XXXXXXX.XXX, INC.
AND
XXXXX & COMPANY, INC.
AND
XXXXX SECURITIES CORPORATION
REPRESENTATIVES'
WARRANT AGREEMENT
DATED AS OF __________, 2000
REPRESENTATIVES' WARRANT AGREEMENT dated as of ___________, 2000 between
XXXXXXX.XXX, INC., a Delaware corporation (the "Company"), and XXXXX & COMPANY,
INC. and XXXXX SECURITIES CORPORATION (collectively, hereinafter referred to
variously as the "Holder" or "Holders" or the "Representatives").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representatives warrants
("Warrants") to purchase up to an aggregate 400,000 shares of common stock,
$0.001 par value ("Common Stock"), of the Company and/or 400,000 non-redeemable
Common Stock purchase warrants of the Company ("Underlying Warrants"), each
Underlying Warrant to purchase one additional share of Common Stock; and
WHEREAS, the Representatives have agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof between
the Company and the several Underwriters listed therein to act as the
Representatives in connection with the Company's proposed public offering of up
to 4,000,000 units ("Units"), consisting of an aggregate 4,000,000 shares of
Common Stock and 4,000,000 redeemable Common Stock purchase Warrants (the
"Public Warrants") at a public offering price of $___ per unit (the "Public
Offering"); 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 Representatives in consideration for, and as
part of the Representatives' compensation in connection with, the
Representatives acting as the Representatives pursuant to the Underwriting
Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representatives to the Company of an aggregate forty dollars ($40.00), the
agreements herein set
forth and other good and valuable consideration, hereby acknowledged, the
parties hereto agree as follows:
1. Grant.
The Representatives (or their designees) are hereby granted the right to
purchase, at any time from ___________, 2001 [twelve months after the date of
this Agreement], until 5:30 P.M., New York time, on ___________, 2005 [five
years after the date of this Agreement], up to an aggregate of 400,000 shares
of Common Stock and/or 400,000 Underlying Warrants at an initial exercise price
(subject to adjustment as provided in Section 8 hereof) of $____ per share of
Common Stock [120% of the public offering price per share of Common Stock], and
$___ per Underlying Warrant [120% of the public offering price per Underlying
Warrant], subject to the terms and conditions of this Agreement. One Underlying
Warrant is exercisable to purchase one additional share of Common Stock at an
initial exercise price of $___ [150% of the public offering price] from
________, 2001, until 5:30 p.m. New York time on _________, 2005, at which time
the Underlying Warrants shall expire. Except as set forth herein, the shares of
Common Stock and the Underlying Warrants issuable upon exercise of the Warrants
are in all respects identical to the shares of Common Stock and the Public
Warrants being purchased by the Underwriters for resale to the public pursuant
to the terms and provisions of the Underwriting Agreement, and particularly
except that the Underlying Warrants are non-redeemable, and the Public Warrants
are redeemable. The shares of Common Stock and the Underlying Warrants issuable
upon exercise of the Warrants are sometimes hereinafter referred to
collectively as the "Securities."
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificates") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth in Exhibit
A, attached hereto and made
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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 aggregate initial exercise
price (subject to adjustment as provided in Section 8 hereof) per share of
Common Stock and per Underlying Warrant set forth in Section 6 hereof payable
by certified or official bank check in New York Clearing House funds, subject
to adjustment as provided in Section 8 hereof. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
shares of Common Stock and/or the Underlying Warrants purchased at the
Company's principal executive offices in New York (presently located at 00
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 10004-2307) the registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to receive a certificate
or certificates for the shares of Common Stock so purchased and a certificate
or certificates for the Underlying Warrants 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 the
Common Stock and Underlying Warrants underlying the Warrants). In the event the
Company redeems all of the Public Warrants (other than the Underlying Warrants
underlying the Warrants, which are not redeemable), then the Warrants may only
be exercised if such exercise is accompanied by the simultaneous exercise of
the Underlying Warrant(s) underlying the Warrants being so exercised. Warrants
may be exercised to purchase all or part of the shares of Common Stock together
with an equal or unequal number of the Underlying Warrants represented thereby.
In the case of the purchase of less than all the shares of Common Stock and/or
the Underlying Warrants purchasable under any Warrant
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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 shares of Common Stock and Underlying
Warrants purchasable thereunder.
