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WARRANT
To Purchase Common Stock of
XXXXXX, INC.
Issued to
BANKBOSTON, N.A.
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June 12, 1997
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Warrant No. 1
1,000,000 Shares
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS
OF THIS WARRANT.
No. of Shares of Common Stock: 1,000,000 Warrant No. 1
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WARRANT
To Purchase Common Stock of
XXXXXX, INC.
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THIS IS TO CERTIFY THAT BANKBOSTON, N.A., a national banking association,
or registered assigns, for and in consideration of its paying the Company (as
hereinafter defined) $1.00, is entitled to purchase from XXXXXX, INC., a New
Jersey corporation ("the Company"), an aggregate number of 1,000,000 shares of
Common Stock (as hereinafter defined and subject to adjustment as provided
herein), in whole or in part, including fractional parts, at a purchase price
of $0.50 per share, all on the terms and conditions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective meanings
set forth below:
1.1 "Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.
1.2 "Appraised Value" shall mean, in respect of any share of Common Stock
on any date herein specified, the fair saleable value of such share of Common
Stock (determined without giving effect to the discount for (i) a minority
interest or (ii) any lack of liquidity of the Common Stock or due to the fact
that the Company may have no class of equity registered under the Exchange Act)
as of the last day of the most recent fiscal month to end within 60 days prior
to such date specified, based on the value of the Company, as determined by an
investment banking firm selected in accordance with the terms of Section 15,
divided by the number of Fully Diluted Outstanding shares of Common Stock.
1.3 "BankBoston" shall mean BankBoston, N.A., a national banking
association.
1.4 "Book Value" shall mean, in respect of any share of Common Stock on
any date herein specified, the consolidated book value of the Company as of the
last day of any month immediately preceding such date, divided by the number of
Fully Diluted Outstanding shares of Common Stock as determined in accordance
with GAAP by Coopers & Xxxxxxx LLP or any other firm of independent certified
public accountants of recognized national standing selected by the Company and
reasonably acceptable to the Majority Holders.
1.5 "Business Day" shall mean any day that is not a Saturday or Sunday or
a day on which banks are required or permitted to be closed in the State of
Massachusetts.
1.6 "Closing Date" shall mean June 12, 1997.
1.7 "Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
1.8 "Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the
Company and which is not subject to redemption and (ii) shares of common stock
of any successor or acquiring corporation (as defined in Section 4.8) received
by or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 4.8.
1.9 "Convertible Securities" shall mean evidences of indebtedness, shares
of stock, warrants, options or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
1.10 "Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the higher of (a) the Book Value per share
of Common Stock at such date, and (b) the Appraised Value per share of Common
Stock as at such date, or if there shall then be a public market for the Common
Stock, the higher of (x) the Book Value per share of Common Stock at such date,
and (y) the average of the daily market prices for 30 consecutive Business Days
commencing 45 days before such date. The daily market price for each such
Business Day shall be (i) the last sale price on such day on the principal
stock exchange on which such Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange, the
average of the last reported closing bid and asked prices on such day as
officially quoted on any such exchange, (iii) if the Common Stock is not then
listed or admitted to trading on any stock exchange, the average of the last
reported closing bid and asked prices on such day in the over-the-counter
market, as furnished by the National Association of Securities Dealers
Automatic Quotation System or the National Quotation Bureau, Inc.; provided,
however, that if neither such corporation at the time is engaged in the
business of reporting such prices, then such prices shall be as furnished by
any similar firm then engaged in such business or, if there is no such firm, as
furnished by any member of the NASD selected mutually by the Majority Holders
and the Company or, if they cannot agree upon such selection, then as selected
by two such members of the NASD, one of which shall be selected by the Majority
Holders and one of which shall be selected by the Company.
1.11 "Current Warrant Price" shall mean, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date.
1.12 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
1.13 "Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1.
1.14 "Expiration Date" shall mean June 12, 2004.
1.15 "Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant and other options or
warrants to purchase, or securities convertible into, shares of Common Stock
outstanding on such date which would be deemed outstanding in accordance with
GAAP for purposes of determining Book Value or net income per share.
1.16 "GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
1.17 "Holder" shall mean the Person in whose name the Warrant set forth
herein is registered on the books of the Company maintained for such purpose.
1.18 "NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
1.19 "Other Property" shall have the meaning set forth in Section 4.8.
1.20 "Outstanding" shall mean, when used with reference to Common Stock,
at any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or for the
account of the Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
1.21 "Permitted Assignee" shall mean BankBoston, N.A., and any Person
directly or indirectly, controlling, controlled by, or under direct or indirect
common control with, BankBoston, N.A.
1.22 "Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
1.23 "Registration Rights Agreement" shall have the meaning set forth in
Section 9.
1.24 "Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in Section
9.1(a).
1.25 "Securities Act" shall mean the Securities Act of 1933, as amended,
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.
1.26 "Transfer" shall mean any disposition of any Warrant or Warrant Stock
or of any interest in either thereof, which would constitute a sale thereof
within the meaning of the Securities Act.
1.27 "Transfer Notice" shall have the meaning set forth in Section 9.2.
1.28 "Warrants" shall mean this Warrant and all warrants issued upon
transfer of, or in substitution for, any thereof. All Warrants shall at all
times be identical as to terms and conditions and date, except as to the number
of shares of Common Stock for which they may be exercised.
