Exhibit 4.2
Exhibit B to Securities
Purchase Agreement
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. ACCORDINGLY, THIS WARRANT
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT (i) AN OPINION OF
COUNSEL SATISFACTORY TO FIELDWORKS, INCORPORATED THAT SUCH SALE, TRANSFER OR
OTHER DISPOSITION MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH REGISTRATION.
FIELDWORKS, INCORPORATED
WARRANT
TO PURCHASE
SHARES OF COMMON STOCK
For value received, in consideration of the execution and delivery of the
Securities Purchase Agreement between the issuer of this Warrant and Industrial-
Works Holding Corp., a Delaware corporation ("Purchaser") dated November 20,
1999 ("Securities Purchase Agreement"), Purchaser and its successors or assigns
("Holder"), is entitled to purchase from FieldWorks, Incorporated, a Minnesota
corporation (the "Company'), up to 500,000 fully paid and nonassessable shares
of the Company's common stock, $.001 par value per share or such greater or
lesser number of such shares as may be determined by application of the anti-
dilution provisions of this Warrant, at the price of One Dollar $1.00 per share
(the "Warrant Exercise Price").
This Warrant may be exercised, with respect to all 500,000 shares, upon the
seventh (7th) anniversary of the date of this Warrant (the "Seventh Anniversary
Date"), provided, however, that the exercise of this Warrant may be accelerated,
with respect to a portion of the shares, under the following circumstances:
(a) This Warrant may be exercised with respect to 167,000 shares (as
adjusted pursuant to Section 4(b) of this Warrant) after the closing price of
the Company's common stock averages $2.50 for five (5) consecutive trading days,
and will remain exercisable
with respect to such shares for a period of three (3) years following such
acceleration, but shall no longer be exercisable with respect to such shares if
not exercised within such three-year period, or, if sooner, prior to the Seventh
Anniversary Date.
(b) This Warrant may be exercised with respect to an additional
167,000 shares (as adjusted pursuant to Section 4(b) of this Warrant) after the
closing price of the Company's common stock averages $3.75 for five (5)
consecutive trading days, and will remain exercisable with respect to such
shares for a period of three (3) years following such acceleration, but shall no
longer be exercisable with respect to such shares if not exercised within such
three-year period or, if sooner, prior to the Seventh Anniversary Date.
(c) This Warrant may be exercised with respect to the remaining
166,000 shares (as adjusted pursuant to Section 4(b) of this Warrant) after the
closing price of the Company's common stock averages $5.00 for five (5)
consecutive trading days, and will remain exercisable with respect to such
shares for a period of three (3) years following such acceleration, but shall no
longer be exercisable with respect to such shares if not exercised within such
three-year period or, if sooner, prior to the Seventh Anniversary Date.
This Warrant is subject to the following terms and conditions:
1. Exercise. The rights represented by this Warrant may be exercised by
--------
the Holder, in whole or in part, by written election, in the form set forth
below, by the surrender of this Warrant (properly endorsed if required) at the
principal office of the Company, and by payment to it by cash, certified check
or bank draft of the Warrant Exercise Price for the shares to be purchased. The
shares so purchased shall be deemed to be issued as of the close of business on
the date on which this Warrant has been exercised by payment to the Company of
the Warrant Exercise Price. Certificates for the shares of stock so purchased,
bearing the restrictive legend set forth at the end of this Warrant, shall be
delivered to Holder within fifteen (15) days after the rights represented by
this Warrant shall have been so exercised, and, unless this Warrant has expired,
a new warrant representing the number of shares, if any, with respect to which
this Warrant remains exercisable shall also be delivered to Holder hereof within
such time. No fractional shares shall be issued upon any exercise of this
Warrant.
2. "Cashless" Exercise. At Holder's option, all or any portion of the
-------------------
Warrant Exercise Price may be paid by surrendering a portion of the shares
issuable upon exercise of this Warrant. The value of the shares so surrendered
shall be the closing price of the Company's common stock on the date of Holder's
notice of exercise.
-2-
3. Shares. All shares that may be issued upon the exercise of the rights
------
represented by this Warrant shall, upon issuance, be duly authorized and issued,
fully paid and nonassessable shares. During the period within which the rights
represented by this Warrant may be exercised, the Company shall at all times
have authorized and reserved for the purpose of issue or transfer upon exercise
of the subscription rights evidenced by this Warrant a sufficient number of
shares of its common stock to provide for the exercise of the rights represented
by this Warrant.
