EXHIBIT 10.4
AN ASTERISK ([*]) INDICATES THAT CONFIDENTIAL INFORMATION HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART
OF A CONFIDENTIAL TREATMENT REQUEST.
SERIES 3 WARRANT AGREEMENT dated as of December 30, 1998 between The
WMF Group, Ltd., a Delaware corporation (the "Company"), and [*], a [*]
corporation (hereinafter referred to as "XYZ Corp.").
W I T N E S S E T H:
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WHEREAS, WMF Capital Corp., a subsidiary of the Company ("Capital
Corp."), issued a certain Credit Lease Loan Commitment dated [*], to XYZ Corp.;
and
WHEREAS, XYZ Corp., [*] ("Party A"), the Company and Capital Corp.
have entered into a Settlement Agreement whereby XYZ Corp. and Party A have
agreed to release the Company and Capital Corp. from liability under the Credit
Lease Loan Commitment; and
WHEREAS, as partial consideration to XYZ Corp. and Party A under the
Settlement Agreement, the Company has agreed to issue to XYZ Corp. Series 3
warrants (the "Warrants") to purchase up to 150,000 shares (the "Shares") of
common stock of the Company, $.01 par value (the "Common Stock");
NOW, THEREFORE, in further consideration for the release by XYZ Corp.
and Party A of the Company and Capital Corp., from their obligations to XYZ
Corp. under the Credit Lease Loan Commitment, and in consideration of the
premises and agreements herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant.
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XYZ Corp. (or its designees, as permitted pursuant to the Settlement
Agreement) is
hereby granted the right to purchase, at any time from the date hereof until
5:00 P.M., New York City time, on December 30, 2003 (the "Warrant Exercise
Term"), up to 150,000 Shares at an initial exercise price of $10.00 per Share
(the "Initial Exercise Price") (subject to adjustment as provided in Section 8
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hereof).
2. Warrant Certificates.
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The warrant certificates (the "Warrant Certificates") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth as Exhibit
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A, attached hereto and made a part hereof, with such appropriate insertions,
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omissions, substitutions and other variations as required or permitted by this
Agreement.
3. Cash Exercise of Warrants.
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The Warrants initially are exercisable at the Initial Exercise Price,
payable in cash or by check to the order of the Company, or any combination of
cash or check, subject to adjustment as provided in Section 8 hereof. Upon
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surrender of the Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the Shares purchased, at the Company's principal
offices (presently located at 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx
00000) the registered holder of a Warrant Certificate ("Holder" or "Holders")
shall be entitled to receive a certificate or certificates for the Shares so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock). In the case of the purchase of less
than all the Shares purchasable under any Warrant Certificate, the Company shall
cancel said Warrant Certificate upon the surrender
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thereof and shall execute and deliver a new Warrant Certificate of like tenor
for the balance of the Shares purchasable thereunder.
4. Cashless Exercise of Warrants.
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At any time during the Warrant Exercise Term, the Holder may, at its
option, exchange the Warrant, in whole or in part, into the number of Shares
determined in accordance with this Section 4 (a "Warrant Exchange"), by
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surrendering this Warrant at the principal office of the Company or at the
office of its transfer agent, accompanied by a notice stating such Holder's
intent to effect such exchange, the number of Shares to be exchanged and the
date on which the Holder requests that such Warrant Exchange occur (the "Notice
of Exchange"). The Warrant Exchange shall take place on the date specified in
the Notice of Exchange or, if later, the date the Notice of Exchange is received
by the Company (the "Exchange Date"). Certificates for the Shares issuable upon
such Warrant Exchange and, if applicable, a new warrant of like tenor evidencing
the balance of the Shares remaining subject to this Warrant, shall be issued as
of the Exchange Date and delivered to the Holder within five (5) business days
following the Exchange Date. In connection with any Warrant Exchange, this
Warrant shall represent the right to subscribe for and acquire the number of
Shares (rounded to the next highest integer) equal to (i) the number of Shares
specified by the Holder in its Notice of Exchange (the "Total Number") less (ii)
the number of Shares equal to the quotient obtained by dividing (A) the product
of the Total Number and the existing Exercise Price (as hereinafter defined) by
(B) the current Market Price of one share of Common Stock.
