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EXH-1.2
AUTOBOND ACCEPTANCE CORPORATION
and
THE BOSTON GROUP, L.P.
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REPRESENTATIVE'S WARRANT AGREEMENT
Dated as of November__, 1996
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REPRESENTATIVE'S WARRANT AGREEMENT
THIS REPRESENTATIVE'S WARRANT AGREEMENT (the "Agreement"), dated as of
____________, 1996, is made and entered into by and between AUTOBOND ACCEPTANCE
CORPORATION, a Texas corporation (the "Company"), and THE BOSTON GROUP, L.P.
("the Representative").
The Company agrees to issue and sell to the Representative and the
Representative agrees to purchase from the Company, for the price of $50, a
warrant, as hereinafter described (the "Warrant" and together with any warrants
subsequently issued hereunder, the "Warrants"), to purchase up to 100,000
shares, as may be adjusted from time to time as set forth herein, of the
Company's common stock, no par value per share (the "Common Stock"), in
connection with a public offering (the "Offering") by the Company of 1,000,000
shares of Common Stock pursuant to an underwriting agreement (the "Underwriting
Agreement"), dated as of ______________, 1996, by and between the Company and
the Representative, as representative of the several Underwriters named therein.
The shares of Common Stock purchasable upon exercise of the Warrants, as may be
adjusted from time to time as set forth herein, are hereinafter referred to as
the "Warrant Stock." The Warrant shall be issued pursuant to this Agreement on
the closing date of the Offering (the "Closing Date").
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants, the Warrant Stock and the respective
rights and obligations thereunder, the Company and the Representative, for value
received, hereby agree as follows:
SECTION 1. TRANSFERABILITY AND FORM OF WARRANTS.
1.1 Registration. All Warrants shall be numbered and shall be
registered on the books of the Company when issued.
1.2 Transfer. The Warrants shall be transferable only on the
books of the Company maintained at its principal office, wherever its principal
office may then be located, upon delivery thereof duly endorsed by a Warrant
holder (a "Warrantholder") or by its duly authorized attorney or representative
and with the signatures properly guaranteed, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new certificate evidencing
each such Warrant to each person entitled thereto.
1.3 Limitations on Transfer of the Warrants. Warrants shall not
be sold, transferred, assigned or hypothecated by the Representative, except
that Warrants may be transferred (i) to one or more officers or partners of any
Warrantholder; (ii) on or after ______, 1997, to one or more employees of the
Representative; (iii) to successors to a Warrantholder or the officers or
partners of
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any such successor; (iv) to a purchaser of all or substantially all of the
assets of a Warrantholder; or (v) by will, pursuant to the laws of descent or
distribution or by operation of law. The Warrants may be divided or combined,
upon request to the Company by a Warrantholder, into a certificate or
certificates representing the right to purchase the same aggregate number of
Warrant Stock. Unless the context indicates otherwise, the term "Warrantholder"
shall include the Representative and any transferee or transferees of the
Warrants pursuant to this subsection 1.3 and as otherwise permitted by this
Agreement, and the term "Warrants" shall include any and all Warrants
outstanding pursuant to this Agreement, including those evidenced by a
certificate or certificates issued upon division, exchange, substitution or
transfer pursuant to this Agreement.
1.4 Form of Warrants. The text of the Warrants and of the form of
election to purchase Warrant Stock shall be substantially as set forth in
Exhibit A attached hereto. The aggregate number of shares of Common Stock
issuable upon exercise of the Warrants is subject to adjustment upon the
occurrence of certain events, all as hereinafter provided. The Warrants shall be
executed on behalf of the Company by its Chief Executive Officer or its
President and attested to by its Chief Financial Officer or its Secretary. A
Warrant bearing the signature of an individual who was at any time the proper
officer of the Company shall bind the Company, notwithstanding that such
individual shall have ceased to hold such office prior to the delivery of such
Warrant or did not hold such office on the date of this Agreement or at any time
thereafter.
The Warrants shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon division, exchange,
substitution or transfer.
1.5 Legend on Warrants and Warrant Stock. Each certificate
evidencing a Warrant (or Warrant Stock initially issued upon exercise of a
Warrant) shall bear the following legend, unless, at the time of exercise, such
Warrant Stock is subject to a currently effective Registration Statement under
the Securities Act of 1933, as amended (the "Act"):
"THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD, EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER
EXCEPT IN COMPLIANCE WITH OF THE REPRESENTATIVE'S WARRANT
AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED."
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to an effective registration
statement under the Act, of the
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securities represented thereby) shall also bear the above legend unless, in the
opinion of the Company's counsel, the securities represented thereby need no
longer be subject to such restrictions.
SECTION 2. EXCHANGE OF WARRANT CERTIFICATE. Any Warrant certificate may
be exchanged for another certificate or certificates entitling the Warrantholder
to purchase a like aggregate number of shares of Warrant Stock as the
certificate or certificates surrendered then entitled such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant certificate shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, the certificate evidencing the Warrant to be so exchanged.
Thereupon, the Company shall execute and deliver to the person entitled thereto
a new Warrant certificate or certificates as so requested.
SECTION 3. TERM OF WARRANTS; EXERCISE OF WARRANTS.
(a) Subject to the terms of this Agreement, the
Warrantholder shall have the right, at any time during the period commencing at
6:30 a.m., Pacific Time, on __________, 1997 and ending at 5:00 p.m., Pacific
Time, on ______________, 2001 (five years from the effective date of the
Offering) (the "Termination Date"), to purchase from the Company up to the
number of fully paid and nonassessable shares of Warrant Stock to which the
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrants to be exercised, together with the purchase
form on the reverse thereof duly completed and executed, and upon payment to the
Company of the Warrant Price (as defined in and determined in accordance with
the provisions of this Section 3 and Sections 7 and 8 hereof) for the number of
shares of Warrant Stock in respect of which such Warrants are then exercised,
but in no event for less than 100 shares of Warrant Stock (unless less than an
aggregate of 100 shares of Warrant Stock are then purchasable under all
outstanding Warrants held by such Warrantholder). This Warrant, when
exercisable, may be exercised from time to time in whole or in part.
(b) Payment of the Warrant Price shall be made in cash,
by certified or official bank check in Los Angeles Clearing House funds (next
day funds), or any combination thereof.
(c) In addition to the method of payment set forth in
Section 3(b) above and in lieu of any cash payment required thereunder, unless
otherwise prohibited by law, the Warrantholders shall have the right at any
time, when exercisable, and from time to time to exercise the Warrants in full
or in part by delivering to the Company the number of shares of Common Stock
having an aggregate value on the date of exercise equal to the Warrant Price
multiplied by the number of shares of Warrant Stock for which this Warrant is
being exercised. For purposes hereof, the "value" of a share of Common Stock on
a given date shall equal to the Current Market Price on such date as defined in
Section 9 of this Agreement.
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(d) Upon surrender of the 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 Warrantholder,
and in such name or names as the Warrantholder may designate, a certificate or
certificates for the number of full shares of Warrant Stock so purchased upon
such exercise of the Warrant, together with cash, as provided in Section 9
hereof, in respect of any fractional shares otherwise issuable upon such
surrender. Such certificate or certificates, to the extent permitted by law,
shall be deemed to have been issued and any person so designated to be named
therein shall be defined to have become a holder of record of such securities as
of the date of surrender of the Warrants and payment of the Warrant Price, as
aforesaid, notwithstanding that the certificate or certificates representing
such securities shall not actually have been delivered or that the stock
transfer books of the Company shall then be closed. The Warrants shall be
exercisable, at the election of the Warrantholder, either in full or from time
to time in part and, in the event that a Warrant is exercised in respect of less
than all of the shares of Warrant Stock specified therein at any time prior to
the Termination Date, a new Warrant evidencing the remaining shares of the
Warrant Stock purchasable by such Warrantholders hereunder shall be issued by
the Company to such Warrantholders.
