EXHIBIT 1.2
WARRANT AGREEMENT
___________, 1998
TEJAS SECURITIES GROUP, INC.
1250 Capital of Texas Hwy. South
Building Two, Suite 500
Austin, Texas 78746
Gentlemen:
Starlight Entertainment, Inc., a Colorado corporation (the "Company"),
hereby agrees to sell to you, and you hereby agree to purchase from the Company
at an aggregate purchase price of $100, warrants (the "Representative's
Warrants") to purchase 100,000 Units (the "Units"), each consisting of one share
of the Company's Common Stock, no par value (the "Common Stock"), and one
Redeemable Common Stock Purchase Warrant (the "Warrants") of the Company, or the
underlying Common Stock and Warrants, if separately transferable, issued in
accordance with the terms of the Warrant Agreement (the "Warrant Agreement"),
dated as of _____________, 1998 between the Company and American Securities
Transfer & Trust, Inc., Denver, Colorado, as warrant agent (the "Warrant
Agent"). The Representative's Warrants will be exercisable by you as to all or
any lesser number of Units, or the underlying Common Stock and Warrants, if
separately transferable, at the Purchase Price per Unit as defined below, at any
time and from time to time on and after the first anniversary of the date hereof
and ending at 5:00 p.m. on the fifth anniversary of the date hereof.
1. Definitions.
As used herein, the following terms, unless the context otherwise requires,
shall have for all purposes hereof the following meanings:
The term "Act" refers to the Securities Act of 1933, as amended.
The term "Affiliate" of any Person refers to any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with, such other Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
The term "Commission" refers to the Securities and Exchange Commission.
The term "Common Stock" refers to all stock of any class or classes
(however designated) of the Company, now or hereafter authorized, the holders of
which shall have the right without limitation as to amount, either to all or to
a part of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingency, be
entitled to vote for the election of a majority of the directors of the Company
(even though the right so to vote has been suspended by the occurrence of such a
contingency).
The term "Current Market Price" on any date refers to the average of the
daily Market Price per share for the 30 consecutive Trading Days commencing 45
Trading Days before the date in question.
The term "Exchange Act" refers to the Securities Exchange Act of 1934, as
amended.
The term "Market Price" refers to the closing sale price on the American
Stock Exchange ("AMEX") or, if no closing sale price is reported, the closing
bid price of the Common Stock, as quoted on the Nasdaq National Market, or, if
the Common Stock is not quoted on the Nasdaq National Market, as reported by the
National Quotation Bureau Incorporated. If Market Price cannot be established as
described above, Market Price shall be the fair market value of the Common Stock
as determined in good faith by the Board of Directors whose determination shall
be conclusive.
The term "Other Securities" refers to any securities of the Company (other
than the Units, Common Stock or Warrants) or any other person (corporate or
otherwise) which the holders of the Representative's Warrants at any time shall
be entitled to receive, or shall have received, upon the exercise of the
Representative's Warrants, in lieu of or in addition to the Units, Common Stock
or Warrants, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Units, Common Stock, Warrants or Other
Securities pursuant to Section 6 below or otherwise.
The term "Person" refers to an individual, a partnership, a corporation, a
trust, a joint venture, an unincorporated organization and a government or any
department or agency thereof.
The term "Prospectus" shall mean the final prospectus of the Company, dated
the date hereof, relating to the offer and sale of 1,000,000 Units.
The term "Purchase Price" refers to the purchase price of the Units subject
to this Agreement. The Purchase Price shall equal to 120% of the initial
offering price to public per Unit as set forth in the Prospectus, subject to
adjustment as provided in Section 6 below.
The term "Registration Statement" refers to a Registration Statement filed
with the Commission pursuant to the Rules and Regulations of the Commission
promulgated under the Act.
The term "Trading Day" shall mean a day on which the Nasdaq Stock Market or
the principal national securities exchange on which the Common Stock is listed
or admitted to trading is open for the transaction of business.
The term "Underlying Securities" refers to the Units, Common Stock and
Warrants (or Other Securities) issuable under this Warrant Agreement, pursuant
to the exercise, in whole or in part, of the Representative's Warrants.
The term "Warrant Stock" refers to shares of Common Stock issuable upon the
exercise of the Warrants or the Representative's Warrants.
The purchase and sale of the Representative's Warrants shall take place,
and the purchase price therefore shall be paid by delivery of your check,
simultaneously with the purchase of and payment for 1,000,000 Units, as provided
in the Underwriting Agreement between the Company and you, dated the date
hereof.