5. Issuance of Certificates.
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Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five (5) business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or, if the requirements of Section
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7 hereof have been satisfied, in such names as may be directed by, the Holder
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thereof; provided, however, that the Company shall not be required to pay any
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tax which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the Holder, and
the Company shall not be required to issue or deliver such certificates unless
and 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
satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares shall
be executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman or Vice Chairman of the Board of Directors or
President or a Vice President of the Company, attested to by the manual or
facsimile signature of the present or any future Treasurer or an Assistant
Treasurer or Secretary or an Assistant Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or in
whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act") or applicable
state securities laws,
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and may not be offered or sold except (i) pursuant to an effective
registration statement under the Act or such laws, (ii) to the extent
applicable, pursuant to Rule 144 under the Act (or any similar rule under
the Act relating to the disposition of securities), or (iii) upon the
delivery by the holder to the Company of an opinion of counsel, reasonably
satisfactory to counsel to the Company, stating that an exemption from
registration under the Act is available."
6. Price.
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6.1 Initial and Adjusted Exercise Price.
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The initial exercise price of each Warrant shall be the Initial Exercise
Price set forth in Section 1. The adjusted exercise price shall be the price
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which shall result from time to time from any and all adjustments of the Initial
Exercise Price in accordance with the provisions of Section 8 hereof.
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6.2 Exercise Price.
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The term "Exercise Price" herein shall mean the Initial Exercise Price or
the adjusted exercise price, depending upon the context.
7. Registration Rights; Limitations on Transfer.
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The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("the Act") or
applicable state securities laws and may not be offered, sold or otherwise
transferred except (i) pursuant to an effective registration statement under the
Act or such laws, (ii) to the extent applicable, pursuant to Rule 144 under the
Act (or any similar rule under the Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company of an
opinion of counsel, reasonably satisfactory to counsel to the Company, stating
that exemptions from registration under the Act and such laws are available. The
Shares shall be registered under the Act pursuant to the terms and conditions
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of the Registration Rights Agreement, of even date herewith, by and between XYZ
Corp. and the Company.
8. Adjustments of Exercise Price and Number of Shares.
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8.1 Adjustment of Number of Shares Purchasable.
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Upon any adjustment of the Exercise Price as provided in Section 8.2, the
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holder hereof shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Common Stock (calculated
to the nearest full share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
purchasable hereunder immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment.
8.2 Adjustment of Exercise Price.
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The Exercise Price shall be subject to adjustment from time to time as
hereinafter set forth.
(a) Stock Dividends, Subdivisions and Combinations. In the event
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that the Company after the date hereof shall:
(1) declare a dividend upon, or make any distribution in
respect of, any of its stock, payable in Common Stock, securities
convertible or exchangeable into Common Stock ("Convertible
Securities") or options, rights or warrants to purchase Common
Stock ("Stock Purchase Rights"), or
(2) subdivide its outstanding shares of Common Stock into a
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larger number of shares of Common Stock, or
(3) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price immediately prior to such event by a fraction (A)
the numerator of which shall be the total number of outstanding shares of Common
Stock of the Company immediately prior to such event, and (B) the denominator of
which shall be the total number of outstanding shares of Common Stock of the
Company immediately after such event, treating as outstanding all shares of
Common Stock issuable upon conversions or exchanges of the Convertible
Securities and exercises of the Stock Purchase Rights referred to in Section
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8.2(a)(1).
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(b) Issuance of Additional Shares of Common Stock. In case the
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Company shall issue or sell any shares of Common Stock after the
Closing Date for a consideration less than the Market Price (as
defined below) per share on the date immediately prior to such
issuance, the Exercise Price upon each such issuance or sale shall be
adjusted (to the nearest full cent) to the price calculated by
multiplying the then existing Exercise Price by a fraction the
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numerator of which is (A) the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issue or sale
multiplied by the Market Price per share of Common Stock on the date
immediately prior to such issue or sale plus (2) the consideration
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received by the Company upon such issue or sale, divided by (B) the
total number of shares of Common Stock outstanding immediately after
such issue or sale, and the denominator of which shall be the Market
Price per share of
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Common Stock on the date immediately prior to such issue or sale.
For purposes of this Section 8.2(b) the adjustment shall be made
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successively whenever any issuance is made, and shall become effective
immediately after such issuance.
