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Exhibit 10.20
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WARRANT AGREEMENT
Dated as of
January 24, 1997
between
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as the Warrant Agent
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Warrants for
Common Stock of
Electronic Retailing Systems International, Inc.
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TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions
SECTION 1.01. Definitions............................................ 1
SECTION 1.02. Other Definitions...................................... 4
SECTION 1.03. Rules of Construction.................................. 4
ARTICLE 2
Warrant Certificates
SECTION 2.01. Form and Dating........................................ 5
SECTION 2.02. Legends................................................ 5
SECTION 2.03. Execution and Countersignature......................... 7
SECTION 2.04. Certificate Register................................... 8
SECTION 2.05 Separation of Warrants and
Notes.............................................. 8
SECTION 2.06. Transfer and Exchange.................................. 9
SECTION 2.07. Replacement Certificates............................... 9
SECTION 2.08. Temporary Certificates................................. 10
SECTION 2.09. Cancellation........................................... 10
ARTICLE 3
Exercise Terms
SECTION 3.01. Exercise Price......................................... 11
SECTION 3.02. Exercise Periods....................................... 11
SECTION 3.03. Expiration............................................. 11
SECTION 3.04. Manner of Exercise..................................... 11
SECTION 3.05. Issuance of Warrant Shares............................. 12
SECTION 3.06. Fractional Warrant Shares.............................. 13
SECTION 3.07. Reservation of Warrant Shares.......................... 13
SECTION 3.08. Compliance with Law.................................... 14
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ARTICLE 4
Antidilution Provisions
SECTION 4.01. Changes in Common Stock................................ 14
SECTION 4.02. Cash Dividends and Other
Distributions........................................ 15
SECTION 4.03. Rights Issue........................................... 16
SECTION 4.04. Issuance of Common Stock or
Rights............................................... 17
SECTION 4.05. Combination; Liquidation............................... 18
SECTION 4.06. Other Events........................................... 19
SECTION 4.07. Superseding Adjustment................................. 19
SECTION 4.08. Minimum Adjustment..................................... 20
SECTION 4.09 Notice of Adjustment................................... 20
SECTION 4.10. Notice of Certain Transactions......................... 21
SECTION 4.11. Adjustment to Warrant
Certificate.......................................... 22
ARTICLE 5
Registration Rights
SECTION 5.01. Effectiveness of Registration
Statements......................................... 22
SECTION 5.02. Suspension............................................. 24
SECTION 5.03. Blue Sky............................................... 25
SECTION 5.04. Accuracy of Disclosure................................. 25
SECTION 5.05. Indemnification ....................................... 26
SECTION 5.06. Additional Acts ....................................... 30
SECTION 5.07. Expenses............................................... 30
ARTICLE 6
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent........................... 31
SECTION 6.02. Rights and Duties of
Warrant Agent........................................ 31
SECTION 6.03. Individual Rights of
Warrant Agent........................................ 32
SECTION 6.04. Warrant Agent's Disclaimer............................. 32
SECTION 6.05. Compensation and Indemnity............................. 33
SECTION 6.06. Successor Warrant Agent................................ 33
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ARTICLE 7
Miscellaneous
SECTION 7.01. SEC Reports and Other Information...................... 35
SECTION 7.02. Persons Benefitting.................................... 35
SECTION 7.03. Rights of Holders...................................... 36
SECTION 7.04. Amendment.............................................. 36
SECTION 7.05. Notices................................................ 36
SECTION 7.06. Governing Law.......................................... 37
SECTION 7.07. Successors............................................. 37
SECTION 7.08. Multiple Originals..................................... 37
SECTION 7.09. Table of Contents...................................... 38
SECTION 7.10. Severability........................................... 38
EXHIBIT A Form of Face of Warrant Certificate
EXHIBIT B Certificate to be Delivered upon
Exchange or Registration of
Transfer of Warrants
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WARRANT AGREEMENT dated as of January 24,
1997 (this "Agreement"), between ELECTRONIC RETAILING
SYSTEMS INTERNATIONAL, INC., a Delaware corporation
(the "Company"), and AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Warrant Agent (the "Warrant Agent").
The Company desires to issue the warrants (the "Warrants")
described herein. The Warrants will initially entitle the holders thereof (the
"Holders") to purchase in the aggregate 2,538,258 shares of common stock, par
value $0.01 per share, of the Company (the "Common Stock") in connection with an
offering by the Company (the "Units Offering") of 147,312 units (the "Units").
Each Unit will consist of (i) 13 1/4% Senior Discount Notes Due 2004 with a
principal amount at maturity of $1,000 (collectively, the "Notes") and (ii) one
Warrant. Each Warrant will entitle the Holder to purchase 17.23 shares of Common
Stock, subject to adjustment as provided herein. In connection with the sale of
the Units, 147,312 Warrants will be issued to the purchasers of the Units.
The Warrants will not trade separately from the Notes until
the commencement of an exchange offer or the effectiveness of a shelf
registration statement for the Notes or such date after February 24, 1997 as
Credit Suisse First Boston Corporation and UBS Securities LLC shall determine
(the "Separation Date").
The Company further desires the Warrant Agent to act on behalf
of the Company in connection with the issuance of the Warrants as provided
herein and the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of Warrants:
ARTICLE 1
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any Person means (i) any other Person which,
directly or indirectly, is in control of, is
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controlled by or is under common control with such Person, or (ii) any other
Person who is a director or executive officer (A) of such Person, (B) of any
subsidiary of such Person or (C) of any Person described in clause (i) above.
For purposes hereof, (a) "control" of a Person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise and (b) beneficial ownership of 5%
or more of the voting common equity (on a fully diluted basis) or warrants to
purchase such equity (whether or not currently exercisable) of a Person shall be
deemed to be in control of such Person; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day that is not a Saturday, a Sunday
or a day on which banking institutions are not required to be open in the State
of New York.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
Exercise Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
"Combination" means an event in which the Company consolidates
with, merges with or into, or sells all or substantially all of its assets to
another Person.
"Current Market Value" per share of Common Stock or any other
security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
Board and certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a Person other than an
Affiliate of the Company and the closing of which occurs on such date or shall
have occurred within the six-month period preceding such date, or (b) if no such
transaction shall have occurred on such date or within such six-month period,
the value of the security as determined by an independent financial expert or
(ii) if the security is registered under the Exchange Act, the average of the
daily closing bid prices (or the equivalent in an over-the-counter market) for
each Business Day during the
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period commencing 15 Business Days before such date and ending on the date one
day prior to such date, or if the security has been registered under the
Exchange Act for less than 15 consecutive Business Days before such date, the
average of the daily closing bid prices (or such equivalent) for all of the
Business Days before such date for which daily closing bid prices are available;
provided, however, that if the closing bid price is not determinable for at
least ten Business Days in such period, the "Current Market Value" of the
security shall be determined as if the security were not registered under the
Exchange Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Date" means, for a given Warrant, the day on which
such Warrant is exercised pursuant to Section 3.04.
"Indenture" means the Indenture dated as of January 24, 1997,
from the Company to the Trustee, with respect to the Notes, as it may be amended
or supplemented from time to time.
"Issue Date" means the date on which Warrants are initially
issued.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Company.
"Person" means any individual, corporation, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"SEC" means the Securities and Exchange Commission, or any
successor agency or body performing substantially similar functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Trustee" means United States Trust Company of New York, any
successor trustee under the Indenture.
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"Warrant Certificates" mean the registered certificates
(including without limitation, the global certificates) issued by the Company
under this Agreement representing the Warrants.
"Warrant Shares" mean the shares of Common Stock (and any
other securities) for which the Warrants are exercisable.
SECTION 1.02. Other Definitions.
