WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Agreement") dated as of February 7, 2000 is
made by and between Research Engineers, Inc., a Delaware corporation (the
"Company"), and Cruttenden Xxxx Incorporated ("Cruttenden") with reference to
that certain warrant agreement dated as of December 7, 1999 (the "Warrant
Agreement") by and between the Company and Cruttenden.
WHEREAS, the Company is in need of funds to finance its working capital
and investment needs;
WHEREAS, Cruttenden is willing to provide the Company with $3,493,750
in connection with the exercise of warrants granted to Cruttenden under the
Warrant Agreement;
WHEREAS, the Warrant Agreement provides that the warrants granted
thereunder are not exercisable until June 7, 2000; and
WHEREAS, in consideration of Cruttenden's willingness to exercise the
warrants under the Warrant Agreement for cash, the Company has agreed to allow
for the exercise of such warrants on the date hereof and to issue additional
warrants to Cruttenden (the "Warrants") to purchase an aggregate of 200,000
shares (hereinafter, and as the number may be adjusted hereto, the "Warrant
Shares"), of the Company's Common Stock, $0.01 par value per share (the "Common
Stock"), each Warrant initially entitling the holder thereof to purchase one
share of Common Stock at a Warrant Price (as hereinafter defined) which takes
into account the Company's two-for-one split of its Common Stock applicable to
stockholders of record on January 31, 2000.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein and for other good and valuable consideration, the parties
hereto agree as follows:
1. EXERCISE OF PRIOR WARRANTS; ISSUANCE OF WARRANTS; FORM OF WARRANT.
The Company hereby accepts Cruttenden's exercise of its warrants granted under
the Warrant Agreement in consideration of the payment by Cruttenden of the
aggregate warrant price thereunder in the amount of $3,493,750 payable as
follows: (a) $1,746, 875 shall be payable upon execution of this Agreement and
(b) $1,746,875, together with interest at a rate of 8% per annum calculated from
the date hereof until payment is made, shall be payable on or before March 7,
2000. In connection therewith, the Company hereby issues and delivers to
Cruttenden, Warrants to purchase 200,000 Warrant Shares for the consideration
described in the Recitals to this Agreement. The text of the Warrants and of the
form of election to purchase shares shall be substantially as set forth in
Exhibit A attached hereto. The Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
Chairman of the Board, President or Vice President of the Company, under its
corporate seal, affixed or in facsimile, attested by the manual or facsimile
signature of the Secretary or an Assistant Secretary of the Company.
Warrants bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrants or did not hold such
offices on the date of this Agreement. Warrants shall be dated as of the date of
execution thereof by the Company either upon initial issuance or upon division,
exchange, substitution or transfer.
2. REGISTRATION. The Warrants shall be numbered and shall be registered
on the books of the Company (the "Warrant Register") as they are issued. The
Company shall be entitled to treat the registered holder of any Warrant on the
Warrant Register (the "Holder") as the owner in fact therefor for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other person, and shall not be liable for any
registration or transfer of Warrants which are registered or are to be
registered in the name of a fiduciary or the nominee of a fiduciary unless made
with the actual knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration or transfer, or with the knowledge of such
facts that its participation therein amounts to bad faith. Warrants to purchase
200,000 shares shall be registered initially in the name of "Cruttenden Xxxx
Incorporated," or in such other denominations as Cruttenden may request in
writing to the Company.
3. EXCHANGE OF WARRANT CERTIFICATES. Subject to any restriction upon
transfer set forth in this Agreement, each Warrant certificate may be exchanged
for another certificate or certificates entitling the Holder thereof to purchase
a like aggregate number of Warrant Shares as the certificate or certificates
surrendered then entitled such Holder to purchase. Any Holder desiring to
exchange a Warrant certificate or certificates shall make such request in
writing delivered to the Company, and shall surrender, properly endorsed, the
certificate or certificates to be so exchanged. Thereupon, the Company shall
execute and deliver to the person entitled thereto a new Warrant certificate or
certificates, as the case may be, as so requested.
4. TRANSFER OF WARRANTS. Until August 7, 2000, the Warrants will not be
sold, transferred, assigned or hypothecated except to bona fide officers and
partners of Cruttenden who agree in writing to be bound by the terms hereof. The
Warrants shall be transferable only on the Warrant Register upon delivery
thereof duly endorsed by the Holder or by the Holder's duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment
or authority to transfer. In all cases of transfer by an attorney, the original
power of attorney, duly approved, or an official copy thereof, duly certified,
shall be deposited with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced and may be required to be
deposited with the Company in its discretion. Upon any registration of transfer,
the Company shall deliver a new Warrant or Warrants to the person entitled
thereto.