The provisions of this Section 8.2(b) shall not apply to any additional
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shares of Common Stock which are distributed to holders of Common Stock pursuant
to a stock dividend or subdivision for which an adjustment is provided for under
Section 8.2(a). No adjustment of the Exercise Price shall be made under this
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Section 8.2(b) upon the issuance of any additional shares of Common Stock which
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are issued pursuant to the exercise of any Stock Purchase Rights or pursuant to
the conversion or exchange of any Convertible Securities to the extent that such
adjustment shall previously have been made upon the issuance of such Stock
Purchase Rights or Convertible Securities pursuant to subsection (a), (c) or (d)
of this Section 8.2.
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Further, the provisions of this Section 8.2(b) shall not apply if:
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(i) the Company issues stock to third parties in an arms-length
transaction for cash or other consideration having a value equal to at
least (A) 85 percent (85%) of the Market Price on the date of the issuance
of such stock or, if the offering is priced prior to the closing of the
applicable market for the Common Stock on such date, the trading day
immediately preceding such date, or (B) 90 percent (90%) of the average of
the Market Prices of the Common Stock for the ten (10) consecutive trading
days ending on the date of the issuance of such stock, including but not
limited to, stock issuances pursuant to a merger, consolidation, corporate
reorganization (both taxable and nontaxable), corporate restructuring, or
private placement or;
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(ii) the Company issues shares of Common Stock to individuals or
entities upon the exercise or conversion of Convertible Securities or Stock
Purchase Rights outstanding on the date hereof, or pursuant to Stock
Purchase Rights issued pursuant to the rights offering first announced
publicly on or about October 21, 1998 (the "Company Rights Offering") or
pursuant to any stand-by purchase commitment relating to the Company Rights
Offering; or
(iii) the Company issues warrants, rights, options or restricted stock
to employees of the Company or its affiliates pursuant to a deferred
compensation plan, key employee incentive plan or another applicable
employment compensation plan so long as the exercise price for any such
warrants, rights or options is equal to or greater than either (A) the
Market Price on the date of the issuance of such warrants, rights or
options, or (B) the average Market Prices for the ten (10) consecutive
trading days ending on the date of the issuance of such warrants, rights or
options.
As used in this Agreement, the phrase "Market Price" at any date shall be
deemed to be the last reported sale price, or, in case no such reported sale
takes place on such day, the average of the last reported sale prices for the
last three trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading
or as reported in the Nasdaq National Market System, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on the Nasdaq National Market System, the closing bid price as furnished by the
National Association of Securities Dealers, Inc. through Nasdaq or similar
organization if Nasdaq is no longer reporting such information, or if the Common
Stock is not quoted on Nasdaq, as determined in good faith by resolution of the
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Board of Directors of the Company based on the best information available to it.
(c) Issuance of Stock Purchase Rights. In case the Company shall
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issue or sell any Stock Purchase Rights and the consideration per
share for which additional shares of Common Stock may at any time
thereafter be issuable upon exercise thereof (or, in the case of Stock
Purchase Rights exercisable for the purchase of Convertible
Securities, upon the subsequent conversion or exchange of such
Convertible Securities) shall be less than the then Market Price per
share, the Exercise Price shall be adjusted as provided in Section
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8.2(b) on the basis that (I) the maximum number of additional shares
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of Common Stock issuable upon exercise of such Stock Purchase Rights
(or upon conversion or exchange of such Convertible Securities
following such exercise) shall be deemed to have been issued as of the
date of the determination of the Market Price, as hereinafter
provided, and (II) the aggregate consideration received for such
additional shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company in connection
with the issuance and exercise of such Stock Purchase Rights (or upon
conversion or exchange of such Convertible Securities). For the
purposes of this Section 8.2(c), the date as of which the Market Price
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shall be determined shall be the earlier of (A) the date on which the
Company shall enter into a firm contract for the issuance of such
Stock Purchase Rights, or (B) the date of actual issuance of such
Stock Purchase Rights. The provisions of this Section 8.2(c) shall
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not apply to Stock Purchase Rights issued in connection with the
Company Rights Offering.