3.2 Exercise by Surrender of Warrant.
In addition to the method of payment set forth in Section 3.1 and in lieu
of any cash payment required thereunder, the Holder(s) of the Warrants shall
have the right at any time and from time to time to exercise the Warrants in
full or in part by surrendering the Warrant Certificate in the manner specified
in Section 3.1 hereof. The number of shares of Common Stock to be issued
pursuant to this Section 3.2 shall be equal to the difference between (a) the
number of shares of Common Stock in respect of which the Warrants are exercised
and (b) a fraction, the numerator of which shall be the number of shares of
Common Stock in respect of which the Warrants are exercised multiplied by the
Exercise Price and the denominator of which shall be the Market Price (as
defined in Section 3.3 hereof) of the shares of Common Stock. The number of
Underlying Warrants to be issued pursuant to this Section 3.2 shall be equal to
the difference between (a) the number of Underlying Warrants in respect of
which the Warrants are exercised and (b) a fraction, the numerator of which
shall be the number of Underlying Warrants in respect of which the Warrants are
exercised multiplied by the Exercise Price and the denominator of which shall
be the Market Price (as defined in Section 3.3 hereof) of the Underlying
Warrants. Solely for the purposes of this paragraph, Market Price shall be
calculated either (i) on the date on which the form of election attached hereto
is deemed to have been sent to the Company pursuant to Section 14 hereof
("Notice Date") or (ii) as the average of the Market Prices for each of the
five trading days preceding the Notice Date, whichever of (i) or (ii) is
greater.
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3.3 Definition of Market Price.
As used herein, the phrase "Market Price" at any date shall be deemed to
be (i) when referring to the Common Stock, the last reported sale price, or, in
case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or by the Nasdaq SmallCap Market
("Nasdaq SmallCap") or by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq"), or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted by Nasdaq,
the average closing bid price as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through Nasdaq or similar organization if
Nasdaq is no longer reporting such information, or if the Common Stock is not
quoted on Nasdaq, as determined in good faith (using customary valuation
methods) by resolution of the members of the Board of Directors of the Company,
based on the best information available to it or (ii) when referring to a
Underlying Warrant, the last reported sales price, or, in the case no such
reported sale takes place on such day, the average of the last reported sale
prices for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Underlying Warrants
are listed or admitted to trading or by Nasdaq, or, if the Underlying Warrants
are not listed or admitted to trading on any national securities exchange or
quoted by Nasdaq, the average closing bid price as furnished by the NASD
through Nasdaq or similar organization if Nasdaq is no longer reporting such
information, or if the Underlying Warrants are not quoted on Nasdaq or are no
longer outstanding, the Market Price of a Underlying Warrant shall equal the
difference between the Market Price of the Common Stock and the Exercise Price
of the Underlying Warrant.
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4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for shares of
Common Stock and Underlying Warrants and/or other securities, properties or
rights underlying such Warrants and, upon the exercise of the Underlying
Warrants, the issuance of certificates for shares of Common Stock and/or other
securities, properties or rights underlying such Underlying Warrants shall be
made forthwith (and in any event within five (5) business days thereafter)
without charge to the Holder thereof including, without limitation, any 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 and the certificates representing the shares of
Common Stock and the Underlying Warrants underlying the Warrants and the shares
of Common Stock underlying the Underlying Warrants (and/or other securities,
property or rights issuable upon the exercise of the Warrants or the Underlying
Warrants) shall be executed on behalf of the Company by the manual or facsimile
signature of the then Chairman or Vice Chairman of the Board of Directors or
President or Vice President 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 shares of Common Stock
and Underlying Warrants, and the shares of Common Stock underlying each
Underlying Warrant (and/or other securities, property or rights
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issuable upon exercise of the Warrants) shall be dated as of the Notice Date
(regardless of when executed or delivered) and dividend bearing securities so
issued shall accrue dividends from the Notice Date.
5. Restriction On Transfer of Warrants.
The Holder of a Warrant Certificate, by its acceptance thereof, covenants
and agrees that the Warrants are being acquired as an investment and not with a
view to the distribution thereof; that the Warrants may not be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole or in
part, for a period of one (1) year from the date hereof, except to officers of
the Representatives.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price.