2. Representations and Warranties.
The Company represents and warrants to you as follows:
(a) Corporate Action. The Company has all requisite corporate power and
authority, and has taken all necessary corporate action, to execute and deliver
this Agreement, to issue and deliver the Representative's Warrants and
certificates evidencing same, and to authorize and reserve for issuance, and
upon payment from time to time of the Purchase Price to issue and deliver, the
Units, including the Common Stock and the Warrants and shares of Common Stock
underlying the Warrants.
(b) No Violation. Neither the execution nor delivery of this Agreement,
the consummation of the actions herein contemplated nor compliance with the
terms and provisions hereof will conflict with, or result in a breach of, or
constitute a default or an event permitting acceleration under, any of the
terms, provisions or conditions of the Articles
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of Incorporation or Bylaws of the Company or any indenture, mortgage, deed of
trust, note, bank loan, credit agreement, franchise, license, lease, permit,
judgment, decree, order, statute, rule or regulation or any other agreement,
understanding or instrument to which the Company is a party or by which it is
bound.
3. Compliance with the Act.
(a) Transferability of Representative's Warrants. You agree that the
Representative's Warrants may not be transferred, sold, assigned or hypothecated
for a period of one (1) year from the date hereof, except to (i) persons who are
officers of you; (ii) a successor to you in a merger or consolidation; (iii) a
purchaser of all or substantially all of your assets; (iv) your shareholders in
the event you are liquidated or dissolved; and (v) persons who are officers of
participating broker-dealers.
(b) Registration of Underlying Securities. The Underlying Securities
issuable upon the exercise of the Representative's Warrants have not been
registered under the Act. You agree not to make any sale or other disposition
of the Underlying Securities, except pursuant to a Registration Statement which
has become effective under the Act, setting forth the terms of such offering,
the underwriting discount and the commissions and any other pertinent data with
respect thereto, unless you have provided the Company with an opinion of counsel
reasonably acceptable to the Company that such registration is not required.
(c) Inclusion in Registration of Other Securities. If at any time
commencing one year after the date hereof but prior to the fifth anniversary of
the date hereof, the Company shall propose the registration on an appropriate
form under the Act of any shares of Common Stock or Other Securities, the
Company shall at least 30 days prior to the filing of such Registration
Statement give you written notice, or telegraphic or telephonic notice followed
as soon as practicable by written confirmation thereof, of such proposed
registration and, upon written notice, or telegraphic or telephonic notice
followed as soon as practicable by written confirmation thereof, given to the
Company within five business days after the giving of such notice by the
Company, shall include or cause to be included in any such Registration
Statement all or such portion of the Underlying Securities as you may request,
provided, however, that the Company may at any time withdraw or cease proceeding
with any such registration if it shall at the same time withdraw or cease
proceeding with the registration of such Common Stock or such Other Securities
originally proposed to be registered.
Notwithstanding any provision of this Agreement to the contrary, if
any holder of the Representative's Warrants exercises such Representative's
Warrants but shall not have included all the Underlying Securities in a
Registration Statement which complies with Section 10(a)(3) of the Act, which
has been effective for at least 30 calendar days following the exercise of the
Representative's Warrants, the registration rights set forth in this Section
3(c) shall be extended until such time as (i) such a Registration Statement
including such Underlying Securities has been effective for at least 30 calendar
days, or (ii) in the opinion of counsel satisfactory to you and the Company,
registration is not required under the Act or under applicable state laws for
resale of the Underlying Securities in the manner proposed.
(d) Company's Obligations in Registration. In connection with any offering
of Subject Stock pursuant to Section 3(c) above, the Company shall:
(i) Notify you as to the filing thereof and of all amendments or
supplements thereto filed prior to the effective date thereof;
(ii) Comply with all applicable rules and regulations of the
Commission;
(iii) Notify you immediately, and confirm the notice in writing, (1)
when the Registration Statement becomes effective, (2) of the
issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceedings for that
purpose, (3) of the receipt by the Company of any notification
with respect to the suspension of qualification of the Subject
Stock for sale in any jurisdiction or of the initiation, or the
threatening, of any
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proceedings for that purpose and (4) of the receipt of any comments,
or requests for additional information, from the Commission or any
state regulatory authority. If the Commission or any state regulatory
authority shall enter such a stop order or order suspending
qualification at any time, the Company will make every reasonable
effort to obtain the lifting of such order as promptly as practicable.
