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WARRANT AGREEMENT
By and Between
NATIONS FLOORING, INC.
and
XXXXXXXXX XXXX & CO., Inc.
Dated as of __________ __, 199_
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WARRANT AGREEMENT
WARRANT AGREEMENT dated as of ____________ __, 199_ by and between NATIONS
FLOORING, INC., a Delaware corporation (the "Company"), and XXXXXXXXX XXXX &
CO., Inc. ("Xxxxxxxxx Xxxx").
The Company proposes to issue to XXXXXXXXX XXXX warrants as
hereinafter described (the "Xxxxxxxxx Xxxx Warrants") to purchase up to an
aggregate of 200,000 shares, subject to adjustment as provided in Section 8
hereof (such shares, as adjusted, being hereinafter referred to as the "Shares")
of the Company's Common Stock, par value $0.001 per share (the "Common Stock"),
each Xxxxxxxxx Xxxx Warrant entitling the holder thereof to purchase one share
of Common Stock. All capitalized terms used herein and not otherwise defined
herein shall have the same meanings as in that certain Underwriting Agreement,
of even date herewith, by and between the Company and Xxxxxxxxx Xxxx (the
"Underwriting Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth and for other good and valuable consideration, the
parties hereto agree as follows;
1. ISSUANCE OF WARRANTS; FORM OF WARRANT. The Company will issue,
sell and deliver for a purchase price of $100 the Xxxxxxxxx Xxxx Warrants to
Xxxxxxxxx Xxxx or its bona fide officers and/or directors or assigns. The form
of the Xxxxxxxxx Xxxx Warrant and the form of election to purchase Shares to be
attached thereto shall be substantially as set forth on Exhibit A attached
hereto. The Xxxxxxxxx Xxxx Warrants shall be executed on behalf of the Company
by the manual or facsimile signature of the present or any future President or
any Vice President of the Company, under its corporate seal, affixed or in
facsimile, and attested by the manual or facsimile signature of the present or
any future Secretary or Assistant Secretary of the Company.
2. REGISTRATION. The Xxxxxxxxx Xxxx Warrants shall be numbered and
shall be registered in a Xxxxxxxxx Xxxx Warrant register to be maintained by the
Company (the "Xxxxxxxxx Xxxx Warrant Register"). The Company shall be entitled
to treat the registered holder of any Xxxxxxxxx Xxxx Warrant on the Xxxxxxxxx
Xxxx Warrant Register (the "Holder") as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Xxxxxxxxx Xxxx Warrant on the part of any other person, and
shall not be liable for any registration of transfer of Xxxxxxxxx Xxxx Warrants
which are registered or are to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration of
transfer, or with such knowledge of such facts that its participation therein
amounts to bad faith. The Xxxxxxxxx Xxxx Warrants shall be registered initially
in the name of "Xxxxxxxxx Xxxx & Co., Inc." in such denominations as Xxxxxxxxx
Xxxx may request in writing to the Company; provided, however, that Xxxxxxxxx
Xxxx may designate that all or a portion of the Xxxxxxxxx Xxxx Warrants be
issued in varying amounts directly to its bona fide officers and/or directors,
or to other Underwriters (identified on Schedule __ of that certain Underwriting
Agreement dated __________ __, 1997 entered into between the Company and
Xxxxxxxxx Xxxx and _________________ as Representatives of the several
Underwriters), and not to Xxxxxxxxx Xxxx. Such designation will only be made by
Xxxxxxxxx Xxxx if it determines that such issuances would not violate the
interpretation of the Board of Governors of the National Association of
Securities Dealers, Inc. (the "NASD") relating to the review of corporate
financing arrangements.
3. TRANSFER OF WARRANTS. The Xxxxxxxxx Xxxx Warrants will not be
sold, transferred, assigned or hypothecated, in part or in whole (other than by
will or pursuant to the laws of descent and distribution), except to bona fide
officers, directors, shareholders, employees or registered representatives of
Xxxxxxxxx Xxxx after twelve (12) months from the effective date (the "Effective
Date") of the Registration Statement on Form S-1 filed by the Company with the
Securities and Exchange Commission (the "Commission") on __________ __, 199_, as
amended or supplemented (the "Registration Statement") and upon delivery thereof
duly endorsed by the Holder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, the original
power of attorney, duly approved, or an official copy thereof, duly certified,
shall be deposited with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be required to be
deposited with the Company in its discretion. Upon any registration of
transfer, the Company shall deliver a new Xxxxxxxxx Xxxx Warrant or Xxxxxxxxx
Xxxx Warrants to the persons entitled thereto. The Xxxxxxxxx Xxxx Warrants may
be exchanged at the option of the Holder thereof for another Xxxxxxxxx Xxxx
Warrant, or other Xxxxxxxxx Xxxx Warrants, of different denominations, of like
tenor and representing in the aggregate the right to purchase a like number of
shares of Common Stock upon surrender to the Company or its duly authorized
agent. Notwithstanding the foregoing, the Company shall have no obligation to
cause Xxxxxxxxx Xxxx Warrants to be transferred on its books to any person, if
such transfer would violate the Securities Act of 1933, as amended (the "Act").