1.29 "Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
1.30 "Warrant Stock" shall mean the shares of Common Stock purchased by
the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 Exercise Period.
(a) Subject to earlier exercise pursuant to Section 4.8, on and
after January 1, 1999, and until 5:00 P.M., Eastern time, on the
Expiration Date, Holder may exercise this Warrant, on any Business Day,
for all of the number of shares of Common Stock purchasable under this
Warrant.
(b) (i) If at any time Holder shall desire to exercise the Warrant,
then Holder shall deliver written notice of its intention to exercise
the Warrant (a "Notice of Intention") to the Company, setting forth
such Holder's desire to make such exercise.
(ii) Upon receipt of the Notice of Intention, the Company shall
then have the right to purchase the Warrant at a price equal to (i)
the number of shares of Common Stock to be purchased upon exercise of
the Warrant multiplied by the Current Market Price less (ii) the
Warrant Price, both calculated as of the date of the Notice of
Intention. The right of the Company pursuant to this Section 2.1(b)
shall be exercisable by the delivery of a notice to the Holder (the
"Notice of Exercise"), within 20 calendar days from the date of
delivery of the Notice of Intention. The Notice of Exercise shall
state the the purchase price for the Warrant. The rights of the
Company pursuant to this Section 2.1(b) shall terminate if
unexercised 20 calendar days after the date of delivery of the Notice
of Intention.
(iii) In the event that the Company exercises its rights to
purchase the Warrant in accordance with Section 2.1(b), then the
Holder must sell the Warrant to the Company, and the Company shall
purchase the Warrant within 30 calendar days after the date of
delivery of the Notice of Exercise to the Holder.
(iv) Upon the consummation of the purchase and sale of the
Warrant, the Holder shall deliver the Warrant, duly endorsed, or
accompanied by written instruments of transfer in form satisfactory
to the Company, duly executed by the Holder free and clear of any
liens, against delivery by the Company of the purchase price of the
Warrant by certified or bank check.
(c) This Warrant is exercisable pursuant to this Section 2
notwithstanding the repayment of any loans or other indebtedness owed by
the Company to any Holder.
2.2 Manner of Exercise. In order to exercise this Warrant, which must be
exercised in whole and not in part, Holder shall deliver to the Company at its
principal office at 000 Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx, 00000-0000 or at the
office or agency designated by the Company pursuant to Section 12, (i) a
written notice of Holder's election to exercise this Warrant, which notice
shall specify the number of shares of Common Stock to be purchased, (ii)
payment of the Warrant Price and (iii) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by Holder or its agent or attorney. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any
event within five (5) Business Days thereafter, execute or cause to be executed
and deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as such
Holder shall request in the notice and shall be registered in the name of
Holder or, subject to Section 9, such other name as shall be designated in the
notice. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and Holder or
any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
notice, when such notice together with this Warrant and payment therefor as
provided in Section 2.3, is received by the Company as described above and all
taxes required to be paid by Holder, if any, pursuant to Section 2.4 prior to
the issuance of such shares have been paid. Notwithstanding any provision
herein to the contrary, the Company shall not be required to register shares in
the name of any Person who acquired this Warrant (or part hereof) or any
Warrant Stock otherwise than in accordance with this Warrant.
2.3 Payment. (a) Payment of the Warrant Price shall be made at the
option of the Holder by (i) certified or official bank check, (ii) the
cancellation by Holder of indebtedness of the Company to Holder (if any) in an
amount equal to such sum, (iii) as provided in Section 2.3(b) or (iv) a
combination of (i), (ii) and (iii) as Holder may determine.
(b) Notwithstanding any provisions herein to the contrary, if the
fair market value of one share of the Company's Common Stock is greater than
Current Warrant Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant for cash or indebtedness, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed subscription form and notice of such election, in which
event the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X=Y (A-B)
A
Where X= the number of shares of Common Stock to be issued to
the Holder
Y= the number of shares of Common Stock purchasable under
the Warrant at the date of such calculation
A= the Current Market Price of one share of the Company's
Common Stock (at the date of such calculation)
B= Current Warrant Price (as adjusted to the date of such
calculation)
2.4 Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock issuable
upon exercise of this Warrant in any name other than that of Holder, and in
such case the Company shall not be required to issue or deliver any stock
certificate until such tax or other charge has been paid or it has been
established to the satisfaction of the Company that no such tax or other charge
is due.
2.5 Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of the Warrant. As to any
fraction of a share which the Holder of the Warrant would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the same fraction of the
Current Market Price per share of Common Stock on the date of exercise.
2.6 Continued Validity. A holder of shares of Common Stock issued upon
the exercise of this Warrant, (other than a holder who acquires such shares
after the same have been publicly sold pursuant to a Registration Statement
under the Securities Act or sold pursuant to Rule 144 thereunder), shall
continue to be entitled with respect to such shares to all rights to which it
would have been entitled as Holder under Sections 9, 10, 13, 14 and 17 of this
Warrant. The Company will, at the time of each exercise of this Warrant, upon
the request of the holder of the shares of Common Stock issued upon such
exercise hereof, acknowledge in writing, in form reasonably satisfactory to
such holder, its continuing obligation to afford to such holder all such
rights; provided, however, that if such holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Transfer. Subject to compliance with Section 9 hereof, transfer of
this Warrant and all rights hereunder, shall be registered on the books of the
Company to be maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company referred to in Section 2.2 or the office or
agency designated by the Company pursuant to Section 12, together with a
written assignment of this Warrant substantially in the form of Exhibit B duly
executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Section 9,
execute and deliver a new Warrant in the name of the assignee or assignees and
this Warrant shall promptly be cancelled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.