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(d) Issuance of Convertible Securities. In case the Company shall
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issue or sell any Convertible Securities and the consideration per
share for which additional shares of Common Stock may at any time
thereafter be issuable pursuant to the terms of such Convertible
Securities shall be less than the then Market Price per share, the
Exercise Price shall be adjusted as provided in Section 8.2(b) on the
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basis that (I) the maximum number of additional shares of Common Stock
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the date for the
determination of the Market Price, as hereinafter provided, and (II)
the aggregate consideration received for such additional shares of
Common Stock shall be deemed to be equal to the minimum consideration
received and receivable by the Company in connection with the issuance
and exercise of such Convertible Securities. For the purposes of this
Section 8.2(d), the date as of which the Market Price per share shall
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be determined shall be the earlier of (A) the date on which the
Company shall enter into a firm contract for the issuance of such
Convertible Securities, or (B) the date of actual issuance of such
Convertible Securities. No adjustment of the Exercise Price shall be
made under this Section 8.2(d) upon the issuance of any Convertible
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Securities which are issued pursuant to the exercise of any Stock
Purchase Rights, if an adjustment shall previously have been made upon
the issuance of such Stock Purchase Rights pursuant to Section 8.2(c).
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(e) Minimum Adjustment. In the event any adjustment of the
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Exercise Price pursuant to this Section 8.2 shall result in an
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adjustment of less than $.02
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per share of Common Stock, no such adjustment shall be made, but any
such lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment, if any,
which, together with any adjustments so carried forward, shall amount
to $.02 more per share of Common Stock; provided, however, that upon
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any adjustment of the Exercise Price resulting from (i) the
declaration of a dividend upon, or the making of any distribution in
respect of, any stock of the Company payable in Common Stock or
Convertible Securities or (ii) the reclassification by subdivision,
combination or otherwise, of the Common Stock into a greater or
smaller number of shares, the foregoing figure of $.02 per share (or
such figure as last adjusted) shall be proportionately adjusted.
(f) Readjustment of Exercise Price. In the event (i) the purchase
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price payable for any Stock Purchase Rights or Convertible Securities
referred to in subsection (c) or (d) above, (ii) the additional
consideration, if any, payable upon exercise of such Stock Purchase
Rights or upon the conversion or exchange of such Convertible
Securities or (iii) the rate at which any Convertible Securities
referred to above are convertible into or exchangeable for additional
shares of Common Stock shall change, the Exercise Price in effect at
the time of such event shall forthwith be readjusted to the Exercise
Price which would have been in effect at such time had such Stock
Purchase Rights or Convertible Securities provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. On the
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expiration of any such Stock Purchase Rights or of any such right to
convert or exchange under any such Convertible Securities, if none of
such Stock Purchase Rights or such Convertible Securities, as the case
may be, shall have been exercised, the Exercise Price then in effect
hereunder shall forthwith be increased to the Exercise Price which
would have been in effect at the time of such expiration or
termination had such Stock Purchase Rights or Convertible Securities
never been issued. No readjustment of the Exercise Price pursuant to
this Section 8.2(f) shall have the effect of increasing the Exercise
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Price by an amount in excess of the adjustment originally made to the
Exercise Price in respect of the issue, sale or grant of the
applicable Stock Purchase Rights or Convertible Securities.
(g) Reorganization, Reclassification or Recapitalization of
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Company. In case of any capital reorganization or reclassification or
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recapitalization of the capital stock of the Company (other than in
the cases referred to in Section 8.2(a)), or in case of the
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consolidation or merger of the Company with or into another
corporation, or in case of the sale or transfer of the property of the
Company as an entirety or substantially as an entirety, there shall
thereafter be deliverable upon the exercise of any Warrant or any
portion thereof (in lieu of or in addition to the number of shares of
Common Stock theretofore deliverable, as appropriate) the number of
shares of stock or other securities or property to which the holder of
the number of shares of Common Stock which would otherwise have been
deliverable upon the exercise of any Warrant or any portion thereof at
the
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time would have been entitled upon such capital reorganization or
reclassification of capital stock, consolidation, merger or sale, and
at the same aggregate Exercise Price.
Prior to and as a condition of the consummation of any transaction
described in the preceding sentence, the Company shall make equitable, written
adjustments in the application of the provisions herein set forth satisfactory
to the holder or holders of a majority of the Warrants, so that the provisions
set forth herein shall thereafter be applicable, as nearly as possible, in
relation to any shares of stock or other securities or other property thereafter
deliverable upon exercise of any Warrant. Any such adjustment shall be made by
and set forth in a supplemental agreement between the Company and/or the
successor entity, as applicable, which agreement shall bind each such entity,
shall be accompanied by an opinion of counsel as to the enforceability of such
agreement and shall be approved by the holder or the holders of a majority of
the Warrants.
