EXHIBIT 10.5
A G R E E M E N T
AGREEMENT dated as of March 28, 2001, between xXxxxx.xxx, Inc., a Delaware
corporation (the "Company"), Whale Securities Co., L.P. ("Whale"), Xxxxxxx Xxxx
("Xxxx"), and the undersigned additional persons listed at the foot of this
Agreement as "Additional Assignees".
W I T N E S S E T H:
WHEREAS, the Company and Whale are parties to a Placement Agent Agreement
dated as of November 17, 1999 (the "Placement Agent Agreement") and a Warrant
Agreement dated as of November 17, 1999 (the "Warrant Agreement);
WHEREAS, pursuant to the Warrant Agreement, as of November 17, 1999 the
Company issued an aggregate of 640,625 Warrants exercisable at a price of $2.50
per share to Whale which in March of 2000 were assigned by Whale to Whale, Gohd
and the Additional Assignees and are currently held by them in the amounts set
forth on Schedule 1 hereto;
WHEREAS, the Company, Whale, Gohd and the Additional Assignees have agreed
to amend the Placement Agent Agreement and the Warrant Agreement in the several
respects set forth below.
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Amendment of Placement Agent Agreement. Section 6(h) entitled
"Employee Stock Option Plan" shall be deleted in its entirety.
2. Amendment of Warrant Agreement. The Warrant Agreement is amended in
the following respects:
a. The exercise price of $2.50 per share provided in Sections 1, 3.1
and 5.1 of the Warrant Agreement is changed from $2.50 to $1.37.
b. Sections 7.1 and 7.2 of the Warrant Agreement are deleted in
their entirety and replaced with the following:
"7.1 Dividends and Distributions. In case the Company shall at any
time after the date hereof pay a dividend in Common Shares or make a
distribution in Common Shares, then upon such dividend or
distribution, the Exercise Price in effect immediately prior to such
dividend or distribution shall be reduced to a price
determined by dividing an amount equal to the total number of Common
Shares outstanding immediately prior to such dividend or
distribution multiplied by the Exercise Price in effect immediately
prior to such dividend or distribution, by the total number of
Common Shares outstanding immediately after such issuance or sale.
For purposes of any computation to be made in accordance with the
provisions of this Section 7.1, the Common Shares issuable by way of
dividend or distribution shall be deemed to have been issued
immediately after the opening of business on the date following the
date fixed for determination of stockholders entitled to receive
such dividend or distribution."
c. Sections 7.3, 7.4 and 7.5 of the Warrant Agreement are
renumbered as Sections 7.2, 7.3, 7.4 respectively.
d. There is added to the Warrant Agreement the following Section
7.5:
"7.5 Determination of Outstanding Shares. The number of Common
Shares at any one time outstanding shall include the aggregate
number of shares issued or issuable upon the exercise of outstanding
options, rights and warrants and upon the conversion or exchange of
outstanding convertible or exchangeable securities."
e. Section 7.7 of the Warrant Agreement is deleted in its
entirety and replaced with the following:
"7.7. Subscription Rights for Common Shares or Other Securities. In
the case that the Company or an affiliate of the Company shall at
any time after the date hereof and prior to the exercise of all the
Warrants issue any rights, warrants or options to subscribe for
Common Shares or any other securities of the Company or of such
affiliate to all the stockholders of the Company, the Holders of
unexercised Warrants on the record date set by the Company or such
affiliate in connection with such issuance of rights, warrants or
options shall be entitled, in addition to the Common Shares or other
securities receivable upon the exercise of the Warrants, to receive
such rights, warrants or options that such Holders would have been
entitled to receive had they been, on such record date, the holders
of record of the number of whole Common Shares then issuable upon
exercise of their outstanding Warrants (assuming for purposes of
this Section 7.7 that the exercise of the Warrants is permissible
immediately upon issuance)."
g. Sections 12 through 18 of the Warrant Agreement are renumbered as
Sections 13 through 19 and all cross references are appropriately adjusted.
f. There is added to the Warrant Agreement the following new
Section 12:
"12. Redemption of Warrants. The Warrants are redeemable by the
Company, in whole or in part, on not less than thirty (30) days'
prior written notice (the "Notice Period") at a price of $.10 per
Warrant any time; provided that (i) the closing sale price of the
Common Stock on the Nasdaq SmallCap Market on all twenty (20)
trading days ending on the third trading day prior to the day on
which the Company gives notice of redemption (the "Call Date") has
been at least $5.00 and (ii) the shares underlying the Warrants are
freely tradable during the entire Notice Period, pursuant to a
registration statement filed with and declared effective by, the
Securities and Exchange Commission. Holders of the Warrants will
have exercise rights until the close of business on the date fixed
for redemption."
h. Exhibit A to the Warrant Agreement is deleted in its entirety
and replaced with Exhibit A hereto.