3.2 [Reserved].
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant under this Section 3.
3.4 Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrant.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise
of this Warrant, shall be subject to adjustment from time to time as set forth
in this Section 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this Section 4 at the
time of such event and as provided in Section 5.2.
4.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other distribution
of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record holder of
the same number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by (B) a
ratio, the numerator of which is the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment and the
denominator of which is the number of shares for which this Warrant is
exercisable immediately after such adjustment.
4.2 Certain Other Distributions. If at any time the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than Convertible
Securities or Additional Shares of Common Stock),
then and in such event (unless and until such dividend or other distribution is
legally abandoned) provision shall be made so that Holder, upon exercise of
this Warrant, shall receive, in addition to the number of shares of Common
Stock receivable thereupon, the amount of such cash, evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights so distributable which Holder would have received had Holder
exercised prior to the date of such event and had thereafter, during the period
from the date of such event to and including the exercise date, retained the
same during such period, subject to all other adjustments called for during
such period under this Section 4 with respect to the rights of Holders of the
Warrant. A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par value)
into shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 4.2 and,
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be,
of the outstanding shares of Common Stock within the meaning of Section 4.1.
4.3 Issuance of Additional Shares of Common Stock.
(a) If the Company shall (except as hereinafter provided) at any
time issue or sell any Additional Shares of Common Stock in exchange for
consideration in an amount per Additional Share of Common Stock less than
the Current Warrant Price at the time the Additional Shares of Common
Stock are issued, then (i) the Current Warrant Price as to the number of
shares for which this Warrant is exercisable prior to such adjustment
shall be reduced to a price determined by dividing (A) an amount equal to
the sum of (x) the number of shares of Common Stock Outstanding
immediately prior to such issue or sale multiplied by the then existing
Current Warrant Price, plus (y) the consideration, if any, received by the
Company upon such issue or sale, by (B) the total number of shares of
Common Stock Outstanding immediately after such issue or sale; and (ii)
the number of shares of Common Stock for which this Warrant is exercisable
shall be adjusted to equal the product obtained by multiplying the Current
Warrant Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale and dividing the product thereof
by the Current Warrant Price resulting from the adjustment made pursuant
to clause (i) above.
(b) If the Company shall (except as hereinafter provided) at any
time issue or sell any Additional Shares of Common Stock, in exchange for
consideration in an amount per Additional Share of Common Stock less than
the Current Market Price at the time the Additional Shares of Common Stock
are issued, then (i) the number of shares of Common Stock for which this
Warrant is exercisable shall be adjusted to equal the product obtained by
multiplying the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such issue or sale by a fraction (A) the
numerator of which shall be the number of shares of Common Stock
Outstanding immediately after such issue or sale, and (B) the denominator
of which shall be the number of shares of Common Stock Outstanding
immediately prior to such issue or sale plus the number of shares which
the aggregate offering price of the total number of such Additional Shares
of Common Stock would purchase at the then Current Market Price; and (ii)
the Current Warrant Price as to the number of shares for which this
Warrant is exercisable prior to such adjustment shall be adjusted by
multiplying such Current Warrant Price by a fraction (X) the numerator of
which shall be the number of shares for which this Warrant is exercisable
immediately prior to such issue or sale; and (Y) the denominator of which
shall be the number of shares of Common Stock purchasable immediately
after such issue or sale.
(c) If at any time the Company (except as hereinafter provided)
shall issue or sell any Additional Shares of Common Stock, in exchange for
consideration in an amount per Additional Shares of Common Stock which is
less than the Current Warrant Price and the Current Market Price at the
time the Additional Shares of Common Stock are issued, the adjustment
required under Section 4.3 shall be made in accordance with the formula in
paragraph (a) or (b) above which results in the lower Current Warrant
Price following such adjustment.
The provisions of paragraphs (a) and (b) of Section 4.3 shall not
apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4.1 or 4.2.
No adjustment of the number of shares of Common Stock for which this
Warrant shall be exercisable shall be made under paragraph (a) or (b) of
Section 4.3 upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Convertible
Securities (or upon the issuance of any warrant or other rights therefor)
pursuant to Section 4.4 or Section 4.5.
(d) For the purposes of this Section 4.3 only, "Additional Shares of
Common Stock" shall not include (i) any shares of Common Stock issued or
issuable pursuant to the Company's 401(k) Plan or pursuant to the
provisions of or the exercise of any options currently outstanding or
hereafter granted under the Company's Amended and Restated 1993
Non-Qualified Stock Option Plan, 1996 Equity Incentive Plan and up to, but
not exceeding 2,000,000 shares of Common Stock which would be authorized
for issuance pursuant to similar plans to which may be adopted by the
Company; provided that, for the purpose of this paragraph (d)(i), the
number of shares of Common Stock under any such plan which are not
included as "Additional Shares of Common Stock" shall be adjusted to
reflect any subdivisions of Common Stock into a larger number of shares of
Common Stock or a combination of shares of Common Stock into a smaller
number of shares of Common Stock or (ii) the issuance of Additional Shares
of Common Stock in connection with the acquisition of assets in the
ordinary course of the Company's business whether the acquisition is
structured as a purchase of assets or as a merger in which the Company is
the surviving Corporation.