4. Adjustment. The Warrant Exercise Price shall be subject to adjustment
----------
from time to time as hereinafter provided in this Section 4:
(a) If the Company at any time divides the outstanding shares of its
common stock into a greater number of shares (whether pursuant to a stock
split, stock dividend or otherwise), and conversely, if the outstanding
shares of its common stock are combined into a smaller number of shares,
the Warrant Exercise Price in effect immediately prior to such division or
combination shall be proportionately adjusted to reflect the reduction or
increase in the value of each such common share.
(b) If any stock dividend, capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the
Company with another corporation, or the sale of all or substantially all
of its assets to another corporation shall be effected in such a way that
holders of the Company's common stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for such common stock,
then, as a condition of such stock dividend, reorganization,
reclassification, consolidation, merger or sale, Holder shall have the
right to purchase and receive upon the basis and upon the terms and
conditions specified in this Warrant and in lieu of the shares of the
common stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such shares
of stock, other securities or assets as would have been issued or delivered
to the Holder if Holder had exercised this Warrant and had received such
shares of common stock immediately prior to such stock dividend,
reorganization, reclassification, consolidation, merger or sale. The
Company shall not effect any such consolidation, merger or sale unless
prior to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and
mailed to Holder at the last address of Holder appearing on the books of
the Company the obligation to deliver to Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions,
Holder may be entitled to purchase.
(c) If and whenever the Company shall (1) issue or sell any shares of
its common stock for a per-share consideration less than the Warrant
Exercise Price in effect
-3-
immediately prior to the time of such issuance or sale, (2) issue or sell
any warrants, options or other rights to acquire shares of its common stock
at a purchase price less than the Warrant Exercise Price in effect
immediately prior to the time of such issuance or sale, or (3) issue or
sell any other securities that are convertible into shares of its common
stock for a purchase or exchange price less than the Warrant Exercise Price
in effect immediately prior to the time of such issuance or sale (except
for the issuance or sale of shares of the Company's common stock pursuant
to stock option plans, stock purchase plans or other employee stock
incentive programs adopted by the Company's Board of Directors, or pursuant
to business acquisition or lease financing transactions), then, upon such
issuance or sale, the Warrant Exercise Price shall be reduced to the price
(calculated to the nearest cent) determined by dividing (A) an amount equal
to the sum of (1) the number of shares of the Company's common stock
outstanding immediately prior to such issue or sale multiplied by the then
existing Warrant Exercise Price and (2) the consideration, if any, received
by the Company upon such issue or sale plus the consideration to be
received by the Company upon the exercise of such stock purchase rights by
(B) an amount equal to the sum of (1) the number of shares of its common
stock outstanding immediately prior to such issue or sale and (2) the
number of its shares of common stock thus issued or sold or issuable or
saleable upon the exercise of such purchase rights or the conversion of
such convertible securities; provided, however, that in the event that any
such purchase right expires or is terminated prior to the exercise of this
Warrant, the Warrant Exercise Price shall be recalculated by deleting such
purchase right and provided further that if an adjustment is made to the
Warrant Exercise Price as a result of the issuance or sale of any such
purchase rights or convertible securities, no further adjustment shall be
made to the Warrant Exercise Price at the time such purchase rights are
exercised or convertible securities are converted.
(d) Upon any adjustment of the Warrant Exercise Price, Holder shall
thereafter be entitled to purchase, at the Warrant Exercise Price resulting
from such adjustment, the number of shares obtained by multiplying the
Warrant Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price
resulting from such adjustment.
(e) Upon any adjustment of the warrant exercise price, the Company
shall give written notice thereof to Holder, stating the Warrant Exercise
Price resulting from such adjustment and the increase or decrease, if any,
in the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
-4-
5. No Rights as Shareholder. This Warrant shall not entitle Holder to any
------------------------
voting rights or other rights as a shareholder of the Company.
6. Registration Rights. Holder shall be entitled to certain demand
-------------------
registration rights and also entitled to participate in any registered offering
of shares of the Company's common stock. Holder's participation in any such
offering shall be in accordance with the procedures, and subject to the
limitations, set forth on Exhibit A to this Warrant.