3. Change in Number of Warrants and Exercise Price. The aggregate number
of Warrants issued under the Warrant Agreement is increased from 640,625 to
950,000 and the exercise price is reduced from $2.50 to $1.375. All references
to the Warrant Agreement in the current Warrants held by Whale, Gohd and the
Additional Assignees are deemed to refer to the Warrant Agreement as amended by
this Agreement. Each of Whale, Gohd and the Additional Assignees shall exchange
its current Warrant for a replacement Warrant in the form attached hereto as
Exhibit A in the amount set forth in the third column of Schedule 1. Within five
business days after the Agreement becomes effective, the Company will deliver
the replacement Warrants to Whale's counsel to be held in escrow and released to
the respective holders upon receipt by the Company of the current Warrants.
4. No Further Adjustment. Whale, Gohd and the Additional Assignees
acknowledge and agree that except only for the change in exercise price and
increase in number of Warrants provided for in this Agreement, no further
adjustment in either the exercise price or number of warrants is required
because of any issuances of the Company's securities, including its shares of
common stock, stock options and warrants, at any time prior to the date hereof.
The Company represents that at no time prior to November 17, 1999 to the date
hereof, has the Company issued any shares or securities exercisable or
convertible into shares at a price less than $.75 per share.
5. Gohd's Options. Gohd is currently the holder of 125,000 stock
options exercisable at $2.00 per share and 25,000 stock options exercisable at
$1.38 per share (the
"Options"). In the event that Gohd leaves the Company's Board of Directors for
any reason, the options shall remain in effect and exercisable for the duration
of their current five year terms.
6. Registration of Warrant Shares. As soon as practicable, but no later
than 15 days after the Company becomes eligible to file a Registration Statement
on Form S-3, but in no event later than May 31, 2001, it shall prepare and file
with the Securities and Exchange Commission a Registration Statement on Form S-3
and include all of the shares underlying the Warrants in the Registration
Statement and use its best efforts to have the Registration Statement be
declared effective as promptly as reasonably practicable.
7. Indemnification Agreement. In the event that this Agreement is not
signed by one or more of the Additional Assignees, then Whale agrees to
indemnify the Company, its officers and directors from any and all liability,
damages, losses, costs or expenses, including but not limited to reasonable
attorneys' fees arising out of any claim based on or related to the Warrant
Agreement or this Agreement that is made by those Additional Assignee(s) who did
not sign this Agreement.
8. Reaffirmation of Agreements. Except as expressly amended by the
terms of this Agreement, the Placement Agent Agreement and the Warrant Agreement
shall remain in full force and effect and unmodified.
9. Effectiveness; Counterparts. This Agreement shall be effective when
signed by the Company, Whale, and Gohd. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed an original, and such counterparts shall together constitute but one in
the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed, as of the day and year first above written.
xXXXXX.XXX, INC.
By: /s/
-----------------------------------------
Xxxxx X. Xxxxxx, Chairman and Chief
Executive Officer
WHALE SECURITIES CO., L.P.
By: WHALE SECURITIES CORP.,
General Partner
By: /s/
-----------------------------------------
XXXXXXX X. XXXXXXX, Chairman
/s/
--------------------------------------------
XXXXXXX XXXX
ADDITIONAL ASSIGNEES:
/s/
--------------------------------------------
Xxxxxxx Xxxxxxxx
/s/
--------------------------------------------
Xxxxxx Xxxxxx
/s/
--------------------------------------------
Xxxxx Xxxxxxx
/s/
--------------------------------------------
Xxxxx Xxxxxxx
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED FOR PURPOSES OF PUBLIC
DISTRIBUTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144
UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, November 17, 2004
No. W- ______ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that _________________________ or
registered assigns, is the registered holder of ________ Warrants to purchase,
at any time from November 17, 1999 until 5:00 P.M. New York City time on
November 17, 2004 ("Expiration Date"), up to________ fully-paid and
non-assessable shares ("Shares") of the common shares, par value per share (the
"Common Shares"), of xXxxxx.xxx, Inc., a Delaware corporation (the "Company"),
at the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $1.37 per Share upon surrender of this Warrant Certificate
and payment of the Exercise Price at an office or agency of the Company, but
subject to the conditions set forth herein and in the warrant agreement dated as
of November 17, 1999 between the Company and Whale Securities Co., L.P., as
amended by an Agreement dated as of March 28, 2001 (the "Warrant Agreement").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination thereof.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is, hereby incorporated by reference in and made a part of
this instrument and is
hereby referred to in a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and the holders
(the words "holders" or "holder" meaning the registered holders or registered
holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange' for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: As of March 28, 2001 XXXXXX.XXX, INC.
By:
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
SCHEDULE 1
WARRANT ADJUSTMENT
Name of Warrant Holder Pre-Adjustment @ $2.50 Post-Adjustment @ 1.375
--------------------------------------------------------------------------------
Whale Securities Co., L.P. 310,625 460,634
Xxxxxxx X. Xxxx 280,000 415,220
Xxxxxx Xxxxxx 15,000 22,244
Xxxxx Xxxxxxx 15,000 22,244
Xxxxxxx Xxxxxxxx 10,000 14,829
Xxxx Xxxxxxx 10,000 14,829
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640,625 950,000
