1
THIS WARRANT, AND THE SHARES ISSUABLE UPON EXERCISE HEREOF, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR "BLUE SKY" LAWS (COLLECTIVELY, "SECURITIES LAWS"),
AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE
BEEN REGISTERED UNDER THE SECURITIES LAWS OR AN EXEMPTION FROM
REGISTRATION APPLIES TO SUCH TRANSFER OR DISPOSITION.
WARRANT
To Purchase Up to 321,853 Shares of Common Stock of
XXXX & XXXXXX, INC.
Dated: November 30, 1999
This is to certify that, for value received, Xxxxxx X. Xxxx and its
registered assigns (collectively, the "Holder") is entitled to purchase from
Xxxx & XxXxxx, Inc., a Delaware corporation (the "Company"), 321,853 shares of
common stock of the Company (the "Common Stock"), subject to adjustment and on
the terms and conditions hereinafter provided (the "Warrant Shares").
Certain terms used in this Warrant are defined in Section 4.
1. EXERCISE OF WARRANT
1.1 EXERCISE PERIOD. The Holder may exercise this Warrant, for all or
any portion of the Warrant Shares, on any Business Day prior to January 15, 2004
(the "Expiration Date").
1.2 MANNER OF EXERCISE. (a) To exercise this Warrant, the Holder shall
deliver to the Company at its office at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or at such other office or agency designated by the Company by written notice to
the Holder (i) this Warrant, (ii) a written notice of the Holder's election to
exercise this Warrant, which notice shall specify the number of Warrant Shares
to be purchased and the denominations of the share certificate or certificates
desired, and (iii) payment of the
2
Exercise Price with respect to such shares. Such payment may be made, at the
option of the Holder, by cash, money order, certified or bank cashier's check or
wire transfer.
(b) (i) In lieu of the exercise of this Warrant as provided in (a)
above, the Warrant (or any portion thereof) may, at the election of the Holder,
be converted into the nearest whole number of shares of Common Stock determined
as follows:
N(FMV - EP)
S=-------------
FMV
where
S = the number of shares to be issued
N = the number of Warrant Shares issuable upon the exercise of the
Warrant (or portion thereof) to be so converted.
FMV = Fair Market Value per share on the date of conversion.
EP = the Exercise Price in effect on the date of conversion.
(ii) The conversion rights provided under this paragraph may be
exercised in whole or in part and at any time and from time to time while any
portion of the Warrant remains outstanding. In order to exercise the conversion
privilege, the Holder shall deliver to the Company or its office as stated in
(a) above (i) this Warrant and (ii) a written notice of the Holder's election to
exercise its conversion rights, which notice shall specify the portion of the
Warrant to be converted pursuant to this paragraph and the denominations of the
share certificate or certificates desired. The Warrant (or so much thereof as
shall have been surrendered for conversion) shall be deemed to have been
converted immediately prior to the close of business on the date the notice is
delivered to the Company.
(c) The Company shall, as promptly as practicable and in any event
within seven days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock to which the Holder
is entitled as a result of its exercise pursuant to 1.2(a) or the conversion
pursuant to 1.2(b), together with cash in lieu of any fractions of a share as
provided in Section 1.4. The share certificate or certificates so delivered
shall be in such denominations as may be specified in such notice or, if such
notice shall not specify denominations, as the Company may determine, and shall
be issued in the name of the Holder. Such certificate or certificates shall be
deemed to have been issued, and the Holder shall be deemed for all purposes to
have become a holder of record of such shares, as of the date the aforementioned
notice and payment (if applicable) is received by the Company. If this Warrant
shall have been exercised for only
3
a portion of the Warrant Shares, the Company shall, at the time of delivery of
the certificate or certificates, deliver to the Holder a new Warrant evidencing
the rights to purchase the remaining Warrant Shares, which new Warrant shall in
all other respects be identical with this Warrant, or, at the request of the
Holder, appropriate notation may be made on this Warrant which shall then be
returned to the Holder. The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and delivery of
share certificates and new Warrants.
1.3 SHARES TO BE FULLY PAID AND NONASSESSABLE. All Warrant Shares
issued upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable.
1.4 NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant.
1.5 SHARE LEGEND. Each certificate for Warrant Shares issued upon
exercise of this Warrant shall bear the following legend:
"This security has not been registered under the Securities Act of
1933, as amended, or any state securities law and may not be transferred,
sold or offered for sale unless registered pursuant to such Act and any
applicable state securities law or unless an exemp tion from such
registration is available."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act) shall also bear such legend unless, in the opinion of counsel to
the Company, the securities represented thereby need no longer be subject to
restrictions on resale under the Securities Act.
