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[KDW Draft 4/17/97]
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WESTBRIDGE CAPITAL CORP.,
FORUM CAPITAL MARKETS L.P.
AND
XXXXXXX XXXXX & ASSOCIATES, INC.
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UNDERWRITERS'
WARRANT AGREEMENT
Dated as of April __, 1997
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UNDERWRITERS' WARRANT AGREEMENT, dated as of April __, 1997 by and
among WESTBRIDGE CAPITAL CORP., a Delaware corporation (the "Company"), FORUM
CAPITAL MARKETS L.P. and XXXXXXX XXXXX & ASSOCIATES, INC. (the "Underwriters").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Underwriters warrants
("Warrants") to purchase up to ________ shares (the "Warrant Securities") of
Common Stock, par value $.10 per share, of the Company (the "Common Stock");
and
WHEREAS, the Underwriters have agreed, pursuant to the Underwriting
Agreement dated April __, 1997 between the Underwriters and the Company (the
"Underwriting Agreement"), to act as the Underwriters in connection with the
Company's proposed public offering (the "Offering") of up to $65,000,000
principal amount of __% Convertible Subordinated Notes due 2007 (the "Notes");
and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Underwriters in consideration for, and as part
of the Underwriters' compensation in connection with, the Underwriters acting
as such pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises hereof, the payment
by the Underwriters to the Company of an aggregate of $_____, the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant. The Underwriters are hereby granted the right to
purchase, up to ______ shares of Common Stock (subject to adjustment as
provided in Section 8 hereof) at an exercise price (subject to adjustment as
provided in Section 8 hereof), of $____ per share subject to the terms and
conditions of this Agreement at any time from April __, 1998 until 5:30 p.m.,
New York time, on April __, 2002 (the "Expiration Date"), which date is the
fifth anniversary of the effective date of the Registration Statement on Form
S-1 (No. 333-24137), (the "Registration Statement") relating to the
registration of the Notes and Warrants. Any Warrant that is not exercised on
or prior to the Expiration Date shall be void, and all rights hereunder shall
cease.
2. Warrant Certificates. The warrant certificates delivered and
to be delivered pursuant to this Agreement (the "Warrant Certificates") shall
be in the form set forth in Exhibit A attached hereto and made a part hereof,
with such appropriate insertions, omissions, substitutions and other variations
as required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are exercisable at
an initial exercise price per share of Common Stock set forth in Section 6
hereof (subject to adjustment as provided in Section 8 hereof) payable by
certified or official bank check. Upon surrender of a Warrant Certificate with
a duly executed Election to Purchase (in the form of Annex A to the Warrant
Certificate) together with payment of the aggregate Exercise Price (as
hereinafter defined) for the Common Stock to be purchased at the Company's
principal offices (presently located at 000 Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxx
76102), the registered holder of a Warrant Certificate ("Holder") shall be
entitled to receive a certificate or certificates for the Common Stock so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not
as to fractional shares of Common Stock underlying the Warrants). In the case
of the purchase of less than all the Common Stock purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Warrants exercisable thereunder.
3.2 Exercise by Surrender of Warrant. As an alternative to the
method of payment set forth in Section 3.1 and in lieu of any cash payment
required thereunder, the Holders shall have the right at any time and
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from time to time to exercise the Warrants by surrendering Warrant Certificates
representing a certain number of additional Warrants (as determined below) as
payment of the aggregate Exercise Price for the shares of Common Stock being
acquired upon exercise of the Warrants. The Warrants are exercisable pursuant
to this Section 3.2 by surrender of the Warrant Certificate with a duly
executed Election to Purchase (in the form of Annex B to the Warrant
Certificate). The number of additional Warrants to be surrendered in payment
of the aggregate Exercise Price for the shares of Common Stock being acquired
upon exercise of the Warrant shall be determined by multiplying the number of
Warrants to be exercised by the Exercise Price, and then dividing the product
thereof by an amount equal to the Market Price minus the Exercise Price.
Solely for the purposes of this Section 3.2, Market Price shall be calculated
at the date on which the Form of Election to Purchase is deemed to have been
sent to the Company pursuant to Section 13 hereof (the "Notice Date").
3.3 Definition of Market Price. As used herein, the phrase
"Market Price" at any date shall be the average of the daily reported closing
price per share of Common Stock for the 30 consecutive trading days immediately
prior to such date or, if the Common Stock is not then publicly traded, as
determined in good faith by resolution of the Board of Directors of the
Company, based on the best information available to it. The closing price for
each trading day shall be the last reported sale price as officially reported
by the Nasdaq National Market system, or, if not quoted on the Nasdaq National
Market system, by the principal securities exchange on which the Common Stock
is listed or admitted to trading or if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted by the Nasdaq
National Market system, the average closing bid price as furnished by the
National Association of Securities Dealers, Inc. (the "NASD") through the
Nasdaq National Market system or similar organization if the Nasdaq Stock
Market is no longer reporting such information.
4. Issuance of Certificates. Upon the exercise of the Warrants,
the issuance of certificates for the total number of whole shares of Common
Stock for which such Warrants were exercised shall be made promptly (and in any
event within five business days thereafter) without charge to the Holder
thereof including, without limitation, any stock transfer or similar tax which
may be payable in respect of the issuance thereof, and such certificates shall
(subject to the provisions of Sections 5 and 7 hereof) be issued in the name
of, or in such names as may be directed by, the Holder thereof; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificates in a name other than that of the Holder, and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
The Warrant Certificates shall be executed on behalf of the Company,
by the manual or facsimile signature of the then present Chairman of the Board
of Directors or President of the Company under its corporate seal reproduced
thereon and by the manual or facsimile signature of the then present Treasurer
or Assistant Treasurer or Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer. Certificates
representing the Common Stock issuable upon exercise of the Warrants (and/or
other securities, property or rights issuable upon exercise of Warrants) shall
be dated the date on which the Company receives the Election to Purchase,
Warrant Certificate and payment of the Exercise Price (regardless of when
executed).