(iv) During the time when a Prospectus is required to be delivered
under the Act during the period required for the distribution of the
Subject Stock, comply so far as it is able with all requirements
imposed upon it by the Act, as hereafter amended, and by the Rules and
Regulations promulgated thereunder, as from time to time in force, so
far as necessary to permit the continuance of sales of or dealings in
the Subject Stock. If at any time when a Prospectus relating to the
Subject Stock is required to be delivered under the Act any event
shall have occurred as a result of which, in the opinion of counsel
for the Company or your counsel, the Prospectus relating to the
Subject Stock as then amended or supplemented includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend such
Prospectus to comply with the Act, the Company will promptly prepare
and file with the Commission an appropriate amendment or supplement
(in form satisfactory to you).
(v) Endeavor in good faith, in cooperation with you, at or prior to the
time the Registration Statement becomes effective, to qualify the
Subject Stock for offering and sale under the securities laws relating
to the offering or sale of the Subject Stock of such jurisdictions as
you may reasonably designate and to continue the qualifications in
effect so long as required for purposes of the sale of the Subject
Stock; provided that no such qualification shall be required in any
jurisdiction where, as a result thereof, the Company would be subject
to service of general process, or to taxation as a foreign corporation
doing business in such jurisdiction. In each jurisdiction where such
qualification shall be effected, the Company will, unless you agree
that such action is not at the time necessary or advisable, file and
make such statements or reports at such times as are or may reasonably
be required by the laws of such jurisdiction. For the purposes of this
paragraph, "good faith" is defined as the same standard of care and
degree of effort as the Company will use to qualify its securities
other than the Subject Stock.
(vi) Make generally available to its security holders as soon as
practicable, but not later than the first day of the eighteenth full
calendar month following the effective date of the Registration
Statement, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless
required by the Act or the rules and regulations promulgated
thereunder, but which shall satisfy the provisions of Section 11(a) of
the Act) covering a period of at least twelve months beginning after
the effective date of the Registration Statement.
(vii) After the effective date of such Registration Statement,
prepare, and promptly notify you of the proposed filing of, and
promptly file with the Commission, each and every amendment or
supplement thereto or to any Prospectus forming a part thereof as may
be necessary to make any statements therein not misleading; provided
that no such amendment or supplement shall be filed if you shall
object thereto in writing promptly after being furnished a copy
thereof.
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(viii) Furnish to you, as soon as available, copies of any such Registration
Statement and each preliminary or final Prospectus, or supplement or
amendment prepared pursuant thereto, all in such quantities as you may
from time to time reasonably request;
(ix) Make such representations and warranties to any underwriter of the
Subject Stock, and use your best efforts to cause Company counsel to
render such opinions to such underwriter, as such underwriter may
reasonably request; and
(x) Pay all costs and expenses incident to the performance of the
Company's obligations under Sections 3(c) and (d), including, without
limitation, the fees and disbursements of the Company's auditors and
legal counsel, fees and disbursements of legal counsel for you,
registration, listing and filing fees, printing expenses and expenses
in connection with the transfer and delivery of the Underlying
Securities; provided, however, that the Company shall not be
responsible for compensation and reimbursement of expenses to
underwriters or selling agents for the included Subject Stock.
(e) Agreements by Warrant Holder. In connection with the filing of a
Registration Statement pursuant to Section 3(c) above, if you participate in the
offering of the Subject Stock by including shares owned by you, you agree:
(i) To furnish the Company all material information requested by the
Company concerning yourself and your holdings of securities of the
Company and the proposed method of sale or other disposition of the
Subject Stock and such other information and undertakings as shall be
reasonably required in connection with the preparation and filing of
any such Registration Statement covering all or a part of the Subject
Stock and in order to ensure full compliance with the Act; and
(ii) To cooperate in good faith with the Company and its underwriters, if
any, in connection with such registration, including placing the
shares of Subject Stock to be included in such Registration Statement
in escrow or custody to facilitate the sale and distribution thereof.
(f) Indemnification. The Company shall indemnify and hold harmless you and
any underwriter (as defined in the Act) for you, and each person, if any, who
respectively controls you or such underwriter within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, against any loss, liability,
claim, damage and expense whatsoever (including but not limited to any and all
expense whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever), joint
or several, to which any of you or such underwriter or such controlling person
becomes subject, under the Act or otherwise, insofar as such loss, liability,
claim, damage and expense (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in (i) a Registration Statement covering the Subject Stock, in the
prospectus contained therein, or in an amendment or supplement thereto or (ii)
in any application or other document or communication (in this Section
collectively called "application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Subject Stock under the securities laws
thereof or filed with the Commission, or arise out of or based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company shall not be obligated to indemnify in any such case
to the extent that any such loss, claim, damage, expense or liability arises out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon, and in conformity with, written
information respectively furnished by you or such underwriter or such
controlling person for use in the Registration Statement, or any amendment or
supplement thereto, or any application, as the case may be.
