EXHIBIT 4.11
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of January 6, 1999, between XXXXXXXXXXXX.XXX,
INC., a Nevada corporation (the "Company"), and XXXXX X. XXXXX ("Xxxxx").
WITNESSETH
WHEREAS, the Company proposes to issue to Laken, or his designees, warrants
("Warrants") to purchase one million (1,000,000) shares of common stock, $.001
par value, of the Company ("Common Stock"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be issued
by the Company to Laken, or his designees, in consideration for, and as part of
Laken's compensation in connection with an Agreement between the Company and
Laken dated January 6, 1999 (the "Agreement Date");
NOW, THEREFORE, in consideration of the premises, the payment by Laken to
the Company of ONE DOLLAR, the agreements herein set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant. The Holders (as defined below) are hereby granted the right to
purchase, at any time from the date thereof until 5:30 p.m., New York
time, on the fifth anniversary of this Agreement, one million
(1,000,000) shares of Common Stock at an initial exercise price
(subject to adjustment as provided in Section 7 hereof) of $4.00 per
share of Common Stock, subject to the terms and conditions of this
Agreement.
2. Warrant Certificates. The Warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement
shall be in the form set forth in Exhibit A, attached hereto and made a
part hereof, with such appropriate insertions, omissions,
substitutions, and other variations as required or permitted by this
Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants are exercisable at an initial exercise
price (subject to adjustment as provided in Section 7 hereof) of $4.00
per share of Common Stock payable by certified or official bank check
in New York Clearing House funds. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly
executed, together with payment of the Exercise Price (as hereinafter
defined) for the shares of Common Stock issuable upon exercisable of
the Warrants (the "Warrant Shares") at the Company's principal offices
at 000 Xxxx Xxxxx Xxxxxxxxx Xxxxxxx, Xxxxxxx, 00000, the registered
holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a certificate or
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certificates for the shares of Common Stock so purchased. The purchase
rights represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to
fractional shares of the Common Stock underlying the Warrants).
Warrants may be exercised to purchase all or part of the shares of
Common Stock purchasable under any Warrant Certificate, the Company
shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for
the balance of the shares of Common Stock.
3.2 Exercise by Surrender of Warrant. In addition to the method of payment
set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrant shall have the right at any
time and from time to time, provided that the Common Stock is
registered under the Securities and Exchange Act of 1934 (the "Exchange
Act"), to exercise the Warrants in full or in part by surrendering the
Warrant Certificate in the manner specified in Section 3.1 in exchange
for the number of shares of Common Stock equal to the product of (x)
the number of shares as to which the Warrants are being exercised
multiplied by (y) a fraction, the numerator of which is the Market
Price [as defined in Section 7.1 (vi) hereof] of the Common Stock less
the Exercise Price and the denominator of which is such Market Price.
Solely for the purposes of this Section 3.2, Market Price shall be
calculated either (i) on the date on which the annexed Form of Election is
deemed to have been sent to the Company pursuant to Section 14 hereof ("Notice
Date") or (ii) as the average of the Market Price for each of the five (5)
trading days preceding the Notice Date, whichever of (i) or (ii) is greater.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock or other
securities, properties or rights underlying such Warrants shall be made
forthwith (as in any event such issuance shall be made within five
business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the
provisions of Section 5 and 7 hereof) be issued in the name of, or in
such names as may be directed by, the Holder thereof; provided,
however, that the Company shall not be required to pay any tax which
may be payable in respect to any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or people requesting the
issuance thereof shall have paid to the Company the amount of such tax
or shall be established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates and the certificates representing the shares of
Common Stock (and/or other securities, property or rights issuable upon exercise
of the Warrants) shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chairman or Vice Chairman of the Board
of Directors or President or Vice President of the Company under its corporate
seal reproduced thereon, attested to by the manual or facsimile signature of the
then
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present Secretary or Assistant Secretary of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
5. Exercise Price.
5.1 Initial and Adjusted Exercise Price. Except otherwise provided in
Section 7 hereof, the Warrants shall be exercisable to purchase Common
Stock at a price of $4.00 per share. The adjusted exercise price shall
be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the
provisions of Section 7 hereof.
5.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon
the context.