4. TERM OF WARRANTS; EXERCISE OF WARRANTS. (a) Each Xxxxxxxxx Xxxx
Warrant entitles the registered owner thereof to purchase one Share at a
purchase price of $_____ per Share (120% of the "Price to Public" as set forth
on the cover page of the Prospectus which forms a part of the Registration
Statement)(the "Exercise Price") at any time from the first anniversary of the
Effective Date until 5:00 p.m., New York City time, on _________ __, 200_ (the
"Warrant Expiration Date"). Prior to the Warrant Expiration Date, the Company
will not take any action which would terminate the Xxxxxxxxx Xxxx Warrants. The
Exercise Price and the Shares issuable upon exercise of Xxxxxxxxx Xxxx Warrants
are subject to adjustment upon the occurrence of certain events, pursuant to the
provisions of Section 8 of this Agreement. Subject to the provisions of this
Agreement, each Holder shall have the right, which may be exercised as set forth
in such Xxxxxxxxx Xxxx Warrants, to purchase from the Company (and the Company
shall issue and sell to such Holder) the number of fully paid and nonassessable
shares of Common Stock specified in such Xxxxxxxxx Xxxx Warrant as follows:
(i) Upon surrender to the Company, or its duly authorized agent, of
such Xxxxxxxxx Xxxx Warrants with the form of election to purchase attached
thereto duly completed and signed, with signatures guaranteed by a member
firm of a national securities exchange, a commercial bank or trust company
located in the United States or a member of the NASD and upon payment to
the Company of the Exercise Price, as adjusted in accordance with the
provisions of Section 8 of this Agreement, for the number of Shares in
respect of which such Xxxxxxxxx Xxxx Warrants are then exercised. Payment
of such Exercise Price may be made in cash or by cashier's check payable to
the order of the Company. No adjustment shall be made for any dividends on
any Shares issuable upon exercise of a Xxxxxxxxx Xxxx Warrant; or
(ii) Upon surrender to the Company, or its duly authorized agent,
of such Xxxxxxxxx Xxxx Warrants with the form of cashless exercise attached
thereto (a "Cashless Exercise"), duly
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completed and signed, with signatures guaranteed by a member firm of a
national securities exchange, a commercial bank or trust company located in
the United States or a member of the NASD. Such surrender shall be deemed
a waiver of the obligation of the Holder to pay all or any portion of the
Exercise Price. In the event of a Cashless Exercise, the exercise price
will be paid by surrendering to the Company that number of Xxxxxxxxx Xxxx
Warrants which is calculated by multiplying (i) the total number of
Xxxxxxxxx Xxxx Warrants by (ii) the exercise price of the Xxxxxxxxx Xxxx
Warrants and (iii) by dividing the product of (i) and (ii) by the then
current bid price for the Company's common stock, on the date of exercise
of the Xxxxxxxxx Xxxx Warrants, of the Company's common stock ("the
Cashless Exercise Price"). The Cashless Exercise Price may be tendered pro
rata by the holder or holders of less than all the Xxxxxxxxx Xxxx Warrants,
as the case may be.
(b) Upon each surrender of Xxxxxxxxx Xxxx Warrants in accordance with
Section 4(a)(i) or 4(a)(ii) hereof, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
Holder of such Xxxxxxxxx Xxxx Warrants and in such name or names as such Holder
may designate, a certificate or certificates for the number of full Shares so
purchased upon the exercise of such Xxxxxxxxx Xxxx Warrants, together with cash,
as provided in Section 9 of this Agreement, in respect of any fractional Shares
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares as of the date
of the surrender of the Xxxxxxxxx Xxxx Warrants as aforesaid (and payment of the
Exercise Price with respect to Section 4(a)(i) hereof); provided, however, that
if, at the date of surrender of such Xxxxxxxxx Xxxx Warrants, the transfer books
for the Common Stock or other class of securities issuable upon the exercise of
such Xxxxxxxxx Xxxx Warrants shall be closed, the certificates for the Shares
shall be issuable as of the date on which such books shall next be opened
(whether before, on or after the Warrant Expiration Date) and until such date
the Company shall be under no duty to deliver any certificate for such Shares;
provided, further, however, that the transfer books of record, unless otherwise
required by law, shall not be closed at any one time for a period longer than
twenty (20) days. The rights of purchase represented by the Xxxxxxxxx Xxxx
Warrants shall be exercisable, at the election of the Holders thereof, either in
full or from time to time in part and, in the event that any Xxxxxxxxx Xxxx
Warrant is exercised in respect of less than all of the Shares issuable upon
such exercise at any time prior to the Warrant Expiration Date, the Company
shall promptly issue or cause to be issued a new Xxxxxxxxx Xxxx Warrant or
Xxxxxxxxx Xxxx Warrants representing the remaining number of Shares specified in
the Xxxxxxxxx Xxxx Warrant so surrendered.
5. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the issuance of Shares upon the exercise of
Xxxxxxxxx Xxxx Warrants; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any certificates for Shares in a name other
than that of the Holder of Xxxxxxxxx Xxxx Warrants in respect of which such
Shares are issued.
