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ECO SOIL SYSTEMS, INC.
______________________________
COMMON STOCK PURCHASE WARRANT
______________________________
Expiring August 25, 2003
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TABLE OF CONTENTS
1. Exercise of Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1. Manner of Exercise. . . . . . . . . . . . . . . . . . . . . . . . 3
1.2. When Exercise Deemed Effected . . . . . . . . . . . . . . . . . . 4
1.3. Delivery of Stock Certificates, etc.. . . . . . . . . . . . . . . 4
1.4. Company to Reaffirm Obligations . . . . . . . . . . . . . . . . . 4
1.5. Payment by Application of the Notes . . . . . . . . . . . . . . . 5
2. Adjustment of Common Stock Issuable Upon Exercise. . . . . . . . . . . 5
2.1. Number of Shares; Warrant Price.. . . . . . . . . . . . . . . . . 5
2.2. Adjustment of Warrant Price . . . . . . . . . . . . . . . . . . . 6
2.2.1. Issuance of Additional Shares of Common Stock. . . . . . . . 6
2.2.2. Extraordinary Dividends and Distributions. . . . . . . . . . 6
2.3. Treatment of Options and Convertible Securities. . . . . . . . . 7
2.4. Treatment of Stock Dividends, Stock Splits, etc. . . . . . . . . 9
2.5. Computation of Consideration . . . . . . . . . . . . . . . . . . 10
2.6. Adjustments for Combinations, etc. . . . . . . . . . . . . . . . 11
2.7. Dilution in Case of Other Securities . . . . . . . . . . . . . . 11
2.8. Minimum Adjustment of Warrant Price. . . . . . . . . . . . . . . 12
3. Consolidation, Merger, Sale of Assets, Reorganization, etc. . . . . . 12
4. Other Dilutive Events . . . . . . . . . . . . . . . . . . . . . . . . 13
5. No Dilution or Impairment . . . . . . . . . . . . . . . . . . . . . . 13
6. Accountants' Report as to Adjustments . . . . . . . . . . . . . . . . 14
7. Notices of Corporate Action . . . . . . . . . . . . . . . . . . . . . 15
8. Restrictions on Transfer. . . . . . . . . . . . . . . . . . . . . . . 15
8.1. Restrictive Legends. . . . . . . . . . . . . . . . . . . . . . . 15
8.2. Notice of Proposed Transfer; Opinions of Counsel . . . . . . . . 16
8.3. Termination of Restrictions. . . . . . . . . . . . . . . . . . . 17
9. Registration under Securities Act, etc. . . . . . . . . . . . . . . . 17
9.1. Incidental Registration. . . . . . . . . . . . . . . . . . . . . 17
9.2. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . 19
9.3. Underwritten Offerings . . . . . . . . . . . . . . . . . . . . . 22
9.4. Preparation; Reasonable Investigation. . . . . . . . . . . . . . 23
9.5. Certain Rights of Holders. . . . . . . . . . . . . . . . . . . . 23
9.6. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 24
9.7. Covenants Relating to Rule 144 . . . . . . . . . . . . . . . . . 26
10. Availability of Information . . . . . . . . . . . . . . . . . . . . . 27
11. Reservation of Stock, etc.. . . . . . . . . . . . . . . . . . . . . . 27
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12. Listing on Securities Exchange. . . . . . . . . . . . . . . . . . . . 27
13. Ownership, Transfer and Substitution of Warrants. . . . . . . . . . . 27
13.1. Ownership of Warrants. . . . . . . . . . . . . . . . . . . . . . 27
13.2. Transfer and Exchange of Warrants. . . . . . . . . . . . . . . . 28
13.3. Replacement of Warrants. . . . . . . . . . . . . . . . . . . . . 28
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
15. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
16. No Rights or Liabilities as Stockholder . . . . . . . . . . . . . . . 34
17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
18. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
19. Expiration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Form of Subscription
Form of Notice
Schedule of Outstanding Options
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Common Stock Purchase Warrant
Expiring August 25, 2003
New York, New York
August 25, 1998
PPN #278858 1 1 3
No. W-2
ECO SOIL SYSTEMS, INC., a Nebraska corporation (the "Company"), for
value received, hereby certifies that PARIBAS CAPITAL FUNDING LLC, or registered
assigns, is entitled to purchase from the Company 122,500 duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock, par value
$.005 per share, of the Company (the "Common Stock") at the purchase price per
share of $.01, at any time or from time to time on or after February 25, 2000
and prior to 3 P.M., New York City time, on August 25, 2003, all subject to the
terms, conditions and adjustments set forth below in this Warrant.
This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants", such term to include all Warrants issued in substitution therefor)
originally issued in connection with the issue and sale by the Company of
$15,000,000 aggregate principal amount of its 12.00% Notes due August 25, 2003
(together with all notes issued in substitution therefor, the "Notes"), pursuant
to the Note and Warrant Purchase Agreements (collectively, the "Purchase
Agreement"), each dated as of August 25, 1998, between the Company and the
institutional investors named therein. The Warrants originally so issued
evidence rights to purchase an aggregate of 262,500 shares of Common Stock,
subject to adjustment as provided herein. Certain capitalized terms used in
this Warrant are defined in section 14.
1. EXERCISE OF WARRANT. 1.1. MANNER OF EXERCISE. This Warrant may
be exercised by the holder hereof, in whole or in part, during normal business
hours on any Business Day by surrender of this Warrant, with the form of
subscription at the end hereof (or a reasonable facsimile thereof) duly executed
by such holder, to the Company at its principal office (or, if such exercise
shall be in connection with an underwritten Public Offering of shares of Common
Stock (or Other Securities) subject to this Warrant, at the location at which
the Company shall have agreed to deliver the shares of Common Stock (or Other
Securities) subject to such offering), accompanied by payment, in cash or by
certified or official bank check payable to the order of the company or by the
application of Notes in the manner provided in section 1.5 (or by any
combination of such methods), in the amount obtained by multiplying (a) the
number of shares of Common Stock (without giving effect to any adjustment
therein) designated in such form of subscription by (b) $.01 and such holder
shall thereupon be
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entitled to receive the number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (or Other Securities) determined as
provided in sections 2 through 4.
1.2. WHEN EXERCISE DEEMED EFFECTED. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to the
Company as provided in section 1.1, and at such time the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
section 1.3 shall be deemed to have become the holder or holders of record
thereof.
1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable
after the exercise of this Warrant, in whole or in part, and in any event within
five Business Days thereafter (unless such exercise shall be in connection with
an underwritten Public Offering of shares of Common Stock (or Other Securities)
subject to this Warrant, in which event concurrently with such exercise), the
Company at its expense (including the payment by it of any applicable taxes
other than transfer taxes) will cause to be issued in the name of and delivered
to the holder hereof or, subject to section 8, as such holder (upon payment by
such holder of any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such holder would otherwise
be entitled, cash in an amount equal to the same fraction of the Market
Price per share of such Common Stock (or Other Securities) on the Business
Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or Warrants
of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal (without giving effect to any
adjustment therein) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the holder upon
such exercise as provided in section 1.1.