4.4 Issuance of Warrants or Other Rights. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon
the exercise of such warrants or other rights or upon conversion or exchange of
such Convertible Securities together with any amount paid in consideration for
such warrants or rights (calculated on a per share basis) shall be less than
the Current Warrant Price or the Current Market Price in effect immediately
prior to the time of such issue or sale, then the number of shares for which
this Warrant is exercisable and the Current Warrant Price shall be adjusted as
provided in Section 4.3 on the basis that the maximum number of Additional
Shares of Common Stock issuable pursuant to all such warrants or other rights
or necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and the Company
shall be deemed to have received all of the consideration payable therefor, if
any, as of the date of the issuance of such warrants or other rights. No
further adjustments of the Current Warrant Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise of
such warrants or other rights or upon the actual issue of such Common Stock
upon such conversion or exchange of such Convertible Securities.
4.5 Issuance of Convertible Securities. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which the Company is the surviving corporation)
issue or sell, any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange
together with the amount paid per share for such Convertible Securities shall
be less than the Current Warrant Price or Current Market Price in effect
immediately prior to the time of such issue or sale, then the number of Shares
for which this Warrant is exercisable and the Current Warrant Price shall be
adjusted as provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
and outstanding and the Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of actual issuance of
such Convertible Securities. No adjustment of the number of Shares for which
this Warrant is exercisable and the Current Warrant Price shall be made under
this Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights pursuant to Section
4.4. No further adjustments of the number of Shares for which this Warrant is
exercisable and the Current Warrant Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible Securities
and, if any issue or sale of such Convertible Securities is made upon exercise
of any warrant or other right to subscribe for or to purchase any such
Convertible Securities for which adjustments of the number of Shares for which
this Warrant is exercisable and the Current Warrant Price have been or are to
be made pursuant to other provisions of this Section 4, no further adjustments
of the number of Shares for which this Warrant is exercisable and the Current
Warrant Price shall be made by reason of such issue or sale.
4.6 Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price shall have been made pursuant to Section 4.4 or Section
4.5 as the result of any issuance of warrants, rights or Convertible
Securities,
(a) such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and all or a portion
of such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the
case may be, shall not have been exercised, or
(b) the consideration per share for which shares of Common Stock are
issuable pursuant to such warrants or rights, or the terms of such other
Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per
share upon the occurrence of a specified date or event,
then, with respect to this Warrant, such previous adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to
have been issued by virtue of the computation made in connection with the
adjustment so rescinded and annulled shall no longer be deemed to have been
issued by virtue of such computation. Thereupon, a recomputation shall be made
of the effect of such rights or options or other Convertible Securities on the
basis of
(y) treating the number of Additional Shares of Common Stock or
other property, if any, theretofore actually issued or issuable pursuant
to the previous exercise of any such warrants or rights or any such right
of conversion or exchange, as having been issued on the date or dates of
any such exercise and for the consideration actually received and
receivable therefor, and
(z) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other property
are issuable under such warrants or rights or other Convertible
Securities; whereupon a new adjustment of the number of shares of Common
Stock for which this Warrant is exercisable and the Current Warrant Price
shall be made, which new adjustment shall supersede the previous
adjustment so rescinded and annulled.
4.7 Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any Additional
Shares of Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the initial public-offering price (in any such case subtracting
any amounts paid or receivable for accrued interest or accrued dividends
and without taking into account any compensation, discounts or expenses
paid or incurred by the Company for and in the underwriting of, or
otherwise in connection with, the issuance thereof). To the extent that
such issuance shall be for a consideration other than cash, then, except
as herein otherwise expressly provided, the amount of such consideration
shall be deemed to be the fair value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors of the
Company. In case any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or purchase
such Additional Shares of Common Stock or Convertible Securities shall be
issued in connection with any merger in which the Company issues any
securities, the amount of consideration therefor shall be deemed to be the
fair value, as determined in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board in good faith shall determine to be attributable
to such Additional Shares of Common Stock, Convertible Securities,
warrants or other rights, as the case may be. The consideration for any
Additional Shares of Common Stock issuable pursuant to any warrants or
other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other
rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable
that would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
adds or subtracts less than 1% of the shares of Common Stock for which
this Warrant is exercisable immediately prior to the making of such
adjustment. Any adjustment representing a change of less than such
minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the
purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
(d) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, and Holder exercises this Warrant,
any such property or Additional Shares of Common Stock issuable upon
exercise by reason of such adjustment shall be deemed the last shares of
Common Stock for which this Warrant is exercised (notwithstanding any
other provision to the contrary herein) and such shares or other property
shall be held in escrow for Holder by the Company to be issued to Holder
upon and to the extent that the event actually takes place.
Notwithstanding any other provision to the contrary herein, if the event
for which such record was taken fails to occur or is rescinded, then such
escrowed shares shall be cancelled by the Company and escrowed property
returned.
(e) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Holder, and any
dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Company and acceptable to the Holder.
