any legend.
(b) Warrant Certificates may be exchanged at the option of the Holder,
when surrendered to the Company at its office for another Warrant Certificate or
other Warrant Certificates of like tenor and representing in the aggregate a
like number of Warrants. Warrant Certificates surrendered for exchange shall be,
upon issuance of the new Warrant Certificates, canceled and disposed of by the
Company.
(c) The Company may not make any notation on its records or give
instructions to any transfer agent of the Company which enlarge the restrictions
on transfer set forth herein, except as required by law.
(d) As long as the Holder owns the Warrant Shares, if the Company is
not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange
Act, it will prepare and furnish to the Holder and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act annual and
quarterly financial statements, together with a discussion and analysis of such
financial statements in form and substance substantially similar to those that
would otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act. As long as the Holder owns the Warrant Shares during any
time when the Company is required to register its Common Stock under Section
12(b) or Section 12(g) of the Exchange Act or to file reports pursuant to
Section 13, 14, or 15(d) of the Exchange Act, then the Company will cause the
Common Stock to continue at all times to be registered under Section 12(b) or
Section 12(g) of the Exchange Act, will timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13, 14 or 15(d) of the Exchange Act and promptly furnish, but in no event later
than two (2) business days after the filing thereof with the Commission, the
Holder with true and complete copies of all such filings (unless filed by XXXXX,
in which case Company shall only provide written notice of such filing to the
Holder), and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such reporting and filing obligations and will make and keep public information
available, as those terms are defined in Rule 144. The Company further covenants
that it will take such further action the Holder may reasonably request, all to
the extent required from time to time to enable the Holder to sell the Warrant
Shares, without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act.
(e) Upon exercise of the Warrants, the Company shall issue instructions
to its transfer agent (and shall issue to any subsequent transfer agent as
required), to issue certificates, registered in the name of the Holder, for the
Warrant Shares in such amounts as specified from time to time by the Holder to
the Company in a form acceptable to the Holder (the "TRANSFER
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AGENT INSTRUCTIONS"). The Company warrants that, except as otherwise required by
law, no instruction other than the Transfer Agent Instructions referred to in
this Section 4(e) (in the case of the Warrant Shares, prior to registration of
the Warrant Shares under the Securities Act) will be given by the Company to its
transfer agent and that the Warrant Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder by violating the
intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 4(e) will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 4(e), that
the Holder shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer without the necessity of showing economic loss and without any bond
or other security being required.
SECTION 5. WARRANTS; EXERCISE OF WARRANTS. The Warrants shall vest and
become exercisable (at an initial exercise price per Warrant Share equal to
$1.83), and Warrant Certificates shall be issued only, in increments as follows:
(a) with respect to 1,442,081 shares of Common Stock, immediately
upon execution of this Agreement by the Company and Holder;
and
(b) with respect to 1,514,367 shares of Common Stock, (i) only if
the Second Closing Date for the Tranche B Shares in the amount
of $22 million (as each term is defined in the Purchase
Agreement) occurs, such event hereinafter referred to as the
"FULL TRANCHE B CLOSING," and (ii) only if the Holder
participates in such Full Tranche B Closing in an amount not
less than $1,000,000, in accordance with the provisions of the
Purchase Agreement; except that if the Full Tranche B Closing
does not occur but the Company is able to sell a portion of
the Tranche B Shares in accordance with the terms of the
Purchase Agreement, such event hereinafter referred to as the
"PARTIAL TRANCHE B CLOSING," and the Holder participates in
such Partial Tranche B Closing in an amount not less than
$1,000,000, in accordance with the provisions of the Purchase
Agreement, then the 1,514,367 shares of Common Stock referred
to above shall be reduced by that number indicated in the
second column on SCHEDULE I attached hereto corresponding to
the total amount of the Partial Tranche B Closing; PROVIDED,
that, if 100% of the Preferred Stock is converted in
accordance with the terms of the Purchase Agreement, Company
shall issue a Warrant to the Holder with respect to 783,539
shares of Common Stock upon such conversion and the balance of
the Warrant with respect to 730,828 shares of Common Stock
upon the earlier of (x) the closing of the Company's first
Underwritten Offering (as such term is defined in the
Registration Rights Agreement) or (y) twelve (12) months from
the date of this Agreement; PROVIDED, FURTHER, that in the
absence of any such conversion of the Preferred Stock, any
Warrants issued pursuant to this Section 5(b) shall only be
issued upon the earlier of (x) the closing of the Company's
first Underwritten
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Offering (as such term is defined in the Registration Rights
Agreement) or (y) twelve (12) months from the date of this
Agreement.