6. Registration.
6.1 Registration Under the Securities Act of 1933. The Warrants and the
Warrant Shares (collectively, the "Warrant Securities") have not been
registered under the Securities Act of 1933 (the "Act") for public
resale. Upon exercise, in part of in whole, of the Warrants,
certificates representing the shares of Common Stock and any of the
other securities issuable upon exercise of the Warrants shall bear the
following legend:
The Securities represented by this certificate have not been registered
under the Securities Act of 1933 ("Act") for public resale, and may not be
offered or sold except pursuant to (i) an effective registration statement
under the Act, (ii) to the extent applicable, Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of securities), or
(iii) an opinion of counsel, if such opinion shall be reasonably
satisfactory to the issuer, that an exemption from registration under such
Act is available.
6.2 Piggyback Registration. If, at any time commencing after the date
hereof until the expiration of the Warrant Exercise Term, the Company
proposes to register any of its securities under the Act (other than in
connection with a merger or pursuant to Form X-0, X-0 or comparable
registration statement) it will give written notice by registered mail,
at least thirty (30) days prior to the filing of each such registration
statement, to Laken and to all other Holders of the Warrant Securities,
of its intention to do so. If Laken or other Holders of the Warrant
Securities notify the Company within twenty (20) days after receipt of
any such notice of its or their desire to include any Warrant Shares in
such proposed registered statement, the Company shall afford Laken and
such Holders of the Warrant Securities the opportunity to have any such
Warrant Shares registered under such registration statement.
Notwithstanding the provisions of this Section 6.2, the Company shall have
the right to any time after it shall have given written notice pursuant to this
Section 6.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect to postpone or not to file any
such proposed registration statement, or to withdraw the same after filing but
prior to the effective date thereof.
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6.3 Demand Registration.
(a) So long as the Company shall have any of its securities registered
under the Act of the Exchange Act, at any time commencing after
the date hereof until expiration of the Warrant Exercise Term, the
Holder of the Warrant Securities representing a "Majority" (as
hereinafter defined) of such securities (assuming the exercise of
all of the then outstanding Warrants) shall have the right (which
right is in addition to the registration rights under Section 6.2
hereof), exerciseable by written notice to the Company, to have
the Company prepare and file with Securities and Exchange
Commission (the "Commission"), on two (2) occasions, a
registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for
the Company and the counsel for the Agent and Holders, in order to
comply with the provisions of the Act, so as to permit a public
offering and sale of their respective Warrant Shares for one
hundred twenty (120) days by such Holder and any other Holders of
the Warrants and/or Warrant Shares who notify the Company within
ten (10) days after receiving notice from the Company of such
request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 6.3 by any Holder or
Holders to all other registered Holders of the Warrants and the
Warrant Shares within ten (10) days from the date of the receipt
of any such registration request.
(c) All expenses (other than underwriting discounts and commissions)
incurred in connection with registration, filings or qualification
pursuant to the first registration request made pursuant to the
subsection (a) of this Section 6.3, including, without limitation,
all registration, listing, filing, and qualification fees,
printers and accounting fees and the fees and disbursements of
counsel for the Holders shall be borne by the Company. Upon a
second registration request pursuant to subsection (a) of this
Section 6.3, the Holders requesting registration shall bear such
costs on a pro-rata basis with respect to the Warrant Shares in
respect of which they are requesting registration.
(d) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the
Warrant Shares within the time period specified in Section 6.4 (a)
hereof pursuant to the written notice specified in Section 6.3 (a)
of a Majority of the Holders of the Warrants and/or Warrant
Shares, the Company agrees that upon the written notice of
election of a Majority of the Holders of the Warrants and/or
Warrant Shares it shall repurchase (i) any and all Warrant
Securities at the higher of the Market Price [as defined in
Section 7.1 (vi)] per share of Common Stock on (x) the date of the
notice sent pursuant to Section 6.3 (a) or (y) the expiration of
the one-hundred-twenty-day (120-day) period specified in Section
6.4 (a) and (ii) any and all Warrants at such Market Price less
the exercise price of such Warrant. Such repurchase shall be in
immediately available funds and shall close within two (2) days
after the later of (i) the expiration of the period
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specified in Section 6.4(a) or (ii) the delivery of the written
notice of election specified in this Section 6.3(d).