1.4. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the time
of or at any time after each exercise of this Warrant, upon the request of the
holder hereof or of any shares of Common Stock (or Other Securities) issued upon
such exercise, acknowledge in writing its continuing obligation to afford to
such holder all rights (including, without limitation, any right of registration
of any shares of Common Stock (or Other Securities) issuable upon exercise of
this Warrant pursuant to section 9) to which such holder shall continue to be
entitled after such exercise in
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accordance with the terms of this Warrant, PROVIDED that if any such holder
shall fail to make any such request, the failure shall not affect the
continuing obligation of the Company to afford such rights to such holder.
1.5. PAYMENT BY APPLICATION OF THE NOTES. Upon any exercise of this
Warrant, the holder hereof may, at its option, instruct the Company, by so
specifying in the form of subscription submitted therewith as provided in
section 1.1, to apply to the payment required by section 1.1 all or any part of
the principal amount then unpaid and of the interest on such principal amount
then accrued on any one or more Notes at the time held by such holder, in which
case the Company will accept the aggregate amount of principal and accrued
interest on such principal specified in such form of subscription in
satisfaction of a like amount of such payment. In case less than the entire
unpaid principal amount of any Note shall be so specified, the principal amount
so specified shall be credited, as of the date of such exercise, against the
installments of principal then remaining unpaid on such Note either in the
inverse order of their maturity dates or in the direct order of their maturity
dates as such holder shall instruct in such form of subscription. Within five
days after receipt of any such notice, the Company will pay to the holder of the
Notes submitting such form of subscription, in the manner provided in such Notes
and the Purchase Agreement, all unpaid interest accrued to the date of exercise
of such Warrant on the principal amount so specified in such form of
subscription that is not applied to the payment required by section 1.1 under
this section 1.5. In the event that the entire unpaid principal amount of any
Note is applied to the payment required by section 1.1 under this section 1.5,
such Note shall be promptly surrendered and canceled in accordance with the
provisions of section 15 of the Purchase Agreement.
2. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE. 2.1. NUMBER
OF SHARES; WARRANT PRICE. The number of shares of Common Stock which the holder
of this Warrant shall be entitled to receive upon each exercise hereof shall be
determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this section 2) be issuable upon such
exercise, as designated by the holder hereof pursuant to section 1.1, by a
fraction of which (i) the numerator is $.01 and (ii) the denominator is the
Warrant Price in effect on the date of such exercise. The "Warrant Price" shall
initially be $.01 per share, shall be adjusted and readjusted from time to time
as provided in this section 2 and, as so adjusted or readjusted, shall remain in
effect until a further adjustment or readjustment thereof is required by this
section 2.
2.2. ADJUSTMENT OF WARRANT PRICE. 2.2.1. ISSUANCE OF ADDITIONAL
SHARES OF COMMON STOCK. In case the Company, at any time or from time to time
after August 25, 1998 (the "Initial Date"), shall issue or sell Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued
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pursuant to section 2.3 or 2.4) without consideration or for a consideration
per share less than the Base Price in effect, in each case, on the date of
and immediately prior to such issue or sale, then, and in each such case,
subject to section 2.8, such Warrant Price shall be reduced, concurrently
with such issue or sale, to a price (calculated to the nearest .001 of a cent)
determined by multiplying such Warrant Price by a fraction,
(a) the numerator of which shall be (i) the number of shares of
Common Stock outstanding immediately prior to such issue or sale plus (ii)
the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of
Common Stock so issued or sold would purchase at the Base Price, and
(b) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale,
PROVIDED that, for the purposes of this section 2.2.1, (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
section 2.3 or 2.4, such Additional Shares shall be deemed to be outstanding,
and (y) treasury shares shall not be deemed to be outstanding.
2.2.2. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case the Company
at any time or from time to time after the Initial Date shall declare, order,
pay or make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property or
Options by way of dividend or spin-off, reclassification, recapitalization or
similar corporate rearrangement) on any Common Stock, other than (a) a dividend
payable in Additional Shares of Common Stock or in Options for Common Stock or
(b) a regular, periodic dividend payable in cash and declared out of the earned
surplus of the Company as at the date hereof as increased by any credits (other
than credits resulting from a revaluation of property) and decreased by any
debits made thereto after such date, then, and in each such case, subject to
section 2.8, the Warrant Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of any class
of securities entitled to receive such dividend or distribution shall be
reduced, effective as of the close of business on such record date, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction,
(i) the numerator of which shall be the Current Market Price in
effect on such record date or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-dividend trading, less
the value of such dividend or distribution (as determined in good faith by
the
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Board of Directors of the Company) applicable to one share of Common Stock, and
(ii) the denominator of which shall be such Current Market Price.
2.3. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case the
Company at any time or from time to time after the Initial Date shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to, any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be issued for purposes of
section 2.2.1 as of the time of such issue, sale, grant or assumption or, in
case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), PROVIDED that such
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to section 2.5) of such shares
would be less than the Base Price in effect, in each case, on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be, and PROVIDED, FURTHER, that in any such case in
which Additional Shares of Common Stock are deemed to be issued,
(a) no further adjustment of the Warrant Price shall be made upon the
subsequent issue or sale of Additional Shares of Common Stock or
Convertible Securities upon the exercise of such Options or the conversion
or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof (by change of rate or otherwise), the Warrant Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement
of ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options, or the rights of
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conversion or exchange under such Convertible Securities, which are outstanding
at such time;
(c) upon the expiration of any such Options or of the rights of conversion
or exchange under any such Convertible Securities which shall not have been
exercised (or upon purchase by the Company and cancellation or retirement of any
such Options which shall not have been exercised or of any such Convertible
Securities the rights of conversion or exchange under which shall not have been
exercised), the Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date prior to
the commencement of ex-dividend trading, as the case may be, with respect
thereto), and any subsequent adjustments based thereon, shall, upon such
expiration (or such cancellation or retirement, as the case may be), be
recomputed as if:
(i) in the case of Options for Common Stock or of Convertible
Securities, the only Additional Shares of Common Stock issued or sold were
the Additional Shares of Common Stock, if any, actually issued or sold upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was (x) an
amount equal to (A) the consideration actually received by the Company for
the issue, sale, grant or assumption of all such Options, whether or not
exercised, plus (B) the consideration actually received by the Company upon
such exercise, minus (C) the consideration paid by the Company for any
purchase of such Options which were not exercised, or (y) an amount equal
to (A) the consideration actually received by the Company for the issue,
sale, grant or assumption of all such Convertible Securities which were
actually converted or exchanged, plus (B) the additional consideration, if
any, actually received by the Company upon such conversion or exchange,
minus (C) the consideration paid by the Company for any purchase of such
Convertible Securities the rights of conversion or exchange under which
were not exercised, and
(ii) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued or sold upon the exercise
of such Options were issued at the time of the issue, sale, grant or
assumption of such Options, and the consideration received by the Company
for the Additional Shares of Common Stock deemed to have then been issued
was an amount equal to (x) the consideration actually received by the
Company for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus (y) the consideration deemed to have been
received by the Company (pursuant to section 2.5) upon the issue or sale
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of the Convertible Securities with respect to which such Options
were actually exercised, minus (z) the consideration paid by the
Company for any purchase of such Options which were not exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Warrant Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Options or Convertible Securities;
and
(e) in the case of any such Options which expire by their terms not
more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment shall
be made in the manner provided in subdivision (c) above.