If any action is brought against a person in respect of which
indemnity may be sought against, the Company pursuant to the foregoing
paragraph, such person shall promptly notify the Company in writing of the
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institution of such action and the Company shall assume the defense of the
action, including the employment of counsel (satisfactory to the indemnified
person in its reasonable judgment) and payment of expenses. The indemnified
person shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
indemnified person or unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of the
action or the Company shall not have employed counsel to have charge of the
defense of the action or the indemnified person shall have reasonably concluded
that there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of the action on behalf of the
indemnified person), in any of which events these fees and expenses shall be
borne by the Company. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any claim
or action effected without its written consent. The Company's indemnity
agreements contained in this Section shall remain in full force and effect
regardless of any investigation made by or on behalf of any indemnified person,
and shall survive any termination of this Agreement. The Company agrees promptly
to notify you of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the Registration
Statement pursuant to Section 3(c) above.
If you choose to include any Subject Stock in a public offering
pursuant to Section 3(c) above, then you agree to indemnify and hold harmless
the Company and each of its directors and officers who have signed any such
Registration Statement, and any underwriter for the Company (as defined in the
Act), and each person, if any, who controls the Company or such underwriter
within the meaning of the Act, to the same extent as the indemnity by the
Company in this Section 3(f) but only with respect to statements or omissions,
if any, made in such Registration Statement, or any amendment or supplement
thereto, or in any application in reliance upon, and in conformity with, written
information furnished by you to the Company for use in the Registration
Statement, or any amendment or supplement thereto, or any application, as the
case may be. In case any action shall be brought in respect of which indemnity
may be sought against you, you shall have the rights and duties given to the
Company, and the persons so indemnified shall have the rights and duties given
to you by the provisions of the first paragraph of this Section.
The Company further agrees that, if the indemnity provisions of the
foregoing paragraphs are held to be unenforceable, any holder of the
Representative's Warrants or controlling person of such a holder may recover
contribution from the Company in an amount which, when added to contributions
such holder or controlling person has theretofore received or concurrently
receives from officers and directors of the Company or controlling persons of
the Company, will reimburse such holder or controlling person for all losses,
claims, damages or liabilities and legal or other expenses; provided, however,
that if the full amount of the contribution specified in this Section 3(f) is
not permitted by law, then such holder or controlling person shall be entitled
to contribution from the Company and its officers, directors and controlling
persons to the full extent permitted by law.
4. Exercise of Representative's Warrants.
(a) Cash Exercise. Each Representative's Warrant may be exercised in full
or in part (but not as to a fractional share of Common Stock) by the holder
thereof by surrender of the Warrant Certificate, with the form of subscription
at the end thereof duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or bank cashier's check
payable to the order of the Company, in the respective amount obtained by
multiplying the number of shares of the Underlying Securities to be purchased by
the Purchase Price per share.
(b) Net Exercise. Notwithstanding anything to the contrary contained in
Section 4(a), any holder of the Representative's Warrants may elect to exercise
the Representative's Warrants in full or in part and receive shares on a "net
exercise" basis in an amount equal to the value of the Representative's Warrants
by delivery of the form of subscription attached to the Warrant Certificate and
surrender of the Representative's Warrants at the principal office of the
Company, in which event the Company shall issue to the holder a number of shares
computed using the following formula:
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X= (P)(Y)(A-B)
-----------
A
Where: X= the number of shares of Common Stock to be issued to
holder.
P= the portion of the Representative's Warrants being exercised
(expressed as a fraction).
Y= the total number of shares of Common Stock issuable upon
exercise of the Representative's Warrants.
A= the Current Market Price of one share of Common Stock.
B= Purchase Price.
(c) Partial Exercise. Prior to the expiration of the Representative's
Warrants, upon any partial exercise, the Company at its expense will forthwith
issue and deliver to or upon the order of the purchasing holder, a new Warrant
Certificate or Certificates of like tenor, in the name of the holder thereof or
as such holder (upon payment by such holder of any applicable transfer taxes)
may request calling in the aggregate for the purchase of the number of shares of
the Underlying Securities equal to the number of such shares called for on the
face of the Warrant Certificate (after giving effect to any adjustment therein
as provided in Section 6 below) minus the number of such shares (after giving
effect to such adjustment) designated by the holder in the aforementioned form
of subscription.