5. Restriction On Transfer of Warrants. The Warrants may not be
sold, transferred, assigned, hypothecated or otherwise disposed of, in whole or
in part, for a period of one year from the effective date of the Registration
Statement on Form S-1 (File No. 333-24137) except that the Warrants may be (i)
assigned in whole or in part to any officer of either Underwriter and (ii)
transferred by operation of law as a result of the death of any transferee to
whom the Warrants may have been transferred. Any assignment shall be effected
by a duly executed assignment in the form of Annex C to the Warrant
Certificate.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. The initial exercise
price of each Warrant shall be $___ per share of Common Stock. The adjusted
exercise price of each Warrant shall be the price which shall result
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from time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean
the initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
7.1 Piggyback Registration. If, at any time commencing after
April ___, 1998 and expiring seven years thereafter, the Company proposes to
register any of Common Stock (excluding for this purpose any Common Stock
issuable upon exercise or conversion of other Securities) in connection with an
offering under the Securities Act (other than pursuant to Form X-0, Xxxx X-0 or
any successor form of limited purpose), it will give written notice by
registered mail at least 20 days prior to the filing of such registration
statement to Holders of the Warrants or Warrant Securities of its intention to
do so. If the Holders of the Warrants and/or Warrant Securities notify the
Company within 20 days after mailing of any such notice of its or their desire
to include any of their respective Warrant Securities in such proposed
registration statement, the Company shall afford each of the Holders the
opportunity to have such Warrant Securities registered under such registration
statement, provided, however, that if the managing underwriter advises the
Company in writing that the inclusion of all Warrant Securities held by the
Holders proposed to be included in such registration statement would interfere
with the successful marketing of the securities proposed to be registered by
the Company, then the securities to be included in such registration shall be
included in the following order:
(a) first, the securities proposed to be included in such
registration by the Company or, if such registration is for securities
of specified security holders of the Company, by such holders; and
(b) second, all holders of Common Stock (including Holders)
entitled to be included in such registration statement (pro rata among
the holders requesting such registration based upon the number of
shares of Common Stock requested by each such holder to be
registered).
Notwithstanding the provisions of this Section 7.1, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.1 (irrespective of whether a written request for inclusion of
any such Warrant Securities shall have been made) to elect not to file any such
proposed registration statement or to withdraw the same after the filing but
prior to the effective date thereof.
7.2 Demand Registration.
(a) At any time commencing on April __, 1998 and expiring four
years thereafter which date is the fifth anniversary of the effective date of
the Registration Statement. (or such earlier time as the Warrant Securities are
eligible for sale under Rule 144(k)), the Holders of the Warrants and/or
Warrant Securities representing a Majority (as hereinafter defined) of such
securities shall have the right (which right is in addition to the registration
rights under Section 7.1 hereof), exercisable by written notice to the Company,
to require the Company to prepare and file with the Securities and Exchange
Commission (the "Commission"), on one occasion only, a registration statement
and such other documents, including a prospectus, as may be necessary in the
opinion of both counsel for the Company and counsel for the Underwriters and
Holders, in order to comply with the provisions of the Securities Act, so as to
permit a public offering and sale of their Warrant Securities for nine
consecutive months (subject to the provisions of Section 7.2(d) below) by any
such Holders and any other Holders of the Warrants and/or Warrant Securities
who notify the Company of their decision to join therein within 15 days after
the Company provides notice pursuant to Section 7.2(b) below.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.2 to all Holders of the Warrants
and/or the Warrant Securities within 10 days from the date of the receipt of
any such registration request.
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(c) Notwithstanding the provisions of Sections 7.2(a), any time
during which the Company is obligated to maintain the effectiveness of a
registration statement pursuant to such Section 7.2(a), the Board of Directors
of the Company, after consultation with counsel to the Company (which counsel
shall be experienced in securities matters) has determined in good faith that
the filing of such registration statement or the compliance by the Company with
its disclosure obligations thereunder would require the disclosure of material
information which the Company has a bona fide business purpose for preserving
as confidential, then the Company may delay the filing or the effectiveness of
such registration statement (if not then filed or effective, as appropriate)
and shall not be required to maintain the effectiveness thereof for a period
expiring upon the earlier to occur of (i) the date on which such information is
disclosed to the public or ceases to be material or the Company is so able to
comply with its disclosure obligations or (ii) 60 days after the Board of
Directors makes such good faith determination. There shall not be more than
one such delay period with respect to any registration pursuant to Section
7.2(a). Notice of any such delay period and of the termination thereof will be
promptly delivered by the Company to each Holder and shall be maintained in
confidence by each such Holder.
7.3 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 7.1 or 7.2 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement as soon as practicable, but in any event within 90 days after receipt
of any demand therefor, shall use its best efforts to have such registration
statement declared effective at the earliest possible time and shall furnish
each Holder desiring to sell Warrant Securities such number of prospectuses as
shall reasonably be requested; provided, however, that the Company shall not be
obligated to effect such registration under the Securities Act except in
accordance with the following provisions:
(i) the Company shall not be obligated to use its best
efforts to file and cause to become effective any registration
statement for a period of up to 90 days if at the time of such request
any other registration statement pursuant to which shares of Common
Stock of the Company are to be or were sold has been filed with the
Commission and not withdrawn or has been declared effective within the
prior 60 days; and
(ii) the Company may delay the filing or effectiveness of the
registration statement for a period of up to 120 days after the date
of a request for registration if at the time of such request the
Company is engaged in a firm commitment underwritten public offering
of Common Stock in which the Holders may include their Warrant
Securities pursuant to Section 7.1 hereof.
