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Exhibit 10.1
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RIVER OAKS FURNITURE, INC.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
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THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT
(i) PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT WHICH HAS BECOME
EFFECTIVE AND IS CURRENT WITH RESPECT TO THE SECURITIES, OR (ii) PURSUANT TO
A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE ACT BUT ONLY UPON THE HOLDER
HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE COMPANY,
OR OTHER COUNSEL ACCEPTABLE TO THE COMPANY, THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE
"BLUE SKY" OR SIMILAR SECURITIES LAW.
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October 24, 1997
RIVER OAKS FURNITURE, INC.
For good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged by River Oaks Furniture, Inc., a Mississippi
corporation, with its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), BNY Financial Corporation (the "Holder" or
"BNY"), of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, subject to the
terms and conditions of this Warrant, is hereby granted the right to purchase,
at the initial exercise price per share equal to the lesser of (i) $2.00; or
(ii) the closing bid price of the Common Stock of the Company on the first day
it is relisted for trading on NASDAQ or any national exchange at any one or more
times from the date hereof until 5:00 p.m. on October 23, 2002, in the
aggregate, one hundred twelve thousand (112,000) shares of Common Stock of the
Company, $.10 par value (the "Shares") subject to adjustment as provided in
Section 5 hereof.
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This Warrant initially is exercisable at a price per share equal to the
lesser of (i) $2.00; or (ii) the closing bid price of the Common Stock of the
Company on the first day it is relisted for trading on NASDAQ or any national
exchange payable in cash, by certified or official bank check in New York
Clearing House funds or other form of payment satisfactory to the Company,
subject to adjustment as provided in Section 5 hereof.
1. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable at the option of the Holder hereof, in whole or in part, at one
or more times during any period in which this Warrant may be exercised as set
forth above. The Holder shall not be deemed to have exercised its purchase
rights hereunder until the Company receives written notice of the Holder's
intent to exercise its purchase rights hereunder. The written notice shall be in
the form of the Subscription Form attached hereto and made a part hereof. Less
than all of the Shares may be purchased under this Warrant.
2. Issuance of Certificates. Upon the exercise of this Warrant, the
issuance of certificates for Shares underlying this Warrant shall be made
forthwith (and in any event within ten (10) business days after the Company's
receipt of (i) written notice hereunder as specified in Section 1 above) and
(ii) good funds in respect of the Purchase Price pursuant to Section 4 hereof
for the shares so exercised and such certificates shall be issued in the name of
the Holder hereof.
3. Restriction on Transfer and Registration Rights. Neither this
Warrant nor any Shares issuable upon exercise hereof have been registered under
the Securities Act of 1933, as amended (the "Act"), and neither may be sold or
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transferred in whole or in part unless the Holder shall have first given prior
written notice to the Company describing such sale or transfer and furnished to
the Company an opinion, satisfactory to counsel for the Company as determined by
such counsel in its sole discretion, to the effect that the proposed sale or
transfer may be made without registration under the Act; provided, however, that
the foregoing shall not apply if there is in effect a registration statement
with respect to this Warrant or the Shares issuable upon exercise hereof, as the
case may be, at the time of the proposed sale or transfer. Upon exercise, in
part or in whole, of this Warrant, each certificate issued representing the
Shares underlying this Warrant shall bear a legend to the foregoing effect. The
Holder shall have such rights to request the Company to register all or any of
the Shares issuable upon exercise of this Warrant as set forth in Annex B hereto
(the "Registration Rights") subject to the terms of Annex B.
4. Price.
4.1 Initial and Adjusted Purchase Price. The initial Purchase Price per
share shall be equal to the lesser of (i) $2.00; or (ii) the closing bid price
of the Common Stock of the Company on the first day it is relisted for trading
on NASDAQ or any national exchange. The adjusted Purchase Price shall be the
price which shall result from time to time from any and all adjustments of the
initial purchase price in accordance with the provisions of Section 5 hereof.
4.2 Purchase Price. The term "Purchase Price" herein shall mean the
initial purchase price or the adjusted purchase price, as the case may be.
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5. Adjustments of Purchase Price and Number of Shares. The Shares
subject to this Warrant and the Purchase Price thereof shall be appropriately
adjusted by the Company in accordance with the Statement of Rights to Warrants
included in Annex A hereto.