Defined in
Term Section
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"Agreement"...................................... Recitals
"Cashless Exercise".............................. 3.04
"Certificate Register"........................... 2.04
"Common Shelf Registration
Statement"...................................... 5.01
"Common Stock"................................... Recitals
"Company"........................................ Recitals
"Exercise Price"................................. 3.01
"Expiration Date"................................ 3.02(b)
"Holders"........................................ Recitals
"Notes".......................................... Recitals
"Registrar"...................................... 3.07
"Separability Legend"............................ 2.02(b)
"Separation Date"................................ Recitals
"Successor Company".............................. 4.05(a)
"Transfer Agent"................................. 3.05
"Units".......................................... Recitals
"Units Offering"................................. Recitals
"Warrant Agent".................................. Recitals
"Warrants"....................................... Recitals
"Warrant Shelf Registration
Statement"...................................... 5.01
SECTION 1.03. Rules of Construction. Unless the text otherwise
requires:
(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
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(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
ARTICLE 2
Warrant Certificates
SECTION 2.01. Form and Dating. Each Warrant Certificate shall
be substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Agreement. The Warrant Certificates may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company) and
shall bear the legends required by Section 2.02. Each Warrant Certificate shall
be dated the date of its countersignature. The terms of the Warrant Certificate
set forth in Exhibit A are part of the terms of this Agreement.
SECTION 2.02 Legends. (a) Each Warrant Certificate shall bear
the following legend:
THE COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF THE COMPANY
FOR WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. ACCORDINGLY, NO
HOLDER SHALL BE ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT
ANY TIME UNLESS, AT THE TIME OF EXERCISE, (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT RELATING TO THE SHARES OF
COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAS
BEEN FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING
THE EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS BEEN
ISSUED BY THE SEC, OR (ii) THE ISSUANCE OF SUCH SHARES IS
PERMITTED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
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(b) Each Warrant Certificate issued prior to the Separation
Date shall bear the following legend (the "Separability Legend"):
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS
OF $1,000 PRINCIPAL AMOUNT AT MATURITY OF 13 1/4% % SENIOR
DISCOUNT NOTES DUE 2004 OF ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC. (THE "NOTES") AND ONE WARRANT. PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE DATE OF THE COMMENCEMENT
OF AN EXCHANGE OFFER OR THE EFFECTIVENESS OF A SHELF
REGISTRATION STATEMENT FOR THE NOTES OR SUCH EARLIER DATE
AFTER FEBRUARY 24, 1997 AS CREDIT SUISSE FIRST BOSTON
CORPORATION AND UBS SECURITIES LLC MAY, IN THEIR DISCRETION,
DEEM APPROPRIATE, THE WARRANTS REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY
BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE NOTES.
(c) Each Warrant Certificate issued prior to the third
anniversary of the original issuance of the Units, unless otherwise agreed by
the Company and the Holder thereof, shall bear the following legend:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (I) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QIB (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
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PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (IV) TO THE COMPANY OR
(V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED
TO IN (A) ABOVE".
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT) OR
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATIONS.
(d) Each Warrant Certificate issued in global form and
deposited with DTC shall bear the following legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE WARRANT AGREEMENT REFERRED TO HEREIN.
SECTION 2.03. Execution and Countersignature. Two Officers
shall sign the Warrant Certificates for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted or
reproduced on the Warrant Certificate and may be in facsimile form. If an
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Officer whose signature is on a Warrant Certificate no longer holds that office
at the time the Warrant Agent countersigns the Warrant Certificate, the Warrant
Certificate shall nevertheless be valid. A Warrant Certificate shall not be
valid until an authorized signatory of the Warrant Agent manually countersigns
the Warrant Certificate. Such authorized signature shall be conclusive evidence
that the Warrant Certificate has been countersigned under this Agreement.
The Warrant Agent shall initially countersign and deliver
Warrant Certificates entitling the Holders thereof to purchase in the aggregate
not more than 2,538,258 Warrant Shares upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company.
The Warrant Agent may appoint an agent reasonably acceptable
to the Company to countersign the Warrant Certificates. Unless limited by the
terms of such appointment, such agent may countersign Warrant Certificates
whenever the Warrant Agent may do so. Each reference in this Agreement to
countersignature by the Warrant Agent includes countersignature by such agent.
Such agent will have the same rights as the Warrant Agent for service of notices
and demands.
SECTION 2.04. Certificate Register. The Warrant Agent shall
keep a register ("Certificate Register") of the Warrant Certificates and of
their transfer and exchange. The Certificate Register shall show the names and
addresses of the respective Holders and the date and number of Warrants
represented on the face of each Warrant Certificate. The Company and the Warrant
Agent may deem and treat the Person in whose name a Warrant Certificate is
registered as the absolute owner of such Warrant Certificate for all purposes
whatsoever and neither the Company nor the Warrant Agent shall be affected by
notice to the contrary.
SECTION 2.05. Separation of Warrants and Notes. (a) Prior to
the Separation Date no Warrant may be sold, assigned or otherwise transferred to
any Person unless, simultaneously with such transfer, the Warrant Agent receives
confirmation from the Trustee for the Notes that the Holder thereof has
requested a transfer of the related Notes to the same transferee.
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(b) On or after the Separation Date, the holder of a Warrant
Certificate containing a Separability Legend may surrender such Warrant
Certificate accompanied by a written application to the Warrant Agent, duly
executed by the Holder thereof, for a new Warrant Certificate or certificates
not containing the Separability Legend.
SECTION 2.06. Transfer and Exchange. The Warrant Certificates
shall be issued in registered form only and shall be transferable only upon the
surrender of such Warrant Certificate for registration of transfer. When a
Warrant Certificate is presented to the Warrant Agent with a request to register
a transfer, the Warrant Agent shall register the transfer as requested if the
reasonable requirements of the Warrant Agent and of Section 8-401(1) of the
Uniform Commercial Code as in effect in the State of New York are met; provided,
however, that prior to the Separation Date the Warrant Agent shall not register
a transfer of a Warrant Certificate and such transfer will be void and of no
effect unless the Notes that are a part of the same Unit as the Warrants
represented by the Warrant Certificate to be transferred are simultaneously
transferred to the same transferee. To permit the registration of transfers and
exchanges, the Company shall execute and the Warrant Agent shall countersign
Warrant Certificates at the Warrant Agent's request. All Warrant Certificates
issued upon any registration of transfer or exchange of Warrant Certificates
shall be valid obligations of the Company, entitled to the same benefits under
this Agreement as the Warrant Certificates surrendered upon such registration of
transfer or exchange. No service charge will be made to a Holder for any
registration of transfer or exchange upon surrender of any Warrant Certificate
at the office of the Warrant Agent maintained for that purpose. However, the
Company may require payment of a sum sufficient to cover any tax, assessment or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Warrant Certificates but not for any
exchange or original issuance (not involving a transfer) pursuant to Section
2.08, 3.04 or 3.05.
SECTION 2.07. Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate if the reasonable requirements of
the Warrant Agent and of
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Section 8-405 of the Uniform Commercial Code as in effect in the State of New
York are met. If required by the Warrant Agent or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Company and the
Warrant Agent to protect the Company and the Warrant Agent from any loss which
either of them may suffer if a Warrant Certificate is replaced. The Company and
the Warrant Agent may charge the Holder for their expenses in replacing a
Warrant Certificate. Every replacement Warrant Certificate is an additional
obligation of the Company.
SECTION 2.08. Temporary Certificates. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare and the Warrant
Agent shall countersign temporary Warrant Certificates. Temporary Warrant
Certificates shall be substantially in the form of definitive Warrant
Certificates but may have variations that the Company considers appropriate for
temporary Warrant Certificates. Without unreasonable delay, the Company shall
prepare and the Warrant Agent shall countersign definitive Warrant Certificates
and deliver them in exchange for temporary Warrant Certificates.