(b) The Company shall pay all costs, fees and expenses in
connection with all registration statements filed pursuant to Sections 7.1 and
7.2(a) hereof (excluding fees and expenses of Holders' counsel and accountants,
any underwriting or selling commissions and any transfer taxes). If the
Company shall fail to comply with the provisions of Section 7.3(a) hereof the
Company shall, in addition to any other equitable or other relief available to
such Holders, and be liable for any or all incidental, special and
consequential damages sustained by such Holders and if such failure to comply
occurred during the twelve month period immediately preceding the expiration of
the Exercise Period, extend the Exercise Period by such number of days as shall
equal the delay caused by the Company's failure.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holders; provided that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject.
(d) The Company shall furnish without charge to each Holder of
Warrant Securities, promptly after filing thereof with the Commission, at least
one copy of the registration statement filed pursuant to Section 7.1 or 7.2 (a
"Registration Statement") and each amendment thereto or each amendment or
supplement to the
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prospectus included therein (the "Prospectus") including all financial
statements and schedules, documents incorporated by reference therein and if
the Holder so requests in writing, all exhibits thereto.
(e) The Company shall take such action as may be reasonably
necessary so that (i) the Registration Statement and any amendment thereto and
any Prospectus forming a part thereof and any supplement or amendment thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) the Registration Statement and any amendment
thereto (in either case, other than with respect to written information
furnished to the Company by or on behalf of any Holder specifically for
inclusion therein) does not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make any statement therein not misleading and (iii) the Prospectus and any
supplement thereto (in either case, other than with respect to such information
from Holders), does not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(f) The Company shall promptly advise the Holders of Warrant
Securities registered under the Registration Statement (which advice pursuant
to clauses (ii) - (iv) shall be accompanied by an instruction to suspend the
use of the Prospectus until the requisite changes have been made) and, if
requested by such persons, shall confirm such advice in writing:
(i) when the Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information relating thereto;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
suspension by any state securities commission of the qualification of
the Warrant Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes;
and
(iv) of the happening of any event that requires the making of
any changes in the Registration Statement or the Prospectus so that,
as of such date, the Registration Statement and the Prospectus do not
contain an untrue statement of a material fact and do not omit to
state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light
of the circumstances under which they were made) not misleading.
(g) If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Warrant
Securities under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
(h) The Company shall, during the period the Company is obligated
to maintain the effectiveness of a Registration Statement under Section 7.2
hereof, deliver to each Holder of Warrant Securities included under the
Registration Statement, without charge, such reasonable number of copies of the
Prospectus (including each preliminary prospectus) included in the Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request to facilitate the public sale or other disposition of the Warrant
Securities by the selling Holder.
(i) The Company shall cooperate with the Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Warrant Securities to be sold under the Registration
Statement, free of any restrictive legends and in such denominations and
registered in such names as the Holders or the underwriter(s), if any, may
reasonably request in connection with the sales of Warrant Securities pursuant
to the Registration Statement.
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(j) Upon the occurrence of any event contemplated by Section
7(e)(ii) - (iv) hereof, the Company shall file (and use its reasonable best
efforts to have declared effective as soon as possible) a post-effective
amendment to the Registration Statement or an amendment or supplement to the
Prospectus or file any other required document so that, as thereafter delivered
to the purchasers of Warrant Securities registered under the Registration
Statement, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein in light of the circumstances under which they were made not
misleading. Each Holder of Warrant Securities registered under the
Registration Statement agrees by acquisition of such Warrant Securities that,
upon receipt of any notice from the Company of the existence of any fact of the
kind described in Section 7(e)(ii) - (iv) hereof, such Holder will forthwith
discontinue disposition of Warrant Securities pursuant to the Registration
Statement until such Holder receives copies of the supplemented or amended
Prospectus contemplated by this Section 7(j), or until such Holder is advised
in writing by the Company that the use of the Prospectus may be resumed, and
such Holder has received copies of any additional or supplemental filings which
are incorporated by reference in the Prospectus. If so directed by the
Company, each Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Warrant Securities current at the time of receipt
of such notice.
(k) Nothing contained in this Agreement shall be construed as
requiring the Holders to exercise their Warrants prior to the initial filing of
any registration statement or the effectiveness thereof.
(l) The Company shall permit the inclusion of securities other
than Warrant Securities in any Registration Statement filed pursuant to Section
7.2(a) unless the managing underwriter advises the Holders in writing that the
inclusion of all securities proposed to be included in such registration
statement which are held by other holders would interfere with the successful
marketing of the Warrant Securities proposed to be registered by the Holders,
then the securities to be included in such registration shall be included in
the following order:
(a) first, the Warrant Securities proposed to be included in
such registration by the Holders; and
(b) second, the Company and holders of Common Stock entitled
to be included in such registration statement (pro rata among the
Company and holders requesting such registration based upon the number
of shares of Common Stock requested by the Company each such holder to
be registered).
(m) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such Registration Statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) if and to the extent
permitted by Statement of Auditing Standards No. 72, a "cold comfort" letter
dated the effective date of such Registration Statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such Registration Statement, in each case covering
substantially the same matters with respect to such Registration Statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(n) The Company shall as soon as practicable after the effective
date of the Registration Statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Securities Act) an earnings statement (which need
not be audited) complying with Section 11(a) of the Securities Act and covering
a period of at least 12 consecutive months beginning after the effective date
of the Registration Statement.
(o) The Company shall deliver promptly to each Holder
participating in the offering upon request, and to the managing underwriters,
if any, copies of all correspondence between the Commission and the
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Company, its counsel or auditors and all non-privileged memoranda relating to
discussions with the Commission or its staff with respect to the Registration
Statement and shall permit each Holder and such underwriters to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the Registration Statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the NASD. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable
times and as often as any Holder or underwriter shall reasonably request.
