Exhibit 10.66
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SYNBIOTICS CORPORATION
Common Stock Purchase Warrant
Dated as of July 9, 1997
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This Warrant and any shares acquired upon the exer cise of this Warrant
have not been registered under the Securities Act of 1933, as amended, and
may not be transferred, sold or otherwise disposed of except while a
registration under such Act is in effect or pursuant to an exemption
therefrom under such Act. This Warrant and such shares may be transferred
only in compliance with the conditions specified in this Warrant.
1. Exercise of Warrant.......................................... 1
1.1. Manner of Exercise.................................... 1
1.2. When Exercise Effective............................... 2
1.3. Delivery of Stock Certificates, etc................... 2
1.4. Company to Reaffirm Obligations....................... 2
1.5. Payment by Application of Notes....................... 2
1.6 Payment by Application of Shares Otherwise
Issuable............................................ 3
2. Adjustment of Common Stock Issuable Upon Exercise............ 3
2.1. General; Warrant Price................................ 3
2.2. Adjustment of Warrant Price........................... 4
2.2.1 Issuance of Additional Shares of
Common Stock................................. 4
2.2.2 Extraordinary Dividends and
Distributions................................ 4
2.3. Treatment of Options and
Convertible Securities.............................. 5
2.4. Treatment of Stock Dividends, Stock Splits, etc....... 8
2.5. Computation of Consideration.......................... 8
2.6. Adjustments for Combinations, etc..................... 10
2.7. Dilution in Case of Other Securities.................. 10
2.8. Minimum Adjustment of Warrant Price................... 10
3. Consolidation, Merger, etc................................... 10
3.1. Adjustments for Consolidation, Merger,
Sale of Assets, Reorganization, etc................. 10
3.2. Assumption of Obligations............................. 11
4. Other Dilutive Events........................................ 12
5. No Dilution or Impairment.................................... 12
6. Accountants' Report as to Adjustments........................ 13
7. Notices of Corporate Action.................................. 14
8. Registration of Common Stock................................. 14
9. Restrictions on Transfer..................................... 15
9.1. Restrictive Legends................................... 15
9.2. Notice of Proposed Transfer; Opinions of Counsel...... 16
9.3. Termination of Restrictions........................... 17
10. Availability of Information................................. 18
11. Reservation of Stock, etc................................... 19
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12. Registration and Transfer of Warrants, etc.................. 19
12.1. Warrant Register; Ownership of Warrants............... 19
12.2. Transfer and Exchange of Warrants..................... 19
12.3. Replacement of Warrants............................... 19
13. Registration under Securities Act, etc...................... 20
13.1. Registration on Request............................... 20
13.2. Incidental Registration............................... 22
13.3. Registration Procedures............................... 24
13.4. Underwritten Offerings................................ 30
13.5. Preparation; Reasonable Investigation................. 33
13.6. Rights of Requesting Holders.......................... 33
13.7. Indemnification....................................... 34
14. Definitions................................................. 39
15. Remedies.................................................... 45
16. No Rights or Liabilities as Stockholder..................... 45
17. Notices..................................................... 45
18. Amendments.................................................. 45
19. Expiration.................................................. 45
20. Descriptive Headings........................................ 46
FORM OF SUBSCRIPTION............................................. 53
FORM OF ASSIGNMENT............................................... 54
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SYNBIOTICS CORPORATION
Common Stock Purchase Warrant
No. W-1 July 9, 1997
SYNBIOTICS CORPORATION (the "Company"), a California corporation, for
value received, hereby certifies that Banque Paribas, as agent on behalf of the
Banks named in the Credit Agreement (as defined below), or registered assigns,
is entitled to purchase from the Company 239,950 duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock, no par value per
share (the "Common Stock") of the Company at the purchase price per share of
$0.01, at any time or from time to time prior to 5:00 p.m., New York City time,
on May 31, 2007 (or such later date as may be determined pursuant to section
19), all subject to the terms, conditions and adjustments set forth below in
this Warrant.