6. MUTILATED OR MISSING WARRANTS. In case any of the Xxxxxxxxx Xxxx
Warrants shall be mutilated, lost, stolen or destroyed, the Company may, in its
discretion, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated Xxxxxxxxx Xxxx Warrant, or in lieu of and
substitution for the Xxxxxxxxx Xxxx Warrant lost, stolen or destroyed, a new
Xxxxxxxxx Xxxx Warrant of like tenor and representing an equivalent right or
interest, but only upon receipt of evidence reasonably satisfactory to the
Company of such mutilation, loss, theft or destruction of such
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Xxxxxxxxx Xxxx Warrant and indemnity, unless mutilated, also reasonably
satisfactory to the Company, indemnifying the Company for any claims arising
under a Xxxxxxxxx Xxxx Warrant that has been lost, stolen or destroyed. An
applicant for such substitute Xxxxxxxxx Xxxx Warrants shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
7. RESERVATION OF SHARES, ETC. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and unissued
Common Stock, such number of shares of Common Stock as shall be sufficient to
provide for the exercise of the rights of purchase represented by the
outstanding Xxxxxxxxx Xxxx Warrants.[__________________], transfer agent for the
Common Stock (the "Transfer Agent"), and every subsequent transfer agent, if
any, for the Company's securities issuable upon the exercise of the Xxxxxxxxx
Xxxx Warrants will be irrevocably authorized and directed at all times until the
Warrant Expiration Date to reserve such number of authorized and unissued shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer
agent for any shares of the Company's securities issuable upon the exercise of
the Xxxxxxxxx Xxxx Warrants. The Company will supply the Transfer Agent or any
subsequent transfer agent with duly executed certificates for such purpose and
will itself provide or otherwise make available any cash which may be
distributable as provided in Section 9 of this Agreement. All Xxxxxxxxx Xxxx
Warrants surrendered in the exercise of the rights thereby evidenced shall be
canceled, and such canceled Xxxxxxxxx Xxxx Warrants shall constitute sufficient
evidence of the number of Shares that have been issued upon the exercise of such
Xxxxxxxxx Xxxx Warrants. No shares of Common Stock shall be subject to
reservation in respect of unexercised Xxxxxxxxx Xxxx Warrants subsequent to the
Warrant Expiration Date.
8. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise
Price and the number and kind of securities issuable upon exercise of each
Xxxxxxxxx Xxxx Warrant shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
(a) In case the Company shall (i) declare a dividend on its
Common Stock in shares of Common Stock or make a distribution in Common Stock,
(ii) subdivide its outstanding Common Stock, (iii) combine its outstanding
Common Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its Common Stock other securities of the Company (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), the number of Shares purchasable
upon exercise of each Xxxxxxxxx Xxxx Warrant immediately prior thereto shall be
adjusted so that the Holder of each Xxxxxxxxx Xxxx Warrant shall be entitled to
receive the kind and number of Shares or other securities of the Company which
he would have owned or have been entitled to receive after the happening of any
of the events described above, had such Xxxxxxxxx Xxxx Warrant been exercised
immediately prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event.
(b) In case the Company shall issue rights, options or warrants
to all holders of its Common Stock, without any charge to such holders,
entitling them (for a period expiring within 45 days after the record date
mentioned below in this paragraph (b)) to subscribe for or to purchase shares of
Common Stock at a price per share that is lower at the record date mentioned
below than the Current Market Price per share of Common Stock, the number of
Shares thereafter purchasable upon exercise of each Xxxxxxxxx Xxxx Warrant shall
be determined by multiplying the
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number of Shares theretofore purchasable upon exercise of each Xxxxxxxxx Xxxx
Warrant by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
Common Stock offered for subscription or purchase, and of which the denominator
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares which the aggregate offering price of the total number
of shares of Common Stock so offered would purchase at the Current Market Price
per share of Common Stock. Such adjustment shall be made whenever such rights,
options or warrants are issued, and shall become effective on the date of
issuance.
(c) In case the Company shall distribute to all holders of its
shares of Common Stock shares of stock (other than Common Stock) or evidences
of its indebtedness or assets (excluding cash dividends payable out of
consolidated earnings or retained earnings and dividends or distributions
referred to in paragraph (a) above) or rights, options or warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding those referred to in paragraph (b)
above), then in each case the number of Shares thereafter issuable upon the
exercise of each Xxxxxxxxx Xxxx Warrant shall be determined by multiplying the
number of Shares theretofore issuable upon the exercise of each Xxxxxxxxx Xxxx
Warrant, by a fraction, of which the numerator shall be the Current Market Price
per share of Common Stock on the record date mentioned below in this paragraph
(c), and of which the denominator shall be the Current Market Price per share of
Common Stock on such record date, less the then fair value (as determined by the
Board of Directors of the Company, whose determination shall be conclusive) of
the portion of the shares of stock (other than Common Stock) or assets or
evidences of indebtedness so distributed or of such subscription rights, options
or warrants, or of such convertible or exchangeable securities, applicable to
one share of Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of distribution.