5. TERM OF WARRANTS; EXERCISE OF WARRANTS.
5.1 Each Warrant entitles the registered owner thereof to
purchase one share of Common Stock at any time from 10:00 a.m., Pacific time, on
August 7, 2000 (the "Initiation Date") until 6:00 p.m., Pacific time, on
February 7, 2005 (the "Expiration Date") at a purchase price of $38.00, subject
to adjustment (the "Warrant Price"). Notwithstanding the foregoing, if at 6:00
p.m., Pacific time on the Expiration Date, any Holder or Holders of the Warrants
have not exercised their Warrants and the Closing Price (as defined below) for
the Common Stock on the Expiration Date is greater than the Warrant Price, then
each such unexercised Warrant shall be automatically converted into a number of
shares of Common Stock of the Company equal to: (A) the number of shares of
Common Stock then issuable upon exercise of a Warrant multiplied by (B) a
fraction (1) the numerator of which is the difference between the Closing Price
for the Common Stock on the Expiration Date and the Warrant Price and (2) the
denominator of which is the Closing Price for the Warrant Stock on the
Expiration Date.
5.2 The Warrant Price and the number of Warrant Shares
issuable upon exercise of Warrants are subject to adjustment upon the occurrence
of certain events, pursuant to the provisions of Section 11 of this Agreement.
Subject to the provisions of this Agreement, each Holder of Warrants shall have
the right, which may be exercised as expressed in such Warrants, to purchase
from the Company (and the Company shall issue and sell to such Holder of
Warrants) the number of fully paid and nonassessable Warrant Shares specified in
such Warrants, upon surrender to the Company, or its duly authorized agent, of
such Warrants, with the form of election to purchase on the reverse thereof duly
filled in and signed, and upon payment to the Company of the Warrant Price, as
adjusted in accordance with the provisions of Section 11 of this Agreement, for
the number of Warrant Shares in respect of which such Warrants are then
exercised. Payment of such Warrant Price shall be made in cash or by certified
or official bank check, or a combination thereof. No adjustment shall be made
for any dividends on any Warrant Shares of stock issuable upon exercise of a
Warrant.
5.3 Upon such surrender of Warrants, and payment of the
Warrant Price as aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch to or upon the written order of the Holder of such
Warrants and in such name or names as such registered Holder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of such Warrants, together with cash, as provided in Section
12 of this Agreement, in respect of any fraction of a share otherwise issuable
upon such surrender and, if the number of Warrants represented by a Warrant
Certificate shall not be exercised in full, a new Warrant Certificate, executed
by the Company for the balance of the number of whole Warrant Shares represented
by the Warrant Certificate.
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5.4 If permitted by applicable law, such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares as of the date of the surrender of such Warrants and payment of the
Warrant Price as aforesaid. The rights of purchase represented by the Warrants
shall be exercisable, at the election of the registered Holders thereof, either
as an entirety or from time to time for only part of the shares specified
therein.
6. COMPLIANCE WITH GOVERNMENT REGULATIONS. The Company covenants that
if any shares of Common Stock required to be reserved for purposes of exercise
or conversion of Warrants require, under any Federal or state law or applicable
governing rule or regulation of any national securities exchange, registration
with or approval of any governmental authority, or listing on any such national
securities exchange before such shares may be issued upon exercise, the Company
will in good faith and as expeditiously as possible endeavor to cause such
shares to be duly registered, approved or listed on the relevant national
securities exchange, as the case may be; provided, however, that (except to the
extent legally permissible with respect to Warrants of which Cruttenden is the
Holder) in no event shall such shares of Common Stock be issued, and the Company
is hereby authorized to suspend the exercise of all Warrants, for the period
during which such registration, approval or listing is required, but not in
effect.
7. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes,
if any, attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue or delivery of any warrants or certificate for Warrant Shares in a name
other than that of the registered Holder of such warrants.
8. MUTILATED OR MISSING WARRANTS. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest; but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of such Warrant and, if requested, indemnity or bond also
reasonably satisfactory to the Company. An applicant for such substitute
Warrants shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.
9. RESERVATION OF WARRANT SHARES. There have been reserved out of the
authorized and unissued shares of Common Stock a number of shares sufficient to
provide for the exercise of the rights of purchase represented by the Warrants
and the transfer agent for the Common Stock ("Transfer Agent") and every
subsequent Transfer Agent for any shares of the Company's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized and unissued shares as shall be required for
such purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent Transfer Agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will supply such Transfer Agent with
duly executed stock certificates for such purposes and will itself provide or
otherwise make available any cash which may be issuable as provided in Section
12 of this Agreement. The Company will furnish to such Transfer Agent a copy of
all notices of adjustments, and certificates related thereto, transmitted to
each Holder pursuant to Section 11.2 of this Agreement. All Warrants surrendered
in the exercise of the rights thereby evidenced shall be cancelled.
10. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from time to
time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of Common Stock are then listed.
11. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of securities purchasable upon the exercise of each Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as hereinafter defined. For purposes of this Section
11, "Common Stock" means shares now or hereafter authorized of any class of
common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
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11.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares
purchasable upon the exercise of each warrant and the Warrant Price shall be
subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in
shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company
(including any such reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of each Warrant immediately prior thereto shall
be adjusted so that the Holder of each Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or would have been entitled to receive after the happening of
any of the events described above, had such Warrants been exercised immediately
prior to the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) In case the Company shall distribute to all
holders of its shares of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the surviving
corporation) evidences of its indebtedness or assets (excluding cash dividends
or distributions payable out of consolidated earnings or earned surplus and
dividends or distribution referred to in paragraph (a) above or in the paragraph
immediately following this paragraph) or rights, options or warrants, or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, then in each case the number of Warrant Shares
thereafter purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon the
exercise of each Warrant by a fraction, the numerator of which shall be the then
current market price per share of Common Stock (as defined in paragraph (c)
below) on the date of such distribution, and the denominator of which shall be
the then current market price per share of Common Stock, less the then fair
value (as reasonably determined by the Board of Directors of the Company) of the
portion of the assets or evidences of indebtedness so distributed or of such
subscription rights, options or warrants, or of such convertible or exchangeable
securities applicable to one share of Common Stock. Such adjustment shall be
made whenever any such distribution is made and shall become effective on the
date of distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
In the event of a distribution by the Company to all holders of its
shares of Common Stock of shares of capital stock of a subsidiary or securities
convertible into or exercisable for such stock, then in lieu of an adjustment in
the number of Warrant Shares purchasable upon the exercise of each Warrant, the
Holder of each Warrant, upon the exercise thereof at any time after such
distribution, shall be entitled to receive from the Company, such subsidiary or
both, as the Company shall determine, the stock or other securities to which
such Holder would have been entitled if such Holder had exercised such Warrant
immediately prior thereto, all subject to further adjustment as provided in this
Section 11.1; provided, however, that no adjustment in respect of dividends or
interest on such stock or other securities shall be made during the term of a
Warrant or upon the exercise of a Warrant.
(c) For the purpose of any computation under
paragraph (b) of this Section, the current market price per share of Common
Stock at any date shall be the average of the daily Closing Prices for 20
consecutive trading days commencing 30 trading days before the date of such
computation. The selling price for each day (the "Closing Price") shall be the
last such reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices regular
way for such day, in each case on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if not
listed or admitted to trading, the average of the closing bid and asked prices
of the Common Stock in the over-the counter market as reported by the Nasdaq
National Market System, Nasdaq SmallCap System or OTC Bulletin Board or if not
approved for quotation on the Nasdaq National Market System, Nasdaq SmallCap
System or OTC Bulletin Board, the average of the closing bid and asked prices as
furnished by two members of the National Association of Securities Dealers, Inc.
selected from time to time by the Company for that purpose.
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(d) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of Warrant
Shares purchasable upon the exercise of each Warrant; provided, however, that
any adjustments which by reason of this paragraph (d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-thousandth of a
share.
(e) Whenever the number of Warrant Shares purchasable
upon the exercise of each Warrant is adjusted, as herein provided, the Warrant
Price payable upon exercise of each Warrant shall be adjusted by multiplying
such Warrant Price immediately prior to such adjustment by a fraction, the
numerator of which shall be the number of Warrant Shares purchasable upon the
exercise of each Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of Warrant Shares purchasable
immediately thereafter.
(f) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each warrant need be made under paragraph (b)
if the Company issues or distributes to each Holder of Warrants the rights,
options, warrants or convertible or exchangeable securities, or evidences of
indebtedness or assets referred to in those paragraphs which each Holder of
Warrants would have been entitled to receive had the Warrants been exercised
prior to the happening of such event or the record date with respect thereto. No
adjustment need be made for a change in the par value of the Warrant Shares.
(g) In the event that at any time, as a result of an
adjustment made pursuant to paragraph (a) above, the Holders shall become
entitled to purchase any securities of the Company other than shares of Common
Stock, thereafter the number of such other shares so purchasable upon exercise
of each Warrant and the Warrant Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
this Section 11, and the other provisions of this Agreement, with respect to the
Warrant and Warrant Shares, shall apply as nearly equivalent as practicable on
like terms to such other securities.
