Exhibit 4.1
EXHIBIT A
to the Underwriting
Agreement
WARRANT
To Subscribe for and Purchase Common Stock of
Colorado Business Bankshares, Inc.
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THIS CERTIFIES THAT, for value received, Xxxx Xxxxxxxx Xxxxxxx, a division
of Xxxx Xxxxxxxx Incorporated (herein called the "Purchaser"), or its registered
assigns, is entitled to subscribe for and purchase, from Colorado Business
Bankshares, Inc. (herein called the "Company"), a corporation organized and
existing under the laws of the State of Colorado, at the price specified below
(subject to adjustment as noted below) at any time from and after the first
anniversary of the date on which the Company's Registration Statement on Form
SB-2 (No. 333-50337) is declared effective by the Securities and Exchange
Commission (the "Effective Date") to and including the fifth anniversary of the
Effective Date, one hundred thousand (100,000) fully paid and nonassessable
shares of the Company's Common Stock, par value $0.01 (subject to adjustment as
noted below).
The warrant purchase price (subject to adjustment as noted below) shall be
$_____________ per share (120% of the initial public offering price).
This Warrant is subject to the following provisions, terms and conditions:
1. Exercise. The rights represented by this Warrant may be exercised by
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the holder hereof, in whole or in part, by written notice of exercise delivered
to the Company and by the surrender of this Warrant (properly endorsed if
required) at the principal office of the Company and upon payment to it by check
of the purchase price for such shares. The Company agrees that the shares so
purchased shall be deemed to be issued to the holder hereof as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment made for such shares as aforesaid.
Subject to the provisions of the next succeeding paragraph, certificates for the
shares of stock so purchased shall be delivered to the holder hereof within a
reasonable time, not exceeding seven 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 shall not then have been exercised shall also be delivered to the
holder hereof within such time.
2. Restriction on Transferability. Notwithstanding the foregoing,
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however, the Company shall not be required to deliver any certificate for shares
of stock upon exercise of this Warrant except in accordance with the provisions,
and subject to the limitations, of paragraph 7 hereof, and each such
certificate shall bear the restrictive legend described under the heading
"Restriction on Transfer" below. This Warrant shall not be sold, transferred,
assigned or hypothecated for a period of one year from the Effective Date,
except to persons who are officers or partners of the Purchaser and the
Purchaser, or by operation of law.
EXHIBIT A
to the Underwriting
Agreement
3. Covenants of the Company. The Company covenants and agrees that all
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shares which may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be duly authorized and issued, fully paid and
nonassessable. The Company further covenants and agrees that, during the period
within which the rights represented by this Warrant may be exercised, the
Company will, 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. Anti-Dilution Adjustments. The above provisions are, however, subject
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to the following:
(a) The warrant purchase price shall, from and after the date of
issuance of this Warrant, be subject to adjustment from time to time as
hereinafter provided. Upon each adjustment of the warrant purchase price,
the holder of this Warrant shall thereafter be entitled to purchase, at the
warrant purchase price resulting from such adjustment, the number of shares
obtained by multiplying the warrant purchase 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 purchase price resulting from such adjustment.
(b) In case the Company shall at any time subdivide its outstanding
shares of Common Stock into a greater number of shares, including any stock
dividend declared to effect a subdivision of the outstanding shares of
Common Stock, the warrant purchase price in effect immediately prior to
such subdivision shall be reduced in proportion to the increase in the
number of outstanding shares of Common Stock resulting from such
subdivision, and conversely, in case the outstanding shares of Common Stock
of the Company shall be combined into a smaller number of shares, the
warrant purchase price in effect immediately prior to such combination
shall be increased in proportion to the decrease in the number of shares of
Common Stock resulting from such combination.
(c) If any 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
Common Stock shall be entitled to receive stock, securities or assets with
respect to, or in exchange for, Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holder hereof shall thereafter
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, securities or assets as may be issued or payable with respect to,
or in exchange for, a number of outstanding shares of such Common Stock
equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented
hereby, had such reorganization, reclassification, consolidation, merger or
sale not taken place, and
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EXHIBIT A
to the Underwriting
Agreement
in any such case, appropri ate provision shall be made with respect to the
rights and interests of the holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for
adjustments of the warrant purchase price and of the number of shares
purchasable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation resulting from
such consolidation or merger or the corporation purchasing such assets
shall assume, by written instrument executed and mailed to the registered
holder hereof at the last address of such holder appearing on the books of
the Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
(d) Upon any adjustment of the warrant purchase price, the Company
shall give written notice thereof, by first-class mail, postage prepaid,
addressed to the registered holder of this Warrant at the address of such
holder as shown on the books of the Company, which notice shall state the
warrant purchase price resulting from such adjustment and the increase or
decrease 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.