(p) With respect to the registration of Warrant Securities
pursuant to Section 7.2 to be sold to an underwriter for reoffering to the
public, the Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested to be included in such
underwriting, which may include the Underwriters. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and such
managing underwriter and shall contain such representations, warranties and
covenants by the Company and such other terms as are customarily contained in
agreements of that type used by the managing underwriter. The Holders shall be
parties to any underwriting agreement relating to an underwritten sale of their
Warrant Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holders.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company except as they may relate to such Holders and
their intended methods of distribution and shall not be requested by the
Company to provide indemnification except as provided in Section 7.3(e) hereof.
(q) In addition to Warrant Securities, and except as otherwise
provided in Section 7(g) hereof, upon the written request therefor by any
Holders, the Company shall include in the registration statement any other
securities of the Company held by such Holders as of the date of filing of such
registration statement, including without limitation restricted shares of
Common Stock, options, warrants or securities convertible into shares of Common
Stock and shall not be requested by the Company to provide indemnification
except as provided in Section 7.3(s) hereof.
(r) For purposes of this Agreement, the term "Majority" in
reference to the Holders of Warrants and/or Warrant Securities shall mean the
Holders of Warrants and/or Warrant Securities who, assuming the immediate
exercise of all of the outstanding Warrants for Common Stock, would hold in
excess of fifty percent (50%) of the Common Stock then issued or issuable
pursuant to Warrants that (i) are not held by the Company, an affiliate or
officer thereof or any of their respective affiliates, members of their family
or persons acting as their nominees or in conjunction therewith or (ii) have
not been resold to the public pursuant to a registration statement filed with
the Commission under the Securities Act.
(s) Indemnification and Contribution.
(1) The Company agrees to indemnify and hold harmless each Holder
(for purposes of this Section 7(s), "Holder" shall include the officers,
directors, partners, employees and agents, and each person, if any, who
controls any Holder ("controlling person") within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, from and against any
and all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, suits and litigation in respect thereof), whatsoever, as
the same are incurred, to which such Holder or any such controlling person may
become subject, under the Securities Act, the Exchange Act or any other statute
or at common law or otherwise insofar as such losses, claims, damages, expenses
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any preliminary Prospectus or Prospectus (as from time to time amended and
supplemented) or arise out of or are based upon the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein (with respect to any preliminary
Prospectus or Prospectus, in the light of the circumstances under which they
were made), not misleading; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
expense or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, or any preliminary Prospectus or Prospectus or any such
amendment
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or supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder specifically for
inclusion therein and provided, further, that the Company shall not be liable
to any such Holder under the indemnity agreement in this subsection (1) (i)
with respect to any preliminary Prospectus or Prospectus (if such Prospectus
has then been amended or supplemented) to the extent that any such loss,
liability, claim, damage or expense of such Holder arises out of a sale of
Warrant Securities by such Holder 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
Prospectus (or of the Prospectus as then amended or supplemented) if the
Company has previously furnished copies thereof to such Holder a reasonable
time in advance and the loss, liability, claim, damage or expense of such
Holder results from an untrue statement or alleged untrue statement or omission
or alleged omission of a material fact contained in the preliminary Prospectus
(or the Prospectus) which was corrected in the Prospectus (or the Prospectus as
amended or supplemented) or (ii) to the extent that any such loss, claim,
damage, expense or liability arises out of or is based upon any action or
failure to act by such Holder that is found in a final judicial determination
(or a settlement tantamount thereto) to constitute bad faith, willful
misconduct or gross negligence on the part of such Holder. The indemnity
agreement in this subsection (1) shall be in addition to any liability which
the Company may have at common law or otherwise.
The Company also agrees to indemnify or contribute to losses of any
underwriters of Warrant Securities registered under the Registration Statement,
their officers and directors and each person, if any, who controls any such
underwriter (within the meaning of the Act) on substantially the same basis as
that of the indemnification of the Holders provided in this Section 7(s)(1) and
shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement, as provided in Section 7(p) hereof.
(2) Each Holder agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers and each other person, if any, who
controls the Company within the meaning of the Securities Act, to the same
extent as the foregoing indemnity from the Company to the Holders, but only
with respect to statements or omissions, if any, made in conformity with
information relating to such Holder furnished in writing by such Holder
specifically for use in the Registration Statement in the Registration
Statement, or any preliminary Prospectus or the Prospectus or any amendment
thereof or supplement thereto; provided, however, that the obligation to
indemnify will be individual to each Holder and will be limited to the amount
of net proceeds received by such Holder from the sale of Warrant Securities
pursuant to the Registration Statement.
(3) Promptly after receipt by an indemnified party under this
Section 7(s) of notice of the commencement of any action, suit or proceeding,
such indemnified party shall, if a claim in respect thereof is to be made
against one or more indemnifying parties under this Section 7(s), notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure to notify an indemnifying party shall not
relieve it from any liability which it may have under Sections 7(s)(1) or (2)
unless and to the extent that it has been prejudiced in a material respect by
such failure or from the forfeiture of substantial rights and defenses). In
case any such action, suit or proceeding is brought against any indemnified
party, and it notifies an indemnifying party or parties of the commencement
thereof, the indemnifying party or parties will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party, which may be the same counsel as
counsel to the indemnifying party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action at the expense of the
indemnifying party, (ii) the indemnifying parties shall not have employed
counsel reasonably satisfactory to such indemnified party to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action or (iii) such indemnified party or parties shall have reasonably
concluded, after consultation with counsel to such indemnified party or
parties, that a conflict of interest exists which makes representation by
counsel chosen by the indemnifying party not advisable (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all
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indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 7(s) to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent.