(d) Company to Reaffirm Obligations. The Company will, at the time of any
exercise of the Representative's Warrants, upon the request of the holder
thereof, acknowledge in writing its continuing obligation to afford to such
holder any rights (including without limitation any right to registration of the
shares of the Underlying Securities issued upon such exercise) to which such
holder shall continue to be entitled after such exercise in accordance with the
provisions of this Agreement; provided, however, that if the holder of the
Representative's Warrants shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to afford to such
holder any such rights.
5. Delivery of Certificates on Exercise.
As soon as practicable after any exercise of the Representative's Warrants
in full or in part, and in any event within twenty days thereafter, the Company
at its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the purchasing holder
thereof, a certificate or certificates for the number of fully paid and
nonassessable Common Stock and Warrants to which such holder shall be entitled
upon such exercise, plus in lieu of any fractional share to which such holder
would otherwise be entitled, cash in an amount determined pursuant to Section
7(g), together with any other stock or other securities and property (including
cash, where applicable) to which such holder is entitled upon such exercise
pursuant to Section 6 below or otherwise.
6. Anti-dilution Provisions.
The Representative's Warrants are subject to the following terms and
conditions during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding shares of
Common Stock (or Other Securities) shall be subdivided into a greater number of
shares or (ii) a dividend in Common Stock (or Other Securities) shall be paid in
respect of Common Stock (or Other Securities), the Purchase Price per share in
effect immediately prior to such subdivision or at the record date of such
dividend or distribution shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend or
distribution be proportionately reduced; and if outstanding shares of Common
Stock (or Other Securities) shall be combined into a smaller number of shares
thereof, the Purchase Price per share in effect immediately prior to such
combination shall simultaneously with the effectiveness
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of such combination be proportionately increased. Any dividend paid or
distributed on the Common Stock (or Other Securities) in stock or any other
securities convertible into shares of Common Stock (or Other Securities) shall
be treated as a dividend paid in Common Stock (or Other Securities) to the
extent that shares of Common Stock (or Other Securities) are issuable upon the
conversion thereof.
(b) Adjustments. Whenever the Purchase Price per share is adjusted as
provided in Section 6(a) above, the number of shares of the Underlying
Securities purchasable upon exercise of the Representative's Warrants
immediately prior to such Purchase Price adjustment shall be adjusted, effective
simultaneously with such Purchase Price adjustment, to equal the product
obtained (calculated to the nearest full share) by multiplying such number of
shares of the Underlying Securities by a fraction, the numerator of which is the
Purchase Price per share in effect immediately prior to such Purchase Price
adjustment and the denominator of which is the Purchase Price per share in
effect upon such Purchase Price adjustment, which adjusted number of shares of
the Underlying Securities shall thereupon be the number of shares of the
Underlying Securities purchasable upon exercise of the Representative's Warrants
until further adjusted as provided herein.
(c) Reorganizations. In case the Company shall be recapitalized by
reclassifying its outstanding Common Stock (or Other Securities) into a stock
with a different par value or by changing its outstanding Common Stock (or Other
Securities) with par value to stock without par value, then, as a condition of
such reorganization, lawful and adequate provision shall be made whereby each
holder of the Representative's Warrants shall thereafter have the right to
purchase, upon the terms and conditions specified herein, in lieu of the shares
of Common Stock (or Other Securities) theretofore purchasable upon the exercise
of the Representative's Warrants, the kind and amount of shares of stock and
other securities receivable upon such recapitalization by a holder of the number
of shares of Common Stock (or Other Securities) which the holder of the
Representative's Warrants might have purchased immediately prior to such
recapitalization. If any 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 consolidation, merger or
sale, lawful and adequate provisions 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 Agreement 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
consolidation, merger or sale not taken place, and in any such case, appropriate
provision shall be made with respect to the rights and interests of the holders
of the Representative's Warrants to the end that the provisions hereof
(including without limitation provisions for adjustments of the Purchase Price
and of the number of shares purchasable and receivable upon the exercise of the
Representative's Warrants) 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 (including an immediate adjustment, by reason of such
consolidation or merger, of the Purchase Price to the value for the Common Stock
reflected by the terms of such consolidation or merger if the value so reflected
is less than the Purchase Price in effect immediately prior to such
consolidation or merger). In the event of a merger or consolidation of the
Company with or into another corporation as a result of which a number of shares
of Common Stock of the surviving corporation greater or lesser than the number
of shares of Common Stock of the Company outstanding immediately prior to such
merger or consolidation are issuable to holders of Common Stock of the Company,
then the Purchase Price in effect immediately prior to such merger or
consolidation shall be adjusted in the same manner as though there were a
subdivision or combination of the outstanding shares of Common Stock of the
Company. The Company will not effect any such consolidation, merger or sale,
unless prior to the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and mailed or
delivered 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. If a purchase, tender or
exchange offer is made to and accepted by the holders of more than of the
outstanding shares of Common Stock of the Company, the Company shall not effect
any consolidation, merger or sale with the Person having
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made such offer or with any Affiliate of such Person, unless prior to the
consummation of such consolidation, merger or sale the holders of the
Representative's Warrants shall have been given a reasonable opportunity to then
elect to receive upon the exercise of the Representative's Warrants either the
stock, securities or assets then issuable with respect to the Common Stock of
the Company or the stock, securities or assets, or the equivalent issued to
previous holders of the Common Stock in accordance with such offer.