(e) In case any time:
(1) the Company shall declare any cash dividend on its Common Stock
at a rate in excess of the rate of the last cash dividend theretofore
paid;
(2) the Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than regular cash
dividends) to the holders of its Common Stock;
(3) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or
other rights;
(4) there shall be any capital reorganization, or reclassification
of the capital stock of the Company, or consolidation or merger of the
Company with, or sale of all or substantially all of its assets to,
another corporation; or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give written
notice, by first-class mail, postage prepaid, addressed to the registered
holder of this Warrant at the address of such holder as shown on the books
of the Company, of the date on which (A) the books of the Company shall
close or a record shall be taken for such dividend, distribution or
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EXHIBIT A
to the Underwriting
Agreement
subscription rights, or (B) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up shall
take place, as the case may be. Such notice shall also specify the date as
of which the holders of Common Stock of record shall participate in such
dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. Such written
notice shall be given at least 20 days prior to the action in question and
not less than 20 days prior to the record date or the date on which the
Company's transfer books are closed in respect thereto, or such shorter
time as may be allowed to be given to the Nasdaq National Market.
(f) If any event occurs as to which the other provisions of this
paragraph 4 are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the holder of this Warrant or of
Common Stock in accordance with the essential intent and principles of such
provisions, then the Company shall adjust this Warrant in the application
of such provisions, in accordance with such essential intent and
principles, so as to protect such purchase rights as aforesaid.
(g) No fractional shares of Common Stock shall be issued upon the
exercise of this Warrant, but, instead of any fraction of a share which
would otherwise be issuable, the Company shall pay a cash adjustment (which
may be effected as a reduction of the amount to be paid by the holder
hereof upon such exercise) in respect of such fraction in an amount equal
to the same fraction of the market price per share of Common Stock as of
the close of business on the date of the written notice of exercise
required by paragraph 1 above. "Market price," for purposes of this
paragraph 4(g) and for purposes of paragraph 10(d) hereof, shall mean, if
the Common Stock is traded on a securities exchange or on the Nasdaq
National Market, the closing price of the Common Stock on such exchange or
the Nasdaq National Market, or, if the Common Stock is otherwise traded in
the over-the-counter market, the closing bid price, in each case averaged
over a period of 5 consecutive business days prior to the date as of which
"market price" is being determined. If at any time the Common Stock is not
traded on an exchange or the Nasdaq National Market, or otherwise traded in
the over-the-counter market, the "market price" shall be deemed to be the
higher of (i) the book value thereof as determined by any firm of
independent public accountants of recognized standing selected by the Board
of Directors of the Company as of the last day of any month ending within
60 days preceding the date as of which the determination is to be made
(provided that the Company will not be required to perform an audit solely
for the purpose of making such determination), or (ii) the fair value
thereof determined in good faith by the Board of Directors of the Company
as of a date which is within 15 days of the date as of which the
determination is to be made.
5. Common Stock. As used herein, the term "Common Stock" shall mean and
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include the Company's presently authorized Common Stock and shall also include
any capital stock of any class of the Company hereafter authorized which shall
not be limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends or in the distribution of assets
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EXHIBIT A
to the Underwriting
Agreement
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Company; provided that the shares purchasable pursuant to this Warrant shall
include shares designated as Common Stock of the Company on the date of original
issue of this Warrant or, in the case of any reclassification of the outstanding
shares thereof, the stock, securities or assets provided for in paragraph 4(c)
above.
6. No Voting Rights. This Warrant shall not entitle the holder hereof to
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any voting rights or other rights as a shareholder of the Company.