7. Transfer. This Warrant and all rights hereunder are transferable, in
--------
whole or in part, at the principal office of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant properly
endorsed to any person or entity who represents in writing that such person or
entity is acquiring the Warrant for investment and without any view to the sale
or other distribution thereof. Each holder of this Warrant, by taking or
holding the same, consents and agrees that the bearer of this Warrant, when
endorsed, may be treated by the Company and all other persons dealing with this
Warrant as the absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented by this Warrant, or to the transfer hereof on
the books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered owner hereof
as the owner for all purposes.
8. Notices. All demands and notices to be given hereunder shall be
-------
delivered or sent by first class mail, postage prepaid; in the case of the
Company, addressed to its corporate headquarters, Attention: Chief Financial
Officer, 0000 Xxxxxxx Xxxxx, Xxxx Xxxxxxx, XX 00000, until a new address shall
have been substituted by like notice; and in the case of Holder, addressed to
Holder at the address written below, until a new address shall have been
substituted by like notice.
[The remainder of this page intentionally is left blank, signature page
follows]
-5-
[SIGNATURE PAGE TO WARRANT]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed and
delivered by a duly authorized officer.
Dated: February 22, 2000
FIELDWORKS, INCORPORATED
By /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------
Chief Financial Officer
Name and Address of Holder:
Industrial-Works Holding Corp.
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
-6-
RESTRICTION ON TRANSFER
The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or the securities laws of any state and
may not be sold, transferred or otherwise disposed of except pursuant to an
effective registration statement or exemption from registration under the
foregoing laws. Accordingly, the shares represented by this certificate may not
be sold, transferred or otherwise disposed of without (i) an opinion of counsel
satisfactory to FieldWorks, Incorporated that such sale, transfer or other
disposition may lawfully be made without registration under the Securities Act
of 1933 and applicable state securities laws or (ii) such registration.
WARRANT EXERCISE
(To be signed only upon exercise of this Warrant)
The undersigned, the Holder of the foregoing Warrant, hereby irrevocably
elects to exercise the purchase right represented by such warrant for, and to
purchase thereunder, _________ shares of common stock of FieldWorks,
Incorporated, to which such warrant relates and herewith makes payment of
[$________] therefor in cash, certified check or bank draft and requests that
the certificates for such shares be issued in the name of, and be delivered to
______________, whose address is set forth below the signature of the
undersigned.
Dated: __________________
____________________________
Signature
If shares are to be issued Social Security or other Tax
other than to Holder: Identification No.
_________________________ ____________________________
_________________________
_________________________
_________________________
Please print present name
and address
WARRANT ASSIGNMENT
(To be signed only upon transfer of this Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________ the right represented by the foregoing warrant to
purchase the shares of common stock of FieldWorks, Incorporated, and appoints
_____________ attorney to transfer such right on the books of FieldWorks,
Incorporated, with full power of substitution in the premises.
Dated: __________________
__________________________
Signature
________________________________ Social Security or other
________________________________ Tax Identification No.
________________________________ __________________________
Please print present name
and address
EXHIBIT A
TO
WARRANT
ISSUED BY
FIELDWORKS, INCORPORATED
Registration Rights
-------------------
1. Definitions. As used in this Exhibit A, the following terms shall have
-----------
the following respective meanings:
"Company" means FieldWorks, Incorporated, a Minnesota corporation.
"Common Stock Equivalents" shall mean, with respect to any Eligible
Holder as of any applicable date of determination, a sum equal to (i) the number
of shares of Common Stock owned by such Eligible Holder as of such date of
determination plus (ii) with respect to any shares of Series B Preferred Stock
owned by such Eligible Holder, the number of shares of Common Stock issued or
issuable upon conversion of such Series B Preferred Stock issued or issuable
upon conversion as of the date of determination, and (iii) with respect to the
Warrant owned by such Eligible Holder, the number of shares of Common Stock
issued or issuable upon exercise of such Warrant as of the date of determination
(in each case, whether or not such Series B Preferred Stock or Warrant is so
converted or exercised).
"Eligible Holders" means each of Industrial-Works Holding Corp. and
any Person to whom it transfers any Registrable Securities, or any of their
respective Permitted Transferees.