2. ANTIDILUTION PROVISIONS
2.1 ADJUSTMENTS GENERALLY. The Exercise Price and the number of Warrant
Shares (or other securities or property) issuable upon exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events, as provided in this Section 2. No such adjustment shall reduce the
exercise price below $0.01 per share, but all computations required by this
Section 2 shall be made without giving effect to this sentence.
2.2 COMMON STOCK REORGANIZATION; COMMON STOCK DIVIDENDS. If the Company
shall
(a) subdivide its outstanding shares of Common Stock into a greater
number of shares or consolidate its outstanding shares of Common Stock
into a smaller number of shares (any such
4
event being called a "Common Stock Reorganization"); or
(b) issue additional shares of Common Stock to pay a dividend or
other distribution to holders of its Common Stock (any such event being
called a "Common Stock Dividend"),
then (i) the Exercise Price shall be adjusted, effective immediately after the
record date at which the holders of shares of Common Stock are determined for
purposes of such Common Stock Reorganization or Common Stock Dividend, as the
case may be, to a price determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on such record date
before giving effect to such Common Stock Reorganization or Common Stock
Dividend, as the case may be, and the denominator of which shall be the number
of shares of Common Stock outstanding after giving effect to such Common Stock
Reorganization or Common Stock Dividend, as the case may be, and (ii) the number
of Warrant Shares subject to purchase upon exercise of this Warrant shall be
adjusted, effective at such time, to a number determined by multiplying the
number of shares of Common Stock subject to purchase hereunder immediately
before such Common Stock Reorganization or Common Stock Dividend, as the case
may be, by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding after giving effect to such Common Stock Reorganization
or Common Stock Dividend, as the case may be, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately before such
Common Stock Reorganization or Common Stock Dividend, as the case may be. This
Section 2.2 shall apply to any securities of the Company purchasable as a result
of an adjustment pursuant to Section 2.3 as if the references to "Common Stock"
in this Section 2.2 were references to such other securities of the Company.
2.3 CAPITAL REORGANIZATIONS. If there shall be any reclassification or
change in the outstanding shares of Common Stock (other than a Common Stock
Reorganization or Common Stock Dividend or a change in par value) or any other
securities purchasable pursuant to this Warrant or any consolidation or merger
to which the Company is a party, other than a consolidation or a merger in which
the Company is a continuing corporation and which does not result in any
reclassification of, or change in the outstanding shares of common stock, or any
exchange of a majority of the outstanding shares of Common Stock for securities
of another corporation or other entity (any such event being called a "Capital
Reorganization"), then, effective upon the effective date of such Capital
Reorganization, the Holder shall have the right to purchase, upon exercise of
this Warrant, the kind and amount of shares of stock or other securities and
property (including cash) which the Holder would have owned or have been
entitled to receive in respect of the securities issuable upon exercise of this
Warrant after such Capital Reorganization if this Warrant had been exercised
immediately prior to such Capital Reorganization. The Company shall cause the
issuer of any securities for which this Warrant becomes exercisable as a result
of a Capital Reorganization to assume the Company's obligations under this
Warrant. The provisions of this Section 2.3 shall similarly apply to successive
Capital Reorganizations.
5
2.4 CERTAIN DIVIDENDS. In case the Company shall
(a) pay a dividend or make a distribution of shares of its capital
stock other than shares of Common Stock (excluding (i) distributions
relating to subdivisions and combinations covered by Section 2.2, (ii)
distributions relating to reclassifications, changes, consolidations,
mergers, sales or conveyances covered by Section 2.3 and (iii) rights,
warrants or options to purchase or subscribe for shares of Common Stock or
Convertible Securities); or
(b) pay a dividend or make a distribution in cash or property other
than capital stock of the Company (excluding dividends or distributions
payable in cash out of the current year's or retained earnings of the
Company),
then the Exercise Price shall be adjusted to a price determined by subtracting
from the Exercise Price in effect immediately prior to the record date
(described below) by an amount equal to a fraction, the numerator of which shall
be equal to (x) the fair market value of such dividend or distribution (as
determined by the Board of Directors of the Company in good faith) as of such
record date, and the denominator of which shall be equal to the total number of
shares of Common Stock then outstanding on the record date. Such adjustment
shall be made whenever any such dividend is paid or such distribution is made
and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or distribution.