SECTION 4. VALIDITY; PAYMENT OF TAXES. All securities delivered upon
exercise of a Warrant shall be duly and validly issued and non-assessable. The
Company shall pay all documentary stamp taxes, if any, attributable to the
initial issuance of the Warrants and the shares of Warrant Stock issuable upon
the exercise of the Warrants; provided, however, the Company shall not be
required to pay any tax which may be payable in respect of any secondary
transfer of the Warrants or the Warrant Stock.
SECTION 5. MUTILATED OR MISSING WARRANTS. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate
or certificates lost, stolen or destroyed, a new Warrant certificate or
certificates 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 receipt by the Company of an
indemnity of lost warrant certificate reasonably satisfactory in form and
substance at the applicant's cost. Applicants for such substitute warrant
certificate or certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
SECTION 6. RESERVATION OF SHARES. The Company represents and warrants to
the Warrantholder that there has been reserved, and the Company shall at all
times keep reserved so long as the Warrants remain outstanding, out of its
authorized Common Stock, such number of shares of Common Stock as shall be
subject to purchase under the Warrants. Every transfer agent for the Common
Stock and other
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securities of the Company issuable upon the exercise of the Warrants shall be
irrevocably authorized and directed at all times to reserve such number of
authorized shares and other securities as shall be requisite for such purpose.
The Company shall keep a copy of this Agreement on file with every transfer
agent for the Common Stock and other securities of the Company issuable upon the
exercise of the Warrants. The Company shall supply every such transfer agent
with duly executed stock and other certificates, as appropriate, for such
purpose and shall provide or otherwise make available any cash which may be
payable in lieu of the issuance of fractional shares, as provided in Section 9
hereof.
SECTION 7. WARRANT PRICE. The price per share at which shares of Warrant
Stock shall be purchasable upon the exercise of the Warrants shall be $[120% of
the initial public offering price], subject to adjustment pursuant to Section 8
hereof (as so adjusted from time to time, the "Warrant Price").
SECTION 8. ADJUSTMENTS OF NUMBER OF SHARES OF WARRANT STOCK AND WARRANT
PRICE. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
8.1 Adjustments. The number of shares of Warrant Stock
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 or make
a distribution on its Common Stock in shares of its capital stock or other
securities, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding Common Stock into a smaller
number of shares or (iv) issue, by reclassification of its Common Stock, shares
of its capital stock or other securities of the Company (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), the number of shares of Warrant Stock
purchasable upon exercise of a Warrant immediately prior thereto shall be
adjusted so that the Warrantholder shall be entitled to receive the kind and
number of shares of Warrant Stock, shares of its capital stock and other
securities of the Company which such holder would have owned or would have been
entitled to receive immediately after the happening of any of the events
described above, had the Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any adjustment
made pursuant to this subsection 8.1(a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.
(b) In case the Company shall issue rights, options
(other than options issued to directors or under, and pursuant to, the Company's
1996 Stock Option Plan or any successor plan thereto (the "Option Plan")),
warrants or convertible securities to holders of its Common Stock, without any
charge to such holders, containing the right to subscribe for or purchase Common
Stock, the number
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of shares of Warrant Stock thereafter purchasable upon the exercise of each
Warrant shall be determined by multiplying the number of shares of Warrant Stock
theretofore purchasable upon exercise of a Warrant by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such rights, options, warrants or convertible
securities plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
rights, options, warrants or convertible securities. Such adjustment shall be
made whenever such rights, options, warrants or convertible securities are
issued, and shall become effective immediately upon issuance of such rights,
options, warrants or convertible securities.
(c) In case the Company shall distribute to holders of
its Common Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions out of current earnings made in the ordinary course
of business), then in each case the number of shares of Warrant Stock thereafter
purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of shares of Warrant Stock theretofore purchasable upon exercise of
such Warrant by a fraction, of which the numerator shall be the then Current
Market Price (as defined below) on the date of such distribution, and of which
the denominator shall be such Current Market Price on such date minus the then
fair value (determined as provided in subsection 8(f) below) of the portion of
the assets or evidences of indebtedness so distributed 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.
(d) No adjustment in the number of shares of Warrant
Stock purchasable pursuant to subsections 8.1(b) or (c) hereof shall be required
unless such adjustment would require an increase or decrease of at least one
percent in the number of shares of Warrant Stock then purchasable upon the
exercise of the Warrants or, if the Warrants are not then exercisable, the
number of shares of Warrant Stock purchasable upon the exercise of the Warrants
on the first date thereafter that the Warrants would become exercisable;
provided, however, that any adjustments which by reason of this subsection
8.1(d) are not required to be made immediately shall be carried forward and
taken into account in any subsequent adjustment.
(e) Whenever the number of shares of Warrant Stock
purchasable upon the exercise of a Warrant is adjusted as herein provided, the
Warrant Price payable upon exercise of the Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of shares of Warrant Stock
purchasable upon the exercise of such Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of shares of
Warrant Stock purchasable immediately thereafter.
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(f) To the extent not covered by subsections 8.1(b) or
(c) hereof, in case the Company shall sell or issue Common Stock or rights,
options (other than options issued under and pursuant to the Option Plan),
warrants or convertible securities containing the right to subscribe for,
purchase or exchange into shares of Common Stock at a price per share
(determined, in the case of such rights, options, warrants or convertible
securities, by dividing (i) the total amount received or receivable by the
Company in consideration of the sale or issuance of such rights, options,
warrants or convertible securities, plus the total consideration payable to the
Company upon exercise, conversion or exchange thereof, by (ii) the total number
of shares covered by such rights, options, warrants or convertible securities)
lower than the then Current Market Price in effect immediately prior to such
sale or issuance, then the Warrant Price shall be reduced to a price (calculated
to the nearest cent) determined by dividing (I) an amount equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior to such
sale or issuance multiplied by the then existing Warrant Price, plus (B) the
consideration received or receivable by the Company upon such sale or issuance,
by (II) the total number of shares of Common Stock outstanding immediately after
such sale or issuance. The number of shares of Warrant Stock purchasable upon
the exercise of a Warrant shall thereafter be that number determined by
multiplying the number of shares of Warrant Stock purchasable upon exercise
immediately prior to such adjustment by a fraction, of which the numerator shall
be the Warrant Price in effect immediately prior to such adjustment and the
denominator shall be the Warrant Price as so adjusted. For the purposes of such
adjustments, the Common Stock which the holders of any such rights, options,
warrants or convertible securities shall be entitled to subscribe for, purchase
or exchange into shall be deemed issued on the date of such sale or issuance and
the consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such rights, options, warrants or
convertible securities, plus the consideration or premiums stated in such
rights, options, warrants or convertible securities to be payable for the Common
Stock covered thereby. In case the Company shall sell or issue Common Stock or
rights, options, warrants or convertible securities containing the right to
subscribe for, purchase or exchange into Common Stock for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then, in determining the "price per share" of Common Stock and the
"consideration received by the Company" for purposes of the first sentence of
this subsection 8.1(f), the Board of Directors shall determine the fair value of
said property, and such determination, if based upon the Board of Directors'
good faith business judgment, shall be binding upon the Warrantholders. In
determining the "price per share" of Common Stock, any underwriting discounts or
commissions paid to brokers, dealers or other selling agents shall not be
deducted from the price received by the Company for sales of securities
registered under the Act or issued in a private placement. There shall be no
adjustment of the Warrant Price pursuant to this subsection 8.1(f) if the amount
of such adjustment would be less than $.05 per share of Common Stock; provided,
however, that any adjustment which by reason of this provision is not required
to be made immediately shall be carried forward and taken into account in any
subsequent adjustment.