(h) Upon the expiration of any rights, options,
warrants or conversion or exchange privileges for which an adjustment was made
hereunder, if any thereof shall not have been exercised, the Warrant Price and
the number of shares of Common Stock purchasable upon the exercise of each
Warrant shall, upon such expiration, be readjusted and shall thereafter be such
as it would have been had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (i) the only shares of
Common Stock so issued were the shares of Common Stock, if any, actually issued
or sold upon the exercise of such rights, options, warrants or conversion or
exchange rights and (ii) such shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Company upon such exercise
plus the aggregate consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options, warrants or conversion
or exchange rights whether or not exercised; provided, however, that no such
readjustment shall have the effect of increasing the Warrant Price or decreasing
the number of shares of Common Stock purchasable upon the exercise of each
Warrant, in each case, by an amount in excess of the amount of the adjustment
initially made in respect to the issuance, sale or grant of such rights,
options, warrants or conversion or exchange rights.
11.2 NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Warrant Price of
such Warrant is adjusted, as herein provided, the Company shall promptly mail by
first Class, postage prepaid, to each Holder notice of such adjustment or
adjustments and a certificate of the Chief Financial Officer of the Company
setting forth the number of Warrant Shares purchasable upon the exercise of each
Warrant and the Warrant Price of such Warrant Shares after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made.
11.3 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in
Section 11.1, no adjustments in respect of any dividends shall be made during
the term of a Warrant or upon the exercise of a Warrant.
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11.4 PRESERVATION OF PURCHASE RIGHTS UPON MERGER,
CONSOLIDATION ETC. In case of any consolidation of the Company with, or merger
of the Company into, another corporation or in case of any sale, transfer or
lease to another corporation of all or substantially all the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with each Holder an agreement that each Holder shall have
the right thereafter upon payment of the Warrant Price in effect immediately
prior to such action to purchase upon exercise of each Warrant the kind and
amount of shares and other securities, cash and property which he would have
owned or would have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had such warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of dividends, interest or other income on or from such shares or other
securities, cash and property shall be made during the term of a Warrant or upon
the exercise of a Warrant. Such agreement shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 11. The provisions of this Section 11.4 shall similarly
apply to successive consolidations, mergers, sales transfer or leases.
11.5 STATEMENTS ON WARRANTS. Irrespective of any adjustments
in the Warrant Price or the number or kind of shares purchasable upon the
exercise of the Warrants, Warrants theretofore or thereafter issued may continue
to express the same price and number and kind of shares as are stated in the
warrants initially issuable pursuant to this Agreement.
12. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be presented for exercise in full at the sale time by the same holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereon
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 12 be issuable on
the exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash equal to the closing price for one share of the Common
Stock, as defined in paragraph (c) of Section 11.1, on the trading day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such faction.
13. REGISTRATION UNDER THE SECURITIES ACT OF 1933. Cruttenden
represents and warrants to the Company that it will not dispose of the Warrants
or the Warrant Shares except pursuant to (i) an effective registration statement
under the Securities Act of 1933, as amended (the "Act"), (ii) Rule 144 under
the Act (or any similar rule under the Act relating to the disposition of
securities), or (iii) an opinion of counsel, reasonably satisfactory to counsel
of the Company, that an exemption from such registration is available.
14. CERTIFICATE TO BEAR LEGENDS. The Warrant shall be subject to a
stop-transfer order and the certificate or certificates therefore shall bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAW. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT.
The Warrant Shares or other securities issued upon exercise of the
Warrant shall be subject to a stop-transfer order and the certificate or
certificates evidencing any such Warrant Shares or securities shall bear the
following legend:
THE SHARES OR OTHER SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW. SAID SECURITIES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT.
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15. REGISTRATION RIGHTS.
15.1 DEMAND REGISTRATION RIGHTS. The Company covenants and
agrees with Cruttenden and any subsequent Holders of the Warrants and/or
Warrants Share that, on one occasion, within 60 days after receipt of a written
request from Cruttenden or from Holders of more than 25% in interest of the
aggregate of Warrants and/or Warrant Shares (considered for this purpose as one
class) issued pursuant to this Agreement that Cruttenden or such Holders of the
Warrants and/or Warrant Shares desires and intends to transfer more than 25% in
interest of the aggregate number of the Warrants and/or Warrant Shares under
such circumstances that a public offering, within the meaning of the Act, will
be involved, the Company shall, on that one occasion, file a registration
statement (and use its reasonable best efforts to cause such registration
statement to become effective under the Act at the Company's expense) with
respect to the offering and sale or other disposition of the Warrant Shares (the
"Offered Warrant Shares"); provided, however, that the Company shall have no
obligation to comply with the foregoing provisions of this Section 15.1 if in
the opinion of counsel to the Company reasonably acceptable to the Holder or
Holders, from whom such written requests have been received, registration under
the Act is not required for the transfer of the Offered Warrant Shares in the
manner proposed by such person or persons or that a post-effective amendment to
an existing registration statement would be legally sufficient for such transfer
(in which latter event the Company shall promptly file such post-effective
amendment (and use its reasonable best efforts to cause such amendment to become
effective under the Act)). Notwithstanding the foregoing, the Company shall not
be obligated to file a registration statement with respect to the Offered
Warrant Shares on more than one occasion.