"Holder" means (i) any person owning of record Registrable Securities
that have not been sold to the public or (ii) any transferee of record of such
Registrable Securities in accordance with Section 7 of the Warrant or Section
6.10 of the Securities Purchase Agreement.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Securities" means (i) Common Stock of the Company issued
or issuable upon exercise of the Warrants or on conversion of shares of Series B
Preferred Stock, and (ii) any Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any Warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such above-described securities.
A-1
Notwithstanding the foregoing, Registrable Securities shall not include any
securities sold by a person to the public either pursuant to a registration
statement or Rule 144, or sold in a private transaction in which the
transferor's rights under this Exhibit A is are not assigned.
---------
"Registrable Securities then outstanding" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (i) are then issued and
outstanding or (ii) are issuable pursuant to then exercisable or convertible
securities.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SEC" or "Commission" means the United States Securities and Exchange
Commission.
"Securities Purchase Agreement" shall mean the Agreement dated
November 20, 1999 pursuant to which the Series B Preferred Stock was sold to
Industrial-Works Holding Corp.
"Series B Preferred Stock" shall mean the Series B Convertible
Participating Preferred Stock of the Company.
"Warrant" shall mean the Warrant to purchase common stock issued by
the Company in connection with the closing of the transactions contemplated by
the Securities Purchase Agreement.
2. Demand Registrations
--------------------
(a) Timing Of Demand Registrations; Required Threshold.
--------------------------------------------------
At any time after the first anniversary of this Agreement, any
Eligible Holder owning at least one million five hundred thousand (1,500,000)
Common Stock Equivalents (as such number may be equitably adjusted from time to
time to reflect any stock split, stock dividend, recapitalization,
reclassification, consolidation or the like) may request (such Person, the
"Initiating Holder") that the Company file a Registration Statement under the
Securities Act on an appropriate form with respect to at least fifty percent
(50%) of the Registrable Securities owned by such Initiating Holder (which form
shall be available for the sale of the Registrable Securities in accordance with
the intended method or methods of distribution thereof and shall include all
financial statements required by the SEC to be filed herewith) covering the
shares of Registrable Securities that are the subject of such request and the
Company shall file such a Registration Statement.
A-2
(b) Number of Demand Registrations.
------------------------------
The Company shall be obligated to prepare, file and cause to become
effective pursuant to this Section 2 no more than two (2) Registration
Statements in the aggregate pursuant to Section 2(a) above for the Eligible
Holders; provided, however, that a Registration Statement shall not be counted
as one of the two (2) Demand Registrations hereunder unless it becomes effective
and is maintained effective in accordance with the requirements specified in
Section 6(a); provided, further, that if there is an underwriter's cutback
pursuant to Section 2(e) with respect to the second request for registration
initiated by an Eligible Holder, such requested registration shall not be deemed
to be a requested registration for purposes of the limitation to two (2) Demand
Registrations pursuant to this Section 2(b).
(c) Deferral by Company.
-------------------
Notwithstanding anything in this Section 2 to the contrary, the
Company shall not be obligated to prepare, file and cause to become effective
pursuant to this Section 2 a Registration Statement if within five (5) days of
receipt of a request for a Demand Registration the Company furnishes to the
Initiating Holder a certificate signed by the Chief Executive Officer of the
Company that, in the good faith judgment of the Board of Directors, it would be
detrimental in any material respect to the Company and its shareholders for the
Company to comply with the Demand Registration, and it is therefore essential to
defer the filing of the Registration Statement relating thereto. Any such
deferral shall be for a period of not more than six (6) months after the
Company's receipt of the Initiating Holder's written request for registration
pursuant to this Section 2; provided, however, that the Company may not exercise
this right more than once with respect to a Demand Registration and that any
requested registration deferred, and not ultimately effected, by the Company
pursuant to the provisions of this Section 2(c) shall thereafter not be deemed
to be a requested registration for purposes of the limitation to two (2) Demand
Registrations pursuant to Section 2(a) above.
(d) Participation.