This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants", such term to include any such warrants issued in substitution
therefor) originally issued in connection with the issuance by the Company of
Notes representing the obligations of the Company pursuant to the Credit
Agreement (the "Credit Agreement"), dated July 9, 1997, among Banque Paribas
(the "Purchaser"), the other Banks named therein, the Company and Banque
Paribas, acting in its capacity as agent for the Banks. The Warrants originally
so issued evidence rights to purchase an aggregate of 239,950 shares of Common
Stock subject to adjustment as provided herein. Certain capitalized terms used
in this Warrant are defined in section 14; references to an "Exhibit" are,
unless otherwise specified, to one of the Exhibits attached to this Warrant and
references to a "section" are, unless otherwise specified, to one of the
sections of this Warrant.
1. Exercise of Warrant. 1.1. Manner of Exercise. This Warrant may
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be exercised by the holder hereof, with respect to all (but not less than all)
of the Common Stock subject hereto, during normal business hours on any Business
Day, by surrender of this Warrant to the Company at its principal office,
accompanied by a subscription in substantially the form attached to this Warrant
(or a reasonable facsimile thereof) duly executed by such holder and accompanied
by payment, in cash, by certified or official bank check payable to the order of
the Company, or in the manner provided in section 1.5 or section 1.6 (or by any
combination of such methods), in the amount obtained by multiplying (a) the
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number of shares of Common Stock (without giving effect to any adjustment
thereof) designated in such subscription by (b) $0.01, and such holder shall
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thereupon be entitled to receive the number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock (or Other Securities)
determined as provided in sections 2 through 4.
1.2. When Exercise Effective. The exercise of this Warrant shall be
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deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in section 1.1, and at such time the Person or Persons in whose name or
names any certificate or certificates for shares of Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in section 1.3
shall be deemed to have become the holder or holders of record thereof.
1.3. Delivery of Stock Certificates, etc. As soon as practicable
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after the exercise of this Warrant and in any event within five Business 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 holder hereof or, subject to section 9, as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of duly authorized, validly is sued, fully paid and
nonassessable shares of Common Stock (or Other Securities) 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 equal to the
same fraction of the Market Price per share on the Business Day next preceding
the date of such exercise.
1.4. Company to Reaffirm Obligations. The Company will, at the time
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of the exercise of this Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder
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all rights (including, without limitation, any rights to registration of the
shares of Common Stock or Other Securities issued upon such exercise) to which
such holder shall continue to be entitled after such exercise in accordance with
the terms of this Warrant, provided that if the holder of this Warrant shall
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fail to make any such request, such failure shall not affect the continuing
obligation of the Company to afford such rights to such holder.
1.5. Payment by Application of Notes. Upon the exercise of this
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Warrant, the holder hereof may, at its option, instruct the Company, by written
notice accompanying the surrender of this Warrant at the time of such exercise,
to apply to the payment required by section 1.1 all or any part of the unpaid
principal amount of any one or more Notes at the time held by such holder which
is at such time due, in which case the Company will accept the principal amount
specified in such notice in satisfaction of a like amount of such payment. In
case less than the entire unpaid principal amount of any Note shall be so
specified, the principal amount so specified shall be credited, as of the date
of such exercise, against the required prepayments of principal then remaining
unpaid on such Note in the inverse order of their maturity dates. Upon any
partial application of a Note, the Company at its expense shall forthwith issue
and deliver to or upon the order of the holder thereof a new Note or Notes in
principal amount equal to the unpaid principal amount of such surrendered Note
which has not been applied against such payment, such new Note or Notes to be
dated and to bear interest from the date to which interest has been paid on such
surrendered Note. Within two Business Days after receipt of any such notice, the
Company will pay to the holder of the Notes giving such notice, in the manner
provided in the Notes and in the Credit Agreement, all unpaid interest on the
principal amount so specified in such notice, accrued to the date of the
exercise of such Warrant.
1.6 Payment by Application of Shares Otherwise Issuable. Upon the
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exercise of this Warrant, the holder hereof may, at its option, instruct the
Company, by written notice accompanying the surrender of this Warrant at the
time of such exercise, to apply to the payment required by section 1.1 such
number of the shares of Common Stock otherwise issuable to such holder upon such
exercise as shall be specified in such notice, in which case an amount equal to
the excess of the aggregate Current Market Price of such specified number of
shares on the date of exercise over the portion of the payment required by
section 1.1 attributable to such shares shall
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be deemed to have been paid to the Company and the number of shares issuable
upon such exercise shall be reduced by such specified number.