There shall be no adjustment to the number of Warrant Shares subject to purchase
upon exercise of this Warrant pursuant to this Section 2.4.
2.5 ADJUSTMENT RULES.
(a) Any adjustments pursuant to this Section 2 shall be made successively
whenever an event referred to herein shall occur, except that, notwithstanding
any other provision of this Section 2, no adjustment shall be made to the number
of Warrant Shares to be delivered to the Holder (or to the Exercise Price) if
such adjustment represents less than 1% of the number of shares previously
required to be so delivered, but any lesser adjustment shall be carried forward
and shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall amount to 1% or
more of the number of shares to be so delivered.
(b) If the Company shall set a record date to determine the holders of
shares of Common Stock for purposes of a Common Stock Reorganization, Common
Stock Dividend or Capital Reorganization and shall legally abandon such action
prior to effecting such action, then no adjustment shall be made pursuant to
this Section 2 in respect of such action.
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2.6 NOTICE OF ADJUSTMENT. Not less than 10 days prior to the record date
or effective date, as the case may be, of any action specified in Section 2.2,
2.3 or 2.4 which requires or might require an adjustment or readjustment
pursuant to this Section 2, the Company shall give notice to the Holder of such
event, describing such event in reasonable detail and specifying the record date
or effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof. If the required adjustment is not
determinable at the time of such notice, the Company shall give notice to the
Holder of such adjustment and computation promptly after such adjustment becomes
determinable.
3. REGISTRATION RIGHTS. The Holder shall be entitled to the registration
rights set forth in Exhibit A.
4. DEFINITIONS.
"BUSINESS DAYS" shall mean each day that is not a Saturday or Sunday and
on which banking institutions in New York are not required or authorized by law
or executive order to close.
"CAPITAL REORGANIZATION" shall have the meaning set forth in Section 2.3.
"COMMON STOCK" shall have the meaning set forth in the first paragraph of
this Warrant.
"COMMON STOCK DIVIDEND" shall have the meaning set forth in Section 2.2.
"COMMON STOCK REORGANIZATION" shall have the meaning set forth in Section
2.2.
"COMPANY" shall have the meaning set forth in the first paragraph of this
Warrant.
"EXERCISE PRICE" shall mean $2.93612 per share of Common Stock, subject to
adjustment pursuant to Section 2.
"EXPIRATION DATE" shall have the meaning set forth in Section 1.1.
"FAIR MARKET VALUE" shall mean the following:
(A) If the Company is a public company, Fair Market Value shall equal (i) the
average of the high and low sales prices of shares of Common Stock on all
securities exchanges on which Common Stock may be listed during the applicable
period listed below, or (ii) if there shall have been no sales on any such
exchange on any day during such period, the average of the bid and asked prices
of Common Stock at the end of each such day, or (iii) if the Common Stock shall
not be so listed, the average of the bid and asked prices during such period in
the over-the-counter market, if any; in each circumstance set forth above,
averaged over the 20 consecutive trading days immediately prior to the day as of
the which Fair Market Value is
7
determined. In the event quotations for the Common Stock are not available for
each day during the twenty-consecutive day period provided above, then Fair
Market Value shall be determined based upon the first twenty days (which need
not be consecutive) preceding the day as of which Fair Market Value is to be
determined for which quotations are available, provided such twenty day period
does not extend past fifty business days from the date as of which Fair Market
Value is to be determined.
(B) If the Company is not a public company, Fair Market Value shall equal the
fair market value per share of the Common stock of the Company, as determined by
the Board of Directors of the Company in good faith. If the Holder objects to
the Board's determination of Fair Market Value, such objection to be given
within ten Business Days of receipt of such valuation, Fair Market Value shall
be determined by an Independent financial Expert, as provided herein.
"HOLDER" shall have the meaning set forth in the first paragraph of this
Warrant.
"INDEPENDENT FINANCIAL EXPERT" shall mean an independent valuation or
appraisal firm (i) selected jointly by the Board of Directors of the Company and
the Holder as having appropriate experience in valuations of the nature required
and (ii) which certifies that it does not (and the directors and officers of
which do not) have a material direct or indirect financial interest in either
the Company or the valuation. If the Board and the Holder do not agree upon the
selection of the Independent Financial Expert, an Independent Financial Expert
solicited by each of the Board and the Holder shall jointly select a third
Independent Financial Expert. the valuation agreed upon by two of the three
Independent Financial Experts shall be conclusive and binding upon the parties.