7. Notice of Transfer of Warrant or Resale of Shares. The holder of this
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Warrant, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant of such holder's intention to do so, describing
briefly the manner of any proposed transfer of this Warrant or such holder's
intention as to the disposition to be made of shares of Common Stock issuable or
issued upon the exercise hereof. Such holder shall also provide the Company
with written representations from the holder and the proposed transferee
satisfactory to the Company regarding the transfer or, at the election of the
Company, an opinion of counsel reasonably satisfactory to the Company to the
effect that the proposed transfer of this Warrant or disposition of shares may
be effected without registration or qualification (under any Federal or State
law) of this Warrant or the shares of Common Stock issuable or issued upon the
exercise hereof. Upon receipt of such written notice and either such
representations or opinion by the Company, such holder shall be entitled to
transfer this Warrant, or to exercise this Warrant in accordance with its terms
and dispose of the shares received upon such exercise or to dispose of shares of
Common Stock received upon the previous exercise of this Warrant, all in
accordance with the terms of the notice delivered by such holder to the Company,
provided that an appropriate legend, if any, respecting the aforesaid
restrictions on transfer and disposition may be endorsed on this Warrant or the
certificates for such shares.
8. Transferability. Subject to the provisions of paragraph 2 and
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paragraph 7 hereof, 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. Each taker and 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 holder hereof as the owner
for all purposes.
This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase such number of
shares as shall be designated by said holder hereof at the time of such
surrender.
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EXHIBIT A
to the Underwriting
Agreement
9. Registration Rights. The holder of this Warrant and of the Common
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Stock issuable or issued upon the exercise hereof shall be entitled to the
registration rights set forth in Exhibit A attached hereto.
10. Optional Conversion.
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(a) In addition to and without limiting the rights of the holder of
this Warrant under the terms of this Warrant, the holder of this Warrant
shall have the right (the "Conversion Right") to convert this Warrant or
any portion thereof into shares of Common Stock as provided in this
paragraph 10 at any time, or from time to time, after the first anniversary
of the date hereof and prior to its expiration, subject to the restrictions
set forth in paragraph (c) below. Upon exercise of the Conversion Right
with respect to a particular number of shares subject to this Warrant (the
"Converted Warrant Shares"), the Company shall deliver to the holder of
this Warrant, without payment by the holder of any exercise price or any
cash or other consideration, that number of shares of Common Stock equal to
the quotient obtained by dividing the Net Value (as hereinafter defined) of
the Converted Warrant Shares by the fair market value (as defined in
paragraph (d) below) of a single share of Common Stock, determined in each
case as of the close of business on the Conversion Date (as hereinafter
defined). The "Net Value" of the Converted Warrant Shares shall be
determined by subtracting the aggregate warrant purchase price of the
Converted Warrant Shares from the aggregate fair market value of the
Converted Warrant Shares. Notwithstanding anything in this paragraph 10 to
the contrary, the Conversion Right cannot be exercised with respect to a
number of Converted Warrant Shares having a Net Value below $100. No
fractional shares shall be issuable upon exercise of the Conversion Right,
and if the number of shares to be issued in accordance with the foregoing
formula is other than a whole number, the Company shall pay to the holder
of this Warrant an amount in cash equal to the fair market value of the
resulting fractional share.
(b) The Conversion Right may be exercised by the holder of this Warrant
by the surrender of this Warrant at the principal office of the Company
together with a written statement specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of
shares subject to this Warrant which are being surrendered (referred to in
paragraph (a) above as the Converted Warrant Shares) in exercise of the
Conversion Right. Such conversion shall be effective upon receipt by the
Company of this Warrant together with the aforesaid written statement, or
on such later date as is specified therein (the "Conversion Date"), but not
later than the expiration date of this Warrant. Certificates for the
shares of Common Stock issuable upon exercise of the Conversion Right,
together with a check in payment of any fractional share and, in the case
of a partial exercise, a new warrant evidencing the shares remaining
subject to this Warrant, shall be issued as of the Conversion Date and
shall be delivered to the holder of this Warrant within 7 days following
the Conversion Date.
(c) In the event the Conversion Right would, at any time this Warrant
remains outstanding, be deemed by the Company's independent certified
public accountants to give
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EXHIBIT A
to the Underwriting
Agreement
rise to a charge to the Company's earnings for financial reporting
purposes, then the Conversion Right shall automatically terminate upon the
Company's written notice to the holder of this Warrant of such adverse
accounting treatment.
(d) For purposes of this paragraph 10, the "fair market value" of a
share of Common Stock as of a particular date shall be its "market price",
calculated as described in paragraph 4(g) hereof.