6. Replacement of Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and, in case of such loss, theft, destruction or mutilation, of
indemnity or security reasonably satisfactory to it in its sole discretion, and
reimbursement to the Company of all expenses incidental or relating thereto, and
upon surrender and cancellation of this Warrant (unless lost, stolen or
destroyed), the Company will make and deliver a new Warrant of like tenor, in
lieu of this Warrant.
7. Notices to Warrant Holder. Nothing contained in this Warrant shall
be construed as conferring upon the Holder hereof the right to vote or to
consent as a shareholder in respect of any meetings of shareholders for the
election of directors or any other matter, or as having any rights whatsoever as
a shareholder of the Company. The Company shall, however, during the term of
this warrant supply BNY with copies of all filings made with the SEC under the
Securities Exchange Act of 1934, as amended and of all documents delivered to
stockholders of the Company.
8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
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(a) If to the registered Holder of this Warrant, to the
address of such Holder as shown on the books of the Company.
(b) If to the Company, to the address set forth on the first
page of this Warrant or to such other address as the Company may
designate by notice to the Holder.
9. Successors. All the agreements contained in this Warrant shall bind
the parties hereto and their respective heirs, executors, administrators,
distributees, permitted successors and assigns. The Holder may assign this
Warrant without the Company's prior written consent provided that the Holder
complies with the provisions of this agreement and applicable securities laws.
Any attempted assignment in violation of the preceding sentence shall be void
and of no effect.
10. Headings. The headings in this Warrant are inserted for purposes of
convenience only and shall have no substantive effect.
11. Law Governing. This Warrant is delivered in the State of
Mississippi and shall be construed and enforced in accordance with, and governed
by, the laws of the State of Mississippi, without giving effect to conflicts of
law principles.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by, and such signature to be attested to by, a duly
authorized officer as of the date first above written.
RIVER OAKS FURNITURE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: CEO
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Attest:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. - Sec.
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ANNEX A
STATEMENT OF RIGHTS TO WARRANTS
AND
FORMS OF SUBSCRIPTION AND ASSIGNMENT
(a) Adjustment to Purchase Price and Number of Shares. In case, prior
to the expiration of this Warrant by exercise or by its terms, the Company shall
issue any shares of its Common Stock as a stock dividend or subdivide the number
of outstanding shares of its Common Stock into a greater number of shares, then
in either of such cases, the then applicable purchase price per share of the
shares of Common Stock purchasable pursuant to this Warrant in effect at the
time of such action shall be proportionately reduced and the number of shares at
that time purchasable pursuant to this Warrant shall be proportionately
increased; and conversely, in the event the Company shall contract the number of
outstanding shares of Common Stock by combining such shares into a smaller
number of shares, then, in such case, the then applicable purchase price per
share of the shares of Common Stock purchasable pursuant to this Warrant in
effect at the time of such action shall be proportionately increased and the
number or shares of Common Stock purchasable pursuant to this Warrant shall be
proportionately decreased. If the Company shall, at any time during the term of
this Warrant, declare a dividend payable in cash on its Common Stock and shall,
at substantially the same time, offer to its stockholders a right to purchase
new Common Stock from the proceeds of such dividend or for an amount
substantially equal to the dividend, all Common Stock so issued shall, for the
purpose of this Warrant, be deemed to have been issued as a stock dividend. Any
dividend paid or distributed upon the Common Stock shall be treated as a
dividend paid in Common Stock to the extent that shares of Common Stock are
issuable upon conversion thereof.
(b) Purchase Price Reset Provision. In the event that prior to the
expiration of this Warrant the Company sells publicly or privately (i) shares of
its Common Stock, (ii) securities convertible into shares of its Common Stock,
or (iii) options or warrants to purchase shares of its Common Stock or
securities convertible into shares of its Common Stock at a sale, conversion or
exercise price per share (the "Issue Price"), as the case may be, less than the
Purchase Price then in effect, the Purchase Price shall be reset to the Issue
Price and the number of shares purchasable pursuant to this Warrant shall be
increased pro rata to the percentage reduction in the Purchase Price, provided,
however, that the reset provision shall not apply to
(i) any shares issued upon exercise or conversion of any
currently outstanding options, warrants or convertible securities,
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(ii) any Common Stock options or warrant issuable pursuant to
an employee stock option plan or other compensation arrangement or any
underlying Common Stock issued on the exercise thereof, or
(iii) one or more sales of any such securities which in the
aggregate do not equal 5% or more than the currently outstanding shares of
Common Stock after giving effect to the conversion or the exercise of all such
securities.