SECTION 2.09. Cancellation. (a) In the event the Company shall
purchase or otherwise acquire Warrant Certificates, the same shall thereupon be
delivered to the Warrant Agent for cancellation.
(b) The Warrant Agent and no one else shall cancel and destroy
all Warrant Certificates surrendered for transfer, exchange, replacement,
exercise or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Warrant Agent to deliver canceled Warrant
Certificates to the Company. The Company may not issue new Warrant Certificates
to replace Warrant Certificates to the extent they represent Warrants which have
been exercised or Warrants which the Company has purchased or otherwise
acquired.
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ARTICLE 3
Exercise Terms
SECTION 3.01. Exercise Price. Each Warrant shall initially
entitle the Holder thereof, subject to adjustment pursuant to the terms of this
Agreement, to purchase 17.23 shares of Common Stock for a per share exercise
price (the "Exercise Price") of $5.23.
SECTION 3.02. Exercise Periods. (a) Subject to the terms and
conditions set forth herein, the Warrants shall be exercisable at any time or
from time to time on or after January 24, 1998; provided, however, that holders
of Warrants will be able to exercise their Warrants only if (i) the Warrant
Shelf Registration Statement relating to the Warrant Shares is effective, or
(ii) the exercise of such Warrants is exempt from the registration requirements
of the Securities Act, and the Warrant Shares are qualified for sale or exempt
from qualification under the applicable securities laws of the states or other
jurisdictions in which such holders reside.
(b) No Warrant shall be exercisable after February 1, 2004
(the "Expiration Date").
SECTION 3.03. Expiration. Each Warrant shall terminate and
become void as of the earlier of (i) the close of business on the Expiration
Date or (ii) the date such Warrant is exercised. The Company shall give notice
not less than 90 and not more than 120 days prior to the Expiration Date to the
Holders of all then outstanding Warrants to the effect that the Warrants will
terminate and become void as of the close of business on the Expiration Date;
provided, however, that if the Company fails to give notice as provided in this
Section 3.03, the Warrants will nevertheless expire and become void on the
Expiration Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised
upon (i) surrender to the Warrant Agent at the office of the Warrant Agent of
the related Warrant Certificate, together with the form of election to purchase
Common Stock on the reverse thereof duly filled in and signed by the Holder
thereof, and (ii) payment to the Warrant Agent, for the account of the Company,
of the Exercise Price for each Warrant Share issuable upon the exercise of such
Warrants then exercised. Such payment shall be made (i) in cash or by certified
or official bank
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check payable to the order of the Company or by wire transfer of funds to an
account designated by the Company for such purpose or (ii) without the payment
of cash, by reducing the number of shares of Common Stock obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (a) the number of shares of Common Stock issuable as of the Exercise
Date upon the exercise of such Warrant (if payment of the Exercise Price were
being made in cash) and (b) the Cashless Exercise Ratio. An exercise of a
Warrant in accordance with the immediately preceding sentence is herein called a
"Cashless Exercise". Upon surrender of a Warrant Certificate representing more
than one Warrant in connection with the holder's option to elect a Cashless
Exercise, the number of shares of Common Stock deliverable upon a Cashless
Exercise shall be equal to the number of shares of Common Stock issuable upon
the exercise of Warrants that the holder specifies are to be exercised pursuant
to a Cashless Exercise multiplied by the Cashless Exercise Ratio. All provisions
of this Agreement shall be applicable with respect to a surrender of a Warrant
Certificate pursuant to a Cashless Exercise for less than the full number of
Warrants represented thereby. Subject to Section 3.02, the rights represented by
the Warrants shall be exercisable at the election of the Holders thereof either
in full at any time or from time to time in part and in the event that a Warrant
Certificate is surrendered for exercise of less than all the Warrants
represented by such Warrant Certificate at any time prior to the Expiration
Date, a new Warrant Certificate representing the remaining Warrants shall be
issued. The Warrant Agent shall countersign and deliver the required new Warrant
Certificates, and the Company, at the Warrant Agent's request, shall supply the
Warrant Agent with Warrant Certificates duly signed on behalf of the Company for
such purpose.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section
2.07, upon the surrender of Warrant Certificates and payment of the per share
Exercise Price, as set forth in Section 3.04, the Company shall issue and cause
the Warrant Agent or, if appointed, a transfer agent for the Common Stock
("Transfer Agent") to countersign and deliver to or upon the written order of
the Holder and in such name or names as the Holder may designate a certificate
or certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered
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or otherwise, to the Person or Persons entitled to receive the same, together
with cash as provided in Section 3.06 in respect of any fractional Warrant
Shares otherwise issuable upon such exercise. Such certificate or certificates
shall be deemed to have been issued and any Person so designated to be named
therein shall be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of such Warrant Certificates and payment of the
per share Exercise Price, as aforesaid; provided, however, that if, at such
date, the transfer books for the Warrant Shares shall be closed, the
certificates for the Warrant Shares in respect of which such Warrants are then
exercised shall be issuable as of the date on which such books shall next be
opened and until such date the Company shall be under no duty to deliver any
certificates for such Warrant Shares; provided further, however, that such
transfer books, unless otherwise required by law, shall not be closed at any one
time for a period longer than 20 calendar days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not
be required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be exercised in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant
Shares purchasable pursuant thereto. If any fraction of a Warrant Share would,
except for the provisions of this Section 3.06, be issuable on the exercise of
any Warrant (or specified portion thereof), the Company shall pay an amount in
cash equal to the Current Market Value per Warrant Share, as determined on the
day immediately preceding the date the Warrant is exercised, multiplied by such
fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. The Company shall
at all times keep reserved out of its authorized shares of Common Stock a number
of shares of Common Stock sufficient to provide for the exercise of all
outstanding Warrants. The registrar for the Common Stock (the "Registrar") shall
at all times until the Expiration Date reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent. All Warrant Shares which may be
issued upon exercise of Warrants shall, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof. The Company
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will supply such Transfer Agent with duly executed stock certificates for such
purpose and will itself provide or otherwise make available any cash which may
be payable as provided in Section 3.06. The Company will furnish to such
Transfer Agent a copy of all notices of adjustments (and certificates related
thereto) transmitted to each Holder.
Before taking any action which would cause an adjustment
pursuant to Article 4 to reduce the Exercise Price below the then par value (if
any) of the Common Stock, the Company shall take any and all 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 shares of Common
Stock at the Exercise Price as so adjusted.
The Company covenants that all shares of Common Stock which
may be issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights, free from all taxes and free from all
liens, charges and security interests, created by or through the Company, with
respect to the issue thereof.
SECTION 3.08. Compliance with Law. Notwithstanding anything in
this Agreement to the contrary, in no event shall a Holder be entitled to
exercise a Warrant unless (i) a registration statement filed under the
Securities Act in respect of the issuance of the Warrant Shares is then
effective or (ii) in the opinion of counsel to the Company addressed to the
Warrant Agent the exercise of such Warrants is exempt from the registration
requirements of the Securities Act and such securities are qualified for sale or
exempt from qualification under the applicable securities laws of the States or
other jurisdictions in which such holders reside.
ARTICLE 4
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at
any time or from time to time the Company shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock or other shares
of its capital stock, (ii) subdivide its outstanding shares of Common Stock into
a larger number of shares of Common Stock, (iii) combine its outstanding shares
of Common Stock
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into a smaller number of shares of Common Stock or (iv) increase or decrease the
number of shares of Common Stock outstanding by reclassification of its Common
Stock, then the number of shares of Common Stock issuable upon exercise of each
Warrant immediately after the happening of such event shall be adjusted to a
number determined by multiplying the number of shares of Common Stock that such
holder would have owned or have been entitled to receive upon exercise had such
Warrants been exercised immediately prior to the happening of the events
described above (or, in the case of a dividend or distribution of Common Stock
or other shares of capital stock, immediately prior to the record date therefor)
by a fraction, the numerator of which shall be the total number of shares of
Common Stock outstanding immediately after the happening of the events described
above and the denominator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the happening of the events described
above; and subject to Section 4.08 the Exercise Price for each Warrant shall be
adjusted to a number determined by dividing the Exercise Price immediately prior
to such event by such fraction. An adjustment made pursuant to this Section 4.01
shall become effective immediately after the effective date of such event,
retroactive to the record date therefor in the case of a dividend or
distribution in shares of Common Stock or other shares of the Company's capital
stock.