The Company shall issue a Warrant Certificate to the Holder only as
described above. Subject to the terms of this Agreement, the Holder shall have
the right, which may be exercised commencing at the opening of business on the
date the Company delivers Warrants to the Holder and until the earlier of (i)
February 14, 2005, (ii) three years from the closing of the Company's first
Underwritten Offering (as such term is defined in the Registration Rights
Agreement) or (iii) thirty (30) days from the date on which the Strategic
Relationship Agreement is terminated for any reason (any of such dates being the
"EXPIRATION DATE"), to receive from the Company the number of fully paid and
nonassessable Warrant Shares which the Holder may at the time be entitled to
receive on exercise of such Warrants and payment of the Exercise Price then in
effect for such Warrant Shares; PROVIDED that at no time shall the Holder
exercise any Warrants if such exercise will result in the Holder holding in
excess of 19.9% of the outstanding Common Stock of the Company EXCEPT
simultaneously upon the occurrence of a Change in Control (as such term is
defined in Section 13(e) herein).
Each Warrant not exercised by the Expiration Date shall become void and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease as of such time.
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 14
hereof) of the Warrant Certificate (or Warrant Certificates, as the case may be)
to be exercised together with the form of election to exercise attached as ANNEX
I to the Warrant Certificate attached hereto as EXHIBIT A, duly filled in and
signed by the Holder, and upon payment to the Company of the exercise price (the
"EXERCISE PRICE") which is set forth in the form of Warrant Certificate attached
hereto as EXHIBIT A, as adjusted as herein provided, for the number of Warrant
Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made in cash or by certified or official bank
check to the order of the Company.
Subject to the provisions of Section 6, upon such surrender of Warrants
and payment of the Exercise Price, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Holder may designate, a stock
certificate or stock certificates for the number of full Warrant Shares issuable
upon the exercise of such Warrants together with cash as provided in Section 11.
Such stock certificate or stock certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a Holder of record of such Warrant Shares as of the date of the surrender of
such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the Holder,
either in full or from time to time in part (provided that Warrants shall be
exercisable in multiples of ten thousand (10,000) Warrants unless all of the
Warrants evidenced by a particular Warrant Certificate are being exercised) and,
in the event that a Warrant Certificate is exercised in respect of fewer than
all of the Warrant Shares issuable on such exercise at any time prior to the
date of expiration of the
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Warrants, a new Warrant Certificate evidencing the remaining Warrant or Warrants
will be issued and delivered pursuant to the provisions of this Section 5 and of
Section 2.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holder during normal business hours at its office.
SECTION 6. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the reasonable satisfaction
of the Company that such tax has been paid.
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon surrender
of the mutilated Warrant Certificate or upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such Warrant
Certificate, and indemnity, if requested, reasonably satisfactory to the
Company.
SECTION 8. RESERVATION OF WARRANT SHARES; REPRESENTATIONS AND
WARRANTIES; COVENANTS.
(a) RESERVATION OF WARRANT SHARES. The Company will at all times
reserve a sufficient number of shares of its authorized but unissued Common
Stock to provide for 100% of the full exercise of the outstanding Warrants. If
at any time the number of shares of Common Stock authorized and reserved for
issuance is insufficient to cover 100% of the number of Warrant Shares issued
and issuable upon exercise of the Warrant without regard to any limitation on
conversions, the Company will promptly take all corporate action necessary to
authorize and reserve 100% of such shares including, without limitation, calling
a special meeting of stockholders to authorize additional shares to meet the
Company's obligations under this Section 8(a), in the case of an insufficient
number of authorized shares, and using its commercially reasonable efforts to
obtain stockholder approval of an increase in such authorized number of shares.
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(b) REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(1) ORGANIZATION; POWERS. The Company (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite corporate power and authority to own its
property and assets and to carry on its business as now conducted, (iii) is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where the failure so to qualify
could not reasonably be expected to result in any material adverse change in, or
the occurrence of any event which would be likely to have a material adverse
effect on, the business, financial condition, operations, assets, prospects or
results of operations of the Company ("MATERIAL ADVERSE EFFECT") and (iv) has
the power and authority to execute, deliver and perform its obligations under
this Agreement and the Warrant Certificate and each other agreement or
instrument contemplated hereby or thereby.