2. Adjustment of Common Stock Issuable Upon Exercise. 2.1. General;
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Warrant Price. The number of shares of Common Stock which the holder of this
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Warrant shall be entitled to receive upon the exercise hereof shall be
determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this section 2) be issuable upon such
exercise, as designated by the holder hereof pursuant to section 1.1, by the
fraction of which (a) the numerator is $0.01 and (b) the denominator is the
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Warrant Price in effect on the date of such exercise. The "Warrant Price" shall
initially be $0.01 per share, shall be adjusted and readjusted from time to time
as provided in this section 2 and, as so adjusted or readjusted, shall remain in
effect until a further adjustment or readjustment thereof is required by this
section 2.
2.2. Adjustment of Warrant Price.
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2.2.1 Issuance of Additional Shares of Common Stock. In case the
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Company at any time or from time to time after the date hereof shall issue or
sell Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to section 2.3 or 2.4) without consideration
or for a consideration per share less than the greater of the Current Market
Price and the Warrant Price in effect immediately prior to such issue or sale,
then, and in each such case, subject to section 2.8, such Warrant Price shall be
reduced, concurrently with such issue or sale, to a price (calculated to the
nearest .001 of a cent) determined by multiplying such Warrant Price by a
fraction
(a) the numerator of which shall be (i) the number of shares of Common
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Stock (including, without limitation, the number of shares of Common Stock
convertible or exchangeable to shares of Common Stock) outstanding
immediately prior to such issue or sale plus (ii) the number of shares of
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Common Stock which the aggregate consideration received by the Company for
the total number of such Additional Shares of Common Stock so issued or
sold would purchase at the greater of such Current Market Price and such
Warrant Price, and
(b) the denominator of which shall be the number of shares of Common
Stock (including, without limitation, the number of shares of Common Stock
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convertible or exchangeable to shares of Common Stock) outstanding
immediately after such issue or sale,
provided that, for the purposes of this section 2.2.1, (x) immediately after any
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Additional Shares of Common Stock are deemed to have been issued pursuant to
section 2.3 or 2.4, such Additional Shares shall be deemed to be outstanding,
and (y) treasury shares shall not be deemed to be outstanding.
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2.2.2 Extraordinary Dividends and Distributions. In case the Company
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at any time or from time to time after the date hereof shall declare, order, pay
or make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property or
Options by way of dividend or spin-off, reclassification, recapitalization or
similar corporate rearrangement) on the Common Stock, other than (a) a dividend
payable in Additional Shares of Common Stock or (b) a dividend payable in cash
or other property and declared out of the earned surplus of the Company as at
the date hereof as increased by any credits (other than credits resulting from a
revaluation of property) and decreased by any debits made thereto after such
date or (c) a regular periodic cash dividend at a rate not in excess of 110% of
the rate of the last regular periodic cash dividend theretofore paid, then, and
in each such case, subject to section 2.8, the Warrant Price in effect
immediately prior to the close of business on the record date fixed for the
determination of holders of any class of securities entitled to receive such
dividend or distribution shall be reduced, effective as of the close of business
on such record date, to a price (calculated to the nearest .001 of a cent)
determined by multiplying such Warrant Price by a fraction
(x) the numerator of which shall be the Current Market Price in
effect on such record date or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-dividend trading, less
the amount of such dividend or distribution (as determined in good faith by
the Board of Directors of the Company) applicable to one share of Common
Stock, and
(y) the denominator of which shall be such Current Market Price.