(4) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes claim for indemnification pursuant
to this Section 7(s), but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7(s) provide for indemnification in such
case, or (ii) contribution under the Securities Act may be required, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid as a result of such losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or litigation in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by a
Holder, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions, suits, proceedings or
litigation in respect thereof) referred to above in this subsection (4) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, preparing or defending any
such action, claim, suit, proceeding or litigation. Notwithstanding the
provisions of this subsection (4), no Holder shall be required to contribute
any amount in excess of the amount by which the total price at which the
Warrant Securities sold by such indemnifying party and distributed to the
public were offered to the public exceeds the amount of any damages that such
indemnifying party has 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 12(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 Section
7(s), each person, if any, who controls the Company within the meaning of the
Securities Act, each executive officer of the Company and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subsection (4). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit,
proceeding or litigation against such party in respect to which a claim for
contribution may be made against another party or parties under this subsection
(4), notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have hereunder or otherwise than under this subsection (4), or to the extent
that such party or parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
(t) Notwithstanding the foregoing provisions of this Section 7.3,
no registration rights shall be extended pursuant to this Section 7 with
respect to any Warrant Securities (i) which have been sold pursuant to and in
accordance with an effective Registration Statement, (ii) sold in accordance
with Rule 144 under the Securities Act or (iii) eligible for sale under Rule
144(k) under the Securities Act.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Adjustments.
(a) In the event that the Company shall subdivide its outstanding
shares of Common Stock into a greater number of shares or combine its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior thereto shall be forthwith
proportionately decreased in the case of a subdivision or increased in the case
of a combination. An adjustment made pursuant to this Section 8.1(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such
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dividend or distribution and shall become effective immediately after the date
of such subdivision or combination, as the case may be.
(b) In the event that the Company shall (i) issue or distribute
(for no consideration or at a price per share less than the Current Market
Price (as defined below) per share on the date of such issuance or
distribution) shares of any class of capital stock of the Company (such shares
being hereafter referred to as "Capital Stock") generally to holders of Common
Stock or to holders of any class or series of Capital Stock which is
convertible into or exchangeable or exercisable for Common Stock (excluding an
issuance or distribution of Common Stock described in Section 8.1(a)) or (ii)
issue or distribute generally to such holders rights, warrants, options or
convertible or exchangeable securities entitling the holder thereof to
subscribe for, purchase, convert into or exchange for Capital Stock at a price
per share less than the Current Market Price per share of such Capital Stock on
the date of such issuance or distribution, then, in each such case, at the
earliest of (A) the date the Company enters into a firm contract for such
issuance or distribution, (B) the record date for the determination of
stockholders entitled to receive any such Capital Stock or any such rights,
warrants, options or convertible or exchangeable securities or (C) the date of
actual issuance or distribution of any such Capital Stock or any such rights,
warrants, options or convertible or exchangeable securities, the Exercise Price
shall be reduced by multiplying the Exercise Price in effect immediately prior
to such earliest date by:
(x) if such Capital Stock is Common Stock, a fraction the numerator of
which is the number of shares of Common Stock outstanding on such
earliest date plus the number of shares of Common Stock which could be
purchased at the Current Market Price per share of Common Stock on the
date of such issuance or distribution with the aggregate consideration
(based on the Fair Market Value thereof) received or receivable by the
Company either (A) in connection with such issuance or distribution or
(B) upon the conversion, exchange, purchase or subscription of all
such rights, warrants, options or convertible or exchangeable
securities (the "Aggregate Consideration"), and the denominator of
which is the number of shares of Common Stock outstanding on such
earliest date plus the number of shares of Common Stock to be so
issued or distributed or to be issued upon the conversion, exchange,
purchase or subscription of all such rights, warrants, options or
convertible or exchangeable securities; or
(y) if such Capital Stock is other than Common Stock, a fraction the
numerator of which is the Current Market Price per share of Common
Stock on such earliest date minus an amount equal to (A) the
difference between (1) the Current Market Price per share of such
Capital Stock multiplied by the number of shares of such Capital Stock
to be so issued and (2) the Aggregate Consideration, divided by (B)
the number of shares of Common Stock outstanding on such date, and the
denominator of which is the Current Market Price per share of Common
Stock on such earliest date.
Such adjustment shall be made successively whenever any such Capital Stock,
rights, warrants, options or convertible or exchangeable securities are so
issued or distributed. In determining whether any rights, warrants, options or
convertible or exchangeable securities entitle the holders thereof to subscribe
for, purchase, convert into or exchange for shares of such Capital Stock at
less than such Current Market Price, there shall be taken into account the Fair
Market Value of any consideration received or receivable by the Company for
such rights, warrants, options or convertible or exchangeable securities
(including upon exercise thereof.) If any right, warrant, option or
convertible or exchangeable securities, the issuance of which resulted in an
adjustment in the Exercise Price pursuant to this Section 8.1(b), shall expire
and shall not have been exercised, the Exercise Price shall immediately upon
such expiration be recomputed to the Exercise Price which would have been in
effect if such right, warrant, option or convertible or exchangeable securities
had never been distributed or issued. Notwithstanding anything contained in
this paragraph to the contrary, the issuance of Capital Stock upon the exercise
of such rights, warrants or options or the conversion or exchange of such
convertible or exchangeable securities will not cause an adjustment in the
Exercise Price if no such adjustment would have been required at the time such
right, warrant, option or convertible or exchangeable security was issued or
distributed; provided, however, that, if the consideration payable upon such
exercise, conversion or exchange and/or the Capital Stock receivable thereupon
are changed after the time of the issuance or distribution of such right,
warrant, option or convertible or
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exchangeable security, then such change shall be deemed to be the expiration
thereof without having been exercised and the issuance or distribution of new
options, rights, warrants or convertible or exchangeable securities.