SECTION 4.02. Cash Dividends and Other Distributions. In the
event that at any time or from time to time the Company shall distribute to all
holders of Common Stock (i) any dividend or other distribution of cash,
evidences of its indebtedness, shares of its capital stock or any other
properties or securities or (ii) any options, warrants or other rights to
subscribe for or purchase any of the foregoing (other than, in each case, (w)
the issuance of any rights under a shareholder rights plan, (x) any dividend or
distribution described in Section 4.01, (y) any rights, options, warrants or
securities described in Section 4.03 and (z) any cash dividends or other cash
distributions from current or retained earnings), then the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be increased to a
number determined by multiplying the number of shares of Common Stock issuable
upon the exercise of such Warrant immediately prior to the record date for any
such dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per share of Common Stock on the record date for such
dividend or
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distribution and the denominator of which shall be such Current Market Value per
share of Common Stock on the record date for such dividend or distribution less
the sum of (x) the amount of cash, if any, distributed per share of Common Stock
and (y) the fair value (as determined in good faith by the Board, whose
determination shall be evidenced by a board resolution filed with the Warrant
Agent, a copy of which will be sent to Holders upon request) of the portion, if
any, of the distribution applicable to one share of Common Stock consisting of
evidences of indebtedness, shares of stock, securities, other property,
warrants, options or subscription or purchase rights; and subject to Section
4.08 the Exercise Price shall be adjusted to a number determined by dividing the
Exercise Price immediately prior to such record date by the above fraction. Such
adjustments shall be made whenever any distribution is made and shall become
effective as of the date of distribution, retroactive to the record date for any
such distribution. No adjustment shall be made pursuant to this Section 4.02
which shall have the effect of decreasing the number of shares of Common Stock
issuable upon exercise of each Warrant or increasing the Exercise Price.
SECTION 4.03. Rights Issue. In the event that at any time or
from time to time the Company shall issue rights, options or warrants entitling
the holders thereof to subscribe for shares of Common Stock, or securities
convertible into or exchangeable or exercisable for Common Stock to all holders
of Common Stock without any charge, entitling such holders to subscribe for or
purchase shares of Common Stock at a price per share that is lower at the record
date for such issuance than the then Current Market Value per share of Common
Stock other than in connection with the adoption of a shareholder rights plan by
the Company, the number of shares of Common Stock issuable upon the exercise of
each Warrant shall be increased to a number determined by multiplying the number
of shares of Common Stock theretofore issuable upon exercise of each Warrant by
a fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options, warrants or
securities plus the number of additional shares of Common Stock offered for
subscription or purchase or into or for which such securities that are issued
are convertible, exchangeable or exercisable, and the denominator of which shall
be the number of shares of Common Stock outstanding on the date of issuance of
such rights, options, warrants or securities plus the total number of shares of
Common Stock which the
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aggregate consideration expected to be received by the Company (assuming the
exercise or conversion of all such rights, options, warrants or securities)
would purchase at the then Current Market Value per share of Common Stock.
Subject to Section 4.08, in the event of any such adjustment, the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such date of issuance by the aforementioned fraction. Such
adjustment shall be made immediately after such rights, options or warrants are
issued and shall become effective, retroactive to the record date for the
determination of stockholders entitled to receive such rights, options, warrants
or securities. No adjustment shall be made pursuant to this Section 4.03 which
shall have the effect of decreasing the number of shares of Common Stock
purchasable upon exercise of each Warrant or of increasing the Exercise Price.
SECTION 4.04 Issuance of Common Stock or Rights. In the event
that at any time or from time to time the Company shall issue (i) shares of
Common Stock (subject to the provisions below), (ii) rights, options or warrants
entitling the holders thereof to subscribe for shares of Common Stock (provided,
however that no adjustment shall be made upon the exercise of such rights,
options or warrants), or (iii) securities convertible into or exchangeable or
exercisable for Common Stock (provided, however, that no adjustment shall be
made upon the conversion, exchange or exercise of such securities (other than
issuances specified in (i), (ii) or (iii) which are made as the result of
anti-dilution adjustments in such securities)), at a price per share at the
record date of such issuance that is less than the then Current Market Value per
share of Common Stock, the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such sale or
issuance plus the number of additional shares of Common Stock offered for
subscription or purchase or into or for which such securities that are issued
are convertible, exchangeable or exercisable, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
sale or issuance plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by the Company (assuming the
exercise or conversion of all such rights, options, warrants
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or securities, if any) would purchase at the then Current Market Value per share
of Common Stock; and subject to Section 4.08 the Exercise Price shall be
adjusted to a number determined by dividing the Exercise Price immediately prior
to such date of issuance by the aforementioned fraction; provided, however, that
no adjustment to the number of Warrant Shares issuable upon the exercise of the
Warrants or to the Exercise Price shall be made as a result of (i) the issuance
of shares of Common Stock under any warrants, options or other rights existing
on the date hereof, (ii) the issuance of shares of Common Stock in bona fide
public offerings that are underwritten or in which a placement agent is retained
by the Company, (iii) the issuance of options, or shares of Common Stock
pursuant to any option, under any employee benefit plans approved by the Board
of Directors or (iv) the issuance of shares of Common Stock in connection with
acquisitions of products, technologies and businesses other than to Affiliates
of the Company. Such adjustments shall be made whenever such rights, options or
warrants or convertible securities are issued. No adjustment shall be made
pursuant to this Section 4.04 which shall have the effect of decreasing the
number of shares of Common Stock issuable upon exercise of each warrant or of
increasing the Exercise Price.
SECTION 4.05. Combination; Liquidation. (a) Except as provided
in Section 4.05(b), in the event of a Combination, each Holder shall have the
right to receive upon exercise of the Warrants the kind and amount of shares of
capital stock or other securities or property which such Holder would have been
entitled to receive upon or as a result of such Combination had such Warrant
been exercised immediately prior to such event. Unless paragraph (b) is
applicable to a Combination, the Company shall provide that the surviving or
acquiring Person (the "Successor Company") in such Combination will enter into
an agreement with the Warrant Agent confirming the Holders' rights pursuant to
this Section 4.05(a) and providing for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
4. The provisions of this Section 4.05(a) shall similarly apply to successive
Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to
the holders of Common Stock in exchange for their shares is payable solely in
cash or (ii) the dissolution, liquidation or winding-up of the Company, the
holders of the Warrants shall be entitled to receive, upon
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surrender of their Warrant Certificates, distributions on an equal basis with
the holders of Common Stock or other securities issuable upon exercise of the
Warrants, as if the Warrants had been exercised immediately prior to such event,
less the Exercise Price.
In case of any Combination described in this Section 4.05(b),
the surviving or acquiring Person and, in the event of any dissolution,
liquidation or winding-up of the Company, the Company, shall deposit promptly
with the Warrant Agent the funds, if any, necessary to pay to the holders of the
Warrants the amounts to which they are entitled as described above. After such
funds and the surrendered Warrant Certificates are received, the Warrant Agent
is required to deliver a check in such amount as is appropriate (or, in the case
of consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrants.
SECTION 4.06. Other Events. If any event occurs as to which
the foregoing provisions of this Article 4 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
and adequately protect the purchase rights of the Warrants in accordance with
the essential intent and principles of such provisions, then such Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of such Board, to protect such purchase rights as aforesaid,
but in no event shall any such adjustment have the effect of increasing the
Exercise Price or decreasing the number of shares of Common Stock issuable upon
exercise of any Warrant.