-------------
The Company shall promptly give written notice to all other Eligible
Holders upon receipt of a request for a Demand Registration pursuant to Section
2(a) above. Such other Eligible Holders may, by written notice to the Company
and the Initiating Holder, within thirty (30) business days of the Company's
notice, elect to join in a request for a Demand Registration pursuant to Section
2(a) above, with respect to any number of shares of Registrable Securities owned
by such Eligible Holder. The Registrable Securities of the other Eligible
Holders being offered in such Demand Registration shall be treated pari passu
with the Registrable Securities being offered by the Initiating Holder for all
purposes including "underwriter's cutbacks" under subsection (e) of this Section
and any such request by an Eligible Holder shall not be treated as either a
request by such Eligible Holder for a Piggyback Registration under Section 3 or
as a request by such Eligible
A-3
Holder for a Demand Registration under this Section 2. The Company shall
include in such Demand Registration such shares of Registrable Securities for
which it has received written requests to register such shares within thirty
(30) days after such written notice has been given, provided that all the
Registrable Securities for which the Initiating Holder and the other Eligible
Holders have requested registration shall be covered by such registration
statement before any other securities are included.
In addition, the Company shall promptly give written notice to all
eligible Holders upon receipt of a request for a demand registration by any
Person (such Person, the "Initiating Person") pursuant to any other registration
rights agreement with the Company (whether such other registration rights
agreement is entered into before or after the date hereof). Each Eligible
Holder may, by written notice to the Company, within thirty (30) business days
of the Company's notice, elect to request a Demand Registration pursuant to
Section 2(a) above, with respect to any shares of Registrable Securities owned
by such Eligible Holder. The Registrable Securities of the Eligible Holders
being offered in such Demand Registration shall be treated pari passu with the
registrable securities being offered by the Initiating Person for all purposes
including "underwriter's cutbacks" and any such request by an Eligible Holder
shall not be treated as either a request by such Eligible Holder for a Piggyback
Registration under Section 3 or as a request by such Eligible Holder for a
Demand Registration under this Section 2. Further, the selection of the
managing underwriter and the underwriters for the demand registration requested
by the Initiating Person shall be subject to the approval of a majority in
interest of the Eligible Holders participating in any underwritten offering.
The Company shall include in such demand registration such shares of Registrable
Securities for which it has received written requests to register such shares
within thirty (30) days after such written notice has been given, provided that
all the Registrable Securities for which the Initiating Person and the Eligible
Holders have requested registration shall be covered by such registration
statement before any other securities are included.
(e) Underwriter's Cutback.
---------------------
If the public offering of Registrable Securities is to be underwritten
and, in the good faith judgment of the managing underwriter, the inclusion of
all the Registrable Securities requested to be registered hereunder would
interfere with the successful marketing of such shares of Registrable
Securities, the number of shares of Registrable Securities to be included shall
be reduced and the number of shares to be included in the underwriting or
registration shall be allocated first among the Eligible Holders pro rata upon
the basis of the number of shares of Registrable Securities sought to be offered
by the Eligible Holders pursuant to such Demand Registration and any remainder
shall be allocated among the Company and the other persons entitled to
incidental registrations pro rata upon the basis of the number of shares of
Registrable Securities sought to be registered thereby. If a person who has
requested inclusion in such Demand Registration does not agree to the terms of
any such underwriting, such person shall be excluded therefrom by written notice
from the Company, the underwriter or the Initiating Holder,
A-4
and the securities owned by such person(s) shall be withdrawn from registration
(the "Withdrawn Securities").
If there are any Withdrawn Securities as a result of an Underwriter's
Cutback, then the Company shall offer to those persons who have retained rights
to include securities in the Demand Registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
Withdrawn Securities that would have been included in the Demand Registration
after giving effect to the Underwriter's Cutback had such securities not been
withdrawn, with such shares to be allocated among such persons in accordance
with the allocation of rights set forth in this paragraph (e).
(f) Managing Underwriter.
--------------------
The managing underwriter or underwriters of any Underwritten Offering
covered by a Demand Registration shall be selected by a majority in interest of
the Eligible Holders participating in such Underwritten Offering and shall be
reasonably acceptable to the Company. The right of any other Holders joining in
a request for registration as provided in Section 2(d) above to registration
pursuant to this Section 2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting on the same terms as those of the Initiating Holder (unless
otherwise mutually agreed by a majority in interest of the Eligible Holders
participating in such registration and such Holder with respect to such
participation and inclusion).
3. Piggyback Registrations
-----------------------
(a) Participation.