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(g) For the purpose of this Section 8, the term "Common
Stock" shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement 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 at any time, as a result of an
adjustment made pursuant to this Section 8, a Warrantholder shall become
entitled to purchase any securities of the Company other than Common Stock, (i)
if the Warrantholder's right to purchase is on any other basis than that
available to all holders of the Company's Common Stock, the Company shall obtain
an opinion of a reputable investment banking firm valuing such other securities
and (ii) thereafter the number of such other securities so purchasable upon
exercise of a Warrant and the Warrant Price of such securities 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 Common Stock contained in this
Section 8.
(h) Upon the expiration of any rights, options, warrants
or conversion privileges, if such shall not have been exercised, the number of
shares of Warrant Stock purchasable upon exercise of a Warrant and the Warrant
Price, to the extent a Warrant has not then been exercised, shall, upon such
expiration, be readjusted and shall thereafter be such number and such price as
they would have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) on the basis of (A) the fact
that the only shares of Common Stock issued in respect of such rights, options,
warrants or conversion privileges were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such rights, options, warrants or
conversion privileges, and (B) the fact that such shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise plus the consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants or
conversion privileges whether or not exercised; provided, however, that no such
readjustment shall have the effect of decreasing the numbers of shares of
Warrant Stock purchasable upon exercise of a Warrant or increasing the Warrant
Price by an amount in excess of the amount of the adjustment made in respect of
the issuance, sale or grant of such rights, options, warrants or conversion
privileges.
(i) Whenever the number of shares of Warrant Stock
purchasable upon the exercise of a Warrant or the Warrant Price is adjusted
pursuant to this Section 8, the Company shall cause to be promptly mailed to
each Warrantholder by first class mail, postage prepaid, notice of such
adjustment or adjustments and a certificate of the chief financial officer of
the Company setting forth the number of shares of Common Stock, capital stock
and other securities purchasable upon the exercise of such Warrantholder's
Warrant and the applicable Warrant Price after such adjustment, a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made.
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8.2 No Adjustment for Dividends, Option Plan. Except as
specifically provided in subsection 8.1, no adjustment in respect of any cash
dividends or distributions on the Company's Common Stock out of current earnings
made in the ordinary course of business shall be made during the term of the
Warrants or upon the exercise of the Warrants. No adjustment in respect to
options issued under, and pursuant to, the Option Plan shall be made during the
term of the Warrants or upon the exercise of the Warrants.
8.3 Preservation of Purchase Rights upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or other entity or in case of any sale,
lease, conveyance or other transfer to another corporation, person or other
entity of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, person or other entity, as the case may be, shall execute with the
Warrantholder, and the agreements governing such consolidation, merger, sale,
lease, conveyance or other transfer shall require such execution of, an
agreement that the Warrantholder shall have the right thereafter upon payment of
the Warrant Price in effect immediately prior to such event, upon exercise of
the Warrants, to receive the kind and amount of shares and other securities and
property which it would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, lease, conveyance or other
transfer had the Warrants (and each underlying security) been exercised
immediately prior to such action. The Company shall promptly mail to each
Warrantholder by first class mail, postage prepaid, notice of the execution of
any such agreement. In the event of a merger described in Section 368(a)(2)(E)
of the Internal Revenue Code of 1986, in which the Company is the surviving
corporation, the right to purchase shares of Warrant Stock under the Warrants
shall terminate on the date of such merger and thereupon the Warrants shall
become null and void, but only if the controlling corporation shall agree to
substitute for the Warrants its warrant which entitles the holder thereof to
purchase upon its exercise the kind and amount of shares and other securities
and property which it would have owned or been entitled to receive had the
Warrants been exercised immediately prior to such merger. Any such agreements
referred to in this subsection 8.3 shall provide for adjustments, which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
Section 8 hereof, and shall provide for terms and provisions at least as
favorable to the Warrantholder as those contained in this Agreement. The
provisions of this subsection 8.3 shall similarly apply to successive
consolidations, mergers, sales, leases, conveyances or other transfers.
8.4 Par Value of Shares of Common Stock. Before taking any action
which would cause an adjustment effectively reducing the portion of the Warrant
Price allocable to each share of Warrant Stock below the then par value per
share, if any, of the Warrant Stock issuable upon exercise of the Warrants, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Stock upon exercise of the Warrants.
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8.5 Independent Public Accountants. The Company may retain
Coopers & Xxxxxxx (or such other accounting firm qualified to practice in front
of the securities and Exchange Commission (the "Commission") as is reasonably
acceptable to the Representative to make any computation required under this
Section 8, and a certificate signed by such firm shall be conclusive evidence of
the correctness of any computation made under this Section 8.
8.6 Statement on Warrant Certificates. Irrespective of any
adjustments in the number of securities issuable upon exercise of Warrants,
Warrant certificates theretofore or thereafter issued may continue to express
the same number of securities as are stated in the similar Warrant certificates
initially issuable pursuant to this Agreement, provided that such expression
shall in no way affect the number of shares of Warrant Stock actually
purchasable upon the exercise of such Warrants.
SECTION 9. FRACTIONAL SHARES; CURRENT MARKET PRICE. The Company shall
not be required to issue fractional shares of Common Stock on the exercise of a
Warrant. If any fraction of a share of Common Stock would, except for the
provisions of this Section 9, be issuable upon the exercise of a Warrant (or
specified portion thereof), the Company shall in lieu thereof pay an amount in
cash equal to the then Current Market Price multiplied by such fraction. For
purposes of this Agreement, the term "Current Market Price" shall mean (i) if
the Common Stock is traded on the Nasdaq National Market ("NNM") or on a
national securities exchange, the per share closing price of the Common Stock in
the NNM or on the principal stock exchange on which it is listed, as the case
may be, on the date of exercise of the Warrant or, with respect to any
adjustment pursuant to Section 8.1 hereof, on the date immediately preceding the
announcement of the event causing such adjustment or (ii) if the Common Stock is
traded in the over-the-counter market and not in the NNM or on any national
securities exchange, the average of the per share closing bid prices of the
Common Stock on the thirty (30) consecutive trading days immediately preceding
the date in question, as reported by The Nasdaq Small Cap Market (or an
equivalent generally accepted reporting service if quotations are not reported
on The Nasdaq Small Cap Market). The closing price referred to in clause (i)
above shall be the last reported sale price or, in the case no such reported
sale takes place on such day, the average of the reported closing bid and asked
prices, in either case in the NNM or on the principal stock exchange on which
the Common Stock is then listed. For purposes of clause (ii) above, if trading
in the Common Stock is not reported by The Nasdaq Small Cap Market, the bid
price referred to in said clause shall be the lowest bid price as reported in
the Nasdaq Electronic Bulletin Board or, if not reported thereon, as reported in
the "pink sheets" published by National Quotation Bureau, Incorporated, and, if
such Common Stock is not so reported, shall be the price of a share of Common
Stock determined by the Company's Board of Directors in good faith.