(d) Effect of Dissolution or Liquidation. In case the Company shall
dissolve or liquidate all or substantially all of its assets, all rights under
this Agreement shall terminate as of the date upon which a certificate of
dissolution or liquidation shall be filed with the Secretary of the State of
Texas (or, if the Company theretofore shall have been merged or consolidated
with a corporation incorporated under the laws of another state, the date upon
which action of equivalent effect shall have been taken); provided, however,
that (i) no dissolution or liquidation shall affect the rights under Section
6(c) of any holder of the Representative's Warrants and (ii) if the Company's
Board of Directors shall propose to dissolve or liquidate the Company, each
holder of the Representative's Warrants shall be given written notice of such
proposal at the earlier of (x) the time when the Company's shareholders are
first given notice of the proposal or (y) the time when notice to the Company's
shareholders is first required.
(e) Notice of Change of Purchase Price. Whenever the Purchase Price per
share or the kind or amount of securities purchasable under the Representative's
Warrants shall be adjusted pursuant to any of the provisions of this Agreement,
the Company shall forthwith thereafter cause to be sent to each holder of the
Representative's Warrants, a certificate setting forth the adjustments in the
Purchase Price per share and/or in such number of shares, and also setting forth
in detail the facts requiring, such adjustments, including without limitation a
statement of the consideration received or deemed to have been received by the
Company for any additional shares of stock issued by it requiring such
adjustment. In addition, the Company at its expense shall within 90 days
following the end of each of its fiscal years during the term of this Agreement,
and promptly upon the reasonable request of any holder of the Representative's
Warrants in connection with any exercise from time to time of all or any portion
of the Representative's Warrants, cause independent certified public accountants
of recognized standing selected by the Company to compute any such adjustment in
accordance with the terms of the Representative's Warrants and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based.
(f) Notice of a Record Date. In the event of (i) any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend payable out of earned surplus of the Company) or other
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, (ii) any capital reorganization of the Company, or any
reclassification or recapitalization of the capital stock of the Company, or any
transfer of all or substantially all of the assets of the Company to, or
consolidation or merger of the Company with or into, any other person or (iii)
any voluntary or involuntary dissolution or liquidation of the Company, then and
in each such event the Company will mail or cause to be mailed to each holder of
the Representative's Warrants a notice specifying not only the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right and stating the amount and character of such dividend, distribution or
right, but also the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or other Securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the proposed record date
therein specified.
7. Further Covenants of the Company.
(a) Reservation of Stock. The Company shall at all times reserve and keep
available, solely for issuance and delivery upon the exercise of the
Representative's Warrants, all shares of the Underlying Securities from time to
time issuable upon the exercise of the Representative's Warrants and shall take
all necessary actions to ensure that the
9
par value per share, if any, of the Underlying Securities is, at all times equal
to or less than the then effective Purchase Price per share.
(b) Title to Units. All of the Underlying Securities delivered upon the
exercise of the Representative's Warrants shall be validly issued, fully paid
and nonassessable; each holder of the Representative's Warrants shall receive
good and marketable title to the Underlying Securities, free and clear of all
voting and other trust arrangements, liens, encumbrances, equities and adverse
claims whatsoever; and the Company shall have paid all taxes, if any, in respect
of the issuance thereof.
(c) Listing on Securities Exchanges; Registration. If the Company at any
time shall list any Units, Common Stock or Warrants on any national securities
exchange, the Company will, at its expense, simultaneously list on such
exchange, upon official notice of issuance upon the exercise of the
Representative's Warrants, and maintain such listing of, all of the Underlying
Securities from time to time issuable upon the exercise of the Representative's
Warrants; and the Company will so list on any national securities exchange, will
so register and will maintain such listing of, any Other Securities if and at
the time that any securities of like class or similar type shall be listed on
such national securities exchange by the Company.