In case at any time after the Initial Date the Company shall be
required to increase the number of Additional Shares of Common Stock subject to
any Option or into which any Convertible Securities (other than the Warrants)
are convertible or exchangeable pursuant to the operation of anti-dilution
provisions applicable thereto, such Additional Shares shall be deemed to be
issued for purposes of section 2.1 as of the time of such increase.
2.4. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case the
Company at any time or from time to time after the Initial Date shall declare or
pay any dividend or other distribution on any class of stock of the Company
payable in Common Stock, or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock) ,
then, and in each such case, Additional Shares of Common Stock shall be deemed
to have been issued (a) in the case of any such dividend, immediately after the
close of business on the record date for the determination of holders of any
class of securities entitled to receive such dividend, or (b) in the case of any
such subdivision, at the close of business on the day immediately prior to the
day upon which such corporate action becomes effective.
2.5. COMPUTATION OF CONSIDERATION. For the purposes of this
section 2:
(a) The consideration for the issue or sale of any Additional Shares
of Common Stock or for the issue, sale, grant or assumption of any Options
or Convertible Securities, irrespective of the accounting treatment of such
consideration, shall
(i) insofar as it consists of cash, be computed at the amount of
cash received by the Company, after deducting any expenses paid or
incurred by the Company or
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any commissions or compensation paid or concessions or discounts
allowed to underwriters, dealers or others performing similar
services and any accrued interest or dividends in connection with
such issue or sale,
(ii) insofar as it consists of consideration (including
securities) other than cash, be computed at the Fair Value
thereof at the time of such issue or sale, after deducting any
expenses paid or incurred by the Company for any commissions or
compensation paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services and any
accrued interest or dividends in connection with such issue or
sale, and
(iii) in case Additional Shares of Common Stock are issued or
sold or Convertible Securities are issued, sold, granted or assumed
together with other stock or securities or other assets of the
Company for a consideration which covers both, be the proportion of
such consideration so received, computed as provided in
subdivisions (i) and (ii) above, allocable to such Additional
Shares of Common Stock or Convertible Securities, as the case may
be, all as determined in good faith by the Board of Directors of
the Company.
(b) All Options issued, sold, granted or assumed together with other
stock or securities or other assets of the Company for a consideration
which covers both, all Additional Shares of Common Stock, Options or
Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Company and all Additional Shares
of Common Stock issued to effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common
Stock) shall be deemed to have been issued without consideration.
(c) Additional Shares of Common Stock deemed to have been issued for
consideration pursuant to section 2.3, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption
of the Options or Convertible Securities in question, plus the
minimum aggregate amount of additional consideration (as set forth
in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration) payable to the Company upon the exercise in full of
such Options or the conversion or
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exchange of such Convertible Securities or, in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such consideration
as provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(d) Additional Shares of Common Stock issued or deemed to have been
issued pursuant to the operation of anti-dilution provisions applicable to
Convertible Securities (other than the Warrants), Options or other
securities of the Company (either as a result of the adjustments provided
for by the Warrants or otherwise) shall be deemed to have been issued
without consideration.
2.6. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7. DILUTION IN CASE OF OTHER SECURITIES. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in section 3) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this section 2, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this section 2 with respect to the Warrant Price shall be made
as nearly as possible in the manner so provided and applied to determine the
amount of Other Securities from time to time receivable upon the exercise of the
Warrants, so as to protect the holders of the Warrants against the effect of
such dilution.
2.8. MINIMUM ADJUSTMENT OF WARRANT PRICE. If the amount of any
adjustment of the Warrant Price required pursuant to this section 2 would be
less than one one-hundredth (.01) of a cent, such amount shall be carried
forward and adjustment with respect
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thereto made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate at least one one-hundredth (.01) of a cent.
3. CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION, ETC.. In
case the Company, after the Initial Date, (a) shall consolidate with or merge
into any other Person and shall not be the continuing or surviving corporation
of such consolidation or merger, or (b) shall permit any other Person to
consolidate with or merge into the Company and the Company shall be the
continuing or surviving Person but, in connection with such consolidation or
merger, Common Stock or Other Securities shall be changed into or exchanged for
cash, stock or other securities of any other Person or any other property, or
(c) shall transfer all or substantially all of its properties and assets to any
other Person, or (d) shall effect a capital reorganization or reclassification
of Common Stock or Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common Stock for
which adjustment in the Warrant Price is provided in section 2.2.1 or 2.2.2),
then, and in the case of each such transaction, the Company shall give written
notice thereof to each holder of any Warrant not less than 30 days prior to the
consummation thereof and proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this section 3, the holder of this
Warrant, upon the consummation of such transaction, shall be entitled to
receive, at the aggregate Warrant Price in effect at the time of such
consummation for all Common Stock (or Other Securities) issuable upon such
exercise immediately prior to such consummation, in lieu of the Common Stock (or
Other Securities) issuable upon such exercise prior to such consummation, the
highest amount of cash, securities or other property to which such holder would
actually have been entitled as a shareholder upon such consummation if such
holder had exercised this Warrant immediately prior thereto, subject to
adjustments (subsequent to such consummation) as nearly equivalent as possible
to the adjustments provided for in section 2 and this section 3, PROVIDED that
if a purchase, tender or exchange offer shall have been made to and accepted by
the holders of Common Stock under circumstances in which, upon completion of
such purchase, tender or exchange offer, the maker thereof, together with
members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange
Act) of which such maker is a part, and together with any affiliate or associate
of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any
members of any such group of which any such affiliate or associate is a part,
own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more
than 50% of the outstanding shares of Common Stock, and if the holder of this
Warrant so designates in such notice given to the Company, the holder of this
Warrant shall be entitled to receive the highest amount of cash, securities or
other property to which such holder would actually have been entitled as a
12
shareholder if the holder of this Warrant had exercised this Warrant prior to
the expiration of such purchase, tender or exchange offer, accepted such offer
and all of the Common Stock held by such holder had been purchased pursuant to
such purchase, tender or exchange offer, subject to adjustments (from and after
the consummation of such purchase, tender or exchange offer) as nearly
equivalent as possible to the adjustments provided for in section 2 and this
section 3.