SECTION 10. NO RIGHTS AS STOCKHOLDER; NOTICES TO WARRANTHOLDER. Except
as expressly provided herein, nothing contained in this Agreement or in the
Warrants shall be construed as conferring upon the Warrantholder or its
transferees any rights
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as a shareholder of the Company, including the right to vote, receive dividends,
consent or receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrants and prior to
their exercise, any one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant
to Section 8.1 or 8.3 hereof;
(b) an issuance by the Company of rights, options,
warrants or convertible securities to all or substantially all holders of its
Common Stock, without any charge to such holders, containing the right to
subscribe for or purchase Common Stock; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger or sale of its
property, assets and business as an entirety or substantially as an entirety)
shall be proposed;
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 13 hereof, 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 any relevant dividend,
distribution or other 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 mail or receive such notice or any defect therein shall
not affect the validity of any action taken with respect thereto.
SECTION 11. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS; OBLIGATION'S
IN REGISTRATION.
(a) The Warrantholder agrees that prior to making any
disposition of the Warrants or the Warrant Stock, other than pursuant to an
effective Registration Statement under Section 11(c) below, the Warrantholder
shall give written notice to the Company describing briefly the manner in which
any such proposed disposition is to be made; and no such disposition shall be
made unless the Warrantholder has delivered, or currently with such disposition
delivers, to the Company an opinion of counsel reasonably satisfactory to the
Company to the effect that such disposition is permitted hereunder and a
registration statement, application or other notification, filing or
post-effective amendment or supplement thereto (hereinafter collectively a
"Registration Statement") under the Act or the state securities or "blue sky"
laws of any applicable jurisdiction is not required with respect to such
disposition pursuant to an available exemption. The Warrantholder agrees that it
shall use its reasonable best efforts to obtain from any transferee who acquires
any Warrants in a private transaction with the Warrantholder an agreement by
such transferee that it agrees to be bound by any transfer restrictions set
forth in this subsection 11(a) then applicable to such transferees.
-11-
(b) [Intentionally omitted]
(c) The Company shall be obligated to the registered
holders of the Warrants and the Warrant Stock as follows:
(i) Whenever during the period beginning on
__________, 1997 and ending on _____________, 2001, the Company proposes to file
with the Commission a Registration Statement (other than as to securities issued
pursuant to an employee benefit plan or as to a transaction subject to Rule 145
promulgated under the Act), it shall, at least thirty (30) days prior to each
such filing, give written notice of such proposed filing to each Warrantholder
and each holder of the Warrant Stock at their respective addresses as they
appear on the records of the Company, and shall offer to include and shall
include in such filing any proposed disposition of the Warrant Stock upon
receipt by the Company, not more than twenty (20) days following the receipt of
such notice, of a request therefor setting forth the facts with respect to such
proposed disposition and all other information with respect to such person
reasonably necessary to be included in such Registration Statement. In the event
that such registration statement relates to an underwritten offering on a "firm
commitment" basis and the managing underwriter for said offering advises the
Company in writing that the inclusion of such securities in the offering would
be materially and substantially detrimental to the completion of the offering,
materially adversely affect the price, timing or distribution of such offering,
then the amount of Common Stock shall be limited pro rata among the Company, the
Warrantholders and each other selling securityholder in proportion to the amount
of Common Stock sought to be registered by each, to the extent necessary to
reduce the total amount of Common Stock to be included in such offering to the
amount that in the reasonable judgment of such managing underwriter or
underwriters, can be sold without materially adversely affecting the success of
such offering.
(ii) In addition to any Registration Statement
pursuant to subparagraph (i) above, during the four-year period beginning on
___________, 1997 and ending on the Termination Date, the Company will, as
promptly as practicable (but in any event within sixty (60) days), after written
request (the "Request") by the Representative, or by a person or persons holding
(or having the right to acquire by virtue of holding the warrants) more than
fifty percent (50%) of the shares of Warrant Stock which have been (or may be)
issued upon exercise of the Warrants, prepare and file at the Company's expense
a Registration Statement with the Commission and such applications or other
filings as required under applicable state securities or blue sky laws
sufficient to permit the public offering of the Warrant Stock, and shall use its
reasonable best efforts at its own expense through its officers, directors,
auditors and counsel, in all matters necessary or advisable, to cause such
Registration Statement to become effective as promptly as practicable and to
maintain such effectiveness so as to permit resale of the securities covered by
the Request until the earlier of the time that all such Warrant Stock has been
sold or the expiration of nine (9) months from the effective date of the
Registration Statement; provided, however, that the Company shall only be
obligated to file one such Registration
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Statement under this Section 11(c)(ii). The Company may delay the filing of such
Registration Statement for a reasonable period of time, but not more than 90
days after receipt of the Request (x) as is necessary to prepare audited
financial statements of the Company for its most recently completed fiscal year
or other audited financial statements reasonably required in the Registration
Statement, or (y) if the Company would be required to divulge in such
Registration Statement the existence of any fact relating to a proposed
acquisition, financing or other material corporate development not otherwise
required to be disclosed and the Board of Directors of the Company shall have in
good faith determined that such disclosure would be materially adverse to the
Company. Notwithstanding the foregoing, once and only once during the period the
Company would have an obligation to register the Warrant Stock pursuant to this
Section 11(b)(ii), the Company shall not be obligated to effect a registration
pursuant to this Section 11(c)(ii) during the three (3) month period starting
with the date thirty (30) days prior to the Company's estimated date of filing
of an underwritten public offering of securities solely for the account of the
Company; provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective and
that the Company's estimate of the date of filing of such registration statement
is made in good faith; provided further, that the Company shall furnish to the
Warrantholder and each holder of Warrant Stock a certificate signed by the
managing underwriter stating that it would be materially adverse to the Company
or its shareholders for the registration statement to be filed in the near
future.
(d) All fees, disbursements and out-of-pocket expenses
(other than the Warrantholder's brokerage fees and commissions and legal fees of
counsel to the Warrantholder, if any and of the underwriters) in connection with
the filing of any Registration Statement and in complying with applicable
federal securities and state securities and blue sky laws shall be borne by the
Company; provided, however, that in the case of a demand registration, such
expenses shall be borne pro rata among the Company and the selling
Warrantholders. The Company at its expense shall supply any Warrantholder and
any holder of Warrant Stock with copies of such Registration Statement and the
prospectus included therein and other related documents and any opinions and
no-action letters in such quantities as may be reasonably requested by such
Warrantholder or holder of Warrant Stock.
(e) The Company shall not be required by this Section 11
to file such Registration Statement if, in the opinion of counsel for the
Warrantholders, which counsel shall be reasonably satisfactory to the Company,
or in the opinion of another counsel experienced in securities law matters
acceptable to such Warrantholders and the Company, the proposed disposition as
to which such Registration Statement is requested is exempt from applicable
federal securities and state securities and blue sky laws.
(f) The offering of Common Stock pursuant to such Request
shall be in the form of an underwritten offering, if practicable. If the
managing underwriter or underwriters unanimously determine in good faith that
the total amount
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of Common Stock proposed to be included in such offering is such as to
materially adversely affect the success of such offering, then the amount of
Common Stock shall be reduced or limited pro rata between the Company and the
holders of Warrant Stock in proportion to the amount of Common Stock sought to
be registered by each, to the extent necessary to reduce the total amount of
Common Stock to be included in such offering to the amount that, in the
reasonable opinion of such managing underwriter or underwriters, can be sold
without materially adversely affecting the success of such offering.