2.3. Treatment of Options and Convertible Securities. In case the
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Company at any time or from time to
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time after the date hereof shall issue, sell, grant or assume, or shall fix a
record date for the determination of holders of any class of securities entitled
to receive, any Options or Convertible Securities, then, and in each such case,
the maximum number of Additional Shares of Common Stock (as set forth in the
instrument relating thereto, without regard to any provisions contained therein
for a subsequent adjustment of such number) issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue, sale,
grant or assumption or, in case such a record date shall have been fixed, as of
the close of business on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), provided that such Additional Shares of Common Stock shall not be
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deemed to have been issued unless the consideration per share (determined
pursuant to section 2.5) of such shares would be less than the greater of the
Current Market Price and the Warrant Price in effect on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be, and provided, further, that in any such case in
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which Additional Shares of Common Stock are deemed to be issued
(a) no further adjustment of the Warrant Price shall be made upon the
subsequent issue or sale of Convertible Securities or shares of Common
Stock upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, except in the case of any such Options or
Convertible Securities which contain provisions requiring an adjustment,
subsequent to the date of the issue or sale thereof, of the number of
Additional Shares of Common Stock issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities by
reason of (x) a change of control of the Company, (y) the acquisition by
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any Person or group of Persons of any specified number or percentage of the
Voting Securities of the Company or (z) any similar event or occurrence,
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each such case to be deemed hereunder to involve a separate issuance of
Additional Shares of Common Stock, Options or Convertible Securities, as
the case may be;
(b) if such Options or Convertible Securities by their terms provide,
with the passage of time or
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otherwise, for any increase in the consideration payable to the Company, or
decrease in the number of Additional Shares of Common Stock issuable, upon
the exercise, conversion or exchange thereof (by change of rate or
otherwise), the Warrant Price computed upon the original issue, sale, grant
or assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be, with
respect thereto), and any subsequent adjustments based thereon, shall, upon
any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options, or the rights
of conversion or exchange under such Convertible Securities, which are
outstanding at such time;
(c) upon the expiration (or purchase by the Company and cancellation
or retirement) of any such Options which shall not have been exercised or
the expiration of any rights of conversion or exchange under any such
Convertible Securities which (or purchase by the Company and cancellation
or retirement of any such Convertible Securities the rights of conversion
or exchange under which) shall not have been exercised, the Warrant Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement
of ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or Convertible
Securities, the only Additional Shares of Common Stock issued or sold
were the Additional Shares of Common Stock, if any, actually issued or
sold upon the exercise of such Options or the conversion or exchange
of such Convertible Securities and the consideration received
therefor was the consideration actually received by the Company for
the issue, sale, grant or assumption of all such Options, whether or
not exercised, plus the consideration actually received by the Company
upon such exercise, or for the issue or sale of all such Convertible
Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Company
upon such conversion or exchange, and
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(ii) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued or sold upon the
exercise of such Options were issued at the time of the issue, sale,
grant or assumption of such Options, and the consideration received
by the Company for the Additional Shares of Common Stock deemed to
have then been issued was the consideration actually received by the
Company for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to have been
received by the Company (pursuant to section 2.5) upon the issue or
sale of such Convertible Securities with respect to which such Options
were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Warrant Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Options or Convertible Securities;
and
(e) in the case of any such Options which expire by their terms not
more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment shall
be made in the manner provided in subdivision (c) above.
2.4. Treatment of Stock Dividends, Stock Splits, etc. In case the
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Company at any time or from time to time after the date hereof shall declare or
pay any dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
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dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
-
on the day immediately prior to the day upon which such corporate action becomes
effective.
2.5. Computation of Consideration. For the purposes of this section
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2,
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(a) the consideration for the issue or sale of any Additional Shares
of Common Stock shall, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, be computed at the net
amount of cash received by the Company, without deducting any expenses
paid or incurred by the Company or any commissions or compensations
paid or concessions or discounts allowed to underwriters, dealers or
others performing similar services in connection with such issue or
sale,
(ii) insofar as it consists of property (including securities)
other than cash, be computed at the fair value thereof at the time of
such issue or sale, as determined in good faith by the Board of
Directors of the Company, and
(iii) in case Additional Shares of Common Stock are issued or
sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be the portion of such
consideration so received, computed as provided in clauses (i) and
(ii) above, allocable to such Additional Shares of Common Stock, all
as determined in good faith by the Board of Directors of the Company;
(b) Additional Shares of Common Stock deemed to have been issued
pursuant to section 2.3, relating to Options and Convertible Securities,
shall be deemed to have been issued for a consideration per share
determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible Securities in question, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjust ment of such consideration
to protect against dilution) payable to the Company upon the exercise
in full of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange
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of such Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision (a), by
(ii) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number to
protect against dilution) issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been issued
pursuant to section 2.4, relating to stock dividends, stock splits, etc.,
shall be deemed to have been issued for no consideration.