The Company may defer the preparation and filing of a
registration statement for up to 180 days after the request for registration is
made if the Board of Directors determines in good faith that such registration
or post-effective amendment would materially adversely affect or otherwise
materially interfere with a proposed or pending transaction by the Company,
including without limitation a material financing or a corporate reorganization,
or during any period of time in which the Company is in possession of material
inside information concerning the Company or its securities, which information
the Company determines in good faith is not ripe for disclosure.
The Company shall not honor any request to register Warrant
Shares pursuant to this Section 15.1 received later than five (5) years from the
date hereof (the "Effective Date"). The Company shall not be required (i) to
maintain the effectiveness of the registration statement beyond the earlier to
occur of 90 days after the effective date of the registration statement or the
date on which all of the Offered Warrant Shares have been sold (the "Termination
Date"); provided, however, that if at the Termination Date the Offered Warrant
Shares are covered by a registration statement which also covers other
securities and which is required to remain in effect beyond the Termination
Date, the Company shall maintain in effect such registration statement as it
relates to Offered Warrant Shares for so long as such registration statement (or
any substitute registration statement) remains or is required to remain in
effect for any such other securities, or (ii) to cause any registration
statement with respect to the Warrant Shares to become effective prior to the
Initiation Date. All expenses of registration pursuant to this Section 15.1
shall be borne by the Company (excluding underwriting discounts and commissions
on Warrant Shares not sold by the Company).
The Company shall be obligated pursuant to this Section 15.1
to include in the registration statement Warrant Shares that have not yet been
purchased by a Holder of Warrants so long as such Holder of Warrants submits an
undertaking to the Company that such Holder intends to exercise Warrants
representing the number of Warrant Shares to be included in such registration
statement prior to the consummation of the public offering with respect to such
Warrant Shares.
15.2 PIGGY-BACK REGISTRATION RIGHTS. The Company covenants and
agrees with the Holders and any subsequent Holders of the Warrants and/or
Warrant Shares that in the event the Company proposes to file a registration
statement under the Act with respect to any class of security (other than in
connection with an exchange offer, a non-cash offer or a registration statement
on Form S-8 or other unsuitable registration statement form, including, without
limitation, Form S-4) which becomes or which the Company believes will become
effective at any time after the Initiation Date then the Company shall in each
case give written notice of such proposed filing to the Holders of Warrants and
Warrant Shares at least 15 days before the proposed filing date and such notice
shall offer to such Holders the opportunity to include in such registration
statement such number of Warrant Shares as they may request, unless, in the
opinion of counsel to the Company reasonably acceptable to any such Holder of
Warrants or Warrant Shares who wishes to have Warrant Shares included in such
registration statement, registration under the Act is not required for the
transfer of such Warrants and/or Warrant Shares in the manner proposed by such
Holders. The Company shall not honor any such request to register any such
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Warrant Shares if the request is received later than six (6) years from the
Effective Date, and the Company shall not be required to honor any request (a)
to register any such Warrant Shares if the Company is not notified in writing of
any such request pursuant to this Section 15.2 within at least 10 days after the
Company has given notice to the Holders of the filing, or (b) to register
Warrant Shares that represent in the aggregate fewer than 25% of the aggregate
number of Warrant Shares. The Company shall permit, or shall cause the managing
underwriter of a proposed offering to permit, the Holders of Warrant Shares
requested to be included in the registration (the "Piggy-back Shares") to
include such Piggy-back Shares in the proposed offering on the same terms and
conditions as applicable to securities of the Company included therein or as
applicable to securities of any person other than the Company and the Holders of
Piggy-back Shares if the securities of any such person are included therein.