4. OTHER DILUTIVE EVENTS. In case any event shall occur as to which
the provisions of section 2 or section 3 are not 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 of such sections, then, in each such case, the Company shall appoint
a firm of independent public accountants of recognized national standing (which
may be the regular auditors of the Company), which shall give their opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in sections 2 and 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon receipt of such
opinion the Company will promptly mail a copy thereof to the holder of this
Warrant and shall make the adjustments described therein.
5. NO DILUTION OR 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 this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not permit the par value of
any shares of stock receivable upon the exercise of this Warrant to exceed the
amount payable therefor upon such exercise, (b) 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 stock upon the exercise of all of
the Warrants from time to time outstanding, (c) will not take any action which
results in any adjustment of the Warrant Price if the total number of shares of
Common Stock (or Other Securities) issuable after the action upon the exercise
of all of the Warrants would exceed the total number of shares of Common Stock
(or other Securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon such exercise and,
(d) will not issue any capital stock of any class which has the right to more
than one vote per share or which is preferred as to dividends or as to the
distribution of assets upon voluntary or involuntary dissolution, liquidation or
winding-up, unless such stock is sold for a cash consideration at least equal
13
to the amount of its preference upon voluntary or involuntary dissolution,
liquidation or winding-up and the rights of the holders thereof shall be
limited to a fixed percentage (not exceeding 15%) of such cash consideration
in respect of participation in dividends.
6. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable upon the exercise of the Warrants, the Company at its
expense will promptly compute such adjustment or readjustment in accordance
with the terms of the Warrants and cause independent public accountants of
recognized national standing selected by the Company (which may be the
regular auditors of the Company) to verify such computation and prepare a
report setting forth such adjustment or readjustment and showing in
reasonable detail the method of calculation thereof and the facts upon which
such adjustment or readjustment is based, including without limitation a
statement of (a) the consideration received or to be received by the Company
for any Additional Shares of Common Stock issued or sold or deemed to have
been issued, (b) the number of shares of Common Stock outstanding or deemed
to be outstanding, and (c) the Warrant Price in effect immediately prior to
such issue or sale and as adjusted and readjusted (if required by section 2)
on account thereof. The Company will forthwith mail a copy of each such
report to each holder of a Warrant and will, upon the written request at any
time of any holder of a Warrant, furnish to such holder a like report setting
forth the Warrant Price at the time in effect and showing in reasonable
detail how it was calculated. The Company will also keep copies of all such
reports at its principal office and will cause the same to be available for
inspection at such office during normal business hours by any holder of a
Warrant or any prospective purchaser of a Warrant designated by the holder
thereof.
7. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a regular periodic dividend
payable in cash out of earned surplus) or other distribution, or any right
to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the assets of the Company to any other
Person, or
14
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which
any such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up is to take place and
the time, if any such time is to be fixed, as of which the holders of record
of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation
or winding-up. Such notice shall be mailed at least 20 days prior to the
date therein specified, in the case of any date referred to in the foregoing
subdivision (i), and at least 90 days prior to the date therein specified, in
the case of the date referred to in the foregoing subdivision (ii).
8. RESTRICTIONS ON TRANSFER. 8.1. RESTRICTIVE LEGENDS. Except
as otherwise permitted by this section 8, each Warrant originally issued
pursuant to the Purchase Agreement and each Warrant issued upon direct or
indirect transfer or in substitution for any Warrant pursuant to section 13
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933 and may
not be transferred in the absence of such registration or an exemption
therefrom under such Act."
Except as otherwise permitted by this section 8, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant and each
certificate issued upon the direct or indirect transfer of any such Common
Stock (or Other Securities) shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
are also subject to certain restrictions on transferability imposed by
Common Stock Purchase Warrants expiring August 25, 2003, a copy of which is
on file at the offices of the Company."
8.2. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior to
any transfer of any Restricted Securities which are not registered under an
effective registration statement under the
15
Securities Act (other than a transfer pursuant to Rule 144 or any comparable
rule under such Act), the holder thereof will give written notice to the
Company of such holder's intention to effect such transfer and to comply in
all other respects with this section 8.2. Each such notice (a) shall
describe the manner and circumstances of the proposed transfer in sufficient
detail to enable counsel to render the opinions referred to below, and
(b) shall designate counsel for the holder giving such notice (who may be
in-house counsel for such holder). The holder giving such notice will submit
a copy thereof to the counsel designated in such notice. The following
provisions shall then apply:
(i) If in the opinion of counsel for the holder the proposed transfer
may be effected without registration, such holder shall thereupon be
entitled to transfer such Restricted Securities in accordance with the
terms of the notice delivered by such holder to the Company. Each Warrant
or certificate, if any, issued upon or in connection with such transfer
shall bear the appropriate restrictive legend set forth in section 8.1
unless, in the opinion of such counsel, such legend is no longer required
to insure compliance with the Securities Act.
(ii) If the opinion of such counsel for the holder is not to the
effect that the proposed transfer may legally be effected without
registration of such Restricted Securities under the Securities Act, such
holder shall not be entitled to transfer such Restricted Securities (other
than in a transfer pursuant to Rule 144 or any comparable rule under the
Securities Act) until the conditions specified in subdivision (i) above
shall be satisfied or until registration of such Restricted Securities
under the Securities Act has become effective.
Notwithstanding the foregoing provisions of this section 8.2, the holder of
any Restricted Securities shall be permitted to transfer any such Restricted
Securities pursuant to Rule 144A under the Securities Act, PROVIDED that each
transferee agrees in writing to be bound by all the restrictions on transfer
of such Restricted Securities contained in this section 8.2. The Company
will pay the reasonable fees and disbursements of counsel (other than
in-house counsel) for any holder of Restricted Securities and of counsel for
the Company in connection with all opinions rendered by them pursuant to this
section 8.2 and pursuant to section 8.3.
8.3. TERMINATION OF RESTRICTIONS. The restrictions imposed by
this section 8 upon the transferability of Restricted Securities shall cease
and terminate as to any particular Restricted Securities (a) when such
securities shall have been effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering such
Restricted Securities, (b) when, in the opinions of both counsel for the
holder thereof and counsel for the Company, such restrictions are
16
no longer required in order to insure compliance with the Securities Act, or
(c) when such securities have been beneficially owned, by a person who has
not been an affiliate of the Company for at least three months, for a period
of at least two years, all as determined under Rule 144 under the Securities
Act. Whenever such restrictions shall terminate as to any Restricted
Securities, as soon as practicable thereafter and in any event within five
days, the holder thereof shall be entitled to receive from the Company,
without expense (other than transfer taxes, if any), new securities of like
tenor not bearing the applicable legend set forth in section 8.1 hereof.