(2) CAPITALIZATION. As of March 2, 2000, (i) the Company's
authorized capital stock consisted of 25,000,000 shares of Common Stock and
1,000,000 shares of preferred stock, 420,000 of which were designated as shares
of Series A1 Preferred Stock and the remainder of which were undesignated; (ii)
the Company had a total of 6,423,806 shares of Common Stock issued and
outstanding and no shares of Preferred Stock were issued and outstanding; and
(iii) the Company had outstanding in total options to purchase an aggregate of
2,531,700 shares of Common Stock and warrants to purchase an aggregate of
409,971 shares of Common Stock. As of the date hereof, (i) the Company's
authorized capital stock consists of 25,000,000 shares of Common Stock and
1,000,000 shares of preferred stock, 430,000 of which have been designated as
shares of Series A1 Preferred Stock and the remainder of which are undesignated;
(ii) the Company has a total of 6,423,806 shares of Common Stock and 210,000
shares of Preferred Stock issued and outstanding; and (iii) the Company has
outstanding in total options to purchase an aggregate of 2,701,200 shares of
Common Stock and warrants to purchase an aggregate of 409,971 shares of Common
Stock.
(c) REPRESENTATIONS AND WARRANTIES OF THE HOLDER.
(1) ORGANIZATION; POWERS. The Holder (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and (ii) has the power and authority to execute, deliver and
perform its obligations under this Agreement.
(2) DUE AUTHORIZATION AND ENFORCEABILITY. This Agreement (i)
has been or will be duly authorized, executed and delivered by the Holder, and
(ii) constitute or will constitute valid and binding obligations of the Holder
enforceable against the Holder in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforceability of creditors'
rights generally and by general principles of equity (whether arising under a
proceeding at law or in equity).
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(3) INVESTMENT INTENT. The Holder represents and warrants to
the Company that it is an "accredited investor" within the meaning of Regulation
501(a) under the Securities Act and the Warrants to be acquired by it pursuant
to this Agreement are being, and the Warrant Shares will be, acquired for its
own account and without a view to, or for resale in connection with, any
distribution thereof or any interest therein; PROVIDED, HOWEVER, that by making
the representations herein, the Holder does not agree to hold the Warrant or the
Warrant Shares for any minimum or other specific term and reserves the right to
dispose of the Warrant and the Warrant Shares at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.
(d) COVENANTS OF THE COMPANY. The Company covenants that all Warrant
Shares which may be issued upon exercise of Warrants will, upon issue, be fully
paid, nonassessable, free of preemptive rights and free from all taxes, liens,
charges and security interests other than those attributable to the Holder.
SECTION 9. ADJUSTMENT PROVISIONS. Subject to the provisions of this
Section 9, the Exercise Price and the number of Warrant Shares issuable upon
exercise of the Warrants in effect from time to time shall be subject to
adjustment, as follows:
(a) STOCK DIVIDENDS. If at any time after the date hereof (i) the
Company shall declare or pay a stock dividend payable in shares of Common Stock
or (ii) the number of shares of Common Stock shall have been increased by a
subdivision or split-up of shares of Common Stock, then the number of Warrant
Shares to be delivered upon exercise of the Warrants shall be increased so that
the Holder will be entitled to receive the number of Warrant Shares that the
Holder would have owned had the Warrants been exercised immediately prior to
such dividend payment, subdivision or split-up, and the Exercise Price shall be
adjusted as provided for in subsection (d) of this Section 9.
(b) COMBINATION OF STOCK. If the number of shares of Common Stock
outstanding at any time after the date of the issuance of the Warrants shall
have been decreased by a combination or reverse split of the outstanding shares
of Common Stock, then the number of Warrant Shares to be delivered upon exercise
of the Warrants will be decreased so that the Holder thereafter shall be
entitled to receive the number of Warrant Shares that the Holder would have
owned had the Warrants been exercised immediately prior to such combination or
reverse split, and the Exercise Price shall be adjusted as provided for in
subsection (d) of this Section 9.
(c) REORGANIZATION. If any capital reorganization of the Company, or
any reclassification of its common stock, or any consolidation of the Company
with or merger of the Company with or into any other person or any sale, lease
or other transfer of all or substantially all of the assets of the Company to
any other person, shall be effected, then, upon exercise of the Warrants the
Holder shall have the right to receive the kind and amount of cash, stock, other
securities or assets receivable upon such reorganization, reclassification,
consolidation, merger or sale, lease or other transfer by a holder of the number
of shares of Common Stock that the Holder would have been entitled to receive
upon exercise of the Warrants had they been exercised
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immediately before such reorganization, reclassification, consolidation, merger
or sale, lease or other transfer. Concurrently with the consummation of any such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or conveyance
shall have been made, shall enter into a supplemental Warrant Agreement with the
Holder so providing and further providing for adjustments which shall be nearly
as equivalent as may be practical to the adjustments provided for in this
Section 9.
(d) EXERCISE PRICE ADJUSTMENT. (i) Whenever the number of Warrant
Shares purchasable upon the exercise of the Warrant(s) is adjusted as provided
pursuant to this Section 9, the Exercise Price payable upon the exercise of the
Warrant(s) shall be adjusted by multiplying such Exercise Price immediately
prior to such adjustment by a fraction, of which the numerator shall be the
number of Warrant Shares purchasable upon the exercise of the Warrant(s)
immediately prior to such adjustment, and of which the denominator shall be the
number of Warrant Shares purchasable immediately thereafter; PROVIDED, HOWEVER,
that the Exercise Price for each Warrant Share shall in no event be less than
the par value of such Warrant Share.