SECTION 4.07. Superseding Adjustment. Upon the expiration of
any rights, options, warrants or conversion or exchange privileges which
resulted in adjustments pursuant to this Article 4, if any thereof shall not
have been exercised, the number of Warrant Shares issuable upon the exercise of
each Warrant shall be readjusted pursuant to the applicable section of Article 4
as if (A) the only shares of Common Stock issuable upon exercise of such rights,
options, warrants, conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (B) shares of Common Stock
actually issued, if any, were issuable for the consideration actually
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received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale or grant of all
such rights, options, warrants or conversion or exchange privileges whether or
not exercised and the Exercise Price shall be readjusted inversely; provided,
however, that no such readjustment shall (except by reason of an intervening
adjustment under Section 4.01) have the effect of decreasing the number of
Warrant Shares purchasable upon the exercise of each Warrant or increase the
Exercise Price by an amount in excess of the amount of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by
the preceding Sections of this Article 4 shall be made whenever and as often as
any specified event requiring an adjustment shall occur, except that no
adjustment of the Exercise Price or the number of shares of Common Stock
issuable upon exercise of Warrants that would otherwise be required shall be
made unless and until such adjustment either by itself or with other adjustments
not previously made increases or decreases by at least 1% the Exercise Price or
the number of shares of Common Stock issuable upon exercise of Warrants
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount shall be carried forward and made as
soon as such adjustment, together with other adjustments required by this
Article 4 and not previously made, would result in a minimum adjustment. For the
purpose of any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence. In computing adjustments
under this Article 4, fractional interests in Common Stock shall be taken into
account to the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise
Price or the number of shares of Common Stock and other property, if any,
issuable upon exercise of the Warrants is adjusted, as herein provided, the
Company shall deliver to the Warrant Agent a certificate of a firm of
independent accountants selected by the Board (who may be the regular
accountants employed by the Company) setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which (i) the Board
determined the fair value of any evidences of indebtedness, other securities or
property or warrants,
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options or other subscription or purchase rights and (ii) the Current Market
Value of the Common Stock was determined, if either of such determinations were
required), and specifying the Exercise Price and the number of shares of Common
Stock issuable upon exercise of Warrants after giving effect to such adjustment.
The Company shall promptly cause the Warrant Agent to mail a copy of such
certificate to each Holder in accordance with Section 7.06. The Warrant Agent
shall be entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same
from time to time, to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any Holder to determine whether any facts exist which
may require any adjustment of the Exercise Price or the number of shares of
Common Stock or other stock or property issuable on exercise of the Warrants, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value of any shares of Common Stock, evidences of indebtedness, warrants,
options, or other securities or property.
SECTION 4.10. Notice of Certain Transactions. In the event
that the Company shall propose to (a) pay any dividend payable in securities of
any class to the holders of its Common Stock or to make any other non-cash
dividend or distribution to the holders of its Common Stock, (b) offer the
holders of its Common Stock rights to subscribe for or to purchase any
securities convertible into shares of Common Stock or shares of stock of any
class or any other securities, rights or options, (c) issue any (i) shares of
Common Stock, (ii) rights, options or warrants entitling the holders thereof to
subscribe for shares of Common Stock, or (iii) securities convertible into or
exchangeable or exercisable for Common Stock (in the case of (i), (ii) and
(iii), if such issuance or adjustment would result in an adjustment hereunder),
(d) effect any capital reorganization, reclassification, consolidation or
merger, (e) effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company or (f) make a tender offer or exchange offer with
respect to the Common Stock, the Company shall within 5 days send to the Warrant
Agent and the Warrant Agent shall within 5 days send the Holders a notice (in
such form as shall be furnished to the Warrant Agent by the Company) of such
proposed action or offer. Such notice shall be mailed by the Warrant Agent to
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the Holders at their addresses as they appear in the Certificate Register, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of any other shares of stock and on other property,
if any, and the number of shares of Common Stock and other property, if any,
issuable upon exercise of each Warrant and the Exercise Price after giving
effect to any adjustment pursuant to Article 4 which will be required as a
result of such action. Such notice shall be given as promptly as possible and
(x) in the case of any action covered by clause (a) or (b) above, at least 10
days prior to the record date for determining holders of the Common Stock for
purposes of such action or (y) in the case of any other such action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Stock, whichever shall be the
earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of
Warrant Certificate need not be changed because of any adjustment made pursuant
to this Article 4, and Warrant Certificates issued after such adjustment may
state the same Exercise Price and the same number of shares of Common Stock
issuable upon exercise of the Warrants as are stated in the Warrant Certificates
initially issued pursuant to this Agreement. The Company, however, may at any
time in its sole discretion make any change in the form of Warrant Certificate
that it may deem appropriate to give effect to such adjustments and that does
not affect the substance of the Warrant Certificate, and any Warrant Certificate
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant Certificate or otherwise, may be in the form as so changed.
ARTICLE 5
Registration Rights
SECTION 5.01. Effectiveness of Registration Statement. Subject
to Section 5.02, the Company shall cause to be filed pursuant to Rule 415 (or
any successor provision) of the Securities Act not later than 45 days after the
Issue Date, a shelf registration statement
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relating to the offer and sale of the Warrants by the Holders from time to time
in accordance with the methods of distribution elected by such holders and set
forth in such registration statement (the "Warrant Shelf Registration
Statement"), and shall use its reasonable best efforts to cause the Warrant
Shelf Registration Statement to be declared effective on or before 150 days
after the Issue Date and a shelf registration statement covering the issuance of
Warrant Shares to the Holders upon exercise of the Warrants by the Holders
thereof (the "Common Shelf Registration Statement", and together with the
Warrant Shelf Registration Statement, the "Registration Statements") and shall
use its reasonable best efforts to cause the Common Shelf Registration Statement
to be declared effective on or before 365 days after the Issue Date, and to
cause each of the Registration Statements to remain effective until the earliest
of (i) such time as all Warrants have been sold or exercised, as the case may
be, (ii) the Expiration Date and (iii) in the case of the Warrant Shelf
Registration Statement, until all Warrants can be sold without restriction under
the Securities Act. In connection with any Registration Statement, (i) the
Company shall furnish to the Warrant Agent, prior to the filing with the
Commission, a copy of any Registration Statement, and each amendment thereof and
each amendment or supplement, if any, to the prospectus included therein and
shall use its reasonable best efforts to reflect in each such document, when
filed with the Commission, such comments as the Warrant Agent may reasonably
propose, (ii) the Company shall furnish to each Holder, without charge, at least
one copy of any Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits thereto (including those incorporated by reference), (iii)
the Company shall, for so long as any Registration Statement is effective,
deliver to each Holder, without charge, as many copies of the prospectus
(including each preliminary prospectus) included in such Registration Statement
and any amendment or supplement thereto as such Holder may reasonably request,
and the Company consents to the proper use of the prospectus therein and any
amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Warrants or the Warrant Shares, as the case
may be, covered by such prospectus and any amendment or supplement thereto, (iv)
the Company may require each Holder of Warrants to be sold pursuant to the
Warrant Shelf Registration Statement or to be exercised in connection with the
Common Shelf
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Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of such Warrants or Warrant Shares as the Company
may from time to time reasonably request for inclusion in such Registration
Statement, (v) the Company shall, if requested, promptly incorporate in a
prospectus supplement or post-effective amendment to such Registration Statement
such information as a majority in interest of the Holders reasonably agree
should be included therein and shall make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment, (vi) the Company shall enter into such agreements (including
underwriting agreements) as are appropriate, customary and reasonably necessary
in connection with any such Registration Statement and (vii) the Company shall
(A) make available all material customary for reasonable due diligence
examinations in connection with such Registration Statements, (B) make such
representations and warranties to the Holders of Warrants and the underwriters,
if any, as are customary and reasonable in connection with such Registration
Statements, (C) obtain such opinions of counsel to the Company addressed to and
reasonably satisfactory to the Holders as are customary and reasonable in
connection with such Registration Statements and (D) obtain such "comfort"
letters and updates thereof from the independent certified public accountants of
the Company addressed to the Holders as are customary and reasonable in
connection with such Registration Statements. The Company will furnish the
Warrant Agent with current prospectuses meeting the requirements of the
Securities Act in sufficient quantity to permit the Warrant Agent to deliver, at
the Company's expense, a prospectus to each holder of a Warrant upon the
exercise thereof. The Company shall promptly inform the Warrant Agent of any
change in the status of the effectiveness or availability of any Registration
Statement.