(d) For the purpose of any computation under this Agreement, the
"Current Market Price" per share of Common Stock at any date shall be the
average of the daily closing prices for fifteen (15) consecutive trading days
commencing twenty (20) trading days before the date of such computation. The
closing price for each day shall be the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in either case on the
principal national securities exchange on which the shares are listed or
admitted to trading, or if they are not listed or admitted to trading on any
national securities exchange, but are traded in the over-the-counter market, the
closing sale price of the Common Stock or, in case no sale is publicly reported,
the average of the representative closing bid and asked quotations for the
Common Stock on the National Association of Securities Dealers Automated
Quotations ("NASDAQ") system or any comparable system, or if the Common Stock is
not listed on the NASDAQ system or a comparable system, the closing sale price
of the Common Stock or, in case no sale is publicly reported, the average of the
closing bid and asked prices as furnished by two members of the NASD selected
from time to time by the Company for that purpose.
(e) No adjustment in the number of Shares purchasable hereunder
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in the number of Shares purchasable upon the
exercise of each Xxxxxxxxx Xxxx Warrant; provided, however, that any adjustments
which by reason of this paragraph (e) are not required to be made shall
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be carried forward and taken into account in any subsequent adjustment, but not
later than three years after the happening of the specified event or events.
All calculations shall be made to the nearest one thousandth of a share.
Anything in this Section 8 to the contrary notwithstanding, the Company shall be
entitled, but shall not be required, to make such changes in the number of
Shares purchasable upon the exercise of each Xxxxxxxxx Xxxx Warrant, in addition
to those required by this Section 8, as it in its discretion shall determine to
be advisable in order that any dividend or distribution in shares of Common
Stock, subdivision, reclassification or combination of shares of Common Stock,
issuance of rights, warrants or options to purchase Common Stock, or
distribution of shares of stock other than Common Stock, evidences of
indebtedness or assets (other than distributions of cash out of consolidated
earnings or retained earnings) or convertible or exchangeable securities
hereafter made by the Company to the holders of its Common Stock shall not
result in any tax to the holders of its Common Stock or securities convertible
into Common Stock.
(f) Whenever the number of Shares purchasable upon the exercise
of each Xxxxxxxxx Xxxx Warrant is adjusted, as herein provided, the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect immediately
prior to such adjustment by a fraction, of which the numerator shall be the
number of Shares purchasable upon the exercise of each Xxxxxxxxx Xxxx Warrant
immediately prior to such adjustment, and of which the denominator shall be the
number of Shares so purchasable immediately thereafter.
(g) For the purpose of this Section 8, the term "shares of
Common Stock" shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares consisting
solely of changes in par value, or from no par value to par value, or from par
value to no par value. In the event that at any time, as a result of an
adjustment made pursuant to paragraph (a) above, the Holders shall become
entitled to purchase any shares of capital stock of the Company other than
Common Stock, thereafter the number of such other shares so purchasable upon
exercise of each Xxxxxxxxx Xxxx Warrant and the Exercise Price of such Shares
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Shares
contained in paragraphs (a) through (f), inclusive, and paragraphs (h) through
(m), inclusive, of this Section 8, and the provisions of Sections 4, 5, 7 and
10, with respect to the Shares, shall apply on like terms to any such other
shares.
(h) Upon the expiration of any rights, options, warrants or
conversion rights or exchange privileges, if any thereof shall not have been
exercised, the Exercise Price and the number of shares of Common Stock
purchasable upon the exercise of each Xxxxxxxxx Xxxx Warrant shall, upon such
expiration, be readjusted and shall thereafter be such as it would have been had
it originally been adjusted (or had the original adjustment not been required,
as the case may be) as if (i) the only shares of Common Stock so issued were the
Common Stock, if any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion rights or exchange privileges and (ii) such
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale or grant of all of
such rights, options, warrants or conversion rights or exchange privileges
whether or not exercised; provided, however, that no such readjustment shall
have the effect of increasing the Exercise Price by an amount in excess of the
amount of the adjustment initially made in respect to the issuance, sale or
grant of such rights, options, warrants or conversion rights or exchange
privileges.
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(i) The Company may, at its option, at any time during the term
of the Xxxxxxxxx Xxxx Warrants, reduce the then current Exercise Price to any
amount deemed appropriate by the Board of Directors of the Company.
(j) Whenever the number of Shares issuable upon the exercise of
each Xxxxxxxxx Xxxx Warrant or the Exercise Price of such Shares is adjusted, as
herein provided, the Company shall promptly mail by first class mail postage
prepaid, to each Holder notice of such adjustment or adjustments at such
Holder's address appearing on the Xxxxxxxxx Xxxx Warrant Register. The Chief
Financial Officer of the Company shall make any computation required by this
Section 8 and shall execute a certificate (the "CFO Certificate") setting forth
the number of Shares issuable upon the exercise of each Xxxxxxxxx Xxxx Warrant
and the Exercise Price of such Shares after such adjustment, setting forth a
brief statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Each Holder shall have the right
to inspect the CFO Certificate during reasonable business hours. In the event
that a Holder shall dispute the determination set forth in the CFO Certificate,
the Company shall retain, at its expense, a firm of independent public
accountants (who may be regular accountants employed by the Company) to make the
required computation and to prepare a certificate which shall set forth the
information required in the CFO Certificate. Such certificate shall be
conclusive on the correctness of such adjustment and each Holder shall have the
right to inspect such certificate during reasonable business hours.
(k) Except as provided in this Section 8, no adjustment in
respect of any dividends shall be made during the term of a Xxxxxxxxx Xxxx
Warrant or upon the exercise of a Xxxxxxxxx Xxxx Warrant.