(g) If any shares of Warrant Stock are covered by a
Registration Statement filed pursuant to Section 11(c) hereof, the holder agrees
not to effect any public sale or distribution of securities of the Company,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten offering), during the 30-day period prior to, and during
the 180-day period beginning on, the closing date of the offering made pursuant
to such Registration Statement, unless the managing underwriter or underwriters
agree in writing to waive or shorten any such period for such holder or for any
other sellers of securities. This provision shall not apply to such holder if
there is a public sale or distribution of securities of the Company subsequent
to such holding period or if such holder is prevented by applicable statute or
regulation from entering into any such agreement. The Company may require the
Warrantholder to furnish to the Company such information regarding the
distribution of such securities, including any information required by law to be
given in connection with the Registration Statement, as the Company may from
time to time reasonably request in writing and as is required by applicable law
or regulations.
(h) In the event any Warrantholder timely elects to
participate in an offering by including Warrant Stock in a Registration
Statement pursuant to subsection 11(c) above, the Company shall use its
reasonable best efforts to effect such registration to permit the sale of
Warrant Stock in accordance with the intended method or methods of disposition
thereof, and pursuant thereto, the Company shall, as expeditiously as possible:
(i) Prepare and file with the Commission a Registration
Statement or Registration Statements on a form available for the sale of the
Warrant Stock, and to cause any such Registration Statement filed under the Act
pursuant to subsection 11(c) above to become effective at the earliest possible
date after the filing thereof and remain effective as provided herein and to
comply with all applicable rules and regulations of the Commission (the "Rules
and Regulations") in connection therewith, provided, however, that before filing
a Registration Statement or prospectus or any amendments or supplements thereto,
including documents which would be incorporated or deemed to be incorporated by
reference in the Registration Statement after the initial filing of any
Registration Statement, the Company will furnish to the Warrantholders, their
counsel, and the underwriters, to be engaged in connection with the offering and
sale by the Company (for purposes of this subsection
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11(h), the "Public Underwriter"), copies of all such documents proposed to be
filed, which documents will he subject to the review of the Warrantholders,
their respective counsel and the Public Underwriter, if any, and the Company
will not file any Registration Statement, amendment thereto, any prospectus or
any supplement thereto (including such documents incorporated or deemed to be
incorporated by reference) to which the Public Underwriter, if any, shall
reasonably object;
(ii) Prepare and promptly file with the Commission such
amendments and post-effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement continuously effective for a
period of nine (9) months; cause the related prospectus to be supplemented, by
any required prospectus supplement, and as so supplemented, to be filed pursuant
to Rule 424 under the Act; and comply with the provisions of the Act with
respect to the disposition of all Warrant Stock covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition as set forth in such Registration Statement or supplement to such
prospectus. The Company shall not be deemed to have used its reasonable best
efforts to keep a Registration Statement effective during the applicable period
if it intentionally or voluntarily takes any action that could reasonably be
expected to result in such Warrantholders not being able to sell such Warrant
Stock;
(iii) As soon as the Company is advised or obtains
knowledge thereof, advise the Warrantholders and confirm the same in writing (A)
when the Registration Statement, as amended, becomes effective and when any
post-effective amendment to the Registration Statement becomes effective, (B) of
the issuance by the Commission or any State or other regulatory body of any stop
order or other order, or of the initiation or the threat or contemplation of any
proceeding, the outcome of which may result in the suspension of the
effectiveness of the Registration Statement or the issuance of any order
preventing or suspending the use of any preliminary prospectus or the
prospectus, or any amendment or supplement thereto, or the institution of any
proceedings for that purpose, (C) of the issuance by the Commission or any State
or other regulatory body of any proceedings for the suspension of the
qualification of any of the Warrant Stock for offering or sale in any
jurisdiction or of the initiation or the threat or contemplation of any
proceeding for that purpose, (D) of the receipt of any comments from the
Commission and (E) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the prospectus related
thereto or for additional information; if the commission or any State or other
regulatory body shall enter a stop order or other order suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of any preliminary prospectus or the prospectus, or any amendment or supplement
thereto, or suspend such qualification at any time, make every effort to obtain
promptly the lifting of such order or suspension;
(iv) If requested by the Public Underwriter, if any, or
any Warrantholder (1) immediately incorporate in a prospectus supplement or
post-
-15-
effective amendment such information as such Warrantholder and the Public
Underwriter, if any, agree should be included therein relating to such sale and
distribution of the Warrant stock, including, without limitation, information
with respect to the number of shares of Warrant Stock being sold to such Public
Underwriter, the purchase price being paid therefor by such Public Underwriter
and with respect to any other terms of the underwritten offering of the Warrant
Stock to be sold in such offering; (2) make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be so incorporated in such prospectus supplement or post-effective
amendment; and (3) supplement or amend any Registration Statement if requested
by the Warrantholders or any underwriter of Warrant Stock;
(v) Furnish to each of the Warrantholders and their
respective counsel, without charge and at such place as such Warrantholders may
designate, copies of each preliminary prospectus, the Registration Statement and
any pre-effective or post-effective amendments thereto, the Prospectus, and all
amendments and supplements thereto, including any prospectus prepared after the
effective date of the Registration Statement and any term sheet, in each case as
soon as available and in such quantities as each Warrantholder may reasonably
request;
(vi) During the time when a prospectus is required to be
delivered under the Act, the Company shall comply with all requirements imposed
upon it by the Act and the Securities Xxxxxxxx Xxx, 0000, as amended (the
"Exchange Act"), as now and hereafter amended, and by the Rules and Regulations,
as from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Warrant Stock in accordance with the provisions
hereof and the prospectus, or any amendments or supplements thereto; if at any
time when a prospectus relating to the Warrant Stock is required to be delivered
under the Act, any event shall have occurred as a result of which, in the
opinion of the Company or counsel for the Company or counsel for the
Warrantholders, the prospectus, as then amended or supplemented, would include
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading, or if it
is necessary at any time to amend or supplement the prospectus to comply with
the Act, notify the Public Underwriter and prepare and file, at the Company's
expense, with the Commission an appropriate amendment or supplement to the
Registration Statement or an amendment or supplement to the prospectus which
will correct such statement or omission, or effect such compliance, each such
amendment or supplement to be reasonably satisfactory to the Warrantholders and
the counsel for the Warrantholders; and furnish to the Warrantholders copies of
such amendment or supplement as soon as available and in such quantities as the
Warrantholders may request;
(vii) As soon as practicable, but in any event not later
than forty-five (45) days after the end of the nine (9) month period beginning
after the
-16-
effective date of the Registration Statement occurs, make generally available to
its security holders, in the manner specified in Rule 158(b) promulgated under
the Act, and to the Representative, an earnings statement which will comply with
the provisions of Section 11(a) of the Act and Rule 158(a) promulgated under the
Act;
(viii) Deliver to each of the selling Warrantholders,
their respective counsel and the Public Underwriter, if any, without charge, as