9. REGISTRATION UNDER SECURITIES ACT, ETC. 9.1. INCIDENTAL
REGISTRATION. (a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company
at any time on or after February 25, 2000 proposes to register any of its
securities under the Securities Act (other than by a registration on Form S-4
or S-8 or any successor or similar forms), whether or not for sale for its
own account, in a manner which would permit registration of Registrable
Securities for sale to the public under the Securities Act, it will each such
time give prompt written notice to all holders of Registrable Securities of
its intention to do so and of such holders' rights under this section 9.1.
Upon the written request of any such holder made within 20 days after receipt
of any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders thereof, to the
extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be
registered, by inclusion of such Registrable Securities in the registration
statement which covers the securities which the Company proposes to register,
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 each holder of Registrable Securities and, thereupon, (a) in
the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith) and (b) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
section 9.1.
17
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration
pursuant to this section 9.1 involves an underwritten offering and the
managing underwriter advises the Company in writing that, in its opinion, the
number of securities requested to be included in such registration exceeds
the number which can be sold in such offering, the Company will include in
such registration to the extent of the number which the Company is so advised
can be sold in such offering securities determined as follows:
(i) if such registration as initially proposed by the Company was
solely a primary registration of its securities, (x) first, the securities
proposed by the Company to be sold for its own account, (y) second, any
Registrable Securities and any other securities of the Company requested to
be included in such registration, pro rata among the holders thereof
requesting such registration on the basis of the number of shares of such
securities requested to be included by such holders, and
(ii) if such registration as initially proposed by the Company was in
whole or in part requested by holders of securities of the Company, other
than holders of Registrable Securities, pursuant to demand registration
rights, (x) first, such securities held by the holders initiating such
registration, pro rata among the holders thereof, on the basis of the
number of shares of such securities requested to be included by such
holders, (y) second, any Registrable Securities and any other securities of
the Company requested to be included in such registration, pro rata among
the holders thereof requesting such registration on the basis of the number
of shares of such securities requested to be included by such holders.
9.2. REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in section 9.1,
the Company will as expeditiously as possible:
(a) prepare and file with the Commission the requisite registration
statement (including such audited financial statements as may be required
by the Securities Act or the rules and regulations promulgated thereunder)
to effect such registration and use its best efforts to cause such
registration statement to become effective, PROVIDED that before filing
such registration statement or any amendments thereto, the Company will
furnish to the counsel selected by the holders of Registrable Securities
whose Registrable Securities are to be included in such registration copies
of all such documents proposed to be filed, which documents will be subject
to the review of such counsel, and PROVIDED, FURTHER, that the Company may
discontinue any registration of
18
its securities which are not Registrable Securities at any time prior to
the effective date of the registration statement relating thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration statement and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement until the earlier of 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 or 90 days after such registration statement becomes effective,
PROVIDED that if less than all the Registrable Securities are withdrawn
from registration after the relevant period, the shares to be so withdrawn
shall be allocated pro rata among the holders thereof on the basis of the
respective numbers of Registrable Securities held by them included in such
registration;
(c) furnish to each seller of Registrable Securities covered by such
registration statement (and each Requesting Holder) 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 contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request;
(d) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as each
seller thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains
in effect, and take any other action which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subdivision (d) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the
19
seller or sellers thereof to consummate the disposition of such Registrable
Securities;
(f) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller (and the underwriters, if any), of
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten Public Offering, dated the
date of any closing under the underwriting agreement), reasonably
satisfactory in form and substance to such seller, and
(ii) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten Public Offering, dated the date of any closing under
the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten Public Offerings of securities and, in the case of the
accountants' letter, such other financial matters, as such seller (or the
underwriters, if any) may reasonably request;
(g) notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, 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 the light of the
circumstances under which they were made, and at the request of any such
holder promptly prepare and furnish to such holder 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 the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
20
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act, and not file any
amendment or supplement to such registration statement or prospectus to
which any such seller shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material respects with
the requirements of the Securities Act or of the rules or regulations
thereunder, having been furnished with a copy thereof at least five
business days prior to the filing thereof;
(i) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement; and
(j) use its best efforts to list all Registrable Securities covered
by such registration statement on any securities exchange on which any of
the securities of the same class as the Registrable Securities are then
listed.
The Company may require each holder of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such holder and the distribution of such securities as
the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by the acquisition of
such Registrable Securities that upon receipt of any notice from the Company
of the happening of any event of the kind described in subdivision (g) of
this section 9.2, such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subdivision
(g) of this section 9.2 and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the periods referred to in
subdivision (b) of this section 9.2 shall be extended by a number of days
equal to the number of days during the period from and including the giving
of notice pursuant to subdivision (g) of this section 9.2 and including the
date when each seller of any Registrable Securities covered by such
registration statement shall receive the copies of
21
the supplemented or amended prospectus contemplated by subdivision (g) of
this section 9.2.
9.3. UNDERWRITTEN OFFERINGS. (a) INCIDENTAL UNDERWRITTEN
OFFERINGS. If the Company at any time proposes to register any of its
securities under the Securities Act as contemplated by section 9.1 and such
securities are to be distributed by or through one or more underwriters, the
Company will, subject to the provisions of section 9.1(b), use its best
efforts, if requested by any holder of Registrable Securities, to arrange for
such underwriters to include the Registrable Securities to be offered and
sold by such holder among the securities to be distributed by such
underwriters. The holders of Registrable Securities to be distributed by
such underwriters shall be parties to the underwriting agreement between the
Company and such underwriters. No holder of Registrable Securities shall be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or
agreements regarding such holder and such holder's intended method of
distribution and any other representation required by law.
(b) HOLDBACK AGREEMENTS. (i) Each holder of Registrable
Securities agrees by acquisition of such Registrable Securities, if so
required by the managing underwriter, not to effect any public sale or
distribution of such securities during the seven days prior to and the 90
days after the closing of any underwritten registration pursuant to section
9.1 has become effective, or, if the managing underwriter advises the Company
in writing that, in its opinion, no such public sale or distribution should
be effected for a specified period longer than 90 days after such
underwritten registration in order to complete the sale and distribution of
securities included in such registration and the Company gives notice to such
holder of Registrable Securities of such advice, during a reasonable longer
period after such underwritten registration, except as part of such
underwritten registration, whether or not such holder participates in such
registration.