2.6. Adjustments for Combinations, etc. In case the outstanding
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shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7. Dilution in Case of Other Securities. In case any Other
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Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in section 3) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this section 2, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this section 2 with respect to the Warrant Price shall be made
as nearly as possible in the manner so provided and applied to determine the
amount of Other Securities from time to time receivable upon the exercise of the
Warrants, so as to protect the holders of the Warrants against the effect of
such dilution.
2.8. Minimum Adjustment of Warrant Price. If the amount of any
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adjustment of the Warrant Price required pursuant to this section 2 would be
less than one tenth
10
(1/10) of one percent (1%) of the Warrant Price in effect at the time such
adjustment is otherwise so required to be made, such amount shall be carried
forward and adjustment with respect thereto made at the time of and together
with any subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least one tenth (1/10)
of one percent (1%) of such Warrant Price.
3. Consolidation, Merger, etc. 3.1. Adjustments for
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Consolidation, Merger, Sale of Assets, Reorganization, etc. In case the
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Company after the date hereof (a) shall consolidate with or merge into any other
-
Person and shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) shall permit any other Person to consolidate
-
with or merge into the Company and the Company shall be the continuing or
surviving Person but, in connection with such consolidation or merger, the
Common Stock or Other Securities shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (c) shall
-
transfer all or substantially all of its properties or assets to any other
Person, or (d) shall effect a capital reorganization or reclassification of the
-
Common Stock or Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common Stock for
which adjustment in the Warrant Price is provided in section 2.2.1 or 2.2.2),
then, and in the case of each such transaction, proper provision shall be made
so that, upon the basis and the terms and in the manner provided in this
Warrant, the holder of this Warrant, upon the exercise hereof at any time after
the consummation of such transaction, shall be entitled to receive (at the
aggregate Warrant Price in effect at the time of such consummation for all
Common Stock or Other Securities issuable upon such exercise immediately prior
to such consummation), in lieu of the Common Stock or Other Securities issuable
upon such exercise prior to such consummation, the highest amount of securities,
cash or other property to which such holder would actually have been entitled as
a shareholder upon such consummation if such holder had exercised the rights
represented by this Warrant immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in sections 2 through 4, provided that if a purchase,
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tender or exchange offer shall have been made to and accepted by the holders of
more than 50% of the outstanding shares of Common Stock, and if the holder of
such Warrants so designates in a notice given to the Company on or before the
date immediately preceding the date of the consummation of such transaction, the
holder
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of such Warrants shall be entitled to receive the highest amount of securities,
cash or other property to which such holder would actually have been entitled as
a shareholder if the holder of such Warrants had exercised such Warrants prior
to the expiration of such purchase, tender or exchange offer and accepted such
offer, subject to adjustments (from and after the consummation of such purchase,
tender or exchange offer) as nearly equivalent as possible to the adjustments
provided for in sections 2 through 4.
3.2. Assumption of Obligations. Notwithstanding anything contained
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in the Warrants or in the Credit Agreement to the contrary, the Company will not
effect any of the transactions described in clauses (a) through (d) of section
3.1 unless, prior to the consummation thereof, each Person (other than the
Company) which may be required to deliver any stock, securities, cash or
property upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the holder of
this Warrant, (a) the obligations of the Company under this Warrant (and if the
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Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant) and (b) the obligation to deliver
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to such holder such shares of stock, securities, cash or property as, in
accordance with the foregoing provisions of this section 3, such holder may be
entitled to receive, and such Person shall have similarly delivered to such
holder an opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such holder, stating that this Warrant shall thereafter continue
in full force and effect and the terms hereof (including, without limitation,
all of the provisions of this section 3) shall be applicable to the stock,
securities, cash or property which such Person may be required to deliver upon
any exercise of this Warrant or the exercise of any rights pursuant hereto.