Notwithstanding the foregoing, if any such managing underwriter shall advise the
Company in writing that it believes that the distribution of all or a portion of
the Piggy-back Shares requested to be included in the registration statement
concurrently with the securities being registered by the Company would
materially adversely affect the distribution of such securities by the Company
for its own account, then the Holders of such Piggy-back Shares shall delay
their offering and sale of Piggyback Shares (or the portion thereof so
designated by such managing underwriter) for such period, not to exceed 180
days, as the managing underwriter shall request, provided that no such delay
shall be required as to Piggy-back Shares if any securities of the Company are
included in such registration statement for the account of any person other than
the Company and the Holders of Piggy-back Shares. In the event of such delay,
the Company shall file such supplements, post-effective amendments or separate
registration statement, and shall use reasonable best efforts to permit such
Holders to make their proposed offering and sale for a period of 90 days
immediately following the end of such period of delay ("Piggy-back Termination
Date"); provided, however, that if at the Piggy-back Termination Date the
Piggyback Shares are covered by a registration statement which is, or required
to remain, in effect beyond the Piggy-back Termination Date, the Company shall
maintain in effect the registration statement as it relates to the Piggy-back
Shares for so long as such registration statement remains or is required to
remain in effect for any of such other securities. All expenses of registration
pursuant to this Section 15.2 shall be borne by the Company, except that
underwriting commissions and expenses attributable to the Piggy-back Shares and
fees and disbursements of counsel (if any) to the Holders requesting that such
Piggy-back Shares be offered will be borne by such Holders.
The Company shall be obligated pursuant to this Section 15.2
to include in the Piggy-back Offering, Warrant Shares that have not yet been
purchased by a holder of Warrants so long as such Holder of Warrants submits an
undertaking to the Company that such Holder intends to exercise Warrants
representing the number of Warrant Shares to be included in such Piggy-back
Offering prior to the consummation of such Piggy-back Offering.
If the Company decides not to proceed with a Piggy-back
Offering, the Company has no obligation to proceed with the offering of the
Piggy-back Shares, unless the Holders of the Warrants and/or Warrant Shares
otherwise comply with the provisions of Section 15.1 hereof (without regard to
the 60 days' written request required thereby). Notwithstanding any of the
foregoing contained in this Section 15.2, the Company's obligation to offer
registration rights to the Piggy-back Shares pursuant to this Section 15.2 shall
terminate one (1) year after the Expiration Date.
15.3 In connection with the registration of Warrants Share in
accordance with Section 15.1 and 15.2 above, the Company agrees to:
(a) Use its reasonable best efforts to register or
qualify the Warrant Shares for offer or sale under the state securities or Blue
Sky laws of such states which the Holders of such Warrant Shares shall
designate, until the dates specified in Section 15.1 and 15.2 above in
connection with registration under the Act; provided, however, that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
general service of process in any jurisdiction where it is not now so subject or
to register or get a license as a broker or dealer in securities in any
jurisdiction where it is not so registered or licensed or to register or qualify
the Warrant Shares for offer or sale under the state securities or Blue Sky laws
of any state other than the states in which some or all of the shares offered or
sold in the Public Offering were registered or qualified for offer and sale.
8
(b) (i) In the event of any post-effective amendment
or other registration with respect to any Warrant Shares pursuant to Section
15.1 or 15.2 above, the Company will indemnify and hold harmless any Holder
whose Warrant Shares are being so registered, and each person, if any, who
controls such Holder within the meaning of the Act, against any losses, claims,
damages or liabilities, joint or several, to which such Holder or such
controlling person may be subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any such registration
statement, or final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the 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 will reimburse each such Holder and
each such controlling person for any legal or other expenses reasonably incurred
by such Holder or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in such case to the extent that any such
loss, claim, damage or liability arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any such registration statement, or final prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished by such Holder expressly for use in the preparation thereof. The
Company will not be liable to a claimant to the extent of any misstatement
corrected or remedied in any amended prospectus if the Company timely delivers a
copy of such amended prospectus to such indemnified person and such indemnified
person does not timely furnish such amended prospectus to such claimant. The
Company shall not be required to indemnify any Holder or controlling person for
any payment made to any claimant in settlement of any suit or claim unless such
payment is approved by the Company.
(ii) Each Holder of Warrants and/or Warrant
Shares who participates in a registration pursuant to Section 15.1 or 15.2 will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed any such registration statement, and each person, if
any, who controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities to which the Company, or any such director,
officer or controlling person may become subject under the Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, any untrue or alleged untrue statement
or any material fact contained in any such registration statement, or final
prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any such registration statement, or final prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished by such Holder expressly for use in the preparation thereof; and will
reimburse any legal or other expenses reasonably incurred by the Company, or any
such director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subparagraph (ii) shall not apply
to amounts paid to any claimant in settlement of any suit or claim unless such
payment is first approved by such Holder.