(ii) Whenever the Exercise Price is adjusted pursuant to this Section 9
the Company shall promptly deliver to the Holder a notice setting forth the
Exercise Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Such notice shall be signed by the Chairman,
Chief Executive Officer, President or Chief Financial Officer of the Company.
SECTION 10. NO IMPAIRMENT. The Company will not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants, but will at all times in reasonable good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder against impairment. Without limiting the generality of the foregoing, the
Company (i) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock on the exercise of the Warrants from time
to time outstanding and (ii) will not take any action which results in any
adjustment of the Exercise Price if the total number of Warrant Shares issuable
after the action upon the exercise of all of the Warrants would exceed the total
number of shares of Common Stock then authorized by the Company's certificate of
incorporation and available for the purposes of issue upon such exercise.
SECTION 11. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If any fraction of
a Warrant Share would be issuable on the exercise of any Warrants (or specified
portion thereof), the Company shall pay an amount in cash equal to the Per Share
Market Value on the last trading day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction.
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SECTION 12. NO RIGHTS AS SHAREHOLDERS. Nothing contained in this
Agreement or in any of the Warrant Certificates shall be construed as conferring
upon the Holder the right to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as a
shareholder of the Company.
SECTION 13. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION.
(1) REQUEST FOR REGISTRATION. At any time after six (6) months
from the date of this Agreement, the Holder may make a written request for
registration under the Securities Act ("DEMAND REGISTRATION") of all or part of
its Registrable Securities; PROVIDED that the Company shall not be obligated to
effect more than two (2) Demand Registrations in respect of the Registrable
Securities or any registration statement during any period in which any other
registration statement (other than on Form S-4 or S-8 promulgated under the
Securities Act or any substitute form that may be adopted by the SEC) has been
filed and not withdrawn or has been declared effective within the prior 180 days
and PROVIDED, FURTHER that Company shall have the right to file such
registration statement on Form S-3 (or any successor form) if available and if
not available, on any other form (other than on Form S-4 or S-8 promulgated
under the Securities Act or any substitute form that may be adopted by the SEC)
prescribed by the SEC. Such request for a Demand Registration will specify the
aggregate amount of Registrable Securities proposed to be sold, the intended
method of disposition thereof and the form of registration statement selected by
the Holder. Company shall use its reasonable efforts to promptly effect the
registration of such Registrable Securities under the Securities Act, and
Company shall use its reasonable efforts to keep such registration statement
continuously effective until the date that is eighteen months from date such
registration is declared effective by the SEC or such earlier date when all
Registrable Securities covered by such registration statement have been sold or
may be sold pursuant to Rule 144(k) under the Securities Act. Notwithstanding
the foregoing, no Demand Registration shall be required to be effected with
respect to any Registrable Securities that are then eligible for resale pursuant
to Rule 144(k) under the Securities Act.
If the Company is requested to effect a Demand Registration and the
Company furnishes to the Holders of Registrable Securities requesting such
registration a copy of a resolution of the Company's Board of Directors
certified by the Company's Secretary stating that in the good faith judgment of
the Board it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed on or before the date such filing
would otherwise be required hereunder, the Company shall have the right to defer
such filing for a period of not more than 180 days after receipt of the request
for such registration from the Holder or Holders of Registrable Securities
requesting such registration; PROVIDED, HOWEVER that Company may exercise such
right no more than one (1) time in any twelve-month period.
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Company shall pay all Registration Expenses in connection with the
registration of Registrable Securities pursuant to a Demand Registration,
PROVIDED that the Holder shall pay any additional expenses incurred by Company
if Company is required to file the registration statement on a form other than
Form S-3 (or any successor form).
(2) EFFECTIVE REGISTRATION. A registration will not count as a
Demand Registration until it has become effective under the Securities Act
(unless such registration is withdrawn at the request of the Holder).