(h) Other Dilutive Events. In case any Distribution shall occur
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as to which the other provisions of this Section 8 are not
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strictly applicable but the failure to make any adjustment would
not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles
hereof, then, in each such case, the Board of Directors of the
Company shall determine the amount of the adjustment in good
faith and on a basis consistent with the essential intent and
principles established in this Section 8, necessary to preserve,
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without dilution, the purchase rights represented by this
Warrant. Upon determination of such adjustment, the Company will
promptly mail a copy thereof
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to the holder of this Warrant and shall make the adjustment described
therein.
(i) Determination of Consideration. For purposes of this
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Section 8, the consideration received or receivable by the Company for
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the issuance, sale, grant or assumption of additional shares of Common
Stock, Stock Purchase Rights or Convertible Securities, irrespective
of the accounting treatment of such consideration, shall be valued as
follows:
(1) Cash Payment. In the case of cash, the net amount
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received by the Company without deduction of any expenses paid or
incurred or any underwriting commissions or concessions paid or
allowed by the Company.
(2) Securities or Other Property. In the case of securities
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or other property, at the Market Price of the security or the
fair value of such other property as determined in good faith by
the Board of Directors of the Company (in both cases as of the
date immediately preceding the issuance, sale or grant in
question).
(3) Allocation Related to Common Stock. In the event
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additional shares of Common Stock are issued or sold together
with other securities or other assets of the Company for a
consideration which covers both, the consideration received
(computed as provided in (1) and (2) above) shall be allocable to
such additional shares of Common Stock as determined in good
faith by the Board of Directors of the Company.
(4) Dividends in Securities. In case the Company shall
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declare
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a dividend or make any other distribution upon any sto ck of the
Company (other than Common Stock) payable in either case in
Common Stock, Convertible Securities or Stock Purchase Rights,
such Common Stock, Convertible Securities or Stock Purchase
Rights, as the case may be, issuable in payment of such dividend
or distribution shall be deemed to have been issued or sold
without consideration.
(5) Stock Purchase Rights and Convertible Securities. The
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consideration for which shares of Common Stock shall be deemed to
be issued upon the issuance of any Stock Purchase Rights or
Convertible Securities shall be determined by dividing (i) the
total consideration, if any, received or receivable by the
Company as consideration for the granting of such Stock Purchase
Rights or the issuance of such Convertible Securities, plus the
minimum aggregate amount of additional consideration payable to
the Company upon the exercise of such Stock Purchase Rights, or,
in the case of such Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the
conversion or exchange thereof, in each case after deducting any
accrued interest, dividends, or any expenses paid or incurred or
any underwriting commissions or concessions paid or allowed by
the Company, by (ii) the maximum number of shares of Common Stock
issuable upon the exercise of such Stock Purchase Rights or upon
the conversion or exchange of all such Convertible Securities.
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(6) Merger, Consolidation or Sale of Assets. In case any
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shares of Common Stock or Convertible Securities or any Stock
Purchase Rights shall be issued in connection with any merger or
consolidation in which the Company is the surviving corporation,
the amount of consideration therefor shall be deemed to be the
fair value of such portion of the assets and business of the
nonsurviving corporation as shall be attributable to such Common
Stock, Convertible Securities or Stock Purchase Rights, as the
case may be. In the event of any merger or consolidation of the
Company in which the Company is not the surviving corporation or
in the event of any sale of all or substantially all of the
assets of the Company for stock or other securities of any
corporation, the Company shall be deemed to have issued a number
of shares of its Common Stock for stock or securities of the
other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated and for a
consideration equal to the Market Price on the date of such
transaction of such stock or securities of the other corporation,
and if any such calculation results in adjustment of the Exercise
Price, the determination of the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such
merger, consolidation or sale, for the purposes of Section 8.2(g)
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above, shall be made after giving effect to such adjustment of
the Exercise Price.
(j) Record Date. In case the Company shall take a record of the
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holders of the Common Stock for the purpose of entitling them (i) to
receive a distribution payable in Common Stock, Stock Purchase Rights
or in Convertible Securities or (ii) to subscribe for or purchase
Common Stock or Convertible Securities, then all references in this
Section 8 to the date of the issue or sale of the shares of Common
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Stock deemed to have been issued or sold upon the making of such
distribution or the date of the granting of such right of subscription
or purchase, as the case may be, shall be deemed to be references to
such record date.