many copies of the prospectus or prospectuses (including each preliminary
prospectus) and any amendment or supplement thereto as such persons may
reasonably request; the Company consents to the use of any such prospectus or
any amendment or supplement thereto by such Warrantholders and the Public
Underwriter, if any, in connection with the offering and sale of the Warrant
Stock covered by such prospectus or any amendment or supplement thereto;
(ix) Prior to any public offering of Warrant Stock, use
its best efforts, at or prior to the time the Registration Statement becomes
effective, to qualify the Warrant Stock for offering and sale under the
securities or "blue sky" laws of such jurisdictions as the Warrantholders may
reasonably designate to permit the continuance of sales and dealings therein for
as long as may be necessary to complete the distribution, and make such
applications, file such documents and furnish such information as may be
required for such purpose; provided, however, the Company shall not be required
to qualify as a foreign corporation or to execute a general consent to service
of process in any such jurisdiction; in each jurisdiction where such
qualification shall be effected, use its best efforts to file and make such
statements or reports at such times as are or may be required by the laws of
such jurisdiction to continue such qualification;
(x) Cooperate with the Warrantholders and the Public
Underwriter, if any, to facilitate the timely preparation and delivery of
certificates representing Warrant Stock to be sold, which certificates shall not
bear any restrictive legends; and enable such Warrant Stock to be in such
denominations and registered in such names as the Public Underwriter, if any,
may request at least two (2) business days prior to any sale of Warrant Stock;
(xi) Use its reasonable best efforts to cause the Warrant
Stock covered by the Registration Statement to be registered with or approved by
such other governmental bodies, agencies or authorities as may be necessary to
enable the Warrantholders or the Public Underwriter, if any, to consummate the
disposition of such Warrant Stock;
(xii) Make every reasonable effort to cause all Warrant
Stock covered by such Registration Statement to be (1) listed on each securities
exchange, if any, in which shares of Common Stock are then listed or (2)
authorized to be quoted on the NNM or Nasdaq Small Cap Market or any exchange if
the
-17-
Company's Common Stock is then authorized to be quoted on the NNM or Nasdaq
Small Cap Market or any exchange;
(xiii) Enter into such agreements (including, without
limitation, if applicable, an underwriting agreement, in form, scope and
substance as is customary in underwritten offerings) and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of such Warrant Stock and, in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration is an
underwritten registration, (1) make such representations and warranties to the
Warrantholders with respect to the business of the Company and its subsidiaries
and the Public Underwriter, if any, the Registration Statement, the prospectus,
the prospectus supplement (if any) and documents, if any, incorporated or deemed
to be incorporated by reference in the Registration Statement, in each case in
such form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested; (2) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Warrantholders), addressed to the Warrantholders with
respect to the matters referred to in the preceding clause in such form, scope
and substance as are customarily rendered to underwriters in underwritten
offerings and such other matters as may be reasonably requested by counsel to
the Warrantholders or the Public Underwriter, if any; (3) obtain "cold comfort"
letters and updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data is, or is required to
be, included in or incorporated by reference into the Registration Statement)
addressed to the Warrantholders (to the extent agreed by the accountants) and
each of the Public Underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
to underwriters in connection with underwritten offerings; (4) if an
underwriting agreement is entered into, the same shall set forth in full the
indemnification and contribution provisions and procedures of Section 12 hereof
(or such other provisions and procedures as shall be acceptable to the
Warrantholders and to the Public Underwriter of such underwritten offering) with
respect to all parties to be indemnified pursuant to said section; and (5)
deliver such documents and certificates as may be reasonably requested by the
Warrantholders and the Public Underwriter, if any, to evidence the continued
validity of the representations and warranties made pursuant to clause (1) above
and to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company; the above
shall be done at each closing under such underwriting or similar agreement or as
and to the extent required thereunder;
(xiv) Make available for inspection by a representative
of the Warrantholders (to the extent agreed by the accountants) or any Public
Underwriter participating in any disposition pursuant to such Registration
Statement,
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and any attorney or accountant retained by the Warrantholders or such Public
Underwriter, all financial and other records, pertinent corporate documents and
properties and assets of the Company and its subsidiaries and cause the
officers, directors, agents and employees of the Company and its subsidiaries to
supply all information reasonably requested by any such representative, Public
Underwriter, attorney or accountant in connection with any registration of
Warrant Stock; provided, however, that any records, information or documents
that are designated by the Company in writing at the time of delivery of such
records, information or documents as confidential shall be kept confidential by
such persons unless (1) disclosure of such records, information or documents is
required by court or administrative order or is necessary to respond to
inquiries of governmental or regulatory bodies, agencies or authorities, (2)
disclosure of such records, information or documents is, in the opinion of
counsel to the Warrantholders or to any Public Underwriter, required by law or
legal process, (3) such records, information or documents are otherwise publicly
available or (4) such records, information or documents become available to such
person from a source other than the Company, and such source is not bound by a
confidentiality agreement;
(xv) If the Company, in the exercise of its reasonable
judgment, objects to any change reasonably requested by the Warrantholders or
the Public Underwriter, if any, to any Registration Statement or prospectus or
any amendments or supplements thereto (including documents incorporated or
deemed to be incorporated therein by reference) as provided for in this
Subsection 11(h), the Company shall not be obligated to make any such change and
the Warrantholders may withdraw the Warrant Stock from such registration, in
which event the Company shall pay all registration expenses (including, without
limitations, attorneys' fees and expenses) incurred by the Warrantholders in
connection with such Registration Statement or prospectus or any amendment
thereto or supplement thereof; provided, that if the Company provides the
Warrantholders with a written opinion of independent counsel (which counsel may
be the Company's regular outside counsel), upon which such Warrantholders may
rely, that the change so requested is not required in order that the
Registration Statement comply with all applicable securities laws (including any
rules and regulations promulgated thereunder), such Warrantholders may withdraw
the Warrant Stock from such registration but the Company shall not be obligated
to pay any registration expenses incurred by the Warrantholders; and
(xvi) Pay all costs and expenses incident to the
performance of or compliance with the Company's obligations under subsection
11(c) above and under this subsection 11(h) (collectively, "Registration
Expenses") whether or not any Registration Statement is filed or becomes
effective, including, without limitation, the fees and disbursements of the
Company's auditors, legal counsel, special legal counsel, legal counsel
responsible for qualifying the Warrant Stock under blue sky laws and with the
NASD, all filing fees (including, without limitation, the Commission, states,
NASD, the Nasdaq Stock Market or any exchange) and printing
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expenses, and all expenses in connection with the qualification of the Warrant
Stock under applicable blue sky laws and with the NASD; provided, however, that
the Company shall not bear the Public Underwriter's discount or commission with
respect to, or any transfer taxes imposed on, the Warrant Stock or the fees and
expenses of counsel to the Warrantholders; provided, further, however, that the
Company shall not be responsible in any way for any fees or expenses of counsel
to the Warrantholders except, as provided in Subsection 11(h)(xv) above.