SECTION 5.02. Suspension. During any consecutive 365-day
period, the Company shall be entitled to suspend the availability of each of the
Warrant Shelf Registration Statement and the Common Shelf Registration Statement
for up to two 45 consecutive-day periods (except during the 45 consecutive-day
period immediately prior to the Expiration Date) if the Company's Board
determines in the exercise of its reasonable judgement that there is a valid
business purpose for such suspension and provides notice that such determination
was made by the Company's board to the holders of the Warrants; provided,
however, that in no event shall
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the Company be required to disclose the business purpose for such suspension if
the Company determines in good faith that such business purpose must remain
confidential.
SECTION 5.03. Blue Sky. The Company shall use its reasonable
best efforts to register or qualify the Warrants and the Warrant Shares under
all applicable securities laws, blue sky laws or similar laws of all
jurisdictions in the United States and Canada in which any holder of Warrants
may or may be deemed to purchase Warrants or Warrant Shares upon the exercise of
Warrants and shall use its reasonable best efforts to maintain such registration
or qualification through the earliest of (i) such time as all Warrants have been
exercised, (ii) the Expiration Date and (iii) in the case of the Warrant Shelf
Registration Statement, until all Warrants can be sold without restriction under
the Securities Act; provided, however, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 5.03 or to take any action
which would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
SECTION 5.04. Accuracy of Disclosure. The Company represents
and warrants to each Holder and agrees for the benefit of each Holder that (i)
each of the Warrant Shelf Registration Statement and the Common Shelf
Registration Statement and any amendment thereto will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading; and (ii) each of the prospectus furnished to such Holder for
delivery in connection with the sale of Warrants and the prospectus delivered to
such Holder upon the exercise of Warrants and the documents incorporated by
reference therein will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Company shall have no
liability under clauses (i) or (ii) of this Section 5.04 with respect to any
such untrue statement or omission made in any Registration Statement in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Holders specifically for inclusion therein.
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SECTION 5.05. Indemnification. (a) In connection with any
Registration Statement, the Company agrees to indemnify and hold harmless each
Holder of the Warrants and each person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act (each Holder and such
controlling persons being referred to collectively as the "Indemnified Parties")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including but not limited to any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Warrants or the Warrant Shares) to which each Indemnified Party may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement or prospectus or in any amendment or supplement
thereto, or arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and shall reimburse, as incurred, the Indemnified Parties
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement or any
preliminary or final prospectus or in any amendment or supplement thereto in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder specifically
for inclusion therein, (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any prospectus relating to such
Registration Statement, the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any person as to which there is a prospectus
delivery requirement (a "Delivering Seller") that sold the Securities to the
person asserting any such losses, claims, damages or liabilities to the extent
that any such loss, claim, damage or liability of such Delivering Seller results
from the fact that there was not sent or given to such person, on or prior to
the written confirmation of such sale, a copy of the relevant prospectus, as
amended and supplemented, provided
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that (I) the Company shall have previously furnished copies thereof to such
Delivering Seller in accordance with this Agreement and (II) such furnished
prospectus, as amended and supplemented, would have corrected any such untrue
statement or omission or alleged untrue statement or omission, and (iii) this
indemnity agreement will be in addition to any liability which the Company may
otherwise have to such Indemnified Party. The Company shall also indemnify
underwriters, selling brokers, dealer-managers and similar securities industry
professionals participating in the distribution (in each case as described in
such Registration Statement), their officers and directors and each person who
controls such persons within the meaning of the Securities Act or the Exchange
Act to the same extent as provided above with respect to the indemnification of
the Holders of the Securities if requested by such Holders.
(b) In connection with any Registration Statement, each Holder
of the Warrants, severally and not jointly, will indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act from and against any losses, claims,
damages or liabilities or any actions in respect thereof to which the Company or
any such controlling person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement or
preliminary or final prospectus or in any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.
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(c) Promptly after receipt by an indemnified party under this
section of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this section, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above, except to the
extent that it is prejudiced or harmed in any material respect by failure to
give such prompt notice. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with one counsel (and local counsel as
necessary) reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof the indemnifying party will not
be liable to such indemnified party under this section for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof. No indemnifying
party shall, without the prior written consent of the indemnified party, not to
be unreasonably withheld, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified party unless
such settlement includes an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action. No
indemnifying party shall be liable for any amounts paid in settlement of any
action or claim without its written consent, which consent shall not be
unreasonably withheld.
(d) If the indemnification provided for in this section is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above for any reason other than as provided in subsection
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in
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respect thereof) referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party on the
other or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the indemnifying party or parties on the one hand and the indemnified
party on the other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities (or actions in respect thereof)
as well as any other relevant equitable considerations. The relative fault of
the parties 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
on the one hand or such Holder or such other indemnified person, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5(d), the Holders shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Warrants pursuant to the Warrant Shelf Registration
Statement or the Warrant Shares pursuant to the Common Shelf Registration
Statement exceeds the amount of damages which such Holders would have otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each officer, director,
employee, representative and agent of an indemnified party and each person, if
any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party, and each officer, director, employee, representative and
agent of the Company and each person, if any, who
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controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this section shall survive the
sale of the Warrants pursuant to the Warrant Shelf Registration Statement and
the sale of the Warrant Shares pursuant to the Common Shelf Registration
Statement, as the case may be, and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any indemnified party.
SECTION 5.06. Additional Acts. If the sale of Warrants or the
issuance or sale of any Common Stock or other securities issuable upon the
exercise of the Warrants requires registration or approval of any governmental
authority (other than the registration requirements under the Securities Act),
or the taking of any other action under the laws of the United States of America
or any political subdivision thereof before such securities may be validly
offered or sold in compliance with such laws, then the Company covenants that it
will, in good faith and as expeditiously as reasonably possible, endeavor to
secure and maintain such registration or approval or to take such other action,
as the case may be.
SECTION 5.07. Expenses. All expenses incident to the Company's
performance of or compliance with its obligations under this Article 5 will be
borne by the Company, including without limitation: (i) all SEC, stock exchange
or National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all reasonable fees and expenses incurred in connection with
compliance with state securities or blue sky laws, (iii) all expenses of any
Persons incurred by or on behalf of the Company in preparing or assisting in
preparing, printing and distributing the Warrant Shelf Registration Statement,
the Common Shelf Registration Statement or any other registration statement,
prospectus, any amendments or supplements thereto and other documents relating
to the performance of and compliance with this Article 5, (iv) the fees and
disbursements of the Warrant Agent, (v) the fees and disbursements of counsel
for the Company and the Warrant Agent and (vi) the fees and disbursements of the
independent public accountants of the Company, including the expenses of any
special audits or comfort letters required by or incident to such performance
and compliance.
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ARTICLE 6
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the provisions of this Agreement and the Warrant Agent hereby accepts such
appointment.
SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent
for the Company. In acting under this Warrant Agreement and in connection with
the Warrant Certificates, the Warrant Agent is acting solely as agent of the
Company and does not assume any obligation or relationship or agency or trust
for or with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) Counsel. The Warrant Agent may consult with counsel
satisfactory to it (who may be counsel to the Company), and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice of such counsel.
(c) Documents. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be
obligated to perform only such duties as are specifically set forth herein and
in the Warrant Certificates, and no implied duties or obligations of the Warrant
Agent shall be read into this Agreement or the Warrant Certificates. The Warrant
Agent shall not be under any obligation to take any action hereunder which may
tend to involve it in any expense or liability for which it does not receive
indemnity if such indemnity is reasonably requested. The Warrant Agent shall not
be accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates countersigned by the Warrant Agent and delivered
by it to the Holders or on behalf of the Holders pursuant to this Agreement or
for the
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application by the Company of the proceeds of the Warrants. The Warrant Agent
shall have no duty or responsibility in case of any default by the Company in
the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) Not Responsible for Adjustments or Validity of Stock. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist that may require an adjustment of
the number of shares of Common Stock issuable upon exercise of each Warrant or
the Exercise Price, or with respect to the nature or extent of any adjustment
when made or with respect to the method employed or provided to be employed
herein or in any supplemental agreement in making the same. The Warrant Agent
shall not be accountable with respect to the validity or value of any shares of
Common Stock or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or upon any adjustment pursuant to
Article 4, and it makes no representation with respect thereto. The Warrant
Agent shall not be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of Common Stock or stock
certificates upon the surrender of any Warrant Certificate for the purpose of
exercise or upon any adjustment pursuant to Article 4, or to comply with any of
the covenants of the Company contained in Article 4.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company
or its affiliates or become pecuniarily interested in transactions in which the
Company or its affiliates may be interested, or contract with or lend money to
the Company or its affiliates or otherwise act as fully and freely as though it
were not the Warrant Agent under this Agreement. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent
shall not be responsible for and makes no representation as to the validity or
adequacy of this Agreement or the Warrant Certificates and it shall not be
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33
responsible for any statement in this Agreement or the Warrant Certificates
other than its countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company and the
Warrant Agent have entered into an agreement pursuant to which the Company
agrees to pay the Warrant Agent from time to time reasonable compensation for
its services and to reimburse the Warrant Agent upon request for all reasonable
out-of-pocket expenses incurred by it, including the reasonable compensation and
expenses of the Warrant Agent's agents and counsel. The Company shall indemnify
the Warrant Agent against any loss, liability or expense (including agents' and
attorneys' fees and expenses) incurred by it without negligence or bad faith on
its part arising out of or in connection with the acceptance or performance of
its duties under this Agreement. The Warrant Agent shall notify the Company
promptly of any claim for which it may seek indemnity. The Company need not
reimburse any expense or indemnify against any loss or liability incurred by the
Warrant Agent through wilful misconduct, negligence or bad faith. The Company's
payment obligations pursuant to this Section 6.05 shall survive the termination
of this Agreement.
To secure the Company's payment obligations under this
Agreement, the Warrant Agent shall have a lien prior to the Holders on all money
or property held or collected by the Warrant Agent.
SECTION 6.06. Successor Warrant Agent. (a) The Company to
Provide Warrant Agent. The Company agrees for the benefit of the Holders that
there shall at all times be a Warrant Agent hereunder until all the Warrants
have been exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at any time
resign by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall not be less than 60 days after the date
on which such notice is given unless the Company otherwise agrees. The Warrant
Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than 60 days after such notice is given unless the Warrant Agent
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34
otherwise agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent.
(c) The Company to Appoint Successor. In the event that at any
time the Warrant Agent shall resign, or shall be removed, or shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall
commence a voluntary case under Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or state bankruptcy,
insolvency or similar law, or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee, seques-
trator (or other similar official) of the Warrant Agent or its property or
affairs, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due, or
shall take corporate action in furtherance of any such action, or a decree or
order for relief by a court having jurisdiction in the premises shall have been
entered in respect of the Warrant Agent in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law, or a decree order by a
court having jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of the Warrant Agent
or of its property or affairs for the purpose of rehabilitation, conservation,
winding up or liquidation, a successor Warrant Agent, qualified as aforesaid,
shall be appointed by the Company by an instrument in writing filed with the
successor Warrant Agent. Upon the appointment as aforesaid of a successor
Warrant Agent and acceptance by the successor Warrant Agent of such appointment,
the Warrant Agent shall cease to be the Warrant Agent hereunder; provided,
however, that in the event of the resignation of the Warrant Agent hereunder,
such resignation shall be effective on the earlier of (i) the date specified in
the Warrant Agent's notice of resignation and (ii) the appointment and
acceptance of a successor Warrant Agent hereunder.
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(d) Successor To Expressly Assume Duties. Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the rights and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such predecessor, as
Warrant Agent hereunder.
(e) Successor by Merger. Any corporation into which the
Warrant Agent hereunder may be merged or consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent shall be a
party, or any corporation to which the Warrant Agent shall sell or otherwise
transfer all or substantially all the assets and business of the Warrant Agent,
provided that it shall be qualified as aforesaid, shall be the successor Warrant
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
ARTICLE 7
Miscellaneous
SECTION 7.01. SEC Reports and Other Information.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with the SEC and thereupon provide the Warrant Agent and Holders with such
annual reports and such information, documents and other reports as are
specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S.
corporation subject to such Sections, such information, documents and other
reports to be so filed and provided at the times specified for the filing of
such information, documents and reports under such Sections.
SECTION 7.02. Persons Benefitting. Nothing in this Agreement
is intended or shall be construed to confer upon any Person other than the
Company, the Warrant Agent
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and the Holders any right, remedy or claim under or by reason of this agreement
or any part hereof.
SECTION 7.03. Rights of Holders. Holders of unexercised
Warrants are not entitled to (i) receive dividends or other distributions, (ii)
receive notice of or vote at any meeting of the stockholders, (iii) consent to
any action of the stockholders, (iv) receive notice as stockholders of any other
proceedings of the Company, (v) exercise any preemptive rights or (vi) exercise
any other rights whatsoever as stockholders of the Company.
SECTION 7.04. Amendment. This Agreement may be amended by the
parties hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the Company and the Warrant
Agent may deem necessary or desirable (including without limitation any addition
or modification to provide for compliance with the transfer restrictions set
forth herein); provided, however, that such action shall not adversely affect
the rights of any of the Holders. Any amendment or supplement to this Agreement
that has an adverse effect on the interests of the Holders shall require the
written consent of the Holders of a majority of the then outstanding Warrants.
The consent of each Holder affected shall be required for any amendment pursuant
to which the Exercise Price would be increased or the number of Warrant Shares
issuable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided herein). In determining whether the Holders of the required
number of Warrants have concurred in any direction, waiver or consent, Warrants
owned by the Company or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall
be disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Warrant Agent shall be protected in relying on any such
direction, waiver or consent, only Warrants which the Warrant Agent knows are so
owned shall be so disregarded. Also, subject to the foregoing, only Warrants
outstanding at the time shall be considered in any such determination.
SECTION 7.05. Notices. Any notice or communication shall be in
writing and delivered in Person or mailed by first-class mail addressed as
follows:
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if to the Company:
000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: President
with a copy to:
Krugman, Xxxxxxxx & Xxxxxxxx
Park 80 West--Plaza Two
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxx
if to the Warrant Agent:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to the Holder at the Holder's address as it appears on the Certificate Register
and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 7.06. Governing Law. The laws of the State of New York
shall govern this Agreement and the Warrant Certificates.
SECTION 7.07. Successors. All agreements of the Company in
this Agreement and the Warrant Certificates shall bind its successors. All
agreements of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.08. Multiple Originals. The parties may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Agreement.