Except as otherwise provided in Section 8 hereof, the initial exercise
price of each Warrant shall be $____ per share of Common Stock and $___ per
Underlying Warrant. The adjusted exercise price shall be the price which shall
result from time to time from any and all adjustments of the initial exercise
price in accordance with the provisions of Section 8 hereof. Any transfer of a
Warrant shall constitute an automatic transfer and assignment of the
registration rights set forth in Section 7 hereof with
respect to the Securities or other securities, properties or rights underlying
the Warrants.
6.2 Exercise Price.
The term "Exercise Price" herein shall mean the initial exercise price or
the adjusted exercise price, depending upon the context or unless otherwise
specified.
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7. Registration Rights.
7.1 Registration Under the Securities Act of 1933.
The Warrants, the shares of Common Stock and Underlying Warrants, or other
securities issuable upon exercise of the Warrants, or other securities issuable
upon exercise of the Underlying Warrants (collectively, the "Warrant
Securities") have been registered under the Securities Act of 1933, as amended
(the "Act") pursuant to the Company's Registration Statement on Form S-1
(Registration No. 333-88065) (the "Registration Statement"). All of the
representations and warranties of the Company contained in the Underwriting
Agreement relating to the Registration Statement, the Preliminary Prospectus
and Prospectus (as such terms are defined in the Underwriting Agreement) and
made as of the dates provided therein, are incorporated by reference herein.
The Company agrees and covenants promptly to file post-effective amendments to
such Registration Statement as may be necessary in order to maintain its
effectiveness and otherwise to take such action as may be necessary to maintain
the effectiveness of the Registration Statement as long as any Warrants are
outstanding. In the event that, for any reason, whatsoever, the Company shall
fail to maintain the effectiveness of the Registration Statement, the
certificates representing the Warrant Securities shall bear the following
legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration statement
under the Act, (ii) to the extent applicable, Rule 144 under the Act (or
any similar rule under such Act relating to the disposition of
securities), or (iii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to counsel to the issuer, that an exemption from
registration under such Act is available.
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7.2 Piggyback Registration.
If, at any time commencing after the date hereof and expiring seven (7)
years thereafter, the Company proposes to register any of its securities under
the Act (other than pursuant to Form X-0, Xxxx X-0 or a comparable registration
statement) it will give written notice by registered mail, at least thirty (30)
days prior to the filing of each such registration statement, to the
Representatives and to all other Holders of the Warrants and/or the Warrant
Securities of its intention to do so. If the Representatives or other Holders
of the Warrants and/or Warrant Securities notify the Company within twenty (20)
business days after receipt of any such notice of its or their desire to
include any such securities in such proposed registration statement, the
Company shall afford the Representatives and such Holders of the Warrants
and/or Warrant Securities the opportunity to have any such Warrant Securities
registered under such registration statement.
Notwithstanding the provisions of this Section 7.2, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 7.2 (irrespective of whether a written request for inclusion of any
such 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.
7.3 Demand Registration.
(a) At any time commencing after the date hereof and expiring five (5)
years thereafter, the Holders of the Warrants and/or Warrant Securities
representing a "Majority" (as hereinafter defined) of such securities (assuming
the exercise of all of the Warrants) shall have the right (which right is in
addition to the registration rights under Section 7.2 hereof), exercisable by
written notice to the Company, to have the Company prepare and file with the
9
Securities and Exchange Commission (the "Commission"), on one occasion, 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
Representatives and Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Warrant
Securities for nine (9) consecutive months by such Holders and any other
Holders of the Warrants and/or Warrant Securities who notify the Company within
ten (10) days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by any Holder or Holders to all
other registered Holders of the Warrants and the Warrant Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Warrant
Securities within the time period specified in Section 7.4(a) hereof pursuant
to the written notice specified in Section 7.3(a) of a Majority of the Holders
of the Warrants and/or Warrant Securities, the Company may, at its option, upon
the written notice of election of a Majority of the Holders of the Warrants
and/or Warrant Securities requesting such registration, repurchase (i) any and
all Warrant Securities of such Holders at the higher of the Market Price per
share of Common Stock and per Underlying Warrant, determined as of (x) the date
of the notice sent pursuant to Section 7.3(a) or (y) the expiration of the
period specified in Section 7.4(a) and (ii) any and all Warrants of such
Holders at such Market Price less the Exercise Price of such Warrant. Such
repurchase shall be in immediately available funds and shall close within two
(2) days after the later of (i) the expiration of the period specified in
Section 7.4(a) or (ii) the delivery of the written notice of election specified
in this Section 7.3(c).