11. Miscellaneous. All questions concerning this Warrant will be governed
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and interpreted and enforced in accordance with the internal law of the State of
Minnesota, without regard for principles of conflict of law. Neither this
Warrant nor any term hereof may be changed, waived, discharged or terminated
except by a written instrument executed by the party against whom enforcement of
the change, waiver, discharge or termination is sought. Each provision of this
Warrant shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of such invalidity,
illegality or unenforceability in such jurisdiction, without invalidating the
remainder of this Warrant in such jurisdiction or any provision hereof in any
other jurisdiction.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer and this Warrant to be dated as of _______________ ,
199___.
COLORADO BUSINESS BANKSHARES, INC.
By_______________________________
Its___________________________
RESTRICTION ON TRANSFER
THIS WARRANT OR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF MAY NOT BE RESOLD OR TRANSFERRED UNLESS SUCH RESALE OR TRANSFER IS
EXEMPTED FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS ("LAWS"), AND THE
COMPANY RECEIVES, PRIOR TO RESALE OR TRANSFER, WRITTEN REPRESENTATIONS OF THE
HOLDER AND PROPOSED TRANSFEREE SATISFACTORY TO THE COMPANY REGARDING SUCH
TRANSFER OR, AT THE ELECTION OF THE COMPANY, AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE PROPOSED TRANSFER OF THIS
WARRANT OR OF SUCH SHARES MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT OR
QUALIFICATION UNDER THE LAWS , OR THE RESALE OR TRANSFER OF THIS WARRANT OR OF
SUCH SHARES IS REGISTERED UNDER THE ACT AND ANY APPLICABLE LAWS.
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FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________ this Warrant, and appoints ___________to transfer this Warrant
on the books of the Company with the full power of substitution in the premises.
Dated:
In the presence of:
Signature:_____________________________
Note: The signature must conform in all
respects to the name of the holder as
written on the face of this Warrant
without alteration, enlargement or any
change whatsoever, and the signature
must be guaranteed in the usual manner.
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SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part:
To: Colorado Business Bankshares, Inc. (the "Company")
The undersigned_____________________________________________
Please insert Social Security or other identifying number of Subscriber:
hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder,___________ shares of the Common Stock
provided for therein and tenders payment herewith to the order of the Company in
the amount of $_____, such payment being made as provided on the face of this
Warrant.
The undersigned requests that certificates for such shares of Common Stock
be issued as follows:
Name:________________________________________________
Address:_____________________________________________
Deliver to:__________________________________________
Address:_____________________________________________
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.
Dated:
Signature:______________________________
Note: The signature must conform in all
respects to the name of the holder as
written on the face of this Warrant
without alteration, enlargement or any
change whatsoever.
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EXHIBIT A to
Warrant
REGISTRATION RIGHTS
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1. Required Registration. If at any time up to five (5) years after the
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Effective Date the Company shall receive a written request therefor from any
record holder or holders of an aggregate of at least a majority of the shares of
Purchased Stock (as hereinafter defined) not theretofore registered under the
Securities Act of 1933 (the "Securities Act") and sold (but in no event less
than ____ shares), the Company shall prepare and file a registration statement
under the Securities Act covering the shares of Purchased Stock which are the
subject of such request and shall use its best efforts to cause such
registration statement to become effective. In addition, upon the receipt of
such request, the Company shall promptly give written notice to all other record
holders of shares of Purchased Stock not theretofore registered under the
Securities Act and sold that such registration is to be effected. The Company
shall include in such registration statement such shares of Purchased Stock for
which it has received written requests to register by such other record holders
within 30 days after the delivery of the Company's written notice to such other
record holders. The Company shall be obligated to prepare, file and cause to
become effective only one registration statement pursuant to this Section 1 and
to pay all costs and expenses associated with such registration statement. In
the event that the holders of a majority of the Purchased Stock for which
registration has been requested pursuant to the foregoing determine for any
reason not to proceed with a registration at any time before a registration
statement has been declared effective by the Securities and Exchange Commission
(the "Commission"), and such registration statement, if theretofore filed with
the Commission, is withdrawn with respect to the Purchased Stock covered
thereby, and the holders of such Purchased Stock agree to bear their own
expenses incurred in connection therewith and to reimburse the Company for the
expenses incurred by it attributable to the registration of such Purchased
Stock, then the holders of such Purchased Stock shall not be deemed to have
exercised their right to require the Company to register Purchased Stock
pursuant to this Section 1. Notwithstanding the foregoing, at any time up to
five (5) years after the Effective Date the record holder or holders of an
aggregate of at least a majority of the shares of Purchased Stock not
theretofore registered under the Securities Act and sold may require, pursuant
to this Section 1, the Company to prepare, file and cause to become effective
any number of registration statements but such holder or holders shall bear
their own costs and expenses and reimburse the Company for its costs and
expenses associated with such registration statements and the Company shall not
be required to comply with more than two such requests per year.