(l) In case of any consolidation of the Company with or merger
of, the Company with or into another corporation or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, the Company or such successor or purchasing
corporation (or an affiliate of such successor or purchasing corporation), as
the case may be, agrees that each Holder shall have the right thereafter upon
payment of the Exercise Price in effect immediately prior to such action to
purchase upon exercise of each Xxxxxxxxx Xxxx Warrant the kind and amount of
shares and other securities and property (including cash) which he would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Xxxxxxxxx Xxxx Warrant been
exercised immediately prior to such action. The provisions of this paragraph
(l) shall similarly apply to successive consolidations, mergers, sales or
conveyances.
(m) Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Xxxxxxxxx Xxxx
Warrants pursuant to this Agreement, certificates for Xxxxxxxxx Xxxx Warrants
issued prior or subsequent to such adjustment may continue to express the same
price and number and kind of Shares as are initially issuable pursuant to this
Agreement.
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9. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractions of Shares upon the exercise of Xxxxxxxxx Xxxx Warrants. If more than
one Xxxxxxxxx Xxxx Warrant shall be presented for exercise in full at the same
time by the same Holder, the number of Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Shares issuable on exercise of the Xxxxxxxxx Xxxx Warrants so presented. If any
fraction of a Share would, except for the provisions of this Section 9, be
issuable on the exercise of any Xxxxxxxxx Xxxx Warrant (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the same fraction of the Current Market Price per share of Common Stock on
the date of exercise.
10. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. The Company covenants and
agrees with Xxxxxxxxx Xxxx and any other or subsequent Holders of the
Registrable Securities (as defined in paragraph (e) of this Section 10) that,
upon written request by the Holder(s) of at least fifty percent (50%) of the
Xxxxxxxxx Xxxx Warrants or of the Registrable Securities which were originally
issued on the date hereof to Xxxxxxxxx Xxxx or its designees within the period
commencing twelve months and ending five years after the Effective Date, the
Company will file as promptly as practicable and, in any event, within 30 days
after receipt of such written request, at its sole expense, no more than once a
post-effective amendment (the "Amendment") to the Registration Statement, or a
new Registration Statement or a Regulation A Offering Statement (an "Offering
Statement") under the Act, registering or qualifying the Registrable Securities
for sale. Not less than thirty (30) days prior to filing such Amendment,
Registration Statement or Offering Statement with the Commission, the Company
shall give notice to the other Holders of the Registrable Securities at the
addresses appearing on the Xxxxxxxxx Xxxx Warrant Register advising that the
Company is proceeding with such Amendment, Registration Statement or Offering
Statement and offering to include therein the Registrable Securities of such
Holders. The Company shall not be obligated to any such other Holder unless
such other Holder shall accept such offer by notice in writing to the Company
within fifteen (15) days thereafter. No other securities of the Company shall
be entitled to be included in such Amendment, Registration Statement or Offering
Statement. The Company will use its best efforts, through its officers,
directors, auditors and counsel in all matters necessary or advisable, to file
and cause to become effective such Amendment, Registration Statement or Offering
Statement as promptly as practicable and for a period of two years thereafter to
reflect in the Amendment, Registration Statement or Offering Statement financial
statements which are prepared in accordance with Section 10(a)(3) of the Act and
any facts or events arising that, individually, or in the aggregate, represent a
fundamental and/or material change in the information set forth in the
Amendment, Registration Statement or Offering Statement to enable any Holders of
the Xxxxxxxxx Xxxx Warrants to exercise such Xxxxxxxxx Xxxx Warrants and sell
Shares, or to enable any holders of Shares to sell such Shares, during said
two-year period. If any registration pursuant to this paragraph (a) is an
underwritten offering, the Holders of a majority of the Registrable Securities
to be included in such registration shall be entitled to select the underwriter
or managing underwriter (in the case of a syndicated offering) of such offering
and all costs incurred in connection with the preparation of such registration
shall be paid by the Company, provided that fees of Underwriter's counsel and
sales commissions for Xxxxxxxxx Xxxx and such holders shall be borne by
Xxxxxxxxx Xxxx. The Company agrees to use its best efforts to cause the above
filing to become effective as promptly as practicable and to remain current for
six (6) months.