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7.4 Covenants of the Company With Respect to Registration.
In connection with any registration under Section 7.2 or 7.3 hereof, the
Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within thirty (30) days of receipt of any demand therefor, shall use
its best efforts to have any registration statements 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.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses.
(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 Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant Securities to
be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any
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claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which
the Company has agreed to indemnify each of the Underwriters contained in
Section 8 of the Underwriting Agreement.
(e) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 8 of the Underwriting
Agreement pursuant to which the Underwriters have agreed to indemnify the
Company.
(f) Nothing contained in this Agreement shall be construed as requiring
the Holder(s) to exercise their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities other
than the Warrant Securities to be included in any registration statement filed
pursuant to Section 7.3 hereof, or permit any other registration statement to
be or remain effective during the effectiveness of a registration statement
filed pursuant to Section 7.3 hereof (other than (i) shelf registrations
effective prior thereto and (ii) registrations on Form S-4 or S-8), without the
prior
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written consent of the Holders of the Warrants and Warrant Securities
representing a Majority of such securities.
(h) 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) relating to the due incorporation of
the Company, the validity of the shares being issued, the due execution and
delivery of the underwriting agreement and Rule 10b-5, and (ii) if such
registration includes an underwritten public offering, a "cold comfort" letter
dated the effective date of such registration statement and 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, covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to underwriters in underwritten public offerings of securities.
(i) 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 Act) an earnings statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least 12 consecutive
months beginning after the effective date of the registration statement.
(j) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence and memoranda described below and to the
managing underwriters, copies of all correspondence between the Commission and
the Company, its
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counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the registration statement and
permit each Holder and underwriter 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 such
Holder or underwriter shall reasonably request.
(k) 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 pursuant to Section 7.3(a) to be
included in such underwriting, which may be the Representatives. Such agreement
shall be reasonably satisfactory in form and substance to the Company, each
Holder and such managing underwriter(s), 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(s). The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Warrant Securities whether pursuant
to Section 7.2 or Section 7.3(a) and may, at their option, require that any or
all of the representations, warranties and covenants of the Company to or for
the benefit of such underwriter(s) 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 or the underwriter(s) except as
they may relate to such Holders and their intended methods of distribution.
(l) For purposes of this Agreement, the term "Majority" in reference to
the Holders of Warrants or Warrant Securities, shall mean in excess of fifty
percent (50%) of the
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then outstanding Warrants or Warrant Securities that (i) are not held by the
Company, an affiliate, officer, creditor, employee or agent thereof or any of
their respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith and (ii) have not been resold to the
public pursuant to a registration statement filed with the Commission under the
Act.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Subdivision and Combination.
In case the Company shall at any time subdivide or combine the outstanding
shares of Common Stock, the Exercise Price shall forthwith be proportionately
decreased in the case of subdivision or increased in the case of combination.
8.2 Stock Dividends and Distributions.
In case the Company shall pay a dividend in, or make a distribution of,
shares of Common Stock or of the Company's capital stock convertible into
Common Stock, the Exercise Price shall forthwith be proportionately decreased.
An adjustment made pursuant to this Section 8.2 shall be made as of the record
date for the subject stock dividend or distribution.
8.3 Adjustment in Number of Securities.
Upon each adjustment of the Exercise Price pursuant to the provisions of
this Section 8, the number of Warrant Securities issuable upon the 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 Warrant Securities
issuable upon exercise of the Warrants immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
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8.4 Definition of Common Stock.
For the purpose of this Agreement, the term "Common Stock" shall mean (i)
the class of stock designated as Common Stock in the Certificate of
Incorporation of the Company as may be amended as of the date hereof, or (ii)
any other class of stock resulting from successive changes or reclassifications
of such Common Stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value.