SECTION 12. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of the filing of any Registration
statement with respect to the Warrant Stock pursuant to Section 11 hereof, the
Company agrees to indemnify and hold harmless the Warrantholders, each Public
Underwriter and any Holder of Warrant Stock (for purposes of this Section 12,
"Holder" shall include the officers, directors, partners, employees, agents and
counsel of a Warrantholder or a holder of Warrant Stock), and each person, if
any, who controls a Holder ("controlling person") within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, from and against any and all
losses, claims, damages, expenses (including, without limitation, reasonable
attorneys' fees and expenses) or liabilities and all actions, suits,
proceedings, injuries, arbitrations, investigations, litigation or governmental
or other proceedings (in this Section 12, collectively, "actions") in respect
thereof, whatsoever (including, without limitation, any and all expenses
whatsoever reasonably incurred in investigating preparing or defending against
any action, commenced or threatened, or any claim whatsoever), as such are
incurred, to which a Holder or such controlling person may become subject under
the Act, the Exchange Act or any other statute or at common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained (i) in any Registration Statement or any prospectus
(as from time to time amended and supplemented) or; (ii) in any post-effective
amendment or amendments or any new registration statement and prospectus in
which is included securities of the Company issued or issuable upon exercise of
the Warrants; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading (in light of the circumstances in which they were made), unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to a Holder by or on behalf of
such Holder expressly for use in any Registration Statement or any prospectus,
or any amendment thereof or supplement thereto, as the case may be. In addition
to its other obligations under this subsection 12(a), the Company agrees that,
as an interim measure during the pendency of any action arising out of or based
upon any untrue statement or omission, or alleged untrue statement or alleged
omission as described in this subsection 12(a), it shall reimburse the Holders
(and, to the extent applicable, each controlling person) on a monthly basis for
all reasonable legal or other expenses incurred in connection with investigating
or defending any such action notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's
obligations to reimburse the Holders (and, to the
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extent applicable, each controlling person) for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement is so held to have been improper as to the Company, the Holders
(and, to the extent applicable, each controlling person) shall promptly return
it to the Company, together with interest compounded daily, based on the
"reference rate" announced from time to time by Bank of America NTSA (the "Prime
Rate"). Any such interim reimbursement payments which are not made to the
applicable Holder within thirty (30) days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request. In no case shall
any interest be in excess of that permitted by law.
The indemnity agreement in this subsection 12(a) shall be
in addition to any liability which the Company may have at common law or
otherwise.
(b) Each Holder severally agrees to indemnify and hold
harmless the Company (for purposes of this Section 12, "Company" shall include
the officers, directors, partners, employees, agents and counsel of the Company)
and each other person, if any, who controls the Company ("controlling person")
within the meaning of the Act, to the same extent as the foregoing indemnity
from the Company to the Holders, but only with respect to statements or
omissions, if any, made in any preliminary prospectus, the Current Registration
Statement, the Registration Statement or any prospectus or any amendment thereof
or supplement thereto or in any application made in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
such Holder by or on behalf of such Holder expressly for use in any preliminary
prospectus, the Current Registration Statement, the Registration Statement or
any prospectus or any amendment thereof or supplement thereto or in any
application, provided that such written information or omissions only pertain to
disclosures in any preliminary prospectus, the Current Registration Statement,
the Registration Statement or any prospectus directly relating to the
transactions in connection with the offering contemplated hereby. In addition to
its other obligations under this subsection 12(b), each Holder severally agrees
that, as an interim measure during the pendency of any action arising out of or
based upon any untrue statement or omission, or alleged untrue statement or
alleged omission as described in this subsection 12(b), it shall reimburse the
Company (and, to the extent applicable, each controlling person) on a monthly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any action with respect to such Holder
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of such Holder's obligations to reimburse the Company (and, to
the extent applicable, each such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement is so held to have been
improper as to such Holder, the Company (and, to the extent applicable, each
controlling person) shall promptly return it to such Holder, together with
interest compounded daily, based on the Prime Rate. Any such interim
reimbursement payments which are not made to the company within thirty (30) days
of a request for
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reimbursement shall bear interest at the Prime Rate from the date of such
request. In no case shall any interest be in excess of that permitted by law.
Notwithstanding the provisions of this subsection 12(b), in connection with a
registration that includes the Warrant Stock pursuant to subsection 11(c)(i)
hereof, no such Holder shall be required to indemnify or hold harmless the
Company or any controlling person for any amounts in excess of the net proceeds
(before deducting expenses) applicable to the Warrant Stock sold by such Holder
pursuant to the Registration Statement. Notwithstanding the provisions of this
subsection 12(b), in connection with a registration that includes that Holder's
Warrant Stock pursuant to subsections 11(b) or 11(c)(ii), no such Holder shall
be required to indemnify and hold harmless the Company or any controlling person
for any amounts in excess of that portion of all expenses as to which
indemnification is properly claimed under this Agreement equal to such Holder's
relevant proportion of all net proceeds (before deduction of expenses)
applicable to all securities sold pursuant to the Current Registration Statement
or the Registration Statement, as applicable.
(c) Promptly after receipt by an indemnified party under
this Section 12 of notice of the commencement of any action, such indemnified
party shall notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure to so notify an
indemnifying party shall not relieve it from any liability which it may have
under this Section 12 except to the extent that it has been materially
prejudiced by such failure). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties shall be entitled to
participate therein, and to the extent it or they may elect by written notice
delivered to the indemnified party or parties promptly after receiving the
aforesaid notice from such indemnified party or parties, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, an indemnified party shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying party or parties in connection with the defense of such action at
the expense of the indemnifying party or parties, (ii) the indemnifying party or
parties shall not have employed counsel reasonably satisfactory to such
indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action or (iii) such
indemnified party shall have reasonably concluded that there may be one or more
defenses available to it which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel (in addition to appropriate
local counsel) shall be borne by the indemnifying parties. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to appropriate local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or
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related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 12 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent may not be unreasonably withheld.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes a claim for
indemnification pursuant to this Section 12, but it 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 the express provisions of this Section 12 provide for indemnification in
such case or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of each of the contributing parties, on the one hand, and the
party to be indemnified, on the other hand, in connection with the statements or
omissions that resulted in such losses, claims, damages, expenses or liabilities
(or actions in respect thereof), as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder, and the parties' relative intent,
knowledge, state of mind and access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages, expenses or liabilities (or
actions in respect thereof) referred to in the first sentence of this subsection
12(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection 12(d), in a
registration that includes a Holder's Warrant Stock pursuant to subsection
11(c)(i) hereof, no Holder shall be required to contribute any amount in excess
of the net proceeds (before deducting expenses) applicable to the shares of
Warrant Stock sold by such Holder pursuant to such registration statement and
prospectus. Notwithstanding the provisions of this subsection 12(d), in a
registration that includes a Holder's Warrant Stock pursuant to subsections
11(b) or 11(c)(ii), no such Holder shall be required to contribute any amount in
excess of that portion of all expenses as to which contribution is properly
claimed under this Agreement equal to such Holder's relevant portion of all net
proceeds (before deducting expenses) applicable to all securities sold pursuant
to the Current Registration Statement or the Registration Statement, as
applicable. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act and the cases and promulgations thereunder) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action against such party in respect to
which a claim
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for contribution may be made against another party or parties under this
subsection 12(d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this subsection 12(d) except
to the extent it has been materially prejudiced by such failure. The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
Notwithstanding anything to the contrary contained in this Agreement, no Holder
shall be required to contribute any amount in excess of the lesser of (i) that
proportion of the total of such losses, claims, damages or liabilities
indemnified or contributed against equal to the proportion of the total
securities sold pursuant to the Registration Statement, which is being sold by
it, or (ii) the proceeds received by it in any such offering. The Holders'
obligations in this Section 12(d) to contribute are several in proportion to the
number of Warrant Shares registered on their behalf and not joint.
(e) The indemnity and contribution agreements contained
in this Section 12 shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Holder or any
person controlling any Holder, the Company, its directors or officers or any
underwriter or any person controlling such underwriter, (ii) acceptance of any
Warrant Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Holder or any person controlling any Holder, or to
the Company, its directors or officers, or any person controlling the Company,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 12.