(d) Exchange of Representative's Warrants. Subject to Section 3(a) hereof,
upon surrender for exchange of any Warrant Certificate to the Company, the
Company at its expense will promptly issue and deliver to or upon the order of
the holder thereof a new Warrant Certificate or certificates of like tenor, in
the name of such holder or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate for the purchase
of the number of shares of the Underlying Securities called for on the face or
faces of the Warrant Certificate or Certificates so surrendered.
(e) Replacement of Representative's Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant Certificate and, in the case of any such loss, theft
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant Certificate, the Company, at the
expense of the warrant holder will execute and deliver, in lieu thereof, a new
Warrant Certificate of like tenor.
(f) Reporting by the Company. The Company agrees that, if it files a
Registration Statement during the term of the Representative's Warrants, it will
use its best efforts to keep current in the filing of all forms and other
materials which it may be required to file with the appropriate regulatory
authority pursuant to the Exchange Act, and all other forms and reports required
to be filed with any regulatory authority having jurisdiction over the Company.
(g) Fractional Shares. No fractional shares of Underlying Securities are to
be issued upon any exercise of the Representative's Warrants, but the Company
shall pay a cash adjustment in respect of any fraction of a share which would
otherwise be issuable in an amount equal to the same fraction of the highest
market price per share of Underlying Securities on the day of exercise, as
determined by the Company.
8. Other Holders.
The Representative's Warrants are issued upon the following terms, to all
of which each holder or owner thereof by the taking thereof consents and agrees
as follows: (a) any person who shall become a transferee, within the limitations
on transfer imposed by Section 3(a) hereof, of the Representative's Warrants
properly endorsed shall take such Representative's Warrants subject to the
provisions of Section 3(a) hereof and thereupon shall be authorized to represent
himself as absolute owner thereof and, subject to the restrictions contained in
this Agreement, shall be empowered to transfer absolute title by endorsement and
delivery thereof to a permitted bona fide purchaser for value; (b) each prior
taker or owner waives and renounces all of his equities or rights in such
Representative's Warrants in favor of each such permitted bona fide purchaser,
and each such permitted bona fide purchaser shall acquire absolute title thereto
and to all rights presented thereby; (c) until such time as the respective
Representative's Warrants is transferred on the books of the Company, the
Company may treat the registered holder thereof as the absolute owner
10
thereof for all purposes, notwithstanding any notice to the contrary and (d) all
references to the word "you" in this Warrant Agreement shall be deemed to apply
with equal effect to any person to whom a Warrant Certificate or Certificates
have been transferred in accordance with the terms hereof, and where
appropriate, to any person holding the Underlying Securities.
9. Miscellaneous.
All notices, certificates and other communications from or at the request
of the Company to the holder of the Representative's Warrants shall be mailed by
first class, registered or certified mail, postage prepaid, to such address as
may have been furnished to the Company in writing by such holder, or, until an
address is so furnished, to the address of the last holder of such
Representative's Warrants who has so furnished an address to the Company, except
as otherwise provided herein. This Agreement and any of the terms hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Texas. The headings in
this Agreement are for reference only and shall not limit or otherwise affect
any of the terms hereof. This Agreement, together with the forms of instruments
annexed hereto as Exhibit A, constitutes the full and complete agreement of the
---------
parties hereto with respect to the subject matter hereof.
11
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed on the
date hereof.
STARLIGHT ENTERTAINMENT, INC.
By:___________________________
R. Xxxxx Xxxxxxx, President
TEJAS SECURITIES GROUP, INC.
By:____________________________
Xxxxxx X. Xxxxx, III
12
EXHIBIT A
---------
STARLIGHT ENTERTAINMENT, INC.
WARRANT CERTIFICATE
-------------------
Evidencing Right to Purchase 100,000 Units
This is to certify that Tejas Securities Group, Inc. (the "Representative")
or assigns, is entitled to purchase at any time or from time to time after 9
A.M., Colorado time, on ___________, 1999 and until 9 A.M., Colorado time, on
___________, 2003 up to the above referenced number of Units ("Units"), each
consisting of one share of Common Stock, no par value ("Common Stock"), and one
Common Stock Purchase Warrant ("Warrants") of Starlight Entertainment, Inc., a
Colorado corporation (the "Company"), or the underlying shares of Common Stock
and Warrants if separately transferable, for the consideration specified in
Section 4 of the Warrant Agreement, dated the date hereof, between the Company
and the Representative (the "Warrant Agreement"), pursuant to which this Warrant
is issued. All rights of the holder of this Warrant Certificate are subject to
the terms and provisions of the Warrant Agreement, copies of which are available
for inspection at the office of the Company. Capitalized terms used but not
defined herein shall have the respective meanings set forth in the Warrant
Agreement.