-------------
Each time the Company decides to file a Registration Statement under
the Securities Act (other than registrations on Forms S-4 or S-8 or any
successor form thereto, and other than a Demand Registration or a demand
registration by an Initiating Person) covering the offer and sale by it or any
of its security holders of any of its securities for money, the Company shall
give written notice thereof to all Eligible Holders. The Company shall include
in such Registration Statement such shares of Registrable Securities for which
it has received a written request from any Eligible Holder to register such
shares within twenty (20) days after such written notice has been given. If the
Registration Statement is to cover an Underwritten Offering, such Registrable
Securities shall be included in the underwriting on the same terms and
conditions as the securities otherwise being sold through the underwriters.
A-5
(b) Underwriter's Cutback.
---------------------
Subject to the requirements of Section 12 hereof, if in the good faith
judgment of the managing underwriter of such offering the inclusion of all of
the shares of Registrable Securities and any other Common Stock requested to be
registered would interfere with the successful marketing of such shares, then
the number of shares of Registrable Securities and other Common Stock to be
included in the offering shall be reduced, with the participation in such
offering to be in the following order of priority: (1) first, the shares of
Common Stock which the Company proposes to sell for its own account, (2) second,
the shares of Registrable Securities of all Eligible Holders requested to be
included, and (3) third, any other shares of Common Stock requested to be
included. Any necessary allocation among the Holders of shares within each of
the foregoing groups shall be pro rata among such Holders requesting such
registration based upon the number of shares of Common Stock and Registrable
Securities owned by such Holders.
(c) Company Control.
---------------
The Company may decline to file a Registration Statement after giving
notice to Eligible Holders pursuant to Section 3(a) above, or withdraw a
Registration Statement after filing and after such notice, but prior to the
effectiveness thereof; provided that the Company shall promptly notify each
Eligible Holder in writing of any such action and provided further that the
Company shall bear all expenses incurred by each Eligible Holder or otherwise in
connection with such withdrawn Registration Statement.
4. Registration on Form S-3
------------------------
(a) Right to Request Registrations on Form S-3.
------------------------------------------
After the Company has qualified for the use of Form S-3, in addition
to the rights contained in the foregoing provisions of this Agreement, the
Eligible Holders shall have the right to request registrations on Form S-3 or
any comparable or successor form. Each such request shall be in writing and
shall state the anticipated number of shares of Registrable Securities to be
disposed of and the anticipated gross proceeds of such shares, and the intended
methods of disposition of such shares by such Eligible Holder or Eligible
Holders, including whether such resales are to be made on a delayed or
continuous basis pursuant to Rule 415. The Company shall not be obligated to
effect any registration pursuant to this Section 4 if (i) the Eligible Holders
propose to sell Registrable Securities representing less than fifteen percent
(15% ) of the shares of the Registrable Securities then held by all Eligible
Holders or (ii) the circumstances described in Section 2(c) shall apply (but
subject to the limitations set forth therein).
(b) Application of Certain Provisions.
---------------------------------
A-6
If the registration is for an Underwritten Offering, the provisions of
Sections 2(d) and 2(f) hereof shall also apply to such registration, except the
Company may not include any shares for its own account.
5. Hold-back Agreements
--------------------
(a) By Holders of Registrable Securities.
------------------------------------
Upon the written request of the managing underwriter of any
Underwritten Offering of the Company's securities, a Holder of Registrable
Securities shall not sell or otherwise dispose of any Registrable Securities
(other than those included in such registration) without the prior written
consent of such managing underwriter for a period (not to exceed thirty (30)
days before the effective date and one hundred twenty (120) days thereafter)
that such managing underwriter reasonably determines is necessary in order to
effect the Underwritten Offering; provided that each of the officers and
directors of the Company, and each Holder of more than one percent (1%) of the
Common Stock of the Company, shall have entered into substantially similar
holdback agreements with such managing underwriter covering at least the same
period.
(b) By the Company and Others.
-------------------------
The Company agrees:
(1) not to effect any public or private sale or distribution of
any of its equity securities during the 30-day period prior to, and
during the 120-day period after, the effective date of each
Underwritten Offering made pursuant to a Demand Registration or a
Piggyback Registration, if so requested in writing by the managing
underwriter (except as part of such Underwritten Offering, pursuant to
registrations on Forms S-4 or S-8 or any successor forms thereto), and
(2) not to issue any Equity Securities other than for sale in a
registered public offering unless each of the Persons to which such
securities are issued has entered a written agreement binding on its
transferees not to effect any public sale or distribution of such
securities during such 130-day period, including without limitation a
sale pursuant to Rule 144 under the Securities Act (except as part of
such Underwritten Registration, if and to the extent permitted
hereunder).