If, at the time any written request for registration is received by the
Company pursuant to this Section 1, the Company has finally determined to
proceed with the actual preparation and filing of a registration statement under
the Securities Act in connection with the proposed offer and sale for cash of
any of its securities by it or any of its security holders, such written request
shall be deemed to have been given pursuant to Section 2 hereof rather than this
Section 1, and the rights of the holders of Purchased Stock covered by such
written request shall be governed by Section 2 hereof.
Without the written consent of the holders of a majority of the Purchased
Stock for which registration has been requested pursuant to this Section 1,
neither the Company nor any other holder of securities of the Company may
include securities in such registration if in the good faith judgment of the
managing underwriter, if any, of such public offering the inclusion of such
securities would
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EXHIBIT A to
Warrant
interfere with the successful marketing of the Purchased Stock
or require the exclusion of any portion of the Purchased Stock to be registered.
The rights granted by this Section 1 may be transferred to, and are
exercisable by subsequent transferee of any shares of Purchased Stock, except
with respect to shares of Purchased Stock that have been registered under the
Securities Act and sold.
2. Incidental Registration. For a period of seven (7) years after the
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Effective Date, Each time the Company shall determine to proceed with the actual
preparation and filing of a registration statement under the Securities Act in
connection with the proposed offer and sale for cash of any of its securities by
it or any of its security holders (other than a registration statement on a form
that does not permit the inclusion of the Purchased Stock), the Company will
give written notice of its determination to all record holders of Purchased
Stock not theretofore registered under the Securities Act and sold. Upon the
written request of a record holder of any shares of Purchased Stock given within
30 days after receipt of any such notice from the Company, the Company will,
except as herein provided, cause all such shares of Purchased Stock, the record
holders of which have so requested registration thereof, to be included in such
registration statement, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Purchased Stock to be so
registered; provided, however, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any registration. If any registration
pursuant to this Section 2 shall be underwritten in whole or in part, the
Company may require that the Purchased Stock requested for inclusion pursuant to
this Section 2 be included in the underwriting on the same terms and conditions
as the securities otherwise being sold through the underwriters. In the event
that the Purchased Stock requested for inclusion pursuant to this Section 2
would constitute more than 25% of the total number of shares to be included in a
proposed underwritten public offering, and if, in the good faith judgment of the
managing underwriter of such public offering, the inclusion of all of the
Purchased Stock originally covered by requests for registration would reduce the
number of shares to be offered by the Company or interfere with the successful
marketing of the shares of stock offered by the Company, the number of shares of
Purchased Stock otherwise to be included in the underwritten public offering may
be reduced pro rata (by number of shares) among the holders thereof requesting
such registration.
The rights granted by this Section 2 may be transferred to and are
exercisable by a subsequent transferee of any shares of Purchased Stock, except
with respect to shares of Purchased Stock that have been registered under the
Securities Act and sold.
3. Registration Procedures. If and whenever the Company is required by
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the provisions of Section 1 or Section 2 hereof to effect the registration of
shares of Purchased Stock under the Securities Act, the Company will:
(a) prepare and file with the Commission a registration statement with
respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period as
may be reasonably necessary to effect the sale of such securities, not to
exceed nine months;
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EXHIBIT A to
Warrant
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for such
period as may be reasonably necessary to effect the sale of such
securities, not to exceed nine months;
(c) furnish to the security holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus,
final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(d) use its best efforts to register or qualify the securities covered
by such registration statement under such state securities or blue sky laws
of such jurisdictions as such participating holders may reasonably request
in writing within 20 days following the original filing of such
registration statement, except that the Company shall not for any purpose
be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein
it is not so qualified;
(e) notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify such holders promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus
or for additional information;
(g) prepare and file with the Commission, promptly upon the request of
any such holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such holders
(and concurred in by counsel for the Company), are required under the
Securities Act or the rules and regulations thereunder in connection with
the distribution of the Purchased Stock by such holder;
(h) prepare and promptly file with the Commission, and promptly notify
such holders of the filing of, such amendments or supplements to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading;
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal, if such stop order should be issued;
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(j) not file any amendment or supplement to such registration statement
or prospectus to which a majority in interest of such holders shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act or the rules and regulations thereunder, after having been furnished
with a copy thereof at least five business days prior to the filing
thereof, unless in the opinion of counsel for the Company the filing of
such amendment or supplement is reasonably necessary to protect the Company
from any liabilities under any applicable federal or state law and such
filing will not violate applicable law; and
(k) at the request of any such holder, furnish (i) an opinion, dated as
of the closing date, of the counsel representing the Company for the
purposes of such registration, addressed to the underwriters, if any, and
to the holder or holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request; and (ii) letters
dated as of the effective date of the registration statement and as of the
closing date, from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and to the holder or
holders making such request, covering such matters as such underwriters and
holder or holders may reasonably request.