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SECTION 7.09. Table of Contents. The table of contents and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference only, are not intended to be considered a part hereof
and shall not modify or restrict any of the terms or provisions hereof.
SECTION 7.10. Severability. The provisions of this Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.,
by /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President, Finance
AMERICAN STOCK TRANSFER &
TRUST COMPANY, as Warrant
Agent,
by /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
43
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT AT MATURITY
OF 13 1/4% SENIOR DISCOUNT NOTES DUE 2004 OF ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC. (THE "NOTES") AND ONE WARRANT. PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE DATE OF THE COMMENCEMENT OF AN EXCHANGE OFFER OR THE
EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT FOR THE NOTES OR SUCH EARLIER
DATE AFTER FEBRUARY 24, 1997, AS CREDIT SUISSE FIRST BOSTON CORPORATION AND UBS
SECURITIES LLC MAY, IN THEIR DISCRETION, DEEM APPROPRIATE, THE WARRANTS
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY
FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE NOTES.
THE COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF THE COMPANY FOR WHICH THIS
WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS. ACCORDINGLY, NO HOLDER SHALL BE ENTITLED TO
EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE TIME OF EXERCISE, (i)
A REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING TO THE SHARES OF
COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAS BEEN FILED WITH, AND
DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), AND
NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS
BEEN ISSUED BY THE SEC, OR (ii) THE ISSUANCE OF SUCH SHARES IS PERMITTED
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS
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2
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE
ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), (A) THIS SECURITY MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) TO THE COMPANY OR (v)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (i) THROUGH (v) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT) OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THE SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH REGULATIONS.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
No. [ ] Certificate for Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
THIS CERTIFIES THAT [ ], or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from Electronic Retailing Systems International, Inc., a
Delaware corporation ("the Company"), 17.23 shares of Common Stock, par value of
$0.01 per share, of the Company (the "Common Stock") at the per share exercise
price of $5.23 (the "Exercise Price"), or by Cashless Exercise referred to
below. This Warrant Certificate shall terminate and become void as of the close
of business on February 1, 2004 (the "Expiration Date") or upon the exercise
hereof as to all the shares of Common Stock subject hereto. The number of shares
issuable upon exercise of the Warrants and the Exercise Price per share shall be
subject to adjustment from time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement dated as of January 24, 1997 (the "Warrant Agreement"),
between the Company and American Stock Transfer & Trust
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Company (the "Warrant Agent", which term includes any successor Warrant Agent
under the Warrant Agreement), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. The Warrant
Agreement is hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations of the Company,
the Warrant Agent and the Holders of the Warrants. Capitalized terms used but
not defined herein shall have the meanings ascribed thereto in the Warrant
Agreement. A copy of the Warrant Agreement may be obtained for inspection by the
Holder hereof upon written request to the Warrant Agent at 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, attention of Xxxxxxx X'Xxxxx.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by presentation of this Warrant
Certificate with the Election to Purchase attached hereto duly executed and with
the simultaneous payment of the Exercise Price in cash (subject to adjustment)
to the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose. Payment by Cashless Exercise shall be made without the payment of cash
by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Current
Market Value per share of Common Stock on the Exercise Date over the Exercise
Price per share as of the Exercise Date and the denominator of which is the
Current Market Value per share of the Common Stock on the Exercise Date.
As provided in the Warrant Agreement and subject to the terms
and conditions therein set forth, the Warrants shall be exercisable at any time
on or after January 24, 1998; provided, however, that Holders of Warrants will
be able to exercise their Warrants only if a Shelf Registration Statement
relating to the Common Stock underlying the Warrant is effective or the exercise
of such Warrants is exempt from the registration requirements of the Securities
Act of 1933 and such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states or other
jurisdictions in which such Holders reside; provided further, however, that no
Warrant shall be exercisable after February 1, 2004.
In the event the Company enters into a Combination, the Holder
hereof will be entitled to receive upon exercise of the Warrants the kind and
amount of shares of capital stock or other securities or other property of such
surviving entity as the Holder would have been entitled to receive upon or as a
result of the combination had the Holder exercised its Warrants immediately
prior to such Combination; provided, however, that in the event that, in
connection with such Combination, consideration to holders of Common Stock in
exchange for their shares is payable solely in cash or in the event of the
dissolution, liquidation or winding-up of the Company, the Holder hereof
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will be entitled to receive such cash distributions as the Holder would have
received had the Holder exercised its Warrants immediately prior to such
Combination, less the Exercise Price.
As provided in the Warrant Agreement, the number of shares of
Common Stock issuable upon the exercise of the Warrants and the Exercise Price
are subject to adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 2.06 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate
representing those Warrants which were not exercised. This Warrant Certificate
may be exchanged at the office of the Warrant Agent by presenting this Warrant
Certificate properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal number of
Warrants. No fractional Warrant Shares will be issued upon the exercise of the
Warrants, but the Company shall pay an amount in cash equal to the Current
Market Value per Warrant Share on the day immediately preceding the date the
Warrant is exercised, multiplied by the fraction of a Warrant Share that would
be issuable on the exercise of any Warrant.
All shares of Common Stock issuable by the Company upon the
exercise of the Warrants shall, upon such issue, be duly and validly issued and
fully paid and non-assessable.
The holder in whose name the Warrant Certificate is registered
may be deemed and treated by the Company and the Warrant Agent as the absolute
owner of the Warrant Certificate for all purposes whatsoever and neither the
Company nor the Warrant Agent shall be affected by notice to the contrary.
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The Warrants do not entitle any holder hereof to any of the
rights of a shareholder of the Company.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
by______________________________________
[SEAL]
Attest:______________________
Secretary
DATED:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent,
by___________________________
Authorized Signatory
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FORM OF ELECTION TO PURCHASE WARRANT CERTIFICATES
(to be executed only upon exercise of Warrants)
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
The undersigned hereby irrevocably elects to exercise [ ]
Warrants at an exercise price per Warrant (subject to adjustment) of $5.23 to
acquire [ ] shares of Common Stock, par value $0.01 per share, of Electronic
Retailing Systems International, Inc. on the terms and conditions specified
within the Warrant Certificate and the Warrant Agreement therein referred to,
surrenders this Warrant Certificate and all right, title and interest therein to
Electronic Retailing Systems International, Inc. and directs that the shares of
Common Stock deliverable upon the exercise of such Warrants be registered or
placed in the name and at the address specified below and delivered thereto.
Date:__________, 19____
______________________________________(1)
(Signature of Owner)
________________________________________
(Xxxxxx Xxxxxxx)
________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
________________________________________
--------
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a national
bank or trust company or by a member firm of any national securities
exchange.
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Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
50
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of
Electronic Retailing Systems International, Inc. (the
"Company")
This Certificate relates to Warrants held in definitive form
by _______________ (the "Transferor").
The Transferor has requested the Warrant Agent by written
order to exchange or register the transfer of a Warrant or Warrants. In
connection with such request and in respect of each such Warrant, the Transferor
does hereby certify that the Transferor is familiar with the Warrant Agreement
relating to the above captioned Warrants and that the transfer of this Warrant
does not require registration under the Securities Act of 1933, (the "Securities
Act") because *:
/ / Such Warrant is being transferred to the Company.
/ / Such Warrant is being transferred pursuant to an effective
Registration Statement under the Securities Act.
/ / Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Securities Act) in reliance on Rule
144A.
/ / Such Warrant is being transferred pursuant to an offshore
transaction in accordance with Rule 904 under the Securities Act.
Such Warrant is being transferred in a transaction meeting the
requirements of Rule 144 under the Securities Act.
The Warrant Agent and the Company are entitled to rely upon
this Certificate and are irrevocably authorized to produce this Certificate or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.
________________________________________
[INSERT NAME OF TRANSFEROR]
by
Date:________________________ ______________________________________
--------
*Please check applicable box.