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(b) PIGGYBACK REGISTRATION RIGHTS. The Company covenants and
agrees with Xxxxxxxxx Xxxx and any other Holders or subsequent Holders of the
Registrable Securities that if, at any time within the period commencing twelve
months and ending five years after the Effective Date, it proposes to file a
Registration Statement or Offering Statement with respect to any class of
security (other than in connection with an offering to the Company's employees)
under the Act in a primary registration on behalf of the Company and/or in a
secondary registration on behalf of holders of such securities and the
registration form or Offering Statement to be used may be used for registration
of the Registrable Securities, the Company will give prompt written notice
(which, in the case of a Registration Statement or notification pursuant to the
exercise of demand registration rights other than those provided in Section
10(a) of this Agreement, shall be within fifteen days after the Company's
receipt of notice of such exercise and, in any event, shall be at least thirty
(30) days prior to such filing) to, Xxxxxxxxx Xxxx and to the Holders of
Registrable Securities (regardless of whether some of the Holders shall have
theretofore availed themselves of the right provided in Section 10(a) of this
Agreement) at the addresses appearing on the records of the Company of its
intention to file a Registration Statement or Offering Statement. Xxxxxxxxx
Xxxx (or its assigns) shall have the right to register all, but not less than
twenty percent (20%), of the Registrable Securities by notifying the Company in
writing within fifteen (15) days of receipt of the Company's notice, requesting
registration of such Registrable Securities and setting forth the intended
method of distribution and such other data or information as the Company or its
counsel shall reasonably require. Such registration shall be without cost to
Xxxxxxxxx Xxxx (or its assigns), provided that fees of Underwriter's counsel and
sales commissions for Xxxxxxxxx Xxxx and such holders shall be borne by
Xxxxxxxxx Xxxx. In the event that such offering is underwritten by a
broker/dealer other than Xxxxxxxxx Xxxx, then Xxxxxxxxx Xxxx'x right to register
the Warrants in such Registration Statement shall be subject to the approval of
such underwriter, and the Company agrees to use its reasonable efforts to obtain
such approval. All registrations requested pursuant to this Section 10(b) are
referred to herein as "Piggyback Registrations." This paragraph is not
applicable to a Registration Statement filed by the Company with the Commission
on Forms S-4 or S-8 or any successor forms.
(i) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration includes an underwritten primary registration on behalf of the
Company and the underwriter(s) for the offering being registered by the
Company shall determine in good faith and advise the Company in writing
that in its/their opinion the number of Registrable Securities requested to
be included in such registration exceeds the number that can be sold in
such offering without materially adversely affecting the distribution of
such securities by the Company, the Company will include in such
registration (A) first, the securities that the Company proposes to sell
and (B) second, the Registrable Securities requested to be included in such
registration, apportioned pro rata among the Holders of Registrable
Securities and (C) third, securities of the holders of other securities
requesting registration.
(ii) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration consists only of an underwritten secondary registration on
behalf of holders of securities of the Company (other than pursuant to
Section 10(a)), and the underwriter(s) for the offering being registered by
the Company advise the Company in writing that in its/their opinion the
number of Registrable Securities requested to be included in such
registration exceeds the number which can be sold in such offering without
materially adversely affecting the distribution of such securities by the
Company, the Company will include in such registration (A) first, the
securities requested to be included therein by the holders requesting such
registration and the
-9-
Registrable Securities requested to be included in such registration above,
pro rata, among all such holders on the basis of the number of shares
requested to be included by each such holder and (B) second, other
securities requested to be included in such registration.
Notwithstanding the foregoing, if any such underwriter(s)
shall determine in good faith and advise the Company in writing that the
distribution of the Registrable Securities requested to be included in the
registration concurrently with the securities being registered by the
Company would materially adversely affect the distribution of such
securities by the Company, then the Holders of such Registrable Securities
shall not participate in the Company's distribution by the underwriter(s)
and shall delay their offering and sale for such period ending on the
earliest of (1) 90 days following the effective date of the Company's
registration statement, (2) the day upon which the underwriting syndicate,
if any, for such offering shall have been disbanded or (3) such date as the
Company, managing underwriter and Holders of Registrable Securities shall
not participate in the Company's distribution by the underwriter(s) and
shall otherwise agree. In the event of such delay, the Company shall file
such supplements, post-effective amendments and take any such other steps
as may be necessary to permit such Holders to make their proposed offering
and sale for a period of 120 days immediately following the end of such
period of delay. If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Company, the underwriter, and Xxxxxxxxx Xxxx. Notwithstanding the
foregoing, the Company shall not be required to file a registration
statement to include Shares pursuant to this Section 10(b) if an opinion of
counsel, reasonably satisfactory to counsel for Xxxxxxxxx Xxxx, that the
Shares proposed to be disposed of may be transferred pursuant to the
provisions of Rule 144 under the Act shall have been delivered to the
Company and Xxxxxxxxx Xxxx.
(c) OTHER REGISTRATION RIGHTS. In addition to the rights above
provided, the Company will cooperate with the then Holders of the Registrable
Securities in preparing and signing any Registration Statement or Offering
Statement, in addition to the Registration Statements and Offering Statements
discussed above, required in order to sell or transfer the Registrable
Securities and will supply all information required therefor, but such
additional Registration Statement or Offering Statement shall be at the then
Holders' cost, and expense and subject to reasonable delay (no longer than 120
days) by the Company if it would adversely impact the Company in its capital
raising plans or otherwise; provided, however, that if the Company elects to
register or qualify additional shares of Common Stock, the cost and expense of
such Registration Statement or Offering Statement will be pro rated between the
Company and the Holders of the Registrable Securities according to the aggregate
sales price of the securities being issued. Notwithstanding the foregoing, the
Company will not be required to file a Registration Statement or Offering
Statement hereunder or under Section 10(a) hereof at a time when the audited
financial statements required to be included therein are not available, which
time shall be limited to the period commencing 45 days after the end of the
Company's last fiscal year and ending 90 days after the end of such fiscal year
existing at the time of the proposed offering.