(ii) The Company agrees not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the seven days
prior to and the 90 days after the closing of any underwritten registration
pursuant to section 9.1 has become effective, except as part of such
underwritten registration and except pursuant to registrations on Form S-4 or
S-8 or any successor or similar forms thereto, and if the managing
underwriter advises the Company in writing that, in its opinion, no such
public sale or distribution should be effected for a specified period longer
than 90 days after such underwritten registration in order to complete the
sale and distribution of securities included in such registration, during a
reasonable longer period after such
22
underwritten registration, except as part of such underwritten registration.
9.4. PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of each registration statement under the
Securities Act, the Company will give the holders of Registrable Securities
registered under such registration statement and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
9.5. CERTAIN RIGHTS OF HOLDERS. The Company will not file any
registration statement under the Securities Act which refers to any holder of
any Notes or Registrable Securities by name or otherwise as the holder of any
securities of the Company, unless it shall first have given to such holder
the right to require (a) the insertion therein of language, in form and
substance satisfactory to such holder, to the effect that the holding by such
holder of such securities does not make such holder a "controlling person" of
the Company within the meaning of the Securities Act and is not to be
construed as a recommendation by such holder of the investment quality of the
Company's debt or equity securities covered thereby and that such holding
does not imply that such holder will assist in meeting any future financial
requirements of the Company, or (b) in the event that such reference to such
holder by name or otherwise is not required by the Securities Act or any
rules and regulations promulgated thereunder, the deletion of the reference
to such holder.
9.6. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. In the
event of any registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and hold
harmless the seller of Registrable Securities covered by any registration
statement filed pursuant to section 9.1, its directors and officers, each
other Person who participates as an underwriter in the offering or sale of
such securities and each other Person, if any, who controls any such seller
or any such underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
seller or any such director or officer or underwriter or controlling Person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any
23
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company will reimburse such
seller and each such director, officer, underwriter and controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding, PROVIDED that with respect to any seller the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such seller
specifically stating that it is for use in the preparation thereof, and,
PROVIDED, FURTHER, that the Company shall not be liable to any Person who
participates as an underwriter, in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of such Person's failure to send or give a
copy of the final prospectus to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director,
officer, underwriter or controlling person and shall survive the transfer of
such securities by such seller.
(b) INDEMNIFICATION BY THE SELLERS. The Company may require, as a
condition to including any Registrable Securities in any registration
statement filed pursuant to section 9.1, that the Company shall have received
an undertaking satisfactory to it from the prospective seller of such
securities, to indemnify and hold harmless (in the same manner and to the
same extent as set forth in subdivision (a) of this section 9.6) the Company,
each director of the Company, each officer of the Company and each other
Person, if any, who controls the Company within the meaning of the Securities
Act, and each Person who participates as an underwriter in the offering or
sale of securities by the Company, with respect to any statement or alleged
statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement
or alleged
24
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such seller specifically stating that it is for
use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement,
PROVIDED that such seller's obligations hereunder shall be limited to an
amount equal to the proceeds to such holder of the Registrable Securities
sold pursuant to such registration statement.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this section
9.6, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action, PROVIDED that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its obligations under the preceding subdivisions of this section
9.6, except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment
upon advice of counsel a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof
other than reasonable costs of investigation. No indemnifying party shall
consent to entry of any judgment or enter into any settlement without the
consent of the indemnified party which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect to such claim or litigation.
(d) OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding subdivisions of this section 9.6 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification
of securities under any Federal or state law or regulation of any
governmental authority, other than the Securities Act.
(e) INDEMNIFICATION PAYMENTS. The indemnification required by
this section 9.6 shall be made by periodic payments of the amount thereof
during the course of the investigation or
25
defense, as and when bills are received or expense, loss, damage or liability
is incurred.
9.7. COVENANTS RELATING TO RULE 144. The Company will file
reports in compliance with the Exchange Act and will, at its expense,
forthwith upon the request of any holder of Restricted Securities, deliver to
such holder a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number,
(b) the Company's Internal Revenue Service identification number, (c) the
Company's Commission file number, (d) the number of shares of Common Stock of
the Company outstanding as shown by the most recent report or statement
published by the Company, and (e) whether the Company has filed the reports
required to be filed under the Exchange Act for a period of at least 90 days
prior to the date of such certificate and in addition has filed the most
recent annual report required to be filed thereunder. If at any time the
Company is not required to file reports in compliance with either section 13
or section 15(d) of the Exchange Act, the Company at its expense will,
forthwith upon the written request of the holder of any Restricted
securities, make available adequate current public information with respect
to the Company within the meaning of paragraph (c)(2) of Rule 144 of the
General Rules and Regulations promulgated under the Securities Act.
10. AVAILABILITY OF INFORMATION. The Company will cooperate with
each holder of any Restricted Securities in supplying such information as may
be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will furnish to each holder of any
Warrants, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, and copies of all regular and
periodic reports and all registration statements and prospectuses filed by
the Company with any securities exchange or with the commission.
11. RESERVATION OF STOCK, ETC. The Company will at all times
reserve and keep available, solely for issuance and delivery upon exercise of
the Warrants, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of all Warrants at the time outstanding.
All shares of Common Stock (or Other Securities) shall be duly authorized
and, when issued upon such exercise, shall be validly issued and, in the case
of shares, fully paid and nonassessable with no liability on the part of the
holders thereof.
12. LISTING ON SECURITIES EXCHANGE. The Company will list on each
national securities exchange on which any Common Stock may at any time be
listed, subject to official notice of issuance upon exercise of the Warrants,
and will maintain such listing of,
26
all shares of Common Stock from time to time issuable upon exercise of the
Warrants. The Company will also so list on each national securities
exchange, and will maintain such listing of, any other securities if at the
time any securities of the same class shall be listed on such national
securities exchange by the Company.
13. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS.
13.1. OWNERSHIP OF WARRANTS. The Company may treat the person in
whose name any Warrant is registered on the register kept at the principal
office of the Company as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, except that, if and when any
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer thereof as the owner of such Warrant for all
purposes, notwithstanding any notice to the contrary. Subject to section 8,
a Warrant, if properly assigned, may be exercised by a new holder without
first having a new Warrant issued.
13.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon the surrender of
any Warrant, properly endorsed, for registration of transfer or for exchange
at the principal office of the Company, the Company at its expense will
(subject to compliance with section 8, if applicable) execute and deliver to
or upon the order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock called
for on the face or faces of the Warrant or Warrants so surrendered.
13.3. REPLACEMENT OF WARRANTS. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction of any Warrant held by a Person other than any institutional
investor, upon delivery of indemnity reasonably satisfactory to the Company
in form and amount or, in the case of any such mutilation, upon surrender of
such Warrant for cancellation at the principal office of the Company, the
Company at its expense will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
14. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
ACQUIRING PERSON: the continuing or surviving corporation of a
consolidation or merger with the Company (if other than the Company), the
transferee of substantially all of the properties and assets of the Company,
the corporation consolidating with or merging into the Company in a
consolidation or merger in connection with which the Common Stock is changed
into or exchanged for stock or other securities of any other Person or cash
or any
27
other property, or, in the case of a capital reorganization or
reclassification, the Company.