6. Registration Procedures
-----------------------
If and whenever the Company is required to register Registrable
Securities pursuant to this Agreement, the Company will use all commercially
reasonable efforts to effect such
A-7
registration to permit the sale of such Registrable Securities in accordance
with the intended plan of distribution thereof and will as expeditiously as
practicable:
(a) prepare and file with the SEC as soon as practicable a
Registration Statement with respect to such Registrable Securities and use all
commercially reasonable efforts to cause such Registration Statement to become
effective and remain continuously effective until the date that is the earlier
to occur of (i) the date six months from the date such Registration Statement
was declared effective, and (ii) the date the last of the Registrable Securities
covered by such Registration Statement have been sold, provided that before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall furnish to Holders of Registrable Securities covered
by such Registration Statement and the underwriters, if any, draft copies of all
such documents proposed to be filed, which documents will be subject to the
review of each Eligible Holder and such underwriters, and the Company shall not
file any Registration Statement or amendment thereto or any Prospectus or any
supplement thereto to which the Eligible Holders or the underwriters, if any,
shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be requested by any underwriter of Registrable Securities or
as may be required by the rules, regulations or instructions applicable to the
registration form used by the Company or by the Securities Act or rules and
regulations thereunder to keep the Registration Statement effective until all
Registrable Securities covered by such Registration Statement are sold in
accordance with the intended plan of distribution set forth in such Registration
Statement or supplement to the Prospectus;
(c) promptly notify the selling Holders of Registrable Securities and
the managing underwriter, if any, and (if requested by any such Person) confirm
such advice in writing,
(1) when the Prospectus or any supplement or post-effective
amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has become
effective,
(2) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information,
(3) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose,
A-8
(4) if at any time the representations and warranties of the
Company contemplated by clause (1) of paragraph (o) below cease to be
accurate in all material respects,
(5) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and
(6) of the existence of any fact which results in the
Registration Statement, the Prospectus or any document incorporated
therein by reference containing a misstatement;
(d) make all commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of the Registration Statement at the
earliest practicable time;
(e) unless the Company objects in writing on reasonable grounds, if
requested by the managing underwriter or any Eligible Holder holding more than
twenty-five percent (25%) of the Registrable Securities then outstanding, as
promptly as practicable incorporate in a supplement or post-effective amendment
such information as the managing underwriter and such Eligible Holder agree
should be included therein relating to the sale of the Registrable Securities,
including, without limitation, information with respect to the number of shares
of Registrable Securities being sold to underwriters, the purchase price being
paid therefor by such underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such offering;
and make all required filings of such supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such supplement or post-
effective amendment;
(f) only with respect to Demand Registrations, promptly prior to the
filing of any document which is to be incorporated by reference into the
Registration Statement or the Prospectus (after initial filing of the
Registration Statement) provide copies of such document to counsel to each of
the Eligible Holders and to the managing underwriter, if any, and make the
Company's representatives available for discussion of such document and make
such changes in such document prior to the filing thereof as counsel for each
Eligible Holder or underwriters may reasonably request;
(g) furnish to each selling Holder of Registrable Securities and the
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
A-9
(h) deliver to each Eligible Holder and the underwriters, if any,
without charge, as many copies of each Prospectus (and each preliminary
prospectus) as such Persons may reasonably request (the Company hereby
consenting to the use of each such Prospectus (or preliminary prospectus) by
each of the selling Holders of Registrable Securities and the underwriters, if
any, in connection with the offering and sale of the Registrable Securities
covered by such Prospectus (or preliminary prospectus));
(i) prior to any public offering of Registrable Securities, use all
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders of Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as such underwriters may designate in writing and do
anything else necessary or advisable to enable from a legal perspective the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statement; 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 in any such jurisdiction where it is not then so subject;
(j) cooperate with the selling Holders of Registrable Securities and
the managing underwriter, if any, to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends representing the
Registrable Securities to be sold and cause such Registrable Securities to be in
such denominations and registered in such names as the managing underwriter may
request at least three business days prior to any sale of Registrable Securities