The Underlying Securities issuable upon the exercise of this Warrant have
not been registered under the Securities Act of 1933, as amended (the "Act"),
and no distribution of such Underlying Securities may be made until the
effectiveness of a Registration Statement under the Act covering such Underlying
Securities. Transfer of this Warrant Certificate is restricted as provided in
Section 3(a) of the Warrant Agreement.
This Warrant has been issued to the registered owner in reliance upon
written representations necessary to ensure that this Warrant was issued in
accordance with an appropriate exemption from registration under any applicable
state and federal securities laws, rules and regulations. This Warrant may not
be sold, transferred, or assigned unless, in the opinion of the Company and its
legal counsel, such sale, transfer or assignment will not be in violation of the
Act, applicable rules and regulations of the Securities and Exchange Commission,
and any applicable state securities laws.
Subject to the provisions of the Act and of such Warrant Agreement, this
Warrant Certificate and all rights hereunder are transferable, in whole or in
part, at the offices of the Company, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant Certificate, together with
the Assignment hereof duly endorsed. Until transfer of this Warrant Certificate
on the books of the Company, the Company may treat the registered holder hereof
as the owner hereof for all purposes.
Any Underlying Securities (or Other Securities) which are acquired pursuant
to the exercise of this Warrant shall be acquired in accordance with the Warrant
Agreement and certificates representing all securities so acquired shall bear a
restrictive legend reading substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF
1933 AND ANY APPLICABLE STATE LAW, OR (2) AN OPINION OF COUNSEL
(SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT REQUIRED.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
executed by its duly authorized officer.
Date:_________________, 1998
STARLIGHT ENTERTAINMENT, INC.
By:_____________________________
R. Xxxxx Xxxxxxx, President
SUBSCRIPTION
------------
(To be signed only upon exercise of Warrant)
To: Starlight Entertainment, Inc.
The undersigned, the holder of the enclosed Warrant Certificate, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, _________________ Units ("Units"),
each consisting of one share of Common Stock, no par value ("Common Stock"), and
one Common Stock Purchase Warrant ("Warrants") of Starlight Entertainment, Inc.,
or the underlying Common Stock and Warrants, if separately transferable, and
either tenders herewith payment of the purchase price in full in the form of
cash or a certified or cashier's check in the amount of $______________ therefor
or, if the undersigned elects pursuant to Section 4(b) of the Warrant Agreement
referred to in the Warrant Certificate to convert the enclosed Warrant
Certificate into Units or underlying Common Stock or Warrants by net issuance,
the undersigned exercises the Warrants by exchange under the terms of said
Section 4(b), and requests that the certificate or certificates for such
securities be issued in the name of and delivered to the undersigned.
Date: ______________________________
________________________________________
(Signature must conform
in all respects to name
of holder as specified on
the face of the Warrant
Certificate)
_______________________________________
_______________________________________
_______________________________________
(Address)
Please indicate in the space below the number of shares called for on the
face of the Warrant Certificate (or, in the case of a partial exercise, the
portion thereof as to which the Warrant is being exercised), in either case
without making any adjustment for additional shares or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise and whether the exercise is a cash exercise
pursuant to Section 4(a) of the Warrant Agreement or a net issuance exercise
pursuant to Section 4(b) of the Warrant Agreement.
Number of Units (or shares of Common Stock and Warrants):______________________
Cash:____________________
Net issuance:______________
ASSIGNMENT
----------
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers
unto ____________________________ the right represented by the enclosed Warrant
Certificate to purchase ____________________ Units ("Units"), each consisting of
one share of Common Stock, no par value ("Common Stock"), and one Common Stock
Purchase Warrant ("Warrants") of Starlight Entertainment, Inc., or the
underlying Common Stock or Warrants, with full power of substitution.
The undersigned represents and warrants that the transfer, in whole in or
in part, of such right to purchase represented by the enclosed Warrant
Certificate is permitted by the terms of the Warrant Agreement referred to in
the Warrant Certificate, and the transferee hereof, by his acceptance of this
Assignment, represents and warrants that he or she is familiar with the terms of
such Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Date:___________________
___________________________________________
(Signature must conform
in all respects to name of
holder as specified on
the face of the Warrant
Certificate)
____________________________________________
(Address)
Signed in the presence of:_______________________