ACQUISITION PRICE: as applied to the Common Stock, with respect to
any transaction to which section 3 applies, (a) the price per share equal to
the greater of the following, determined in each case as of the date
immediately preceding the date of consummation of such transaction: (i) the
Market Price of the Common Stock and (ii) the highest amount of cash plus the
Fair Value of the highest amount of securities or other property which the
holder of this Warrant would have been entitled as a shareholder to receive
upon such consummation if such holder had exercised this Warrant immediately
prior thereto, or (b) if a purchase, tender or an exchange offer is made by
the Acquiring Person (or by any of its affiliates) to the holders of the
Common Stock and such offer is accepted by the holders of more than 50% of
the outstanding shares of Common Stock, the greater of (i) the price
determined in accordance with the foregoing, subdivision (a) and (ii) the
price per share equal to the greater of the following, determined in each
case as of the date immediately preceding the acceptance of such offer by the
holders of more than 50% of the outstanding shares of Common Stock: (x) the
Market Price of the Common Stock and (y) the highest amount of cash plus the
Fair Value of the highest amount of securities or other property which the
holder of this Warrant would be entitled as a shareholder to receive pursuant
to such offer if such holder had exercised this Warrant immediately prior to
the expiration of such offer and accepted the same.
ADDITIONAL SHARES OF COMMON STOCK: all shares (including treasury
shares) of Common Stock issued or sold (or, pursuant to section 2.3 or 2.4,
deemed to be issued) by the Company after the Initial Date hereof, whether or
not subsequently reacquired or retired by the Company, other than (a) shares
of Common Stock issued upon the exercise of Warrants and (b) the Options
listed on Schedule A hereto.
BASE PRICE: as of any date of determination, the lesser of
(a) $4.00 and (b) the Current Market Price as of such date.
BUSINESS DAY: any day other than a Saturday or a Sunday or a day
on which commercial banking institutions in the City of New York are
authorized by law to be closed, PROVIDED that, in determining the period
within which certificates or Warrants are to be issued and delivered pursuant
to section 1.3 at a time when shares of Common Stock (or Other Securities)
are listed or admitted to trading on any national securities exchange or in
the over-the-counter market and in determining the Market Price of any
securities listed or admitted to trading on any national securities exchange
or in the over-the-counter market, "Business Day" shall mean any day when the
principal exchange in which securities are then listed or admitted to trading
is open for trading or, if such securities are traded in the over-the-counter
market in the United
28
States, such market is open for trading, and PROVIDED, FURTHER, that any
reference to "days" (unless Business Days are specified) shall mean calendar
days.
COMMISSION: the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange
Act, whichever is the relevant statute for the particular purpose.
COMMON STOCK: the Company's Common Stock, par value $.005 per
share, as constituted on the date hereof, any stock into which such Common
Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
COMPANY: Eco Soil Systems, Inc., a Nebraska corporation.
CONVERTIBLE SECURITIES: any evidences of indebtedness, shares of
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
CURRENT MARKET PRICE: on any date specified herein, (a) with
respect to Common Stock, (i) the lesser of (x) the average daily Market Price
during the period of the most recent 20 consecutive Business Days ending on
such date and (y) the Market Price on the Business Day immediately preceding
such date, or (ii) if shares of Common Stock are not then listed or admitted
to trading on any national securities exchange and if the closing bid and
asked prices thereof are not then quoted or published in the over-the-counter
market, the Market Price on such date; and (b) with respect to any other
securities, the Market Price on such date.
EXCHANGE ACT: the Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the commission thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Securities Exchange Act of 1934 shall include a reference to
the comparable section, if any, of any such similar Federal statute.
FAIR VALUE: with respect to any securities or other property, the
Fair Value thereof as of a date which is within 15 days of the date as of
which the determination is to be made (a) determined by an agreement between
the Company and the Requisite Holders of Warrants or (b) if the Company and
the Requisite Holders of Warrants fail to agree, determined jointly by an
independent investment banking firm retained by the Company and by an
independent investment banking firm retained by the Requisite
29
Holders of Warrants, either of which firms may be an independent investment
banking firm regularly retained by the Company or any such holder or (c) if
the Company or such holders shall fail so to retain an independent investment
banking firm within five Business Days of the retention of such firm by such
holders or the Company, as the case may be, determined solely by the firm so
retained or (d) if the firms so retained by the Company and by such holders
shall be unable to reach a joint determination within 15 Business Days of the
retention of the last firm so retained, determined by another independent
investment banking firm which is not a regular investment banking firm of the
Company or any such holder chosen by the first two such firms.
INITIAL DATE: the meaning specified in section 2.2.
MARKET PRICE: on any date specified herein, (a) with respect to
Common Stock, the amount per share equal to (i) the last sale price of shares
of such security, regular way, on such date or, if no such sale takes place
on such date, the average of the closing bid and asked prices thereof on such
date, in each case as officially reported on the principal national
securities exchange on which the same are then listed or admitted to trading,
or (ii) if no shares of such security are then listed or admitted to trading
on any national securities exchange but such security is designated as a
national market system security by the NASD, the last trading price of such
security on such date, or if such security is not so designated, the average
of the reported closing bid and asked prices thereof on such date as shown by
the NASD automated quotation system or, if no shares thereof are then quoted
in such system, as published by the National Quotation Bureau, Incorporated
or any successor organization, and in either case as reported by any member
firm of the New York Stock Exchange selected by the Company, or (iii) if no
shares of such security are then listed or admitted to trading on any
national exchange or designated as a national market system security and if
no closing bid and asked prices thereof are then so quoted or published in
the over-the-counter market, the higher of (x) the book value thereof as
determined by agreement between the Company and the Requisite Holders of
Warrants, or if the Company and the Requisite Holders of Warrants fail to
agree, by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company, as of the last day of any
month ending within 60 days preceding the date as of which the determination
is to be made or (y) the fair value thereof determined in good faith by the
Board of Directors of the issuer thereof as of a date which is within 15 days
of the date as of which the determination is to be made; and (b) with respect
to any other securities, the fair value thereof determined in good faith by
the Board of Directors of the Company as of a date which is within 15 days of
the date as of which the determination is to be made.
NASD: the National Association of Securities Dealers.
30
NOTES: the meaning specified in the opening paragraphs of this
Warrant.
OPTIONS: rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
securities.
OTHER SECURITIES: any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to section 3 or otherwise.