Notwithstanding anything contained in this Agreement to the contrary,
options, rights or warrants issued or distributed by the Company, including
options, rights or warrants distributed prior to the date of this Agreement, to
holders of Common Stock generally which, until the occurrence of a specified
event or events (a "Trigger Event"), (i) are deemed to be transferred with
Common Stock, (ii) are not exercisable and (iii) are also issued on a pro rata
basis with respect to future issuances of Common Stock, shall be deemed not to
have been issued or distributed for purposes of this Section 8.1 (and no
adjustment to the Exercise Price under this Section 8.1 will be required) until
the occurrence of the earliest Trigger Event. Upon the occurrence of a Trigger
Event, such options, rights or warrants shall continue to be deemed not to have
been issued or distributed for purposes of this Section 8.1 (and no adjustment
to the Conversion Price under this Section 8.1 will be required) if and for so
long as each Holder who thereafter exercises such Holder's Warrants shall be
entitled to receive upon such exercise, in addition to the shares of Common
Stock issuable upon such conversion, a number of such options, rights or
warrants, as the case may be, equal to the number of options, rights or
warrants to which a holder of the number of shares of Common Stock equal to the
number of shares of Common Stock issuable upon exercise of such Holder's
Warrants is entitled to receive at the time of such exercise in accordance with
the terms and provisions of and applicable to such options, rights or warrants.
Upon the expiration of any such options, rights or warrants or at such time, if
any, as a Holder is not entitled to receive such options, rights or warrants
upon exercise of such Holder's Warrants, an adjustment (if any is required) to
the Conversion Price shall be made in accordance with this Section 8.1 with
respect to the issuance of all such options, rights and warrants as of the date
of issuance thereof, but subject to the provisions of the preceding paragraph.
If any such option, right or warrant, including any such options, rights or
warrants distributed prior to the date of this Agreement, are subject to
events, upon the occurrence of which such options, rights or warrants become
exercisable to purchase different securities, evidences of indebtedness, cash,
properties or other assets or different amounts thereof, then, subject to the
preceding provisions of this paragraph, the date of the occurrence of any and
each such event shall be deemed to be the date of distribution and record date
with respect to new options, rights or warrants with such new purchase rights
(and a termination or expiration of the existing options, rights or warrants
without exercise thereof). In addition, in the event of any distribution (or
deemed distribution) of options, rights or warrants, or any Trigger Event or
other event of the type described in the preceding sentence, that required (or
would have required but for the provisions of Section 8.3) an adjustment to the
Exercise Price under this Section 8.1 and such options, rights or warrants
shall thereafter have been redeemed or repurchased without having been
exercised, then the Exercise Price shall be adjusted upon such redemption or
repurchase to give effect to such distribution, Trigger Event or other event,
as the case may be, as though it had instead been a cash distribution, equal on
a per share basis to the result of the aggregate redemption or repurchase price
received by holders of such options, rights or warrants divided by the number
of shares of Common Stock outstanding as of the date of such repurchase or
redemption, made to holders of Common Stock generally as of the date of such
redemption or repurchase.
(c) If the Company shall pay or distribute, as a dividend or
otherwise, generally to holders of Common Stock or any class or series of
Capital Stock which is convertible into or exercisable or exchangeable for
Common Stock any assets, properties or rights (including, without limitation,
evidences of indebtedness of the Company, any subsidiary or any other person or
entity, cash or Capital Stock or other securities of the Company, any
subsidiary or any other person or entity, but excluding payments and
distributions as described in Section 8.1(a) or 8.1(b), dividends and
distributions in connection with the liquidation, dissolution or winding up of
the Company in its entirety and distributions consisting solely of cash
described in Section 8.1(d)), then in each such case the Exercise Price shall
be reduced by multiplying the Exercise Price in effect immediately prior to the
date of such payment or distribution by a fraction, the numerator of which is
the Current Market Price per share of Common Stock on the record date for the
determination of stockholders entitled to receive such payment or distribution
less the Fair Market Value per share on such record date of the assets,
properties or rights so paid or distributed and the denominator shall be the
Current Market Price per share of Common Stock on such record date. For
purposes of this Section 8.1(c), such Fair Market Value per share shall equal
the aggregate Fair Market Value on such record date of the assets, properties
or rights to paid or distributed divided by the number of shares of Common
Stock outstanding on such record date. Such adjustment shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such distribution.
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(d) If the Company shall, by dividend or otherwise, make a
distribution (other than in connection with the liquidation, dissolution or
winding up of the Company in its entirety), generally to holders of Common
Stock or any class or series of Capital Stock which is convertible into or
exercisable or exchangeable for Common Stock, consisting solely of cash where
(x) the sum of (i) the aggregate amount of such cash plus (ii) the aggregate
amount of all cash so distributed (by dividend or otherwise) to such holders
within the 12-month period ending on the record date for determining
stockholders entitled to receive such distribution with respect to which no
adjustment has been made to the Exercise Price pursuant to this Section 8.1(d)
exceeds (y) 10% of the result of the multiplication of (1) the Current Market
Price per share of Common Stock on such record date times (2) the number of
shares of Common Stock outstanding on such record date, then the Exercise Price
shall be reduced, effective immediately prior to the opening of business on the
day following such record date, by multiplying the Exercise Price in effect
immediately prior to the close of business on the day prior to such record date
by a fraction, the numerator of which is the Current Market Price per share of
Common Stock on such record date less the aggregate amount of cash per share so
distributed and the denominator of which is such Current Market Price;
provided, however, that, if the aggregate amount of cash per share is equal to
or greater than such Current Market Price, then, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion (with respect to each share of Common Stock
issued upon such conversion and in addition to the Common Stock issuable upon
conversion) the aggregate amount of cash per share such Holder would have
received had such Holder's Warrants been exercised immediately prior to such
record date. In no event shall the Exercise Price be increased pursuant to this
Section 8.1(d); provided, however, that if such distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price which would have
been in effect if such distribution had not been declared. For purposes of
this paragraph of this Section 8.1(d), such aggregate amount of cash per share
shall equal such sum divided by the number of shares of Common Stock
outstanding on such record date.