The Issue Price shall be calculated taking into account the
amount paid for the issuance of such Common Stock, option or warrant or
convertible security and the amount, if any, payable upon the exercise or
conversion thereof.
(c) Recapitalization. In case, prior to the expiration of this Warrant
by exercise or by its terms, the Company shall be recapitalized by reclassifying
its outstanding Common Stock, (other than a change in par value to no par
value), or the Company or a successor corporation shall consolidate or merge
with or convey all or substantially all of its or of any successor corporation's
property and assets to any other corporation or corporations (any such other
corporations being included within the meaning of the term "successor
corporation" hereinbefore used in the event of any consolidation or merger of
any such other corporation with, or the sale of all or substantially all of the
property of any such other corporation to, another corporation or corporations),
then, as a condition of such recapitalization, consolidation, merger or
conveyance, lawful and adequate provision shall be made whereby the Holder of
this Warrant shall thereafter have the right to purchase, upon the basis and on
the terms and conditions specified in this Warrant, in lieu of the shares of
Common Stock of the Company theretofore purchasable upon the exercise of this
Warrant, such shares of stock, securities or assets of the other corporation as
to which the Holder of this Warrant would have been entitled had this Warrant
been exercised immediately prior to such recapitalization, consolidation, merger
or conveyance; and in any such event, the rights of the Warrant Holder to any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of this Warrant, as hereinbefore provided, shall continue and be preserved in
respect of any stock which the Warrant Holder becomes entitled to purchase.
(d) Dissolution. In case the Company at any time while this Warrant
shall remain unexpired and unexercised shall sell all or substantially all of
its property or dissolve, liquidate or wind up its affairs, lawful provision
shall be made as part of the terms of any such sale, dissolution, liquidation or
winding up, so that the Holder of this Warrant may thereafter receive upon
exercise hereof in lieu of each share of Common Stock of the Company which he
would have been entitled to receive, the same kind and amount of any securities
or assets as may be issuable, distributable or payable upon any such sale,
dissolution, liquidation or winding up with respect to each share of Common
Stock of the Company; provided, however, that in any case of any such sale or of
dissolution, liquidation or winding up, the
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right to exercise this Warrant shall terminate on a date fixed by the Company.
Such date so fixed shall be no earlier than 3 P.M. New York City Time, on the
forty-fifth (45th) day next succeeding the date on which notice of such
termination of the right to exercise this Warrant has been given by mail to the
registered Holder of this Warrant at its address as it appears on the books of
the Company.
(e) No Fractional Shares. Upon any exercise of this Warrant by the
Warrant Holder, the Company shall not be required to deliver fractions of one
share, but adjustment in the purchase price payable by the Warrant Holder shall
be made in respect of any such fraction of one share on the basis of the
purchase price per share then applicable upon exercise of this Warrant.
(f) Notices. In the event that, prior to the expiration of this Warrant
by exercise or by its terms, the Company shall determine to take a record of its
stockholders for the purpose of determining stockholders entitled to receive any
dividend, stock dividend, distribution or other right whether or not it may
cause any change or adjustment in the number, amount, price or nature of the
securities or assets deliverable upon the exercise of this Warrant pursuant to
the foregoing provisions, the Company shall give at least ten (10) days' prior
written notice to the effect that it intends to take such record to the
registered Holder of this Warrant at its address as it appears on the books of
the Company, said notice to specify the date as of which such record is to be
taken, the purpose for which such record is to be taken, and the effect which
the action which may be taken will have upon this Warrant.
(g) Registered Owner. The Company may deem and treat the registered
Holder of the Warrant at any time as the absolute owner hereof for all purposes,
and shall not be affected by any notice to the contrary.
(h) Status. This Warrant shall not entitle any Holder thereof to any of
the rights of a stockholder, and shall not entitle any Holder thereof to any
dividend declared upon the Common Stock unless the Holder shall have exercised
the within Warrant and purchased the shares of Common Stock prior to the record
date fixed by the Board of Directors for the determination of Holders of Common
Stock entitled to exercise any such rights or receive said dividend.