(d) ACTION TO BE TAKEN BY THE COMPANY. In connection with the
registration of Registrable Securities in accordance with paragraphs (a), (b) or
(c) of this Section 10, the Company agrees to:
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(i) Bear the expenses of any registration or qualification under
paragraphs (a) or (b) of this Section 10, including, but not limited to,
legal, accounting and printing fees; provided, however, that in no event
shall the Company be obligated to pay (A) any fees and disbursements of
special counsel for Holders of Registrable Securities, or (B) any
underwriters' discount or commission in respect of such Registrable
Securities, or (C) upon the exercise of and demand registration right
provided for in paragraph (a) of this Section 10, the cost of any liability
or similar insurance required by an underwriter, to the extent that such
costs are attributable solely to the offering of such Registrable
Securities, payment of which shall, in each case, be the sole
responsibility of the Holders of the Registrable Securities;
(ii) Use its best efforts to register or qualify the Registrable
Securities for offer or sale under state securities or Blue Sky laws of
jurisdictions in which Xxxxxxxxx Xxxx shall reasonably request and to do
any and all other acts and things which may be necessary or advisable to
enable the holders to consummate the proposed sale, transfer or other
disposition of such securities in any jurisdiction; and
(iii) Enter into a cross-indemnity agreement, in customary form,
with each underwriter, if any, and each holder of securities included in
such Amendment, Registration Statement or Offering Statement,
(e) For purposes of this Section 10, (i) the term "Holder" shall
include holders of Shares, and (ii) the term "Registrable Securities" shall
mean the Shares issuable or issued upon exercise of the Xxxxxxxxx Xxxx
Warrants.
11. NOTICES TO HOLDERS.
(a) Nothing contained in this Agreement or in any of the
Xxxxxxxxx Xxxx Warrants shall be construed as conferring upon the Holders
thereof the right to vote or to receive dividends or to consent or to
receive notice as shareholders in respect of the meetings of shareholders
or the election of directors of the Company or any other matter, or any
rights whatsoever as shareholders of the Company; provided, however, that
in the event that a meeting of shareholders shall be called to consider and
take action on a proposal for the voluntary dissolution of the Company,
other than in connection with a consolidation, merger or sale of all, or
substantially all, of its property, assets, business and good will as an
entirety, then and in that event the Company shall cause a notice thereof
to be sent by first-class mail, postage prepaid, at least twenty (20) days
prior to the date filed as a record date or the date of closing the
transfer books in relation to such meeting, to each registered Holder of
Xxxxxxxxx Xxxx Warrants at such Holder's address appearing on the Xxxxxxxxx
Xxxx Warrant Register; but failure to mail or to receive such notice or any
defect therein or in the mailing thereof shall not affect the validity of
any action taken in connection with such voluntary dissolution. If such
notice shall have been so given and if such a voluntary dissolution shall
be authorized at such meeting or any adjournment thereof, then from and
after the date on which such voluntary dissolution shall have been duly
authorized by the shareholders, the purchase rights represented by the
Xxxxxxxxx Xxxx Warrants and all other rights with respect thereto shall
cease and terminate.
-11-
(b) In the event the Company intends to make any distribution on
its Common Stock (or other securities which may be issuable in lieu thereof upon
the exercise of Xxxxxxxxx Xxxx Warrants), including, without limitation, any
such distribution to be made in connection with a consolidation or merger in
which the Company is the continuing corporation, or to issue subscription rights
or warrants to holders of its Common Stock, the Company shall cause a notice of
its intention to make such distribution to be sent by first-class mail, postage
prepaid, at least twenty (20) days prior to the date fixed as a record date or
the date of closing the transfer books in relation to such distribution, to each
registered Holder of Xxxxxxxxx Xxxx Warrants at such Holder's address appearing
on the Xxxxxxxxx Xxxx Warrant Register, but failure to mail or to receive such
notice or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with such distribution.
12. NOTICES. Any notice pursuant to this Agreement to be given or
made by the Holder of any Xxxxxxxxx Xxxx Warrant and/or the holder of any Share
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed as follows or to such other address as the
Company may designate by notice given in accordance with this Section 12, to the
Holders of Xxxxxxxxx Xxxx Warrants and/or the holders of Shares:
Xxxxxx Investments, Inc.
000 Xxxxxx Xxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
with a copy to:
Xxxxxxxx & Xxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 0000
Attn: Xxxxxx Xxxxxxxx, Esq.
Notices or demands authorized by this Agreement to be given or
made by the Company to or on the Holder of any Xxxxxxxxx Xxxx Warrant and/or the
holder of any Share shall be sufficiently given or made (except as otherwise
provided in this Agreement) if sent by first-class mail, postage prepaid,
addressed to such Holder or such holder of Shares at the address of such Holder
or such holder of Shares as shown on the Xxxxxxxxx Xxxx Warrant Register or the
books of the Company, as the case may be.
13. GOVERNING LAW. This Agreement and each Xxxxxxxxx Xxxx Warrant
issued hereunder shall be governed by and construed in accordance with the
substantive laws of the State of New York. The Company hereby agrees to accept
service of process by notice given to it pursuant to the provisions of Section
12.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
-12-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day, month and year first above written.
(Corporate Seal)
NATIONS FLOORING, INC.
By:
---------------------
Name:
Title:
Attest:
-----------------
(Corporate Seal)
XXXXXXXXX XXXX & CO. INC.