8.5 Merger or Consolidation.
In case of any consolidation of the Company with, or merger of the Company
with, or merger of the Company into, another corporation (other than a
consolidation or merger which does not result in any reclassification or change
of the outstanding Common Stock), the corporation formed by such consolidation
or merger shall execute and deliver to the 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 exercise of such Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of securities of the Company
for which such Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental warrant agreement
shall provide for adjustments which shall be identical to the adjustments
provided in Section 8. The above provision of this subsection shall similarly
apply to successive consolidations or mergers.
8.6 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 (2) cents 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,
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together with any adjustment so carried forward, shall amount to at least two
(2) cents per Warrant Security.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered 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 security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, 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 or Underlying Warrants upon the exercise of
the Warrants, 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 Underlying Warrants 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 shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants and the
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Underlying Warrants, such number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the 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, Underlying Warrants
and other securities issuable upon such exercise shall be duly and validly
issued, fully paid, non-assessable and not subject to the preemptive rights of
any stockholder. The Company further covenants and agrees that upon exercise of
the Underlying Warrants underlying the Warrants and payment of the respective
Underlying Warrant exercise price therefor, all shares of Common Stock and
other securities issuable upon such exercises shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
stockholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts to cause all shares of Common Stock issuable upon the
exercise of the Warrants and Underlying Warrants and all Underlying Warrants
underlying the Warrants to be listed (subject to official notice of issuance)
on all securities exchanges on which the Common Stock or the Public Warrants
issued to the public in connection herewith may then be listed and/or quoted on
Nasdaq SmallCap or Nasdaq.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring upon
the Holders the right 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 take a record of the holders of its shares of Common
Stock 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
18
earnings or capital surplus (in accordance with applicable law), 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 its 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 at least fifteen (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, convertible or
exchangeable securities or subscription rights, 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 the declaration or payment of
any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
13. Underlying Warrants.
The form of the certificate representing Underlying Warrants (and the form
of election to purchase shares of Common Stock upon the exercise of Underlying
Warrants and the form of assignment printed on the reverse thereof) shall be
substantially as set forth in Exhibit "A" to the Warrant Agreement dated as of
the date hereof by and between the Company and Atlas Stock Transfer Corporation
(the "Underlying Warrant Agreement"). Each Underlying
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Warrant issuable upon exercise of the Warrants shall evidence the right to
initially purchase a fully paid and non-assessable share of Common Stock at an
initial purchase price of $__ per share [150% of the public offering price per
share of Common Stock] from ____, 2001 [one year after the effective date of
the offering] until 5:30 p.m. New York time on ________, 2005 [five years after
the effective date of the offering] at which time the Underlying Warrants,
unless the exercise period has been extended, shall expire. The exercise price
of the Underlying Warrants and the number of shares of Common Stock issuable
upon the exercise of the Underlying Warrants are subject to adjustment, whether
or not the Warrants have been exercised and the Underlying Warrants have been
issued, in the manner and upon the occurrence of the events set forth in
Section 8 of the Underlying Warrant Agreement, which is hereby incorporated
herein by reference and made a part hereof as if set forth in its entirety
herein. Subject to the provisions of this Agreement and upon issuance of the
Underlying Warrants underlying the Warrants, each registered holder of such
Underlying Warrant shall have the right to purchase from the Company (and the
Company shall issue to such registered holders) up to the number of fully paid
and non-assessable shares of Common Stock (subject to adjustment as provided
herein and in the Underlying Warrant Agreement), free and clear of all
preemptive rights of stockholders, provided that such registered holder
complies with the terms governing exercise of the Underlying Warrants set forth
in the Underlying Warrant Agreement, and pays the applicable exercise price,
determined in accordance with the terms of the Underlying Warrant Agreement.
Upon exercise of the Underlying Warrants, the Company shall forthwith issue to
the registered holder of any such Underlying Warrants in his name or in such
name as may be directed by him, certificates for the number of shares of Common
Stock so purchased. Except as otherwise provided in this Agreement, the
Underlying Warrants underlying the Warrants shall be governed in all respects
by the terms of the Underlying Warrant Agreement. The Underlying Warrants
20
shall be transferable in the manner provided in the Underlying Warrant
Agreement, and upon any such transfer, a new Underlying Warrant Certificate
shall be issued promptly to the transferee. The Company covenants to, and
agrees with, the Holder(s) that without the prior written consent of the
Holder(s), which will not be unreasonably withheld, the Underlying Warrant
Agreement will not be modified, amended, canceled, altered or superseded, and
that the Company will send to each Holder, irrespective of whether or not the
Warrants have been exercised, any and all notices required by the Underlying
Warrant Agreement to be sent to holders of Underlying Warrants.