(i) No Adjustment for Small Amounts. Anything in the Statement of
Rights to Warrants to the contrary notwithstanding, the Company shall not be
required to give effect to any adjustment in the Purchase Price unless and until
the net effect of one or more adjustments, determined as above provided, shall
have required a change of the Purchase Price by at least ten cents, but when the
cumulative net effect of more than one adjustment so determined shall be to
change the actual Purchase Price by at least ten cents, such change in the
Purchase Price shall thereupon be given effect.
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ASSIGNMENT
(To Be Executed By the Registered Holder
to Effect a Transfer of the Within Warrant)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto ____________________________
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(Name)
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(Address)
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the right to purchase Common Stock evidenced by the within Warrant, to the
extent _____________________ of shares of Common Stock, and does hereby
irrevocably constitute and appoint ________________________
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to transfer the said right on the books of the Company, with full power of
substitution.
Dated: ____________________________, 19___.
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(Signature)
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NOTICE: The signature to this assignment must correspond with the name
as written upon the case of the within Warrant in every particular,
without alteration or enlargement, or any change whatsoever and must
be guaranteed by a bank, other than a savings bank or trust company,
having an office or correspondent in New York, or by a firm having
membership on a registered national securities exchange and an office
in New York, New York.
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FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To River Oaks Furniture, Inc.
The undersigned, the Holder of the within Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, ________(1) shares of Common Stock of River
Oaks Furniture, Inc. and herewith makes payment of $______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated
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(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrants)
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(Address)
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(1) Insert here the maximum number of shares or, in the case of a partial
exercise, the portion thereof as to which the Warrant is being exercised.
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ANNEX B
REGISTRATION RIGHTS
(a) If, at any time prior to September 14, 2002 the Company proposes to
register any of its securities under the Securities Act of 1933 (the "Securities
Act") (other than securities to be issued pursuant to a stock option or other
employee benefit or similar plan or in connection with a transaction
contemplated by Rule 145 under the Securities Act, the Company shall, promptly
give written notice (the "Registration Notice.") to Holder of the Company's
intention to effect such registration. The Company also agrees that on two
occasions it will deliver such a Registration Notice to Holder within 30 days of
its receipt of a written demand from Holder for a Registration Notice. If,
within 15 days after receipt of such Registration Notice, Holder submits a
written request to the Company specifying the number of shares of Common Stock
which it will receive upon exercise of the Warrant and which it proposes to sell
or otherwise dispose of, (the "Subject Stock") the Company shall include the
Subject Stock in such registration statement, provided that any registration of
Subject Stock pursuant to such two-time demand and right shall be for not less
than 50% of the shares covered by the Warrant. Holder when requesting inclusion
of the Subject Stock in any such registration statement, may in its discretion
delay exercise of the Warrant and notify the Company that it will exercise its
Warrant as to the Subject Stock immediately upon the registration statement
becoming effective or for delivery upon closing of a related offering. The
Company shall keep each registration statement covering any Subject Stock in
effect until the earlier of (i) 90 days following the effectiveness of such
registration statement and (ii) the sale of the Subject Shares. Notwithstanding
the foregoing, if the offering of the Company's securities pursuant to such
registration statement is to be made by or through underwriters, the Company
shall not be required to include Subject Stock therein if and to the extent that
the underwater managing the offering advises the Company in writing that such
inclusion would materially adversely affect such offering and, in such event,
the Company may delay the effectiveness of the registration of or cause Holder
to delay the sale of the Subject Stock for a period of not more than 30 days
after completion of the distribution of securities being underwritten on behalf
of the Company (but in no event for more than 180 days after the registration
statement first becomes effective) and the Company shall thereupon promptly file
such supplements and post-effective amendments and take such other steps as may
be necessary to permit Holder to make its proposed offering following the end of
such period of delay.