PARENT: as to any Acquiring Person, any corporation which
(a) controls the Acquiring Person directly or indirectly through one or more
intermediaries, (b) is required to include the Acquiring Person in its
consolidated financial statements under generally accepted accounting
principles and (c) is not itself included in the consolidated financial
statements of any other Person (other than its consolidated subsidiaries).
PERSON: an individual, a partnership, an association, a joint
venture, a corporation, a limited liability company, a business, a trust, an
unincorporated organization or a government or any department, agency or
subdivision thereof.
PUBLIC OFFERING: any offering of Common Stock to the public
pursuant to an effective registration statement under the Securities Act.
PURCHASE AGREEMENT: the meaning specified in the opening
paragraphs of this Warrant.
REGISTRABLE SECURITIES: (a) any shares of Common Stock or other
Securities issued or issuable upon exercise of the Warrants and (b) any
securities issued or issuable with respect to any Common Stock or Other
Securities referred to in subdivision (a) by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any
particular Registrable Securities, once issued such securities shall cease to
be Registrable Securities when (x) 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, (y) they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act,
or (z) they shall have ceased to be outstanding.
31
REGISTRATION EXPENSES: all expenses incident to the Company's
performance of or compliance with section 9, including, without limitation,
all registration, filing and NASD fees, all fees and expenses of complying
with securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, the
reasonable fees and disbursements of a single counsel and single firm of
accountants retained by the holders of the Registrable Securities being
registered, premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable Securities
being registered and any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, but excluding underwriting
discounts and commissions and transfer taxes, if any.
REQUISITE HOLDERS OF WARRANTS: the holders of at least 60% of all
the Warrants at the time outstanding determined on the basis of the number of
shares of Common Stock or Other Securities deliverable upon exercise thereof.
RESTRICTED SECURITIES: (a) any Warrants bearing the applicable
legend set forth in section 8.1, (b) any shares of Common Stock (or Other
Securities) which have been issued upon the exercise of Warrants and which
are evidenced by a certificate or certificates bearing the applicable legend
set forth in such section, and (c) unless the context otherwise requires, any
shares of Common Stock (or Other Securities) which are at the time issuable
upon the exercise of Warrants and which, when so issued, will be evidenced by
a certificate or certificates bearing the applicable legend set forth in such
section.
SECURITIES ACT: the Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time. Reference to a particular section
of the Securities Act of 1933 shall include a reference to the comparable
section, if any, of any such similar Federal statute.
SUBSIDIARY: any corporation, association or other business entity at
least 50% (by number of votes) of the Voting Common Stock of which is at the
time owned by the Company or by one or more Subsidiaries or by the Company and
one or more Subsidiaries.
TRANSFER: unless the context otherwise requires, any sale,
assignment, pledge or other disposition of any security, or of any interest
therein, which could constitute a "sale" as that term is defined in section 2(3)
of the Securities Act.
32
VOTING COMMON STOCK: with respect to any corporation, association
or other business entity, stock of any class or classes (or equivalent
interest) , if the holders of the stock of such class or classes (or
equivalent interests) are ordinarily, in the absence of contingencies,
entitled to vote for the election of a majority of the directors (or persons
performing similar functions) of such corporation, association or business
entity, even if the right so to vote has been suspended by the happening of
such a contingency.
WARRANT PRICE: the meaning specified in section 2.1.
WARRANTS: the meaning specified in the opening paragraphs of this
Warrant.
15. REMEDIES. The Company stipulates that the remedies at law of
the holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
16. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in
this Warrant shall be construed as conferring upon the holder hereof any
rights as a stockholder of the Company or as imposing any liabilities on such
holder to purchase any securities or as a stockholder of the Company, whether
such liabilities are asserted by the Company or by creditors or stockholders
of the Company or otherwise.
17. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be delivered by hand, facsimile
transmission or courier service, or mailed by registered or certified mail,
return receipt requested, addressed (a) if to any holder of any Warrant or
any holder of any Common Stock (or Other Securities), at the registered
address of such holder as set forth in the register kept at the principal
office of the Company, or (b) if to the Company, to the attention of its
Chief Financial Officer, at its principal office, PROVIDED that the exercise
of any Warrant shall be effected in the manner provided in section 1.
18. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. The agreements of the Company contained
in this Warrant, other than those applicable solely to the Warrants and the
holders thereof, shall inure to the benefit of and be enforceable by any
holder or holders at the time of any Common Stock (or Other Securities)
issued upon the exercise of Warrants, whether so expressed or not. This
33
Warrant shall be construed and enforced in accordance with and governed by
the laws of the State of New York. The section headings in this Warrant are
for purposes of convenience only and shall not constitute a part hereof.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
34
19. EXPIRATION. The right to exercise this Warrant shall expire
at 3 P.M., New York City time, on August 25, 2003.
ECO SOIL SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Title: Chief Executive Officer
35
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To _________________
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder,
_____________(1) shares of Common Stock of ECO SOIL SYSTEMS, INC., a Nebraska
corporation, and herewith makes payment of $________ therefor
[by application pursuant to section 1.5 of such Warrant of $________ aggregate
principal amount of Notes (as defined in such Warrant) plus $________ accrued
interest thereon], (2) and requests that the certificates for such shares be
issued in the name of, and delivered to ________ whose address is ________.
[The undersigned hereby instructs you to credit the principal amount
of each Note so applied against the installments of principal remaining unpaid
on such Note in the ________ order of their maturity dates.]
Dated: ______________
_____________________
(Signature must conform in all respects to name of
holder as specified on the face of this Warrant)
[insert address]
_____________________
(1) Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which this
Warrant is being exercised), in either case without making any adjustment for
additional Common Stock or any other stock or other securities or property or
cash which, pursuant to the adjustment provisions of this Warrant, may be
delivered upon exercise. In the case of a partial exercise, a new warrant or
Warrants will be issued and delivered, representing the unexercised portion
of this Warrant, to the holder surrendering the same.
(2) Delete inapplicable language in brackets.
36
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto ________ the right
represented by such Warrant to purchase shares ________ of Common Stock of
ECO SOIL SYSTEMS, INC., a Nebraska corporation, to which such Warrant
relates, and appoints ________ Attorney to make such transfer on the books of
________ maintained for such purpose, with full power of substitution in the
premises.
Dated: _____________
_________________________
(Signature must conform in all respects to name of
holder as specified on the face of this Warrant)
[insert address]
Signed in the presence of:
_________________________
xxxvii
SCHEDULE I
Eco Soil Systems, Inc. (the "Company") issued a substantially identical
Common Stock Purchase Warrant to Albion Alliance Mezzanine Fund, L.P.
("Albion"). In addition to the different holder, the warrant issued to
Albion (the "Albion Warrant") differs from that issued to Paribas Capital
Funding LLC in the following respects:
1. The Albion Warrant is numbered W-1.
2. The Albion Warrant grants Albion the right to purchase 140,000
shares of the Company's common stock.
ii