(b) PIGGY-BACK REGISTRATIONS. Except as provided herein if, at any time
when there is not an effective Registration Statement covering the Registrable
Securities, the Company shall determine to prepare and file with the Commission
a registration statement pursuant to an Underwritten Offering (as such term is
defined in the Registration Rights Agreement) relating to an offering for its
own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to the Holder written notice of such
determination and, if within ten (10) days after receipt of such notice, the
Holder shall so request in writing, (which request shall specify the Registrable
Securities intended to be disposed of by the Holder), the Company will use
reasonable efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Holder, to the extent requisite to permit the disposition 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 Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to the 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 expenses in accordance with this section), and
(ii) in the case of a determination to delay registering, shall be permitted to
delay registering any Registrable Securities being registered pursuant to this
Section 13(b) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or any
part of such Registrable Securities the Holder requests to be registered;
PROVIDED, that the Holder shall not have the piggy-back rights described in this
Section 13(b) in connection with the Company's registration of the Preferred
Stock pursuant to the Initial Registration Statement (as such term is defined in
the Registration Rights Agreement) and PROVIDED, FURTHER that the Company shall
not be required to register any of the Registrable Securities pursuant to this
Section 13(b) that are eligible for sale pursuant to Rule 144(k) of the
Securities Act. In the case of an Underwritten Offering, if the managing
underwriter(s) or underwriter(s) should reasonably object to the inclusion of
the Registrable Securities in such registration statement, then if the Company
after consultation with the underwriter's representative should reasonably
determine that the inclusion of such Registrable Securities
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would materially adversely affect the offering contemplated in such registration
statement, and based on such determination recommends inclusion in such
registration statement of fewer Registrable Securities than proposed to be sold
by the Holder, then (x) the number of Registrable Securities of the Holder
included in such registration statement shall be reduced pro rata to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such management underwriter or
underwriters (based upon the number of Registrable Securities requested to be
included in the registration) or (y) none of the Registrable Securities of the
Holder shall be included in such registration statement if the Company, after
consultation with the underwriter(s), recommends the inclusion of none of such
Registrable Securities; PROVIDED, HOWEVER, that if securities are being offered
for the account of other Persons as well as the Company, such reduction shall
not represent a greater fraction of the number of Registrable Securities
intended to be offered by the Holder than the fraction of similar reductions
imposed on such other Persons (other than Company).
Company shall pay all Registration Expenses in connection with the
registration of Registrable Securities.
(c) REGISTRATION PROCEDURES.
In connection with the Company's registrations obligations hereunder,
the Company shall:
(1) prepare and file with the SEC a registration statement
with respect to such securities, make all required filings with the National
Association of Securities Dealers, Inc. ("NASD") and use reasonable efforts to
cause such registration statement to become effective;
(2) prepare and file with the SEC 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 set forth in
such registration statement;
(3) furnish to counsel (if any) of the Holder copies of all
documents proposed to be filed with the SEC in connection with such
registration, which documents will be subject to the review of such counsel;
(4) furnish to each seller of such securities such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies
of the prospectus included in such registration statement (including such
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such seller may
reasonably request in order to facilitate the disposition of the securities
owned by such seller;
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(5) use reasonable efforts to register or qualify such
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as each seller shall reasonably request in
writing, and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the Company
shall not for any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction wherein it is not so qualified or
to take any action which would subject it to general service of process in any
such jurisdiction where it is not then so subject;
(6) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, (i) of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, or (ii) if the Company is in possession of material information that
it deems advisable not to disclose in a registration statement, and at the
request of any such seller 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 so that, as thereafter delivered to 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 light of the circumstances then existing;
(7) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months, but not more than eighteen (18) months,
beginning with the first month after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act; and
(8) use reasonable efforts to list such securities on any
securities exchange on which the Common Stock is then listed, if such securities
are not already so listed and if such listing is then permitted under the rules
of such exchange, and to provide a transfer agent and registrar for such
Registrable Securities not later than the effective date of such registration
statement.
The Company may require each seller of any securities as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such seller agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Subject to the last sentence of this paragraph, the Company may by
written notice require that the Holder immediately cease sales of Registrable
Securities (for a period not to exceed twenty (20) consecutive days in any one
instance and for a period not to exceed
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sixty (60) calendar days in any twelve-month period) pursuant to a registration
statement at any time that (i) the Company becomes engaged in a business
activity or negotiation which is not disclosed in a registration statement (or
the prospectus included therein) which the Company reasonably believes must be
disclosed therein under applicable law and which the Company desires to keep
confidential for business purposes, (ii) the Company determines that a
particular disclosure so determined to be required to be disclosed therein would
be premature or would adversely affect the Company or its business or prospects
or (iii) the registration statement can no longer be used under the existing
rules and regulations promulgated under the Securities Act (each of (i), (ii) or
(iii), a "MATERIAL CONDITION"). The Company shall not be required to disclose to
the Holders which of the reasons specified in (i), (ii) or (iii) above is the
basis for requiring a suspension of sales due to the occurrence of a Material
Condition. The Company will use its commercially reasonable best efforts to
ensure that the use of the registration statement (and the prospectus included
therein) may be resumed as soon as it is practicable.