(b) In connection with any offering of shares of Subject Stock registered
pursuant to this Annex B the Company (i) shall furnish to Holder such number of
copies of each registration statement, each prospectus and each preliminary
prospectus, and of each amendment and supplement to any thereof as Holder may
reasonably request in order to effect the offering and sale of the Subject
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Stock to be offered and sold, but only while the Company shall be required under
the provisions hereof to cause the registration statement to remain current and
(ii) take such action as shall be necessary to qualify the shares covered by
such registration statement under such blue sky or other state securities laws
for offer and sale as Holder shall request; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation to do business under
the laws of any jurisdiction in which it shall not then be qualified or to file
any general consent to service of process in any jurisdiction in which such a
consent has not been previously filed. To the extent the Company shall enter
into an underwriting agreement (the "Agreement") with a managing underwater or
underwriters selected by it containing representations, warranties, indemnities
and agreements then customarily included by an issuer in underwriting agreements
with respect to secondary distributions, Holder agrees as a condition to
participation in such offering to make such representations and warranties with
respect to information as to it as selling stockholder, and as to its holdings,
which is furnished in writing to the underwriter for use in the registration
statement as are customary and appropriate. In connection with any offering of
Subject Stock registered pursuant to this Annex B, the Company shall furnish to
the underwater, at the Company's expense, unlegended certificates representing
ownership of the Subject Stock being sold in such denominations as requested and
instruct any transfer agent and registrar of the Subject Stock to release any
stop transfer orders with respect to such Subject Stock.
(c) In connection with any registration pursuant to this Annex B all
expenses of registration shall be borne by the Company (unless contrary to the
federal securities laws or the laws of any state where the Subject Stock is to
be offered), provided, however, in connection with any such registration, Holder
shall be obligated to pay any and all underwriter's and/or brokers commissions,
to the extent that such commissions would not have been so incurred in the
absence of the registration of such Subject Stock. Under no circumstances shall
the Company have any liability for any fees and expenses of underwriters,
counsel, accountants or other agents of Holder relating to the subject stock
with respect to any registration statement filed pursuant hereto, including but
not limited to any out-of-pocket expenses, securities liability insurance
policies, the costs of any investigations by or on behalf of Holder of the
accuracy and completeness of such registration statement or related to the
furnishing of information by Holder in connection with such registration
statement.
(d) For a period until the earlier of (i) ninety (90) days from and after
the effective date of any registration statement filed pursuant hereto in which
any of the Subject Stock is included and (ii) the sale of the Subject Shares,
the Company shall from time to time amend or supplement the registration
statement and the prospectus used in connection therewith as may be necessary to
permit such sale and disposition and to the extent necessary in order to keep
such registration statement effective and such prospectus current under the Act
so that
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neither the registration statement nor the prospectus contains any untrue
statement as to any material fact, omits any statements necessary to make the
statements contained therein not misleading.
(e) In the case of any offering registered pursuant to this Annex B, the
Company agrees to indemnify and hold harmless Holder and each controlling person
of Holder within the meaning of Section 15 of the Securities Act, and the
directors and officers of Holder, against any and all losses, claims, damages or
liabilities to which they or any of them may become subject under the Securities
Act or any other statute or common law or otherwise, and to reimburse them, from
time to time upon request, for any legal or other expenses reasonably incurred
by them in connection with investigating any claims and defending any actions,
insofar as any such losses, claims, damages, liabilities or actions shall arise
out of or shall be based upon any untrue statement or alleged untrue statement
contained in the registration statement relating to the sale of such Subject
Stock in any preliminary prospectus or in any prospectus or in any supplement or
amendment to any of the foregoing of a material fact, or the omission or alleged
omission to state therein a material fact required to be stated or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, provided, however, that the indemnification agreement
contained in this paragraph (e) shall not apply to such losses, claims, damages,
liabilities or actions which shall arise from (i) the sale of Subject Stock if
such losses, claims, damages, liabilities or actions shall arise out of or shall
be based upon any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission shall have been made
in reliance upon and in conformity with information furnished in writing to the
Company by Holder specifically for use in connection with the preparation of the
registration statement or any preliminary prospectus or prospectus contained in
the registration statement or any amendment thereof or supplement thereto; or
(ii) any actual or alleged untrue statement of a material fact or any actual or
alleged omission of a material fact required to be stated in any preliminary
prospectus if Holder sells Securities to a Person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the final
prospectus or of the final prospectus as then amended or supplemented, whichever
is most recent, if the Company had previously furnished copies thereof to Holder
or its representatives and such final prospectus, as then amended or
supplemented, corrected any such misstatement or omission; or (iii) the use of
any preliminary, final or summary prospectus by or on behalf of Holder after the
Company has notified Holder that such prospectus contains an untrue statement of
a material fact or omits to state a material fact required to be stated therein,
in the light of the circumstances under which they were made, not misleading; or
(iv) the use of any final prospectus, as amended or supplemented, by or on
behalf of Holder after such time as the obligation of the Company under this
Annex B to keep the related registration statement effective has expired; or (v)
any violation of any federal or state securities laws, rules or regulations
committed by Holder (other than any violation that arises out of or is based
upon the
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circumstances described above and as to which Holder would otherwise be
entitled to indemnification hereunder).