(iii) In order to provide for just and
equitable contribution in any action in which a claim for indemnification is
made pursuant to this subsection b(iii) of Section 15.3 but is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this subsection (b) of Section 15.3 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that each Holder whose
Warrant Shares are being registered is responsible pro rata for the portion
represented by the public offering price received by such Holder from the sale
of such Holder's Warrant Shares, and the Company is responsible for the
remaining portion; provided, however, that (i) no Holder shall be required to
contribute any amount in excess of the public offering price received by such
Holder from the sale of such Holder's Warrant Shares and (ii) no person guilty
of a fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. This subsection (b)(iii) shall not be operative as
to any Holder of Warrant Shares to the extent that the Company has received
indemnity under this subsection (b) of Section 15.3.
9
15.4 In connection with the registration of Warrant Shares in
accordance with Section 15.1 and 15.2 above, each of Cruttenden and any
subsequent Holders of the Warrants and/or Warrant Shares agrees to comply with
all reasonable requests made by the Company or its counsel with respect to the
registration of such Warrant Shares, including, without limitation, providing
access to all relevant books and records, completing, executing and delivering
all questionnaires, powers of attorney and other usual and customary documents
necessary or appropriate with respect to the offering of such Warrant Shares. In
the case of a registration which is underwritten, each of Cruttenden and any
subsequent Holders of the Warrants and/or Warrant Shares agrees to sell such
Warrant Shares on the basis provided in the applicable underwriting arrangement
including the making of reasonable representations or warranties to the Company
or the underwriters, or to undertake any indemnification obligations to the
Company or the underwriters with respect thereto.
16. NO RIGHTS AS STOCKHOLDER; NOTICES TO HOLDERS. Nothing contained in
this Agreement or in any of the Warrants shall be construed as conferring upon
the Holders or their transferee(s) the right to vote or to receive dividends or
to consent to or receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the Company or any other matter or
any rights whatsoever as stockholders of the Company. If, however, at any time
prior to the expiration of the Warrants and prior to their exercise, any of the
following events occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution (other than
a cash dividend) to the holders of its shares of Common Stock; or
(b) the Company shall offer to the holders of its shares of
Common Stock any additional shares of Common Stock or securities convertible
into or exchangeable for shares of Common Stock or any right to subscribe to or
purchase any thereof; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, sale, transfer or lease
of all or substantially all of its property, assets and business as an entirety)
shall be proposed, then in any one or more of said events the Company shall (i)
give notice in writing of such event to the Holders, as provided in Section 17
hereof and (ii) if there are more than 100 Holders, cause notice of such event
to be published once in The Wall Street Journal (national edition), such giving
of notice and publication to be completed at least 20 days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution or
subscription rights, or for the determination of stockholders entitled to vote
on such proposed dissolution, liquidation or winding up. Such notice shall
specify such record date or the date of closing the transfer books, as the case
may be. Failure to publish, mail or receive such notice or any defect therein or
in the publication or mailing thereof shall not affect the validity of any
action taken in connection with such dividend, distribution or subscription
rights, or such proposed dissolution, liquidation or winding up.
17. NOTICES. Any notice pursuant to this Agreement to be given or made
by the registered Holder of any Warrant to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed as follows:
Research Engineers, Inc.
00000 Xxxx Xxxxx Xxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: President
Notices or demands authorized by this Agreement to be given or made by
the Company to the registered Holder of any Warrant shall be sufficiently given
or made (except as otherwise provided in this Agreement) if sent by first-class
mail, postage prepaid, addressed to such Holder at the address of such Holder as
shown on the Warrant Register.
10
18. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without giving effect to
principles of conflicts of laws.
19. SUPPLEMENTS AND AMENDMENTS. The Company and Cruttenden may from
time to time supplement or amend this Agreement in order to cure any ambiguity
or to correct or supplement any provision contained herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and Cruttenden may deem necessary or desirable and which shall not be
inconsistent with the provisions of the Warrants and which shall not adversely
affect the interests of the Holders. This Agreement may also be supplemented or
amended from time to time by a writing executed by or on behalf of the Company
and all of the Holders.
20. SUCCESSOR. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Holders shall bind and inure to the
benefit of their respective successors and assigns hereunder. Assignments by the
Holders of their rights hereunder shall be made in accordance with Section 4
hereof.
21. MERGER OR CONSOLIDATION OF THE COMPANY. So long as Warrants remain
outstanding, the Company will not merge or consolidate with or into, or sell,
transfer or lease all or substantially all of its property to, any other
corporation unless the successor or purchasing corporation, as the case may be
(if not the Company), shall expressly assume, by supplemental agreement executed
and delivered to the Holders, the due and punctual performance and observance of
each and every covenant and condition of this Agreement to be performed and
observed by the Company.
22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders, any legal or equitable right, remedy or claim under this Agreement, but
this Agreement shall be for the sole and exclusive benefit of the Company, any
Holders of the Warrants and Warrant Shares.
23. CAPTIONS. The captions of the sections and subsections of this
Agreement have been reserved for convenience only and shall have no substantive
effect.