4.8 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. After the Closing Date, and to and through the Exercise
Period (ignoring the January 1, 1999 date in Section 2.1(a)), in case the
Company shall reorganize its capital, reclassify its capital stock, consolidate
or merge with or into another corporation (where the Company is not the
surviving corporation or where there is a change in or distribution with
respect to the Common Stock of the Company), or sell, transfer or otherwise
dispose of all or substantially all its property, assets or business to another
corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of the Company,
then each Holder shall have the right thereafter to receive, upon exercise of
such Warrant, the number of shares of common stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For purposes of
this Section 4.8, "common stock of the successor or acquiring corporation"
shall include stock of such corporation of any class which is not preferred as
to dividends or assets over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions
of this Section 4.8 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
4.9 Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock
other than action described in this Section 4, then, unless such action will
not have a materially adverse effect upon the rights of the Holder, the number
of shares of Common Stock or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
4.10 Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDER
5.1 Notice of Adjustments. Whenever the number of shares of Common Stock
for which this Warrant is exercisable, or whenever the price at which a share
of such Common Stock may be purchased upon exercise of the Warrants, shall be
adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the adjustment and the
method by which such adjustment was calculated (including a description of the
basis on which the Board of Directors of the Company determined the fair value
of any evidences of indebtedness, shares of stock, other securities or property
or warrants or other subscription or purchase rights referred to in Section
4.7(a)), specifying the number of shares of Common Stock for which this Warrant
is exercisable and (if such adjustment was made pursuant to Section 4.8 or 4.9)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. The Company
shall promptly cause a signed copy of such certificate to be delivered to
Holder in accordance with Section 17.2. The Company shall keep at its office
or agency designated pursuant to Section 12 copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by Holder or any prospective purchaser of a Warrant designated
by Holder.
5.2 Notice of Corporate Action. If at any time
(a) The Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of
its indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right as contemplated by Section 4
hereof, or otherwise, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company
or any consolidation or merger of the Company with, or any sale, transfer
or other disposition of all or substantially all the property, assets or
business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 20 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
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 Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to
Holder at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 17.2.
6. NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, 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 actions as may be necessary or appropriate to protect the rights of
Holder against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take
all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain
all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times reserve
and keep available for issue upon the exercise of the Warrant such number of
its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of the Warrant. All shares of Common Stock which
shall be so issuable, when issued upon exercise of the Warrant and payment
therefor in accordance with the terms of the Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrant, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the number
of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any
governmental authority or other governmental approval or filing under any
federal or state law before such shares may be so issued, the Company will in
good faith and as expeditiously as possible and at its expense endeavor to
cause such shares to be duly registered.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business
on a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise
or transfer of the Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrant shall not be assigned or transferred to any Person other than
a Permitted Assignee, and the Warrant and the Warrant Stock shall not otherwise
be transferred, hypothecated or assigned before satisfaction of the conditions
specified in this Section 9, which conditions are intended to ensure compliance
with the provisions of the Securities Act with respect to the Transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees to
be bound by the provisions of this Section 9.
9.1 Restrictive Legend.
(a) Except as otherwise provided in this Section 9, each certificate
for Warrant Stock initially issued upon the exercise of this Warrant, and
each certificate for Warrant Stock issued to any subsequent transferee of
any such certificate, 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, as
amended, and are subject to the conditions specified in a
certain Warrant dated June 12, 1997, originally issued by
XXXXXX, INC. No transfer of the shares represented by this
certificate shall be valid or effective until such
conditions have been fulfilled. A copy of the form of said
Warrant is on file with the Secretary of XXXXXX, INC. The
holder of this certificate, by acceptance of this
certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Section 9, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby
have not been registered under the Securities Act of 1933,
as amended, and may not be transferred in violation of such
Act, the rules and regulations thereunder or the provisions
of this Warrant."
9.2 Notice of Proposed Transfers. Prior to any Transfer or attempted
Transfer of the Warrant or any shares of Restricted Common Stock, the holder of
the Warrant or Restricted Common Stock shall give ten days' prior written
notice (a "Transfer Notice") to the Company of such holder's intention to
effect such Transfer, describing the manner and circumstances of the proposed
Transfer, and obtain from counsel to such holder who shall be reasonably
satisfactory to the Company, an opinion that the proposed Transfer of the
Warrant or such Restricted Common Stock may be effected without registration
under the Securities Act. After receipt of the Transfer Notice and opinion,
the Company shall, within five days thereof, notify the holder of the Warrant
or such Restricted Common Stock as to whether such opinion is reasonably
satisfactory and, if so, such holder shall thereupon be entitled to Transfer
the Warrant or such Restricted Common Stock, in accordance with the terms of
the Transfer Notice. Each certificate, if any, evidencing such shares of
Restricted Common Stock issued upon such Transfer shall bear the restrictive
legend set forth in Section 9.1(a), and each Warrant issued upon such Transfer
shall bear the restrictive legend set forth in Section 9.1(b), unless in the
opinion of such counsel such legend is not required in order to ensure
compliance with the Securities Act. The holder of the Warrant or the
Restricted Common Stock, as the case may be, giving the Transfer Notice shall
not be entitled to Transfer such Warrant or such Restricted Common Stock until
receipt of notice from the Company under this Section 9.2(a) that such opinion
is reasonably satisfactory.
9.3 Registration Rights Agreement. The holders of Warrant and Warrant
Stock shall have the right to request registration of the Warrant Stock
pursuant to the Registration Rights Agreement of even date herewith (the
"Registration Rights Agreement") between the Company and BankBoston.