(f) In connection with any registration statement in which Holder is
participating, Holder will indemnify, to the extent permitted by law, the
Company, controlling persons of the Company under Section 15 of the Securities
Act and its directors and officers against any and all losses, claims, damages,
liabilities and expenses resulting, and to reimburse them, from time to time
upon request, for any legal or other expenses reasonably incurred by them in
connection with investigating any claims and defending any actions, solely by
reason of (i) any untrue statement of a material fact or any omission of a
material fact necessary to make the statements therein not misleading, in the
registration statement or any prospectus or preliminary prospectus or any
amendment or supplement thereto, but only to the extent that such untrue
statement is contained in, or such omission is omitted from, information so
furnished to the Company by Holder in writing; (ii) the use of any prospectus by
or on behalf of Holder (x) after the Company has notified Holder that such
prospectus contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein, in light of the circumstances under
which they were made, not misleading or (y) after such time as the obligation of
the Company to keep the related registration statement effective and current has
expired; (iii) the failure to send or deliver to a party to whom Holder sells
the Securities, at or prior to the written confirmation of sale, a copy of the
final prospectus or of the final prospectus as then amended or supplemented,
whichever is most recent, if the Company had previously furnished copies thereof
to Holder or its representatives; or (iv) any violation by Holder of any federal
or state securities law or rule or regulation thereunder (other than any
violation that arises out of or is based upon the circumstances described above
and as to which Holder is entitled to indemnification hereunder); provided,
however, that Holder shall not be liable in the aggregate for any amounts
exceeding the product of the sale price minus the exercise price per share of
Subject Stock of Holder sold in such registered offering and the number of
shares of Subject Stock sold pursuant to such registration statement or
prospectus by Holder.
(g) Each party indemnified under paragraph (e) or (f) of this Annex B
shall, promptly after receipt of notice of the commencement of any action
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the commencement thereof.
The omission of any indemnified party to so notify an indemnifying party of any
such action shall not relieve the indemnifying party from any liability in
respect of such action which it may have to such indemnifies party on account of
the indemnity agreement contained in paragraph (e) or (f) of this Annex B,
unless the indemnifying party was prejudiced by such omission, and in no event
shall relieve the indemnifying party from any other liability which it may have
to such indemnified party. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, the
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indemnifying party shall be entitled to participate therein and, to the extent
that it may desire to assume the defense thereof through counsel satisfactory to
the indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under paragraph
(e) or (f) of this Annex B for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof, other than
reasonable costs of investigation (unless such indemnified party reasonably
objects to such assumption on the grounds that there may be defenses available
to it which are different from or in addition to such indemnifying party in
which event the indemnified party shall be reimbursed by the indemnifying party
for the expenses incurred in connection with retaining one separate legal
counsel).
(h) Nothing in paragraph (e) or (f) of this Annex B shall prevent the
indemnified party from retaining counsel of its own choosing, at its own
expense, to defend or cooperate in the defense or investigation of any claim in
respect of which indemnification is available hereunder. No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(i) If recovery is not available under the foregoing indemnification
provisions, for any reason other than as specified therein, the parties entitled
to indemnification by the terms thereof shall be entitled to contribution for
any and all losses, claims, damages, or liabilities, joint or several, and
expenses to which they may become subject, in such proportion as is appropriate
to reflect the relative fault of the parties entitled to indemnification, on the
one he and, and the indemnifying parties, on the other, in connection with the
matter out of which such losses, claims, damages, liabilities or expenses arise
or result from. In determining the amount of contribution to which the
respective parties are entitled, there shall be considered the parties' relative
knowledge and access to information concerning the matter with respect to which
the action was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate under the
circumstances. The Company and each Holder agrees that it would not be equitable
if the amount of such contribution were determined by pro rata or per capita
allocations. Notwithstanding the provisions of this Section (i) the Holder shall
not be required to contribute any amount in excess of the amount by which the
net proceeds received by such Holder from the sale of its Warrants or underlying
shares of Common Stock exceeds the amount of the exercise price of the Warrants
plus any damages that such Holder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.