6.4 Covenants of the Company with Respect to Registration. In connection
with any registration under Sections 6.2 or 6.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within forty-five (45) days of receipt of any demand
therefor, shall use its best efforts to have any registration
statement declared effective at the earliest possible time, and
shall furnish each Holder desiring to sell Warrant Shares such
number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs [excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions or
other charges of any broker-dealer acting on behalf of Holder(s)],
fees and expenses in connection with all registration statements
filed pursuant to Section 6.2 and 6.3(a) hereof including, without
limitation, the Company's legal and accounting fees, printing
expenses, blue sky fees and expenses. The Holder(s) will pay all
costs, fees and expenses in connection with any registration
statement filed pursuant to Section 6.3(c). If the Company shall
fail to comply with the provisions of Section 6.4(a), the Company
shall, in addition to any other equitable or other relief
available to the Holder(s), be liable for any or all damages due
to loss of profit sustained by the Holder(s) requesting
registration of their Warrant Securities.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Warrant Shares included in the
registration statement for offering and sale under the securities
or blue sky laws of such states as reasonably are requested by the
Holder(s), provided that the Company shall not be obligated to
execute or file any general consent to service or process or to
qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant Shares to
be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become
subject.
(e) The Holder(s) of the Warrant Shares to be sold pursuant to a
registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers
and directors and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, against all loss, claim, damage or
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expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim
whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from information furnished by
or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such a registration statement.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement of the effectiveness
thereof.
(g) The Company shall not permit any securities other than the
Warrant Shares to be included in any registration statement filed
pursuant to Section 6.3 hereof, or permit any other registration
statement to be or remain effective during the effectiveness of a
registration statement filed pursuant to Section 6.3 hereof,
without the prior written consent of the Holders of the Warrant
Securities representing a Majority of such securities (assuming
an exercise of all of the Warrants).
(h) The Company shall furnish to each Holder participating in an
offering including Warrant Shares, pursuant to Sections 6.2 or
6.3 hereof, and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an
opinion of counsel to the Company, dated the effective date of
such registration statement (and, if such registration includes
an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold
comfort" letter dated the effective date of such registration
statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent public
accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten
public offerings of securities.
(i) The Company shall as soon as practicable after the effective date
of a registration statement relating to any Warrant Shares
pursuant to Section 6.2 or 6.3 hereof, and in any event within
fifteen (15) months thereafter, make "generally available to its
security holders" (within the meaning of Rule 157 under the Act)
an earnings statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least twelve
(12) consecutive months beginning after the effective date of the
registration statement.
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(j) The Company shall deliver promptly to each Holder participating in
an offering including any Warrant Shares pursuant to Sections 6.2
or 6.3 hereof, who so requests, and to the managing underwriter,
copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the
registration statement and permit each Holder and underwriter to
do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply
with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such
investigation shall include access to books, records and
properties and opportunities to discuss the business of the
Company and its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any
such Holder shall reasonably request as it deems necessary to
comply with applicable securities laws and NASD rules.
(k) With respect to a registration pursuant to Section 6.3 hereof, the
Company shall enter into an underwriting agreement with the
managing underwriter selected for such underwriting by Holders
holding a Majority of the Warrant Shares requested to be included
in such underwriting. Such managing underwriter(s) shall be
satisfactory to the Company and each Holder and such agreement
shall be satisfactory in form and substance to the Company, each
Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such
other terms as are customarily contained in agreements of that
type used by the managing underwriter. The Holders shall be
parties to any underwriting agreement relating to an underwritten
sale of their Warrant Shares and may, at their option, require
that any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriters shall also
be made to and for the benefit of such Holders. Such Holders shall
not be required to make any representations or warranties to or
agreements with the Company or the Underwriters except as they may
relate to such Holders and their intended methods of distribution.
(l) In addition to the Warrant Shares, upon the written request
therefor by any Holder(s), the Company shall include in the
registration statement any other securities of the Company held by
such Holder(s) as of the date of filing of such registration
statement, including without limitation, restricted shares of
Common Stock, options, warrants or any other securities
convertible into shares of Common Stock.
(m) For purposes of this Agreement, the term "Majority" in reference
to the Holders of Warrants or Warrant Shares, shall mean in excess
of fifty percent (50%) of the outstanding Warrants or Warrant
Shares that (i) are not held by the Company, an affiliate
(excluding the Agent and any affiliate of the Agent), officer,
creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or
in
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conjunction therewith or (ii) have not been resold to the public
pursuant to a registration statement filed with the Commission
under the Act.