(k) Shares Outstanding. The number of shares of Common Stock
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deemed to be outstanding at any given time shall exclude shares of
Common Stock in the treasury of the Company and those held by any
subsidiary of the Company.
(l) Maximum Exercise Price. At no time shall the Exercise Price
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per share of Common Stock exceed the amount set forth in Section 1 of
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this Agreement except as provided in subsection (a) or (g) of this
Section 8.2.
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(m) Application. Except as otherwise provided herein, all
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subsections of this Section 8.2 are intended to operate independently
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of one another. If an event occurs that requires the application of
more than one subsection, all applicable subsections shall be given
independent effect.
8.3 Certificates and Notices.
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(a) Adjustments to Exercise Price. Upon any adjustment under this
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Section 8 of the number of shares of Common Stock purchasable upon
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exercise of a Warrant or of the Exercise Price, a certificate, signed
(i) by the President or a
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Vice President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company, or (ii) by any
independent firm of certified public accountants of recognized
national standing selected by, and at the expense of, the Company,
setting forth in reasonable detail the events requiring the adjustment
and the method by which such adjustment was calculated, shall be
mailed to the holders of the Warrant specifying the adjusted Exercise
Price and the number of shares of Common Stock purchasable upon
exercise of such holder's Warrant after giving effect to such
adjustment.
The certificate of any independent firm of certified public accountants of
recognized national standing selected by the Board of Directors of the Company
shall be conclusive evidence of the correctness of any computation made under
this Section 8.
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(b) Effect of Failure.
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Failure to file any certificate or notice or to mail any
notice or any defect in any certificate or notice pursuant to this
Section 8.3 shall not affect the legality or validity of the
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adjustment of the Exercise Price or the number of shares purchasable
upon exercise of any Warrant, or any transaction giving rise thereto.
9. Exchange and Replacement of Warrant Certificates.
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Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
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Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrant
Certificate, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests.
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The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
11. Reservation and Listing of Securities.
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The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall
cause all shares of Common Stock issuable upon the exercise of the Warrants to
be listed on or quoted by Nasdaq or listed on such national securities exchanges
as the Company's Common Stock is then listed or quoted, if any.
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12. Notices to Warrant Holders.
---------------------------
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe
therefor; or
(c) a merger or consolidation involving the Company or
subsidiary of the Company and any other entity and the Company is not
the surviving entity; or
(d) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed; then, in any one or more of said events,
the Company shall give written notice of such event at
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least fifteen (15) days prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants,
or entitled to vote on such proposed merger, consolidation,
dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer books, as
the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with
the declaration or payment of any such dividend or distribution, or
the issuance of any convertible or exchangeable securities or
subscription rights, options or warrants, or any proposed merger,
consolidation, dissolution, liquidation, winding up or sale.
13. Notices.
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All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of
---------
this Agreement or to such other address as the Company may designate
by notice to the Holders.
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14. Supplements and Amendments.
---------------------------
The Company and XYZ Corp. may from time to time supplement or amend this
Agreement without the approval of any Holders of Warrant Certificates in order
to cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and XYZ Corp. may deem necessary or desirable and which the Company
and XYZ Corp. deem not to adversely affect the interests of the Holders of
Warrant Certificates.
15. Successors.
-----------
All the covenants and provisions of this Agreement by or for the benefit of
the Company and the Holders inure to the benefit of their respective successors
and assigns hereunder.
16. Termination.
------------
This Agreement shall terminate at the close of business on December 30,
2003. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public.
17. 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 laws of said State.
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18. Benefits of This Agreement.
---------------------------
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and XYZ Corp. and any other registered Holder
or Holders of the Warrant Certificates, Warrants or the Shares any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and XYZ Corp. and any other
Holder or Holders of the Warrant Certificates, Warrants or the Shares.
19. Counterparts.
-------------
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
[SEAL] THE WMF GROUP, LTD.
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: President and Chief Executive Officer
Attest:
/s/ Xxxxxxx Xxxxxxx
-------------------
XYZ CORP.
By:[*]
Name:[*]
Title:[*]
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