(j) Notwithstanding the foregoing, Holder shall furnish to the Company such
information regarding Holder, its intended method of distribution of the
Securities and such other information as the Company may from time to time
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reasonably request for purposes of preparation of any registration statement
pursuant to this Annex B and to maintain the effectiveness of such registration
statement.
(i) At least five business days prior to any disposition of
Securities (other than pursuant to an underwritten offering) by Holder, Holder
will orally advise the Company (and promptly confirm such advise in writing) of
the dates on which such disposition is expected to commence and terminate, the
number of Securities expected to be sold, the method of disposition and such
other information as the Company may reasonably request in order to supplement
the prospectus contained in the registration statement in accordance with the
rules and regulations of the Commission. Promptly after receiving such advise,
the Company will, if necessary, (x) prepare a supplement to the prospectus based
upon such advice and file the same with the Commission pursuant to Rule 424(b)
under the Securities Act and (y), if necessary, qualify the Securities to be
sold under the securities or blue sky laws of such jurisdiction in the United
States as Holder shall reasonably request (subject to the proviso of Section (b)
of this Annex B).
(ii) Holder agrees that, upon receipt of any notice from the
Company of any event of the kind described in Section (d) of this Annex B,
Holder will forthwith discontinue disposition of the Securities pursuant to such
registration statement until receipt of copies of the supplemented or amended
prospectus contemplated by Section (d), and, if so directed by the Company, will
deliver to the Company all copies of the prospectus covering the Securities in
its possession at the time of receipt of such notice.
(iii) Holder shall, at any time it is engaged in a distribution
of Securities, comply with all applicable requirements of Rule M (or any
successor provisions then in force) promulgated under the Exchange Act and (x)
will not engage in any stabilization activity in connection with the securities
of the Company in contravention of such rules, (y) will distribute the
Securities solely in the manner described in the registration statement and (z)
will not bid for or purchase any securities of the Company or attempt to induce
any person to purchase any securities of the Company other than as permitted
under the Exchange Act.
(iv) Holder shall provide such information and materials, execute
all such documents and take all such other actions as the Company shall
reasonably request in order to permit the Company to comply with all applicable
requirements of law and to effect the registration of Holder's Securities.
(v) If Securities are registered for sale pursuant to Rule 415
under the Securities Act, Holder shall cease any distribution of such shares
under the registration statement twice a year, for up to 90 days each, upon the
request of the Company if: (x) such distribution would require the public
disclosure of material
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non-public information concerning any transaction or negotiations involving the
Company or any of its affiliates that, in the good faith judgment of the
Company's Board of Directors (or the executive committee thereof), would
materially interfere with such transaction or negotiations, (y) such
distribution would otherwise require premature disclosure of information that,
in the good faith judgment of the Company's Board of Directors, would adversely
affect or otherwise be detrimental to the Company or (z) the Company proposes to
file a registration statement under the Securities Act for the offering and sale
of securities for its own account in an underwritten offering and the managing
underwriter therefor shall advise the Company in writing that in its opinion the
continued distribution of the Securities would adversely affect the success of
the offering of the securities proposed to be registered for the account of the
Company. The Company shall promptly notify Holder at such time as (i) such
transactions or negotiations have been otherwise publicly disclosed or
terminated, (ii) such non-public information has been publicly disclosed or
counsel to the Company has determined that such disclosure is not required due
to subsequent events or (iii) the completion of such underwritten offering.
(vi) The Company shall be entitled to postpone once a year, for a
reasonable period of time not to exceed 90 days, the filing of a registration
statement otherwise require to be prepared and filed by it pursuant to Section
(a) of this Annex B if, at the time it receives the written demand, (y) such
registration would require the public disclosure of material non-public
information concerning any transaction or negotiations involving the Company or
any affiliate that, in the opinion of counsel to the Company, is not yet
required to be publicly disclosed and the Company's Board of Directors, in good
faith, determines that such disclosure would materially interfere with such
transaction or negotiations on (z) such registration would, in good faith
judgment of the Company, otherwise require premature disclosure of information
which would adversely affect or otherwise be detrimental to the Company.
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