(d) INDEMNIFICATION
(1) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
Holder, the officers, directors, agents, brokers (including brokers who offer
and sell Registrable Securities as principal as a result of a pledge or any
failure to perform under a margin call of Common Stock), investment advisors and
employees of Holder, each Person who controls Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
joint or several losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, together with Proceedings by any regulatory or self-regulatory
organization, whether commenced or threatened, "LOSSES"), as incurred, arising
out of or relating to (i) any untrue or alleged untrue statement of a material
fact contained in any registration statement, any prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any prospectus or form of prospectus or
amendment or supplement thereto, in light of the circumstances under which they
were made) not misleading, except to the extent, but only to the extent, that
such untrue statements or omissions are based solely upon and in conformity with
information regarding Holder furnished in writing to the Company by Holder
expressly for use therein, which information was reasonably relied on by the
Company for use therein or to the extent that such information relates to Holder
or Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by Holder expressly for use in such
registration statement, such prospectus or such form of prospectus or in any
amendment or supplement thereto (PROVIDED that the Company amended any
disclosure with respect to the method of distribution upon written notice from
Holder that such section of the prospectus should be revised in any way) or (ii)
any violation or alleged violation by the
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Company of the Securities Act, the Exchange Act, any other law, including,
without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of Registrable Securities. The Company
shall not, however, be liable to Holder for any Losses with respect to any
untrue or alleged untrue statement of material fact or omission or alleged
omission of material fact if such statement or omission was made in a
preliminary prospectus and Holder did not receive a copy of the final prospectus
(or any amendment or supplement thereto) at or prior to the confirmation of the
sale of the Registrable Securities in any case where such delivery is required
by the Securities Act and the untrue or alleged untrue statement of material
fact or omission or alleged omission of material fact contained in such
preliminary prospectus was corrected in the final prospectus (or any amendment
or supplement thereto), unless the failure to deliver such final prospectus (as
amended or supplemented) was a result of noncompliance by the Company with
Section 13(c)(4) of this Agreement. The Company shall notify Holder promptly of
the institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.
(2) INDEMNIFICATION BY HOLDER. Holder shall indemnify and hold
harmless the Company, its officers, directors, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the officers, directors, agents and
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, arising solely out of
or based solely upon any untrue statement of a material fact contained in any
registration statement, any prospectus, or any form of prospectus, or arising
solely out of or based solely upon any omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by Holder to the Company
specifically for inclusion in such registration statement or such prospectus and
that such information was reasonably relied upon by the Company for use in such
registration statement, such prospectus or such form of prospectus or to the
extent that such information relates to Holder or Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by Holder expressly for use in such registration statement, such
prospectus or such form of prospectus; PROVIDED, HOWEVER, that the indemnity
agreement contained in this Section 13(d)(2) shall not apply to amounts paid in
settlement of any Losses if such settlement is effected without the prior
written consent of Holder. In no event shall the liability of the Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by Holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
(3) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
PROVIDED,
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HOWEVER, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Indemnified Parties unless: (i) the Indemnifying Party has agreed in writing to
pay such fees and expenses; (ii) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the reasonable
expense of the Indemnifying Party). The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party, which notice
shall be delivered no more frequently than on a monthly basis (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; PROVIDED, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(4) CONTRIBUTION. If a claim for indemnification under Section
13(d)(1) or 13(d)(2) is unavailable to an Indemnified Party because of a failure
or refusal of a court of competent jurisdiction to enforce such indemnification
in accordance with its terms (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations.
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The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 13(d)(3), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms. In no event shall Holder be required to
contribute an amount under this Section 13(d)(4) in excess of the net proceeds
received by Holder upon sale of the Registrable Securities pursuant to any
registration statement giving rise to such contribution obligation.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 13(d)(4) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person 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.
The indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
(e) CERTAIN DEFINITIONS.
(1) The term "CHANGE OF CONTROL" shall mean the occurrence of
any of (i) any acquisition or series of related acquisitions after the date
hereof by any Person or "group" (as described in Rule 13d-5(b)(1) promulgated
under the Exchange Act), of in excess of 50% of the voting power of Company,
(ii) the merger or consolidation of the Company with or into another Person,
unless the holders of the Company's securities immediately prior to such
transaction or series of related transactions continue to hold at least 50% of
such securities following such transaction or series of related transactions or
(iii) a sale, conveyance, lease, transfer or disposition of all or substantially
all of the assets of the Company, in one or a series of related transactions.
(2) The term "EXCHANGE ACT" shall mean the Securities Exchange
Act of 1934, as amended.
(3) The term "NATIONAL MARKET" shall mean the NASDAQ National
Market, the NASDAQ SmallCap Market, the New York Stock Exchange and the American
Stock Exchange.