7. Adjustments to Exercise Price and Number of Securities.
7.1 Computation of Adjusted Exercise Price. Except as hereinafter provided,
in case the Company shall at any time after the date hereof issue or
sell any shares of Common Stock (other than the issuance or sales
referred to in Section 7.6 hereof), including shares held in the
Company's treasury and shares of Common Stock issued upon the exercise
of any options, rights or warrants, to subscribe for shares of Common
Stock and shares of Common Stock issued upon the direct or indirect
conversion or exchange of securities for shares of Common Stock, for a
consideration per share less than the Exercise Price in effect
immediately prior to the issuance or sale of such shares or the "Market
Price" [as defined in Section 7.1(vi) hereof] per share of Common Stock
on the date immediately prior to the issuance of sale of such shares, or
without consideration, then forthwith upon such issuance or sale, the
Exercise Price shall (until another such issuance or sale) be reduced to
the price (calculated to the nearest full cent) equal to the quotient
derived by dividing (A) an amount equal to the sum of (X) the product of
(a) the lower of (i) the Exercise Price in effect immediately prior to
such issuance or sale and (ii) the Market Price per share of Common
Stock on the date immediately prior to the issuance or sale of such
shares, in either event, reduced, but not to a number which is below
.001, by the positive difference, if any, between the (u) Market Price
per share of Common Stock on the date immediately prior to the issuance
or sale and (v) the amount per share received in connection with such
issuance or sale, multiplied by (b) the total number of shares of Common
Stock outstanding immediately prior to such issuance or sale, plus (Y)
the aggregate of the amount of all consideration, if any, received by
the Company upon such issuance or sale, by (B) the total number of
shares of Common Stock outstanding immediately after such issuance or
sale; provided, however, that in no event shall the Exercise Price be
adjusted pursuant to this computation to an amount in excess of the
Exercise Price in effect immediately prior to such computation, except
in the case of a combination of outstanding shares of Common Stock, as
provided by Section 7.3 hereof.
For the purposes of this Section 7 the term Exercise Price shall mean the
Exercise Price per share of Common Stock set forth in Section 6 hereof, as
adjusted from time to time pursuant to the provisions of this Section 7.
For purposes of any computation to be made in accordance with this Section
7.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration, therefor shall be deemed to be the amount of cash
received by the Company for such shares (or, if shares of Common Stock
are offered by the Company for subscription, the subscription price, or,
if either of such securities shall be sold to underwriters or dealers
for public offering without a subscription offering, the public offering
price,
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before deducting therefrom any compensation paid or discount allowed
in the sale, underwriting or purchase thereof by underwriters or
dealers or other performing similar services, or any expenses incurred
in connection therewith and less any amounts payable to security
holders or any affiliate thereof, including without limitation, any
employment agreement, royalty, consulting agreement, covenant not to
compete, earnout or contingent payment right or similar arrangement,
agreement or understanding, whether oral or written; all such amounts
shall be valued at the aggregate amount payable thereunder whether
such payments are absolute or contingent and irrespective of the
period or uncertainty of payment, the rate of interest, if any, or the
contingent nature thereof.
(ii) In case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock
for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed
to be the value of such consideration as determined in good faith by
the Board of Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following
the record date for the determination of stockholders entitled to
receive such dividend or other distribution and shall be deemed to
have been issued without consideration.
(iv) The reclassification of securities of the Company other than shares of
Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of
business on the date fixed for the determination of security holders
entitled to receive such shares, and the value of the consideration
allocable to such shares of Common Stock shall be determined as
provided in subsection (ii) of this Section 7.1.
(v) The number of shares of Common Stock at any one time outstanding shall
include the aggregate number of shares issued or issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of
then outstanding options, rights, warrants and upon the conversion or
exchange of then outstanding convertible or exchangeable securities.
(vi) As used herein, the phrase "Market Price" at any date shall be deemed
to be the last reported sale price, or, in case no such reported sale
takes place on such day, the average of the last reported sale prices
for the last three (3) trading days, in either case of officially
reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the
average closing bid price as furnished by the NASD through NASDAQ or
similar organization if NASDAQ is no longer reporting such
information, or if the Common Stock is not quoted on NASDAQ, as
determined in good faith by resolution of the Board of Directors of
the company, based on the best information available to it.