4. Expenses. With respect to Section 1 and Section 2 hereof (except as
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otherwise provided in Section 1), the Company shall bear the following fees,
costs and expenses: all registration, filing and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, fees and
disbursements of counsel for the underwriter or underwriters of such securities
(if the Company and/or selling security holders are required to bear such fees
and disbursements), all internal Company expenses, all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered or qualified, and the premiums and other costs of policies of
insurance against liability (if any) arising out of such public offering. Fees
and disbursements of counsel and accountants for the selling security holders,
underwriting discounts and commissions and transfer taxes relating to the shares
included in the offering by the selling security holders, and any other expenses
incurred by the selling security holders not expressly included above, shall be
borne pro rata by the selling security holders.
5. Indemnification.
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(a) The Company will indemnify and hold harmless each holder of shares
of Purchased Stock which are included in a registration statement pursuant
to the provisions of Section 1 or 2 hereof, its directors and officers, and
any underwriter (as defined in the Securities Act) for such holder and each
person, if any, who controls such holder or such underwriter within the
meaning of the Securities Act, from and against, and will reimburse such
holder and each such underwriter and controlling person with respect to,
any and all loss, damage, liability, cost and expense to which such holder
or any such underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein
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EXHIBIT A to
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or necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading; provided, however, that the
Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by such holder,
such underwriter or such controlling person in writing specifically for use
in the preparation thereof.
(b) Each holder of shares of Purchased Stock which are included in a
registration pursuant to the provisions of Section 1 or 2 hereof will
indemnify and hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will reimburse
the Company, its directors and officers, any controlling person and any
underwriter with respect to, any and all loss, damage, liability, cost or
expense to which the Company or any controlling person and/or any
underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused
by any untrue or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so made in
reliance upon written information furnished by such holder specifically for
use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to
be made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, or if there is a conflict of interest
which would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party or parties shall
have the right to select separate counsel to participate in the defense of
such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of said paragraph (a) or
(b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnified party shall
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EXHIBIT A to
Warrant
have employed counsel in accordance with the proviso of the preceding
sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the notice of the commencement of the
action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
6. Special Definition. "Purchased Stock" shall mean the Warrant dated as
------------------
of________, 199__(together with any warrant or warrants issued in substitution
or exchange therefor, the "Warrant") to purchase 100,000 shares of Common Stock
of the Company, and the shares of Common Stock of the Company issuable upon
exercise of the Warrant and all shares of such Common Stock issued in exchange
or substitution therefor, whether or not such securities (other than such
Warrant) have in fact been issued, and the stock or other securities of the
Company issued in a stock split or reclassification of, or a stock dividend or
other distribution on or in substitution or exchange for, or otherwise in
connection with, any of the foregoing securities, or in a merger or
consolidation involving the Company or a sale of all or substantially all of the
Company's assets. For purposes hereof, the record holder of the Warrant shall
be treated as the record holder of the related Common Stock then issuable upon
the exercise thereof. Nothing in this Section 6 shall, however, be deemed to
require the Company to register the Warrant, it being understood that the
registration rights granted hereby relate only to shares of Common Stock of the
Company and securities issued in substitution or exchange therefor.
7. Availability of Registration Rights. The right to registration
-----------------------------------
pursuant hereto shall commence on the first anniversary of the Issuance Date (as
defined in the Warrant to which these Registration Rights are attached) and
shall terminate with respect to the provisions of Section 1 hereof, on the
seventh anniversary of the Issuance Date.
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