9.4 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrant, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrant) and the
legend requirements of Section 9.1 shall terminate as to the Warrant or any
share of Warrant Stock or Restricted Common Stock (or Common Stock issuable
upon the exercise of the Warrants) (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such shares may be transferred
without registration thereof under the Securities Act. Whenever the
restrictions imposed by Section 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN
WARRANT CONTAINED IN SECTION 9 HEREOF TERMINATED ON
________ __, ____, AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer of, or in substitution for,
any Warrant or Warrants entitled to bear such legend shall have a similar
legend endorsed thereon. Whenever the restrictions imposed by this Section
shall terminate as to any share of Restricted Common Stock, as hereinabove
provided, the holder thereof shall be entitled to receive from the Company, at
the Company's expense, a new certificate representing such Common Stock not
bearing the restrictive legend set forth in Section 9.1(a).
9.5 Listing on Securities Exchange. If the Company shall list, or
continue the listing of, any shares of Common Stock on any securities exchange,
it will, at its expense, list thereon, maintain and, when necessary, increase
such listing of, all shares of Common Stock issued or, to the extent
permissible under the applicable securities exchange rules, issuable upon the
exercise of this Warrant so long as any shares of Common Stock shall be so
listed during any such Exercise Period.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder and each holder of Restricted
Common Stock in supplying such information as may be reasonably 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 the Warrant or Restricted
Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from a Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY
As long as the Warrant remains outstanding, the Company shall maintain an
office or agency (which may be the Principal executive offices of the Company)
where the Warrants may be presented for exercise or registration of transfer as
provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1 Quarterly Information. The Company will deliver to the Holder, as
soon as practicable after the end of each of the first three quarters of the
Company, and in any event within 45 days thereafter, one copy of an unaudited
consolidated balance sheet of the Company and its subsidiaries as at the close
of such quarter, and the related unaudited consolidated statements of income
and cash flows of the Company for such quarter and, in the case of the second
and third quarters, for the portion of the fiscal year ending with such
quarter, setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year. Such financial statements
shall be prepared by the Company in accordance with GAAP and accompanied by the
certification of the Company's chief executive officer or chief financial
officer that such financial statements are complete and correct and present
fairly the consolidated financial position, results of operations and cash
flows of the Company and its subsidiaries as at the end of such quarter and for
such year-to-date period, as the case may be.
13.2 Annual Information. The Company will deliver to each Holder as soon
as practicable after the end of each fiscal year of the Company, and in any
event within 90 days thereafter, one copy of:
(i) an audited consolidated balance sheet of the Company and its
subsidiaries as at the end of such year; and
(ii) audited consolidated statements of income, retained earnings and
cash flows of the Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all prepared in accordance
with GAAP, and which audited financial statements shall be accompanied by (i)
an opinion thereon of the independent certified public accountants regularly
retained by the Company, or any other firm of independent certified public
accountants of recognized national standing selected by the Company and (ii) a
report of such independent certified public accountants confirming any
adjustment made pursuant to Section 4 during such year.
13.3 Filings. The Company will file on or before the required date all
regular or periodic reports (pursuant to the Exchange Act) with the Commission
and will deliver to Holder promptly upon their becoming available one copy of
each report, notice or proxy statement sent by the Company to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange
Act) and any Registration Statement, prospectus or written communication (other
than transmittal letters) (pursuant to the Securities Act), filed by the
Company with (i) the Commission or (ii) any securities exchange on which shares
of Common Stock are listed.
14. APPRAISAL
Any determination of the Appraised Value per share of Common Stock
pursuant to the terms hereof shall be made by an investment banking firm of
nationally recognized standing selected by the Company and acceptable to the
Holder. If the investment banking firm selected by the Company is not
acceptable to the Holder and the Company and the Holder cannot agree on a
mutually acceptable investment banking firm, then the Holder and the Company
shall each choose one such investment banking firm and the respective chosen
firms shall agree on another investment banking firm which shall make the
determination. The Company shall retain, at its sole cost, such investment
banking firm as may be necessary for the determination of Appraised Value
required by the terms of this Warrant.
15. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder
for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
16. MISCELLANEOUS
16.1 Nonwaiver and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder's rights, powers or remedies. If
the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
16.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in
writing and (a) delivered in person with receipt acknowledged; or (b) sent by
registered, certified or express mail, return receipt requested, postage
prepaid, or (c) by reputable overnight courier service, or (d) by confirmed
facsimile transmission with a copy sent by means of (a), (b) or (c) hereof,
addressed as follows:
(a) If to Holder or holder of Warrant Stock, at its last known
address appearing on the books of the Company maintained for such purpose.
(b) If to the Company at
XXXXXX, INC.
000 Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxxx X. Little and Xxxxxx X. Fourniadis
Facsimile Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, acknowledged, transmitted by confirmed facsimile, or three (3)
Business Days after the same shall have been deposited in the United States
mail. Failure or delay in delivering copies of any notice, demand, request,
approval, declaration, delivery or other communication to the person designated
above to receive a copy shall in no way adversely affect the effectiveness of
such notice, demand, request, approval, declaration, delivery or other
communication.