(e) Anything in this Section 8 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Exercise Price, in
addition to those required by this Section 8.1, as it in its discretion shall
determine to be advisable.
(f) For purposes of this Agreement, "Current Market Price" means,
when used with respect to any security as of any date, the last sale price,
regular way, of such security as reported for consolidated transactions on the
New York Stock Exchange or, if such security is not listed or admitted to
trading on the New York Stock Exchange, as reported for consolidated
transactions with respect to securities listed on the principal national
securities exchange on which such security is listed or admitted to trading or,
if such security is not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices, regular
way, as reported on the Nasdaq National Market, or, if such security is not
listed or admitted to trading on the Nasdaq National Market, as reported on the
Nasdaq SmallCap Market, or if such security is not listed or admitted to
trading on any national securities exchange or the Nasdaq National Market or
the Nasdaq SmallCap Market, the average of the high bid and low asked prices of
such security in the over-the-counter market as reported by the NASD Automated
Quotations System or such other system then in use or, if such security is not
quoted by any such organization, the average of the closing bid and asked
prices of such security furnished by a New York Stock Exchange member firm
selected by the Company. If such security is not quoted by any such
organization and no such New York Stock Exchange member firm is able to provide
such prices, the Current Market Price of such security shall be the Fair Market
Value thereof.
(g) For purposes of this Agreement, "Fair Market Value" means, at
any date as to any asset, property or right (including without limitation,
capital stock or any person, evidences of indebtedness or other securities, but
excluding cash), the fair market value of such item as determined in good faith
by the Board of Directors, whose determination shall be conclusive; provided,
however, that, if there is a Current Market Price for such item on such date,
"Fair Market Value" means such Current Market Price (without giving effect to
the last sentence of the definition thereof).
8.2 Merger or Consolidation. In the event of (i) any
reclassification (including, without limitation, a reclassification effected by
means of an exchange or tender offer by the Company or any Subsidiary) or
change of outstanding Common Stock (other than a change in par value, or from
par value to no par value, or
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from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation, merger or combination of the Company with
another corporation as a result of which holders of Common Stock shall be
entitled to receive securities or other assets (including cash) with respect to
or in exchange for Common Stock or (iii) any sale or conveyance of the assets
of the Company as, or substantially as, an entirety to any other corporation as
a result of which holders of Common Stock shall be entitled to receive
securities or other assets (including cash) with respect to or in exchange for
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute and deliver to the Holder upon surrender of the
Warrant Certificate held by such Holder a supplemental warrant agreement
providing that the holder of each Warrant then outstanding or to be outstanding
shall have the right thereafter (until the expiration of such Warrant) to
receive, upon full exercise of such Warrant, the kind and amount of shares of
stock and/or other securities and/or property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock
for which such Warrant might have been exercised immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance. Such supplemental warrant agreement shall provide for adjustments
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 8. The above provision of this subsection shall similarly
apply to successive events of the type described in this Section 8.2.
8.3 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made if the amount of said adjustment
shall be less than two cents ($0.02) per Warrant Security, provided, however,
that in such case any adjustment that would otherwise be required then to be
made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with any adjustment so
carried forward, shall amount to at least two cents ($0.02) per Warrant
Security.
8.4 Adjustment in Number of Securities. Upon each adjustment of
the Exercise Price pursuant to the provisions of Section 8.1(a) or (b), the
number of shares of Common Stock issuable upon exercise at the adjusted
Exercise Price of each Warrant shall be adjusted to the nearest full amount by
multiplying a number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Common Stock issuable upon exercise
of Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.5 Certificate of Adjustment. After each adjustment of the
Exercise Price or the amount of Warrant Securities purchasable upon exercise of
Warrants pursuant to this Section 8, the Company will promptly prepare a
certificate signed by the Chairman or President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company
setting forth: (i) the Exercise Price, as so adjusted; (ii) the amount of
Warrant Securities purchasable upon exercise of each Warrant after such
adjustment; and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with its records
and cause a brief summary thereof to be sent by ordinary first class mail to
each Holder at his or her last address as it shall appear on the registry books
of the Company.
8.6 Validity of Warrant Certificate. Irrespective of any
adjustments or changes in the Exercise Price or the amount of Warrant
Securities purchasable upon exercise of Warrants, Warrant Certificates
theretofore and thereafter issued shall continue to express the Exercise Price
per share and the amount of Warrant Securities purchasable thereunder as of the
date such Warrant Certificates were originally issued; provided, the Holders
shall be entitled to exercise Warrants represented by such Warrant Certificates
after giving effect to each such adjustment and change, and such Warrant
Certificate shall be deemed to incorporate each such adjustment and change as
if new Warrant Certificates reflecting each such adjustment and change had been
issued to the Holders.
9. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable, without expense, upon the surrender
thereof by the Holder at the principal executive office of the Company, for a
new Warrant Certificate of like tenor and date representing in the aggregate
the right to purchase the same number of Warrant Securities in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or
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security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
such Warrant Certificates, if mutilated, the Company will make and deliver a
new Warrant Certificate of like tenor in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants to purchase Common Stock, nor shall it be
required to issue scrip or pay cash in lieu of fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of shares of Common Stock
or other securities, properties or rights.
11. Reservation and Listing of Securities. The Company shall at
all times reserve and keep available out of its authorized capital stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock or other securities, property or rights as
shall be issuable upon exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all shares of Common Stock and other securities issued by the Company upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any security holder of the Company. As
long as the Warrants shall be outstanding, the Company shall use its reasonable
best efforts to cause the Common Stock issuable upon the exercise of the
Warrants to be listed (subject to official notice of issuance) on all
securities exchanges on which the Common Stock may then be listed and/or quoted
on the Nasdaq Stock Market if the Common Stock issued to the public is so
quoted.