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(4) The term "PER SHARE MARKET VALUE" shall mean on any
particular date (i) the closing bid price per share of the Common Stock on such
date on (a) the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. (the "OTCBB"), as reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its function of
reporting prices) or (b) on the National Market on which the Common Stock is
then listed or quoted, or, if there is no such price on such date, then the
closing bid price on such exchange or quotation system on the date nearest
preceding such date, or (ii) if the Common Stock is not then listed or quoted on
the OTCBB or any National Market, the fair market value of a share of Common
Stock as determined by the Company's Board of Directors in good faith.
(5) The term "PERSON" shall mean an individual or a
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or political subdivision thereof) or other entity of any kind.
(6) The term "PROCEEDING" shall mean an action, claim, suit,
arbitration, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.
(7) The term "REGISTRABLE SECURITIES" shall mean the Warrant
Shares and shall include any shares of the Company's capital stock issued with
respect to the Warrant Shares as a result of any stock split, stock dividend,
recapitalization or otherwise. As to any particular Registrable Securities, once
issued, such securities shall cease to be Registrable Securities when (A) they
have been registered under the Securities Act, a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (B) they shall have been sold or distributed,
or, in the opinion of counsel to the Company, may be sold or distributed, to the
public pursuant to Rule 144(k) (or any successor provisions) under the
Securities Act, (C) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered to the transferee and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any similar
state law then in force, or (D) they shall have ceased to be outstanding.
(8) The term "REGISTRATION EXPENSES" shall mean all expenses
incident to the Company's performance of or compliance with Section 13,
including, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to any National Market on
which Registrable Securities are required hereunder to be listed or quoted and
(B) in compliance with state securities or Blue Sky laws, (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriters, if any), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other persons
retained by the Company in connection with the
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consummation of the transactions contemplated by this Agreement. In addition,
the Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange, system or
market as required hereunder. The Holder shall pay any underwriting discounts or
commissions and any transfer or similar taxes in connection with the sale of
Registrable Securities.
(9) The term "SECURITIES ACT" shall mean the Securities Act of
1933, as amended.
(f) REQUIREMENTS FOR PARTICIPATION IN UNDERWRITTEN OFFERINGS. The
Holder may not participate in any underwritten offering pursuant to a
registration hereunder unless the Holder agrees to sell its securities on the
basis provided in any underwriting arrangements approved by the Holder.
SECTION 14. NOTICES TO COMPANY AND HOLDER. Any notice or demand
authorized by this Agreement to be given or made by the Holder or on the Company
shall be deemed to have been delivered (i) upon receipt, when delivered
personally, (ii) upon receipt, when sent by facsimile (if received on or before
5:00 p.m. Eastern Time where such notice is received) or (iii) the first
Business Day (defined as any day except Saturday, Sunday or any day which shall
be a legal holiday or a day on which banking institutions in the State of
Florida generally are authorized or required by law or other government action
to close) following such delivery, PROVIDED that confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party
and such delivery is also made in accordance with clause (iii) hereof or (iii)
one (1) Business Day after deposit with a nationally recognized overnight
courier, addressed to the office of the Company expressly designated by the
Company at its office for purposes of this Agreement (until the Holder is
otherwise notified in accordance with this Section 14 by the Company), as
follows:
Xxxxx.xxx, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Kenbian Ng
Any notice pursuant to this Agreement to be given by the Company to the Holder
shall be deemed to have been delivered when delivered in accordance with any of
subparagraphs (i), (ii) and (iii) above, addressed to the Holder at the address
appearing on the Warrant Register (until the Company is otherwise notified in
accordance with this Section 14 by the Holder).
SECTION 15. BOARD OBSERVER RIGHTS. At any time prior to the Expiration
Date, Holder shall have the right to appoint one (1) representative, subject to
the approval of the Company (which approval shall not be unreasonably withheld),
to attend each meeting of the Board of
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Directors of Company (the "Holder Board Observer"). The Holder Board Observer
shall not be entitled to vote in any such meeting. Company shall send to the
Holder Board Observer the notice of the time and place of each meeting of the
Board in the same manner and at the same time as it shall send such notice to
its directors. Company shall also provide to the Holder Board Observer copies of
all notices, reports, minutes and consents at the time and in the manner as they
are provided to its directors. The Holder Board Observer shall have no right to
(a) participate in discussions of the Board or receive information which the
Board in good faith determines to be attorney-client privileged communications,
(b) participate in Board discussions regarding, or receive information
concerning, confidential terms (such as prices, quantities or other confidential
sales terms) of Company's relationships with competitors of Holder or any of its
subsidiaries or (c) participate in Board discussions regarding Company's
commercial relationship with Holder or any of its subsidiaries. The Holder Board
Observer shall have no duties, responsibilities or liability by virtue of
attendance at any Board meetings or the failure to attend the same (except as
required under applicable law).