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7.2 Options, Rights, Warrants and Convertible and Exchangeable Securities.
In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Common Stock, or
issue any securities convertible into or exchangeable for shares of
Common Stock, for a consideration per share less than the Exercise
Price in effect or the Market Price immediately prior to the issuance
of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration, the Exercise Price
in effect immediately prior to the issuance of such options, rights or
warrants, or such convertible or exchangeable securities, as the case
may be, shall be reduced to a price determined by making a computation
in accordance with the provisions of Section 7.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under such options, rights or warrants shall
be deemed to be issued and outstanding at the time such options,
rights or warrants were issued, and for a consideration equal to
the minimum purchase price per share provided for in such options,
rights or warrants at the time of issuance, plus the consideration
(determined in the same manner as consideration received on the
issue or sale of shares in accordance with the terms of the
Warrants), if any, received by the Company for such options,
rights or warrants.
(b) The aggregate maximum number of shares of Common Stock issuable
upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the
time of issuance of such securities, and for a consideration equal
to the consideration (determined in the same manner as
consideration received on the issue or sale of shares of Common
Stock in accordance with the terms of the Warrants) received by
the Company for such securities, plus the minimum consideration,
if any, receivable by the Company upon the conversion or exchange
thereof.
(c) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in subsection
(a) of this Section 7.2, or in the price per share at which the
securities referred to in subsection (b) of this Section 7.2 are
convertible or exchangeable, such options, rights or warrants or
conversion or exchange rights, as the case may be, shall be deemed
to have expired or terminated on the date when such price change
became effective in respect to shares not theretofore issued
pursuant to the exercise or conversion or exchange thereof, and
the Company shall be deemed to have issued upon such date new
options, rights or warrants or convertible or exchangeable
securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or
the conversion or exchangeable such convertible or exchangeable
securities.
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7.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case
of subdivision or increased in the case of combination.
7.4 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 7, the number
of securities issuable upon the exercise of each Warrant shall be
adjusted to the nearest full amount by multiplying a number equal to
the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Securities issuable upon exercise of the Warrants
immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
7.5 Definition of Common Stock. For the purpose of this Agreement, the term
"Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Certificate of incorporation of the Company as may be
amended as of the date hereof, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par value to
no par value, or from no par value to par value. In the event that the
Company shall after the date hereof issue securities with greater or
superior voting rights than the shares of Common Stock outstanding as
of the date hereof, the Holder, at its option, may receive upon
exercise of any Warrants either shares of Common Stock or a like number
of such securities with greater or superior voting rights.
7.6 Merger or Consolidation. In case of any consolidation of the Company
with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does
not result in any reclassification or change of the outstanding Common
Stock), the corporation formed by such consolidation or merger shall
execute and deliver to the Holder a supplemental warrant agreement
providing that the holder of each Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of
such Warrant) to receive, upon exercise of such warrant, the kind and
amount of shares of stock and other securities and property receivable
upon such consolidation or merger, by a property receivable upon such
consolidation or merger, by a holder of the number of shares of Common
Stock of the Company for which such warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which
shall be identical to the adjustments provided in Section 7. The above
provision of this Subsection shall similarly apply to successive
consolidations or mergers.
7.7 No Adjustment of Exercise Price in Certain Cases. No adjustment of the
Exercise Price shall be made:
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(a) Upon issuance or sale of the Warrants or the shares of Common
Stock issuable upon the exercise of the Warrants.
(b) If the amount of said adjustment shall be less than two cents
($0.02) per security issuable upon exercise of the Warrants,
provided, however, that in such case any adjustment that would
otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward,
shall amount to at least two cents ($0.02) per security issuable
upon exercise of the Warrants.
7.8 Dividends and Other Distributions. In the event that the Company shall
at any time prior to the exercise of all Warrants declare a dividend
(other than a dividend consisting solely of shares of Common Stock) or
otherwise distribute to its stockholders any assets, properties,
rights, evidence of indebtedness, securities (other than shares of
Common Stock), whether issued by the Company or by another, or any
other thing of value, the Holders of the unexercised Warrants shall
thereafter be entitled, in addition to the shares of Common Stock or
other securities and property receivable upon the exercise thereof, to
receive, upon the exercise of such Warrants, the same property, assets,
rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such
dividend or distribution as if the Warrants had been exercised
immediately prior to such dividend or distribution. At the time of any
such dividend or distribution, the Company shall make appropriate
reserves to ensure the timely performance of the provisions of this
Subsection 7.7.
8. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof
by the registered Holder at the principal office of the Company, for a
new Warrant Certificate of like tenor and date representing in the
aggregate the right to purchase the same number of securities in such
denominations as shall be designated by the Holder thereof at the time
of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any Warrant Certificate, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Warrants, if mutilated, the
Company will make and deliver a new Warrant Certificate of like tenor, in lieu
thereof.
9. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue
script or pay cash in lieu of fractional interests, it being the intent
of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number or shares of
Common Stock or other securities, properties or rights.
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10. Reservation of Listing of Securities. The Company shall at times
reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issuance upon the exercise of the
Warrants, such number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock
and other securities issuable upon such exercise shall be duly and
validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder. As long as the Warrants shall be
outstanding and the Company shall have a class of its securities
registered under the Act or the Exchange Act, the Company shall use its
best efforts to cause all shares of Common Stock issuable upon the
exercise of the Warrants to be listed (subject to official notice of
issuance) on all security exchanges on which the Common Stock issued to
the public in connection herewith may then be listed and/or quoted on
NASDAQ.
11. Notices to Warrant Holders. Nothing contained in this Agreement shall
be constructed as conferring upon the Holders the right to vote or to
consent or to receive notice of stockholder in respect of any meetings
of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company. If,
however, at any time prior to the expiration of the Warrants and their
exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of
such dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of
the Company, or any option right or warrant to subscribe therefor;
or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as
an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
convertible or exchangeable securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be. Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with the declaration of payment
of any such dividend, or the issuance of any convertible or exchangeable
securities or subscription rights, options or warrants, or any proposed
dissolution, winding up or sale.
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12. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly
made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or
to such other address as the Company may designate by notice to
the Holders.
13. Supplements and Amendments. The Company and Laken may from time to time
supplement or amend this Agreement without the approval of any holders
of Warrant Certificates (other than Laken) in order to cure any
ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provision herein, or to
make any other provisions in regard to matters or questions arising
hereunder which the Company and Laken may deem necessary or desirable
and which the Company and Xxxxx xxxx shall not adversely affect the
interests of the Holders of Warrant Certificates. Other amendments to
this Agreement may be made only with the written consent of the Holders
of the Majority of the Warrant Securities.
14. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
15. Termination. This Agreement shall terminate at the close of business on
the fifth anniversary of the date hereof. Notwithstanding the
foregoing, the indemnification provisions of Section 6 shall survive
such termination until the close of business on the eighth anniversary
of the date hereof.
16. Governing Law: Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall
be construed in accordance with the laws of said State without giving
effect to the rules of said State governing the conflicts of laws.
The Company, Laken and the Holders hereby agree that any action, proceeding
or claim against it arising out of, or relating in any way to, this Agreement
shall be brought and enforced in the courts of the State of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company, Laken and the Holders hereby irrevocably waive any objection to
such exclusive jurisdiction or inconvenient forum. Any such process or summons
to be served upon any of the Company, Laken and the Holders (at the option of
the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address as set forth in
Section 13 hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the party
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so served in any action, proceeding or claim. The Company, Laken and the Holders
agree that the prevailing party(ies) in any such action or proceeding shall be
entitled to recover from the other party(ies) all of its/their reasonable legal
costs and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
17. Entire Agreement; Modification. This Agreement contains the entire
understanding between the parties hereto with respect to the subject
matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification
or amendment is sought.
18. Severability. If any provision of this Agreement shall be held to be
invalid and unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
19. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they
be construed as, a part of this Agreement and shall be given no
substantive effect.
20. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company
and Laken and any other registered Holder(s) of the Warrant
Certificates or Warrant Shares any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole
and exclusive benefit of the Company and Laken and any other Holder(s)
of the Warrant Certificates or Warrant Shares.
21. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and such counterparts shall together
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 and year first written.
[SEAL] /s/ Xxxxx X. Xxxxxxxx
By: ___________________________________
Xxxxx X. Xxxxxxxx, President
ATTEST:
/s/ SIGNATURE APPEARS HERE
____________________________________
Secretary
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
By: ___________________________________
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