24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which when so executed shall be deemed to be an original;
but such counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
CRUTTENDEN XXXX INCORPORATED
Attest:
/s/ By: /s/ Xxxx X. Xxxxxxx
------------------------ --------------------------------
Name: Xxxx X. Xxxxxxx
--------------------------
Title: CFO
-------------------------
RESEARCH ENGINEERS, INC.
Attest:
/s/ Xxxxx Xxxxx By: /s/ Xxxxx Xxxxxxxxxx
------------------------ --------------------------------
Xxxxx Xxxxx, Secretary Name: XXXXX XXXXXXXXXX
--------------------------
Title: PRESIDENT
------------------------
11
EXHIBIT A
[Form of Warrant Certificate]
EXERCISABLE ON OR BEFORE FEBRUARY 7, 2005
No. ____________ Warrants
Warrant Certificate
RESEARCH ENGINEERS, INC.
This Warrant Certificate certifies that Cruttenden Xxxx Incorporated,
or registered assigns, is the registered holder of Warrants expiring February 7,
2005 (the "Warrants") to purchase Common Stock, $0.01 par value per share (the
"Common Stock"), of Research Engineers, Inc., a Delaware corporation (the
"Company"). Each Warrant entitles the holder upon exercise to receive from the
Company from 10:00 a.m., Pacific time, on August 7, 2000 through and until 6:00
p.m., Pacific time, on February 7, 2005, one fully paid and nonassessable share
of Common Stock (a "Warrant Share") at the initial exercise price (the "Warrant
Price") of $38.00 payable in lawful money of the United States of America upon
surrender of this Warrant Certificate and payment of the Warrant Price at the
conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. The Warrant Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.
No Warrant may be exercised after 6:00 p.m., Pacific time, on February
7, 2005 (the "Expiration Date"). Notwithstanding the foregoing, if at 6:00 p.m.,
Pacific time on the Expiration Date, any Holder or Holders of the Warrants have
not exercised their Warrants and the Closing Price (as defined in the Warrant
Agreement) for the Common Stock on the Expiration Date is greater than the
Warrant Price, then each such unexercised Warrant shall be automatically
converted into a number of shares of Common Stock of the Company equal to: (A)
the number of shares of Common Stock then issuable upon exercise of a Warrant
multiplied by (B) a fraction (1) the numerator of which is the difference
between the Closing Price for the Common Stock on the Expiration Date and the
Warrant Price and (2) the denominator of which is the Closing Price for the
Warrant Stock on the Expiration Date.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Company.
IN WITNESS WHEREOF, Research Engineers, Inc. has caused this Warrant
Certificate to be signed by its President and by its Secretary and has caused
its corporate seal to be affixed hereunto or imprinted hereon.
Dated: ________________ 2000
Attest: RESEARCH ENGINEERS, INC.
By: ______________________________
By: ___________________________
Name: ________________________
Title: _______________________ Name: _____________________
Title: ____________________
12
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring February 7, 2005 entitling the holder on
exercise to receive shares of Common Stock, $0.01 par value per share, of the
Company (the "Common Stock"), and are issued or to be issued pursuant to a
Warrant Agreement, dated as of February 7, 2000 (the "Warrant Agreement"), duly
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in, and made a part of, this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
The Warrants may be exercised at any time on or before February 7,
2005. The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Warrant Price in cash at the office of the Company designated for such
purpose. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his assignee a
new Warrant Certificate evidencing the number of Warrants not exercised. No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the number of shares of Common Stock issuable upon the exercise of each
Warrant shall be adjusted. If the number of shares of Common Stock issuable upon
such exercise is adjusted, the Warrant Agreement provides that the Warrant Price
set forth on the face hereof may, subject to certain conditions, be adjusted. No
fractions of a share of Common Stock will be issued upon the exercise of any
Warrants but the Company will pay the cash value thereof determined as provided
in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company, a new Warrant certificate or Warrant
certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to other transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
13
(Form of Election to Purchase)
(To be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant certificate, to receive ____________ shares of
Common Stock and herewith tenders payment for such shares to the order of
Research Engineers, Inc., in the amount of $___________ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of ____________________________________, whose address is
________________________________________________ and that such shares be
delivered to ____________________________ whose address is
_______________________________________. If said number of shares is less than
all of the shares of Common Stock purchasable hereunder, the undersigned
requests that a new Warrant certificate representing the remaining balance of
such shares be registered in the name of ___________________________, whose
address is _______________________________________, and that such Warrant
certificate be delivered to _______________, whose address is _________________.
Signature:
Date:_________________________________ ________________________________
Signature Guaranteed:
________________________________