If any final determination of Fair Market Value hereunder by an Independent
Financial Expert is not greater than 10% of the original valuation presented to
the Holder by the board, the fees of all Independent Financial Experts involved
in the valuation shall be paid by the Holder; otherwise, such fees shall be paid
by the Company.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
any successor Federal statute, and the rules and regulations of the Securities
and Exchange Commission (or its successor) thereunder, all as the same shall be
in effect from time to time.
"TRANSFER" shall include any sale, transfer, assignment or other
disposition of this Warrant or any Warrant Shares, or of any interest thereof,
which would constitute a sale of either thereof within the meaning of the
Securities Act.
8
"WARRANT SHARES" shall have the meaning set forth in the first paragraph
of this Warrant.
Dated: November 30, 1999
XXXX & XXXXXX, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: President
30018187.WPD
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EXHIBIT A
REGISTRATION RIGHTS
1. REGISTRATION ON REQUEST.
1.1 REQUEST. Upon a written request from a Holder of Registrable
Securities (the "Requesting Party") to the Company, requesting that the Company
effect the registration under the Securities Act of all or part of the
Requesting Party's Registrable Securities and specifying the intended method or
methods of disposition thereof, the Company will promptly, but in any event
within 10 Business Days, give written notice of such requested registration to
all holders of Registrable Securities and thereupon will use its best efforts to
effect the registration under the Securities Act of:
(a) First, the Registrable Securities which the Requesting Party has
requested the Company to register for disposition in accordance with the
intended method or methods of disposition stated in the Requesting Party's
request, and
(b) Second, all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request delivered to the
Company within five Business Days after the giving of such written notice by the
Company, in accordance with Section 2.
1.2 LIMITATIONS.
(a) The Company shall not be required to effect any registration pursuant
to this Section 1 until one year after the Company has effected an underwritten
initial public offering of its common stock,
(b) If the Company shall have previously effected a registration pursuant
to this Section 1, the Company shall not be required to effect another
registration pursuant to this Section 1 at the request of the same Requesting
Party until a period of 180 days shall have elapsed from the effective date of
the most recent such previous registration,
(c) The Company shall not be required to effect more than two
registrations pursuant to this Section 1 of the request of the same Requesting
Party;
(d) if at the time of a request pursuant to Section 1(a) the Company has
authorized or
10
taken steps with a view to effecting a registration under the Securities Act for
an underwritten public offering, whether or not pursuant to Section 1(a), (the
"Pending Offering"), the Company need not take any action pursuant to that
request until 180 days after the registration statement for the Pending Offering
becomes effective under the Securities Act or, if no registration statement is
filed for the Pending Offering within 90 days after such request, 91 days after
such request; and
(e) The Company shall not be required to effect any registration pursuant
to this Section 1 if all Registrable Securities proposed to be sold thereunder
by the Requesting Party are eligible for public sale at that time without
registration (including, but not limited to, sales pursuant to Rule 144 under
the Securities Act).
1.3 SELECTION OF UNDERWRITERS. Whenever a registration is requested
pursuant to Section 1 hereof, the Requesting Holder shall have the right to
select the managing underwriter to administer the offering subject to the
approval of the Company, such approval not to be unreasonably withheld.
1.4 TRANSFEREES. The rights granted under this Section 1 shall inure to
the transferee of more than 50% of the Registrable Securities then held by the
transferor.
2. PIGGYBACK REGISTRATIONS.
2.1 RIGHT TO PIGGYBACK. Whenever the Company proposes to register any of
its securities under the Securities Act on a registration form that may be used
for the registration of Registrable Securities (a "Piggyback Registration"), the
Company will, not later than the first Business Day following the filing of such
registration form, give prompt written notice thereof to all holders of
Registrable Securities and will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within five Business Days after the Company's notice is given.
2.2 PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is in
connection with an underwritten primary registration on behalf of the Company
and other stockholders, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in an orderly manner
in such offering within a price range acceptable to the Company, the Company
will include in such registration (i) first, the securities the Company proposes
to sell and (ii) second the Registrable Securities requested to be included
therein and other securities requested to be included in such registration, pro
rata among the holders of such securities on the basis of the number of
securities so requested to be included therein.