16.3 Indemnification. The Company agrees to indemnify and hold harmless
Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or
asserted against Holder in any manner relating to or arising out of (i)
Holder's exercise of this Warrant and/or ownership of any shares of Warrant
Stock issued in consequence thereof, or (ii) any litigation to which Holder is
made a party in its capacity as a stockholder of the Company; provided,
however, that the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, attorneys' fees, expenses or disbursements are found in a
final non-appealable judgment by a court to have resulted from Holder's gross
negligence, bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
16.4 Remedies. Each Holder and each holder of Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate.
16.5 Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant and the Registration Rights
Agreement are intended to be for the benefit of all Holders from time to time
of this Warrant or holders of Warrant Stock, as the case may be, and shall be
enforceable by any such Holder or holder of Warrant Stock.
16.6 Amendment. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder, provided
that the Warrant may not be modified or amended to reduce the number of shares
of Common Stock for which the Warrant is exercisable or to increase the price
at which such shares may be purchased upon exercise of the Warrant (before
giving effect to any adjustment as provided therein) without the prior written
consent of the Holder thereof.
16.7 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
16.8 Headings. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
16.9 Governing Law. This Warrant shall be governed by the laws of the
State of Massachusetts, without regard to the provisions thereof relating to
conflict of laws.
17. MOST FAVORED WARRANT PROVISIONS
If the Company provides to the holders of Convertible Securities, terms
more favorable to such holders than as set forth herein dealing with: the terms
substantially similar to Sections 2.2-2.6; Sections 3; 4; 5; 6; 7; 8; 9.2, 9,
4, 9, 5; 13; 16.3 and 16.4, then the appropriate terms of this Warrant shall be
equitably adjusted to provide Holder the benefit of such more favorable terms.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: June 12, 1997
XXXXXX, INC., a New Jersey corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
ATTEST:
By: /s/ Xxxxxx X. Fourniadis
Name: Xxxxxx X. Fourniadis
Title: Secretary
EXHIBIT A
_________
SUBSCRIPTION FORM
To be executed only upon exercise of Warrant
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of _____ Shares of Common Stock of XXXXXX, INC.
for the Shares set forth in the schedule below and in accordance with the
schedule set forth below, and the undersigned herewith makes payment therefor,
all at the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common Stock hereby purchased (and
any securities or other property issuable upon such exercise) be issued in the
name of and delivered to _______________________ whose address is
________________.
Total No. of Number of Shares
Shares Covered Purchased
by this Warrant
_______________ __________
_________________________________________________
(Name of Registered Owner)
_________________________________________________
(Signature of Registered Owner or Authorized
Representative of Registered Owner)
_________________________________________________
(Street Address)
_________________________________________________
(City) (State) (Zip Code)
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Permitted Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Permitted Assignee Name: ______________________________
Address of Permitted Assignee: ______________________________
______________________________
______________________________
Total No. of Number of Shares
Shares Covered Assigned
by the Warrant
_______________ __________
_______________ __________
_______________ __________
and does hereby irrevocably constitute and appoint ______________
attorney-in-fact to register such transfer on the books of XXXXXX, INC.
maintained for the purpose, with full power of substitution in the premises.
Dated: ____________ Print Name: ____________________________________________
Signature of Registered
Owner (or Authorized
Representative of
Registered Owner): _________________________________
Witness: _________________________________
TABLE OF CONTENTS
_________________
Page
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Additional Shares of Common Stock" . . . . . . . . . . . . 1
1.2 "Appraised Value" . . . . . . . . . . . . . . . . . . . . . 1
1.3 "BankBoston". . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 "Book Value". . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 "Business Day". . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Closing Date". . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Commission". . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 "Common Stock". . . . . . . . . . . . . . . . . . . . . . . 2
1.9 "Convertible Securities". . . . . . . . . . . . . . . . . . 2
1.10 "Current Market Price". . . . . . . . . . . . . . . . . . . 2
1.11 "Current Warrant Price" . . . . . . . . . . . . . . . . . . 3
1.12 "Exchange Act". . . . . . . . . . . . . . . . . . . . . . . 3
1.13 "Exercise Period" . . . . . . . . . . . . . . . . . . . . . 3
1.14 "Expiration Date" . . . . . . . . . . . . . . . . . . . . . 3
1.15 "Fully Diluted Outstanding" . . . . . . . . . . . . . . . . 3
1.16 "GAAP". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 "Holder". . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 "NASD". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 "Other Property". . . . . . . . . . . . . . . . . . . . . . 3
1.20 "Outstanding" . . . . . . . . . . . . . . . . . . . . . . . 3
1.21 "Permitted Assignee". . . . . . . . . . . . . . . . . . . . 3
1.22 "Person". . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.23 "Registration Rights Agreement" . . . . . . . . . . . . . . 4