By:
---------------------
Name:
Title:
Attest:
-------------------
-13-
EXHIBIT A
No. ________ ________ Warrants
VOID AFTER 5:00 P.M. NEW YORK CITY TIME
ON __________, 2001
NATIONS FLOORING, INC.
Warrant Certificate
THIS CERTIFIES THAT for value received ______________ or registered
assigns, is the owner of the number of warrants set forth above, each of which
entitles the owner thereof to purchase at any time from __________ __, 199_,
until 5:00 p.m., New York City time on __________ __, 200_,(the "Warrant
Expiration Date"), one fully paid and nonassessable share of Common Stock, par
value $.001 per share (the "Common Stock"), of NATIONS FLOORING, INC., a
Delaware corporation (the "Company"), at the purchase price of $____ per share
(the "Exercise Price") upon presentation and surrender of this Warrant
Certificate with either the Form of Election to Purchase or Form of Cashless
Exercise duly executed. The number of Warrants evidenced by this Warrant
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Exercise Price per share set forth above, are
the number and Exercise Price as of the date of original issuance of the
Warrants, based on the shares of Common Stock of the Company as constituted at
such date. As provided in the Warrant Agreement referred to below, the Exercise
Price and the number or kind of shares which may be purchased upon the exercise
of the Warrants evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.
This Warrant Certificate is subject to, and entitled to the benefits
of, all of the terms, provisions and conditions of an agreement dated as of
_________ __, 199_ (the "Warrant Agreement") between the Company and Xxxxxxxxx
Xxxx & Co., Inc. which Warrant Agreement is hereby incorporated herein by
reference and made a part hereof and to which Warrant Agreement reference is
hereby made for a full description of the rights, limitations of rights, duties
and immunities hereunder of the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are on file at the principal
office of the Company.
This Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing Warrants entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Warrants evidenced by the Warrant Certificate or
Warrant Certificates surrendered entitled such holder to purchase. If this
Warrant Certificate shall be exercised in part, the holder hereof shall be
entitled to receive upon surrender hereof another Warrant Certificate or Warrant
Certificates for the number of whole Warrants not exercised.
No fractional shares of Common Stock will be issued upon the exercise
of any Warrant or Warrants evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Warrant Agreement.
A-1
No holder of this Warrant Certificate shall be entitled to vote or
receive dividends or be deemed the holder of Common Stock, any other securities
of the Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained in the Warrant Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance, or otherwise) or,
except as provided in the Warrant Agreement, to receive notice of meetings, or
to receive dividends or subscription rights or otherwise, until the Warrant or
Warrants evidenced by this Warrant Certificate shall have been exercised and the
shares shall have become deliverable as provided in the Warrant Agreement.
If this Warrant shall be surrendered for exercise within any period
during which the transfer books for the Company's Common Stock or other class of
stock purchasable upon the exercise of this Warrant are closed for any purpose,
the Company shall not be required to make delivery of certificates for shares
purchasable upon such exercise until the date of the reopening of said transfer
books.
IN WITNESS WHEREOF, NATIONS FLOORING, INC. has caused the signature
(or facsimile signature) of its President and its Secretary to be printed hereon
and its corporate seal (or facsimile) to be printed hereon.
Dated: __________, 199_
NATIONS FLOORING, INC.
By:
-------------------------
Name:
Title:
[Corporate Seal]
Attest:
-----------------------------
Name:
Title: Secretary
A-2
FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate in
accordance with Section 4(a)(i) of the Warrant Agreement.)
TO: NATIONS FLOORING, INC.
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Warrant Certificate to purchase the shares of Common Stock
issuable upon the exercise of such Warrants and payment of the Exercise Price
therefor in accordance with Section 4(a)(i) of the Warrant Agreement and
requests that certificates for such shares to be issued in the name of:
Please insert social security or other
identifying number
--------------------------------------
--------------------------------------
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security number or other
identifying number
--------------------------------------
--------------------------------------
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
Dated: ______________, 199_
------------------------------
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant Certificate)
Signature Guaranteed:
FORM OF CASHLESS EXERCISE
(To be executed if holder desires to exercise
the Warrant Certificate in accordance
with Section 4(a)(ii) of the Warrant Agreement)
TO: NATIONS FLOORING, INC.
The undersigned hereby irrevocably elects a Cashless Exercise of the
Warrants represented by this Warrant Certificate to purchase the shares of
Common Stock issuable upon the exercise of such Warrants in accordance with
Section 4(a)(ii) of the Warrant Agreement and requests that certificates for
such shares be issued in the name of:
Please insert Social Security or
other identifying number
-----------------------------------
-----------------------------------
-------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert Social Security or
other identifying number
-----------------------------------
-----------------------------------
-------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------
Dated: __________, 199_
--------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the back of this
Warrant Certificate)
Signature Guaranteed:
FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificates.)
FOR VALUE RECEIVED, ________________________ hereby sells, assigns and
transfers unto this Warrant Certificate, together with all right, title and
interest herein, and does hereby irrevocably constitute and appoint
________________, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _______________, 199_
Signature
------------------
Signature Guaranteed:
NOTICE
The signature of the foregoing Assignment must correspond to the name
as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