2.3 PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is in
connection with an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities
11
requested to be included in such registration exceeds the number which can be
sold in an orderly manner in such offering within a price range acceptable to
the holders initially requesting such registration, the Company will include in
such registration (i) first, the securities requested to be included therein by
the holders initially requesting such registration, pro rata among the holders
of such securities on the basis of the number of securities so requested to be
included therein, and (ii) second, any other Registrable Securities and other
securities requested to be included in such registration, pro rata among the
holders of such securities on the basis of the number of securities so requested
to be included therein.
2.4 HOLDBACK AGREEMENTS. Each holder of Registrable Securities agrees not
to effect any public sale or distribution (including, but not limited to, sales
pursuant to Rule 144 under the Securities Act) of equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities (collectively, "Equity Securities"), during the seven days prior
to and the 90-day period (or such longer period, not to exceed 180 days in the
aggregate, as the managing underwriter may request) beginning on the effective
date of any underwritten registration in which Registrable Securities are
included or any Applicable Registration (the "Holdback Period") except as part
of such underwritten registration, unless the underwriters managing the
registered public offering otherwise agree in writing. An "Applicable
Registration" is any underwritten registration if any of the securities included
in such registration are to be sold on behalf of the Company or on behalf of
Holdback Stockholders; and a "Holdback Stockholder" is any person party to or
entitled to the benefits of any registration rights or similar agreement with
the Company.
3. REGISTRATION PROCEDURES. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be included in a registration
statement pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, provided that the
Company may at any time delay or abandon the underlying registration (with the
consent of the Requesting Party in the case of a registration pursuant to
Section 1) without any liability to the holders of Registrable Securities. The
Company will:
(a) prepare and file with the Securities and Exchange Commission a
registration statement (or an amendment to a registration statement) with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective;
(b) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of Registrable Securities owned by such
seller;
(c) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other
12
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(d) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(e) cause all such Registrable Securities to be listed on each securities
exchange or automated quotation system on which similar securities issued by the
Company are then listed;
(f) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(g) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter attorney, accountant or
agent in connection with such registration statement, subject to receipt of such
confidentiality undertakings which Company may reasonably require; and
(h) otherwise use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.
4. REGISTRATION EXPENSES. All expenses incident to the Company's
performance of or compliance with this Exhibit A, including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses,
and fees and disbursements of counsel for the Company, all independent certified
public accountants and other
13
Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), will be paid by the Company, except the holders of
Registrable Securities in any event will pay the fees and disbursements of their
counsel and any underwriting discounts or commissions with respect to the
Registrable Securities.
5. INDEMNIFICATION.
In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is based upon and in conformity with any
information or affidavit so furnished in writing by such holder expressly for
use therein.
The Company agrees to indemnify, to the extent permitted by law, each
holder of Registrable Securities, its officers and directors and each Person who
controls such holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as the same are based upon and in conformity with any information
furnished in writing to the Company by such holder expressly for use therein or
by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
Any Person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not
14
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel selected by all
parties indemnified by such indemnifying party to represent such indemnified
parties with respect to such claim.
The indemnification provided for under this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.
6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No holder of Registrable
Securities may participate in any registration hereunder which is underwritten
unless such holder (a) agrees to sell such Registrable Securities on the basis
provided in any underwriting arrangements approved by the Company and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements (which may include indemnification and contribution
provisions which differ from those set forth in Section 4).
7. DEFINITIONS.
"BUSINESS DAY" means any day that is not a Saturday or Sunday or a day on
which banks located in the City of New York are authorized or required to be
closed.
"COMPANY" means Xxxx & XxXxxx, Inc., a Delaware corporation.
"REGISTRABLE SECURITIES" means (i) the Warrant Shares issued or issuable
upon exercise of a Warrant and (ii) any Common Stock issued or issuable with
respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities continue to be Registrable
Securities as long as they have been sold pursuant to a private transaction and
are not eligible for public sale without registration (including, but not
limited to, sales pursuant to Rule 144 under the Securities Act). For purposes
of this Agreement, a Person will be deemed to be a holder of Registrable
Securities and such Registrable Securities will be deemed to be in existence
whenever such Person has the right to acquire such Registrable Securities
directly or indirectly (upon conversion or exercise of any security, warrants or
options), whether or not such acquisition has actually been effected.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"WARRANT" means the warrant dated November 30, 1999 issued by the Company
to Xxxxxx X. Xxxx and any new warrant issued pursuant to Section 1.2 thereof.
Unless otherwise stated, other capitalized terms contained herein have the
meanings set forth in the Warrant.