14. 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
or by FedEx or other recognized overnight courier:
(a) If to the registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(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.
15. Supplements and Amendments.
The Company and the Representatives may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant
Certificates (other than the Representatives) 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
Representatives may deem necessary or desirable and which the Company and the
21
Representatives deem shall not adversely affect the interests of the Holders of
Warrant Certificates.
16. 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.
17. Termination.
This Agreement shall terminate at the close of business on _______, 2007.
Notwithstanding the foregoing, the indemnification provisions of Section 7
shall survive such termination until the close of business on _____, 2013.
18. 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 Representatives 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 Representatives and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the
Representatives 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
22
prepaid, addressed to it at the address set forth in Section 14 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
Representatives 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
therefore.
19. Entire Agreement; Modification.
This Agreement (including the Underwriting Agreement and the Underlying
Warrant 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 and 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.
20. 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.
21. 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.
22. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Representatives and any other
registered Holder(s) of the Warrant Certificates or Warrant Securities any
legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole benefit of the Company and the
23
Representatives and any other registered Holders of Warrant Certificates or
Warrant Securities.
23. 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.
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
XXXXXXX.XXX, INC.
By:
---------------------------------
Name:
Title:
Attest:
-------------------------
Secretary
XXXXX & COMPANY, INC
By:
-------------------------------
Name:
Title:
XXXXX SECURITIES CORPORATION
By:
-------------------------------
Name:
Title:
25
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, ____, 2005
No. W
Warrants to Purchase __ shares of
Common Stock and/or
_____ Underlying Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ____________, or registered
assigns, is the registered holder of Warrants to purchase initially, at any
time from ______, 2001 until 5:30 p.m. New York time on ______, 2005
("Expiration Date"), up to __________ fully-paid and non-assessable shares of
common stock, $0.001 par value ("Common Stock"), of XXXXXXX.XXX, INC., a
Delaware corporation (the "Company"), and ___ Underlying Warrants of the
Company (one Underlying Warrant entitling the owner to purchase one fully-paid
and non-assessable share of Common Stock) at the initial exercise price,
subject to adjustment in certain events (the "Exercise Price"), of $_____ per
share of Common Stock and $_______ per Underlying Warrant upon surrender of
this Warrant Certificate and payment of the 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 ______, 2000 between the Company and XXXXX &
COMPANY, INC. and XXXXX SECURITIES CORPORATION (the "Warrant Agreement").
Payment of the Exercise Price shall be made by certified or official bank check
in New York Clearing House funds payable to the order of the Company or 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, hereby 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 type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. 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 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.
Upon the exercise of less than all of the Warrants evidenced by this
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 ______, 2000
XXXXXXX.XXX, INC.
By:
-------------------------------
Name:
Title:
[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;
_____________ Underlying Warrants;
_____________ shares of Common Stock together with an equal number of
Underlying Warrants; or
_____________ shares of Common Stock together with
_____________ Underlying Warrants.
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
XxxxXXX.xxx, Inc. in the amount of $_______________________, all in accordance
with the terms of Section 3.1 of the Representatives' Warrant Agreement dated
as of ______, 2000 between XxxxXXX.xxx, Inc. and Xxxxx & Company, Inc and Xxxxx
Securities Corporation. 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)
[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;
________________ Underlying Warrants;
________________ shares of Common Stock together with an equal number of
Underlying Warrants; or
________________ shares of Common Stock together with _________________
________________ Underlying Warrants.
and herewith tenders in payment for such securities ________ Warrants all in
accordance with the terms of Section 3.2 of the Representatives' Warrant
Agreement dated as of ______, 2000 between XxxxXXX.xxx, Inc. and Xxxxx &
Company, Inc and Xxxxx Securities Corporation. 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)
[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)
this 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 Assignee)