to the underwriters;
(k) use all commercially reasonable efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Registrable Securities;
(l) if the Registration Statement or the Prospectus contains a
misstatement, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus will
not contain a misstatement;
(m) use all commercially reasonable efforts to cause all Registrable
Securities covered by the Registration Statement to be listed on any national
securities exchange on which the Company's securities are listed or authorized
for quotation on Nasdaq, if requested by any Eligible Holder or the managing
underwriter, if any; provided, however, that the payment of any
A-10
required listing or other fee shall always be deemed to be "commercially
reasonable" for purposes of this Section 6(m);
(n) provide a CUSIP number for all Registrable Securities not later
than the effective date of the Registration Statement;
(o) enter into such agreements (including an underwriting agreement)
and do anything else reasonably necessary or advisable in order to expedite or
facilitate the disposition of such Registrable Securities, and in such
connection, whether or not the registration is an Underwritten Registration:
(1) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to holders and
underwriters, respectively, in similar Underwritten Offerings;
(2) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriter, if any,
and each Eligible Holder) addressed to each selling Holder and the
underwriter, if any, covering the matters customarily covered in
opinions delivered to holders and underwriters, respectively, in
similar Underwritten Offerings and such other matters as may be
reasonably requested by any Eligible Holder or such underwriters;
(3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
selling Holders of Registrable Securities and the underwriters, if
any, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters to holders and
underwriters, respectively, in connection with similar Underwritten
Offerings;
(4) if an underwriting agreement is entered into, cause the same
to include customary indemnification and contribution provisions and
procedures with respect to such underwriters; and
(5) deliver such documents and certificates as may be reasonably
requested by any Eligible Holder and the managing underwriter, if any,
to evidence compliance with clause (1) above and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company.
A-11
The above shall be done at each closing under such underwriting or similar
agreement or as and to the extent otherwise reasonably requested by any Eligible
Holder;
(p) make available for inspection by representatives of any Eligible
Holder, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by the sellers
or any such underwriter, all financial and other records and pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller or underwriter in connection with the Registration; provided that
any records, information or documents that are designated by the Company in
writing as confidential shall be kept confidential by such Persons unless
disclosure of such records, information or documents is required by court or
administrative order; and
(q) otherwise use all commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC relating to such Registration,
and make generally available to its security holders earnings statements
satisfying the provisions of Section 12(a) of the Securities Act, no later than
forty-five (45) days after the end of any 12-month period (or ninety (90) days,
if such period is a fiscal year) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in an Underwritten
Offering, or, if not sold to underwriters in such an offering, beginning with
the first month of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement, which statements shall cover said
12-month period.
7. Registration Expenses
---------------------
(a) Demand Registrations and S-3 Registrations.
------------------------------------------
The Company shall bear all Expenses incurred in connection with any
Demand Registrations, S-3 Registrations or any Registrations which do not become
or are not maintained effective in accordance with the requirements specified in
Section 6(a), including expenses and fees of one counsel for all Holders.
Notwithstanding the foregoing, the Underwriters' Commissions related or
attributable to Registrable Securities sold or incurred in connection with a
Demand Registration or S-3 Registration that becomes effective shall be shared
by the Holders of the Registrable Securities whose Registrable Securities are
included in such Registration, pro rata, in accordance with the aggregate amount
of Registrable Securities sold by such Holders.
(b) Piggyback Registrations.
-----------------------
The Company shall bear all Registration Expenses incurred in
connection with any Piggyback Registrations, including expenses and fees of one
counsel for all Holders, except that each Holder of the Registrable Securities
whose Registrable Securities are included in such
A-12
Registration shall pay its pro rata share of the Underwriters' Commissions
related or attributable to Registrable Securities sold or incurred in such
Registration, in accordance with the amount of Registrable Securities sold by
all such Holders.
(c) Company Expenses.
----------------
The Company also will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with any listing of the
securities to be registered on a securities exchange, and the fees and expenses
of any Person, including special experts, retained by the Company.
8. Termination of Registration Rights. A Holder's registration rights
----------------------------------
under this Exhibit A shall terminate and be of no further force and effect if
all the Registrable Securities held by and issuable to such Holder may be sold
under Rule 144 during any ninety (90) day period.
A-13