(f) In any proceeding relating to a Registration
Statement, or any prospectus or any amendment or supplement thereto, each party
against whom contribution may be sought under this Section 12 hereby consents to
the jurisdiction of any court having jurisdiction over any other contributing
party, agrees that process issuing from such court may be served upon him or it
by any other contributing party and consents to the service of such process and
agrees that any other contributing party may join him or it as an additional
defendant in any such proceeding in which such other contributing party is a
party.
SECTION 13. NOTICES. All notices and communications hereunder, except
as herein otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed, delivered by hand or transmitted by
any standard form of telecommunication. Notices to the Warrantholders or a
holder of Warrant Stock shall be directed to The Boston Group, L.P. at 0000
Xxxxxx xx xxx Xxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention:
Xx. Xxxxxxx Xxxxx, with a copy to Fulbright & Xxxxxxxx L.L.P., 000 Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000, Attention: Xxxxxxx X. Xxxxxx, Esq.
Notices to the Company shall be directed to the Company at 000 Xxxxxxxx Xxxxxx,
0xx Xxxxx, Xxxxxx, Xxxxx 00000, Attention: Mr.
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Xxxxxx Xxxx, with a copy to Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxx, Esq.
SECTION 14. PARTIES. This Agreement shall inure solely to the benefit of
and shall be binding upon, the Representative, the Company and the
Warrantholders and the holders of Warrant Stock and the controlling persons,
officers, directors and others referred to in Section 12 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained.
SECTION 15. MERGER OR CONSOLIDATION OF THE COMPANY. The Company shall
not merge or consolidate with or into any other corporation or sell all or
substantially all of its property to another corporation, unless the provisions
of Section 8.3 hereof are complied with.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements
contained in the Underwriting Agreement, any schedule, exhibit, certificate or
other instrument delivered by or on behalf of the parties hereto, or in
connection with the transactions contemplated by this Agreement, shall be deemed
to be representations and warranties hereunder. Notwithstanding any
investigations made by or on behalf of the parties to this Agreement, all
representations, warranties and agreements made by the parties to this Agreement
or pursuant hereto shall survive the termination of this Agreement and the
issuance, sale and delivery of the Warrant and the Warrant Stock.
SECTION 17. CONSTRUCTION. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas,
without giving effect to conflict of laws principles thereof.
SECTION 18. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which taken together shall be deemed to be one and the same instrument.
SECTION 19. ENTIRE AGREEMENT, AMENDMENTS. This Agreement and the
Underwriting Agreement constitute the entire agreement of the parties hereto
concerning the subject matter hereof and supersede all prior written or oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may not be amended, modified or altered except in a
writing signed by the Representative and the Company.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
AUTOBOND ACCEPTANCE
CORPORATION
By:___________________________________
Xxxxxxx X. Xxxxxxxx
Chairman of the Board and CEO
THE BOSTON GROUP, L.P.
By:__________________________________
Name:
Title:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD, EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY
MANNER EXCEPT IN COMPLIANCE WITH SECTION 1.3 AND 11(a) OF THE
REPRESENTATIVE'S WARRANT AGREEMENT PURSUANT TO WHICH THEY
WERE ISSUED.
WARRANT CERTIFICATE NO. 1
WARRANT TO PURCHASE 100,000
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.
PACIFIC TIME, ON NOVEMBER __, 2001
AUTOBOND ACCEPTANCE CORPORATION
INCORPORATED UNDER THE LAWS
OF THE STATE OF TEXAS
This certifies that, for value received, THE BOSTON GROUP, L.P., the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from AUTOBOND ACCEPTANCE CORPORATION (the "Company"), at any time
during the period commencing at 6:30 a.m., Pacific time, on ___________, 1997,
and before 5:00 p.m., Pacific time, on _____________, 2001, at the purchase
price per share of Common Stock of $______ (the "Warrant Price"), 100,000 shares
of Common Stock of the Company, no par value (the "Warrant Stock "). The number
of shares of Common Stock of the Company purchasable upon exercise of each
Warrant evidenced hereby shall be subject to adjustment from time to time as set
forth in the Representative's Warrant Agreement, dated as of November__, 1996,
by and between the Company and the Representative (the "Representative's Warrant
Agreement").
The Warrants evidenced hereby represent the right to purchase an
aggregate of up to 100,000 shares of Warrant Stock (subject to adjustment as
provided in the Representative's Warrant Agreement) and are issued under and in
accordance with the Representative's Warrant Agreement, and are subject to the
terms and provisions contained in the Representative's Warrant Agreement, to all
of which the Warrantholder by acceptance hereof consents.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached hereto
duly executed (with a signature guarantee as provided hereon) and simultaneous
payment of the Warrant Price at the principal office of the Company. Payment of
such price shall be made at the option of the Warrantholder in any manner
allowed in the Representative's Warrant Agreement.
Upon any partial exercise of the Warrants evidenced hereby, there shall
be signed and issued to the Warrantholder a new Warrant Certificate in respect
of the shares of Warrant Stock as to which the Warrants evidenced hereby shall
not have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of shares of Warrant Stock as
evidenced by the Warrant or Warrants exchanged. No fractional securities shall
be issued upon the exercise of rights to purchase hereunder, but the Company
shall pay the cash value of any fraction upon the exercise of one or more
Warrants. These Warrants are transferable at the office of the Company in the
manner and subject to the limitations set forth in the Warrant Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a shareholder of the Company.
AUTOBOND ACCEPTANCE
CORPORATION
By:
---------------------------
Xxxxxxx X. Xxxxxxxx
Chairman of the Board and CEO
Dated: November__, 1996
ATTEST: [Seal]
-----------------------------
Xxxxxx Xxxx
Chief Operating Officer
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AUTOBOND ACCEPTANCE CORPORATION
PURCHASE FORM
AUTOBOND ACCEPTANCE CORPORATION (the "Company")
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: President
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, _____ shares of common stock of the Company (the "Warrant Stock")
provided for therein, and requests that certificates for the Warrant Stock be
issued in the name of:
---------------------------------------------------------------
(Please print or Type Name, Address and Social Security Number)
---------------------------------------------------------------
---------------------------------------------------------------
and, if said number of shares of Warrant Stock shall not be all the Warrant
Stock purchasable hereunder, that a new Warrant Certificate for the balance of
the Warrant Stock purchasable under the within Warrant Certificate be registered
in the name of the undersigned Warrantholder or his Assignee as below indicated
and delivered to the address stated below.
Dated:_________________
Name of Warrantholder
or Assignee: _________________________
(Please Print)
Address: _________________________
_________________________
Signature: _________________________
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
Signature Guaranteed:_____________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange of the National Association of Securities Dealers, Inc.)
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the right to purchase _____ shares of Warrant Stock represented by the within
Warrant Certificate unto, and requests that a certificate for such Warrant be
issued in the name of:
---------------------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
---------------------------------------------------------------
---------------------------------------------------------------
hereby irrevocably constituting and appointing _______________ Attorney to
transfer said Warrants on the books of the Company, with full power of
substitution in the premises and, if said number of warrant Stock shall not bear
all of the Warrant Stock purchasable under the within Warrant Certificate, that
a new Warrant Certificate for the balance of the Warrant Stock purchasable under
the within Warrant Certificate be registered in the name of the undersigned
Warrantholder and delivered to such Warrantholder's address as then set forth on
the Company's books.
Dated:_______________ ______________________________
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
Signature Guaranteed:_____________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