SECTION 16. AMENDMENTS. This Agreement and any term hereof may be
changed, waived, discharged, supplemented, or terminated only by an instrument
in writing signed by the party against which enforcement of such change, waiver,
discharge, supplement or termination is sought.
SECTION 17. SUCCESSORS AND ASSIGNS. All the covenants and provisions of
this Agreement by or for the benefit of the parties hereto shall bind and inure
to the benefit of their respective successors and assigns hereunder.
SECTION 18. TERMINATION. This Agreement shall terminate upon the
earlier of (i) February 14, 2005, (ii) three years from the closing of the
Company's first Underwritten Offering or (iii) thirty (30) days from the date on
which the Strategic Relationship Agreement is terminated for any reason.
Notwithstanding any provision of this Agreement, if the Strategic Relationship
Agreement shall be terminated for any reason, the Company shall no longer be
obligated to issue any additional Warrant Certificates to Holder and any rights
of Holder entitling it to additional Warrants and Warrant Certificates shall
cease. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date if all Warrants have been exercised; PROVIDED, HOWEVER, that (i)
Sections 13(d), 14 and 19 shall survive the termination of this Agreement and
(ii) the rights granted to the Holder pursuant to Sections 13(a) and 13(b)
hereof shall survive the termination of this Agreement for a period of two years
from the date upon which all Warrants have been exercised, but in no event later
than February 14, 2005.
SECTION 19. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF NEW YORK (BUT WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS
THEREOF WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION).
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SECTION 20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and the
registered Holder any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company and each registered Holder.
SECTION 21. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Signature Page Follows]
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[SIGNATURE PAGE OF WARRANT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
XXXXX.XXX
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
----------------------------------
Title: CEO and President
---------------------------------
GENMAR HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxx XX
-----------------------------------
Name: Xxxxx X. Xxxxxxxx XX
----------------------------------
Title: EVP and CFO
---------------------------------
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER
DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
No. _____
Issue Date:
Void After:
For ____ shares of Common Stock
WARRANT CERTIFICATE
XXXXX.XXX, INC.
This Warrant Certificate certifies that Genmar Holdings, Inc. or
registered assigns, is the registered holder of ________ Warrants (the
"WARRANTS") expiring upon the earlier of (i) February 14, 2005, (ii) three years
from the closing of the Company's first Underwritten Offering or (iii) thirty
(30) days from the date on which the Strategic Relationship Agreement is
terminated for any reason (the "EXPIRATION DATE") to purchase Common Stock, $.01
par value (the "COMMON STOCK"), of Xxxxx.xxx, Inc., a Florida corporation (the
"COMPANY"). The Warrants are issued or will be issued pursuant to a Warrant
Agreement dated as of April 26, 2000 (the "WARRANT AGREEMENT"), duly executed
and delivered by the Company, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the Holder of the Warrants. Capitalized
terms used herein shall have the meanings specified in the Warrant Agreement. A
copy of the Warrant Agreement may be obtained by the Holder hereof upon written
request to the Company.
Each Warrant entitles the holder upon exercise to receive from the
Company on or before the Expiration Date, one (1) fully paid and nonassessable
share of Common Stock (a "WARRANT SHARE") at an initial exercise price (the
"EXERCISE PRICE") per Warrant Share equal to $1.83, payable in lawful money of
the United States of America upon surrender of this Warrant
A-1
27
Certificate and payment of the Exercise Price at the office of the Company
designated for such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement.
In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the Holder hereof or his assignee a
new Warrant Certificate evidencing the number of Warrants not exercised.
The Exercise Price and the number of Warrant Shares issuable upon
exercise are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after the Expiration Date.
Reference is hereby made to the further provisions of the Warrant
Agreement and such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, Xxxxx.xxx, Inc. has caused this Warrant Certificate
to be signed by its Chairman of the Board, Chief Executive Officer, President or
Vice President and by its Chief Financial Officer, Secretary or Assistant
Secretary, each by a facsimile of his signature, and has caused a facsimile of
its corporate seal to be affixed hereunto or imprinted hereon.
Dated: XXXXX.XXX, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
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ANNEX I
TO WARRANT CERTIFICATE
FORM OF ELECTION TO EXERCISE
(TO BE EXECUTED UPON EXERCISE OF WARRANT)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of
_______________ in the amount of $________ in accordance with the terms hereof.
The undersigned requests that a certificate for such shares be
registered in the name of ____________________, whose address is
__________________________________ and that such shares be delivered to
__________________________________ whose address is
__________________________________.
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
____________________ whose address is
______________________________________________, and that such Warrant
Certificate be delivered to ___________________________________________________
whose address is ________________________________________________.
Signature:
Date:
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