1.24 "Restricted Common Stock" . . . . . . . . . . . . . . . . . 4
1.25 "Securities Act". . . . . . . . . . . . . . . . . . . . . . 4
1.26 "Transfer". . . . . . . . . . . . . . . . . . . . . . . . . 4
1.27 "Transfer Notice" . . . . . . . . . . . . . . . . . . . . . 4
1.28 "Warrants". . . . . . . . . . . . . . . . . . . . . . . . . 4
1.29 "Warrant Price" . . . . . . . . . . . . . . . . . . . . . . 4
1.30 "Warrant Stock" . . . . . . . . . . . . . . . . . . . . . . 4
2. EXERCISE OF WARRANT. . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Exercise Period . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Manner of Exercise. . . . . . . . . . . . . . . . . . . . . 5
2.3 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . 6
2.5 Fractional Shares . . . . . . . . . . . . . . . . . . . . . 7
2.6 Continued Validity. . . . . . . . . . . . . . . . . . . . . 7
3. TRANSFER, DIVISION AND COMBINATION . . . . . . . . . . . . . . . . 7
3.1 Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Maintenance of Books. . . . . . . . . . . . . . . . . . . . 8
4. ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Stock Dividends, Subdivisions and Combinations. . . . . . . 8
4.2 Certain Other Distributions . . . . . . . . . . . . . . . . 8
4.3 Issuance of Additional Shares of Common Stock . . . . . . . 9
4.4 Issuance of Warrants or Other Rights. . . . . . . . . . . . 11
4.5 Issuance of Convertible Securities. . . . . . . . . . . . . 11
4.6 Superseding Adjustment. . . . . . . . . . . . . . . . . . . 12
4.7 Other Provisions Applicable to Adjustments
under this Section. . . . . . . . . . . . . . . . . . . . . 13
4.8 Reorganization, Reclassification, Merger, Consolidation
or Disposition of Assets. . . . . . . . . . . . . . . . . . 14
4.9 Other Action Affecting Common Stock . . . . . . . . . . . . 15
4.10 Certain Limitations . . . . . . . . . . . . . . . . . . . . 15
5. NOTICES TO WARRANT HOLDER. . . . . . . . . . . . . . . . . . . . . 16
5.1 Notice of Adjustments . . . . . . . . . . . . . . . . . . . 16
5.2 Notice of Corporate Action. . . . . . . . . . . . . . . . . 16
6. NO IMPAIRMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY. . . . 17
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS . . . . . . . . 18
9. RESTRICTIONS ON TRANSFERABILITY. . . . . . . . . . . . . . . . . . 18
9.1 Restrictive Legend. . . . . . . . . . . . . . . . . . . . . 18
9.2 Notice of Proposed Transfers. . . . . . . . . . . . . . . . 19
9.3 Registration Rights Agreement . . . . . . . . . . . . . . . 19
9.4 Termination of Restrictions . . . . . . . . . . . . . . . . 20
9.5 Listing on Securities Exchange. . . . . . . . . . . . . . . 20
10. SUPPLYING INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 20
11. LOSS OR MUTILATION . . . . . . . . . . . . . . . . . . . . . . . . 21
12. OFFICE OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . 21
13. FINANCIAL AND BUSINESS INFORMATION . . . . . . . . . . . . . . . . 21
13.1 Quarterly Information . . . . . . . . . . . . . . . . . . . 21
13.2 Annual Information. . . . . . . . . . . . . . . . . . . . . 21
13.3 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14. APPRAISAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . . . 22
16. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.1 Nonwaiver and Expenses. . . . . . . . . . . . . . . . . . . 22
16.2 Notice Generally. . . . . . . . . . . . . . . . . . . . . . 23
16.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . 23
16.4 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.5 Successors and Assigns. . . . . . . . . . . . . . . . . . . 24
16.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . 24
16.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 24
17. MOST FAVORED WARRANT PROVISIONS. . . . . . . . . . . . . . . . . . 24
EXHIBITS
________
Exhibit A - Subscription Form . . . . . . . . . . . . . . . . . . . . . .26
Exhibit B - Assignment Form . . . . . . . . . . . . . . . . . . . . . . .27
CONCORDANCE
___________
Additional Shares of Common Stock . . . . . . . . . . . . . . . 1, 2, 8-14
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 22
BankBoston. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 3, 19
Book Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 4, 18
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 14, 17
Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4, 20, 22
Common Stock. . . . . . . . . . . . . . . . . . . . . 1-20, 22, 24, 26, 27
Convertible Securities. . . . . . . . . . . . . . . . . . . . . 2, 8-14, 24
Current Market Price. . . . . . . . . . . . . . . . . . . . . 2, 5-7, 9-11
Current Warrant Price . . . . . . . . . . . . . . . . 3, 4, 6, 8-13, 15, 18
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 3, 22
Exercise Period . . . . . . . . . . . . . . . . . . . . . . . 3, 4, 14, 20
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4
Fully Diluted Outstanding . . . . . . . . . . . . . . . . . . . . . . . 1-3
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 21
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-9, 14-24
NASD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3
Other Property. . . . . . . . . . . . . . . . . . . . . . 3, 12, 14-17, 26
Outstanding . . . . . . . . . . . . . . . . . . . . . . . 1-3, 8-12, 17, 21
Permitted Assignee. . . . . . . . . . . . . . . . . . . . . . . . 3, 18, 27
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4, 6, 18, 23
Registration Rights Agreement . . . . . . . . . . . . . . . . . . 4, 19, 24
Restricted Common Stock . . . . . . . . . . . . . . . . . . . . . 4, 19, 20
Securities Act. . . . . . . . . . . . . . . . . . . . 1, 2, 4, 7, 18-20, 22
Transfer. . . . . . . . . . . . . . . . . . . . . . . 4, 5, 7, 8, 15-21, 27
Transfer Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 19
Warrant Price . . . . . . . . . . . . . . . . . . . . . . 3-6, 8-13, 15, 18
Warrant Stock . . . . . . . . . . . . . . . . . 1, 4, 6, 14, 18-20, 23, 24
Warrants. . . . . . . . . . . . . . . . . . . 2-4, 9-13, 15, 16, 18, 20, 21
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