12. Notices to Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holders the right to receive dividends or
to vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter or
as having any rights whatsoever as a stockholder of the Company. If, however,
at any time prior to the expiration of the Warrants and their exercise, any of
the following events shall occur:
(a) the Company shall set a record date for the purpose of
entitling them to receive a dividend or distribution payable otherwise
than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of
the Company; or
(b) the Company shall offer to all the holders of shares of
Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe
therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event to each Holder at least 15 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution or offer, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with any of the
events described in this Section 12.
13. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made and sent when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a Holder, to the address of such Holder as shown on
the books of the Company; or
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(b) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice
to the Holders.
14. Supplements and Amendments. The Company and the Underwriters
may from time to time supplement or amend this Agreement without the approval
of any Holders (other than the Underwriters) in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Initial Purchaser may deem necessary or desirable and which the Company and the
Underwriters deem shall not adversely affect the interests of the Holders in
any material respect.
15. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Company, the
Holders and their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close of
business on April __, 2004. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close of
business on April __, 2009.
17. Governing Law; Submission to Jurisdiction. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Underwriters and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Underwriters and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum and
also hereby irrevocably waive any right or claim to trial by jury in connection
with any such action, proceeding or claim. Any such process or summons to be
served upon any of the Company, the Underwriters and the Holders (at the option
of the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
13 hereof. Such mailing shall be deemed personal service and shall be legal
and binding upon the party so served in any action, proceeding or claim. The
Company, the Underwriters and the Holders agree that the prevailing party(ies)
in any such action or proceeding shall be entitled to recover from the other
party(ies) all of its/their reasonable legal costs and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
18. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to
the subject matter hereof. Except as set forth in Section 14 hereof, this
Agreement may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
19. Severability. If any provision of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only, and are not intended, nor
should they be construed as, a part of this Agreement and shall be given no
substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person, corporation or entity other than the Company
and the Underwriters and any other Holders of Warrants and/or Warrant
Securities any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Company
and the Underwriters and any other Holders of Warrants and/or Warrant
Securities.
-15-
17
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
[SEAL] WESTBRIDGE CAPITAL CORP.
By:
-----------------------------------
Name:
Title:
Attest:
---------------------------------
Name:
Title:
FORUM CAPITAL MARKETS X. X.
XXXXXXX XXXXX & ASSOCIATES, INC.
By: Forum Capital Markets L.P.
By:
-----------------------------------
Name:
Title:
-16-
18
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON AND AFTER APRIL __, 1998 UNTIL
5:30 P.M., NEW YORK TIME, APRIL __, 2002
No. W- ______ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ____________________________,
or registered assigns, is the registered holder of _____________ Warrants to
purchase initially, at any time from April __, 1998 until 5:30 p.m. New York
time on April __, 2002 (the "Expiration Date"), up to __________ fully-paid and
non-assessable shares of Common Stock, par value $.10 per share (the "Common
Stock"), of WESTBRIDGE CAPITAL CORP. (the "Company"), at the initial exercise
price, subject to adjustment in certain events (as adjusted, the "Exercise
Price"), of $_____ per share upon surrender of this Warrant Certificate and
payment of the aggregate Exercise Price, at an office or agency of the Company,
but subject to the conditions set forth herein and in the warrant agreement
dated as of April __, 1997 by and among the Company, Forum Capital Markets L.P.
and Xxxxxxx Xxxxx & Associates, Inc. (the "Warrant Agreement"). Payment of the
aggregate Exercise Price, shall be made by certified or official bank check in
New York Clearing House funds payable to the order of the Company and by
surrender of this Warrant Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the amount the type and/or number of the
Company's securities issuable hereunder may, subject to certain conditions, be
adjusted. Subject to Section 8.6 of the Warrant Agreement, in such event, the
Company will, at the request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter or otherwise impair the rights of the holder as set forth
in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the permitted transferee(s) in exchange
for this Warrant Certificate, subject to the limitations provided herein and in
the Warrant Agreement, without any charge except for any tax or other
governmental charge imposed in connection with such transfer.
A-1
19
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of , 1997
-----------------------
WESTBRIDGE CAPITAL CORP.
[SEAL] By:
------------------------------------
Name:
Title:
Attest:
------------------------------
Name:
Title:
A-2
20
ANNEX A
TO WARRANT CERTIFICATE
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase
_____________________________ shares of Common Stock and herewith tenders in
payment for such securities a certified or official bank check payable in New
York Clearing House Funds to the order of Westbridge Capital Corp. in the
amount of $_______________________________________________, all in accordance
with the terms of Section 3 of the Underwriters' Warrant Agreement dated as of
April __, 1997 by and among Westbridge Capital Corp., Forum Capital Markets
L.P and Xxxxxxx Xxxxx & Associates, Inc. The undersigned requests that a
certificate for such securities be registered in the name of __________________
______________________________________ whose address is _______________________
_______________________________________________________________________________
and that such certificate be delivered to ______________________ whose address
is ___________________________________________________________________________.
Dated:
-----------------------
Signature
------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
---------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
A-3
21
ANNEX B
TO WARRANT CERTIFICATE
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____________________
shares of Common Stock all in accordance with the terms of Section 3.2 of the
Underwriters' Warrant Agreement dated as of April __, 1997 by and among
Westbridge Capital Corp., Forum Capital Markets L.P. and Xxxxxxx Xxxxx &
Associates, Inc. The undersigned requests that a certificate for such
securities be registered in the name of __________________________________
whose address is _______________________________________________________ and
that such certificate be delivered to ____________________________ whose
address is _______________________________________________________________.
Dated:
Signature
------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
---------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
A-4
22
ANNEX C
TO WARRANT CERTIFICATE
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ____________________________________ hereby sells,
assigns and transfers unto ____________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
the within Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
___________________________ Attorney to transfer the within Warrant Certificate
on the books of the within-named Company, with full power of substitution.
Dated:
-----------------------
Signature
------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
---------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
A-5