Nothing in this section 3 shall be deemed to authorize the Company to enter into
any transaction not otherwise permitted by the Credit Agreement.
4. Other Dilutive Events. In case any event shall occur as to which
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the provisions of section 2 or section 3 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such sections, then, in each such case, the Company shall appoint
a firm of independent certified public accountants of recognized national
standing (which may be the regular auditors of
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the Company), which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in
sections 2 and 3, necessary to preserve, without dilution, the purchase rights
represented by this Warrant. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the holder of this Warrant and shall make the
adjustments described therein.
5. No Dilution or Impairment. The Company will not, by amendment of
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its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against dilution or other impairment. Without limiting
the generality of the foregoing, the Company (a) will not permit the par value
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of any shares of stock receivable upon the exercise of this Warrant to exceed
the amount payable therefor upon such exercise, (b) will take all such action as
-
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of stock on the exercise of
the Warrants from time to time outstanding, (c) will not take any action which
-
results in any adjustment of the Warrant Price if the total number of shares of
Common Stock (or Other Securities) issuable after the action upon the exercise
of all of the Warrants would exceed the total number of shares of Common Stock
(or Other Securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon such exercise, and (d)
-
will not issue any capital stock of any class which is preferred as to dividends
or as to the distribution of assets upon voluntary or involuntary dissolution,
liquidation or winding-up, unless the rights of the holders thereof shall be
limited to a fixed sum or percentage of par value or a sum determined by
reference to a formula based on a published index of interest rates, an interest
rate publicly announced by a financial institution or a similar indicator of
interest rates in respect of participation in dividends and to a fixed sum or
percentage of par value in any such distribution of assets.
6. Accountants' Report as to Adjustments. In each case of any
-------------------------------------
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of this Warrant, the Company at its expense will
13
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and cause independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company) selected by
the Company to verify such computation (other than any computation of the fair
value of property as determined in good faith by the Board of Directors of the
Company) and prepare a report setting forth such adjustment or readjustment and
showing in reasonable detail the method of calculation thereof and the facts
upon which such adjustment or readjustment is based, including a statement of
(a) the consideration received or to be received by the Company for any
-
Additional Shares of Common Stock issued or sold or deemed to have been issued,
(b) the number of shares of Common Stock outstanding or deemed to be
-
outstanding, and (c) the Warrant Price in effect immediately prior to such issue
-
or sale and as adjusted and readjusted (if required by section 2) on account
thereof. The Company will forthwith mail a copy of each such report to each
holder of a Warrant and will, upon the written request at any time of any holder
of a Warrant, furnish to such holder a like report setting forth the Warrant
Price at the time in effect and showing in reasonable detail how it was
calculated. The Company will also keep copies of all such reports at its
principal office and will cause the same to be available for inspection at such
office during normal business hours by any holder of a Warrant or any
prospective purchaser of a Warrant designated by the holder thereof.
7. Notices of Corporate Action. In the event of
---------------------------
(a) 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 regular periodic dividend
payable in cash out of earned surplus in an amount not exceeding the amount
of the immediately preceding cash dividend for such period) 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, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation
or merger involving the Company and any other Person or any transfer of all
or substantially all the assets of the Company to any other Person, or
14
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
-
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
--
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, 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 the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least 45 days prior to the date therein specified.
8. Registration of Common Stock. If any shares of Common Stock
----------------------------
required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
exercise, the Company will, at its expense and as expeditiously as possible, use
its best efforts to cause such shares to be duly registered or approved, as the
case may be. At any such time as Common Stock is listed on any national
securities exchange, the Company will, at its expense, obtain promptly and
maintain the approval for listing on each such exchange, upon official notice of
issuance, the shares of Common Stock issuable upon exercise of the then
outstanding Warrants and maintain the listing of such shares after their
issuance; and the Company will also list on such national securities exchange,
will register under the Exchange Act and will maintain such listing of, any
Other Securities that at any time are issuable upon exercise of the Warrants, if
and at the time that any securities of the same class shall be listed on such
national securities exchange by the Company.
9. Restrictions on Transfer. 9.1. Restrictive Legends. Except as
------------------------ -------------------
otherwise permitted by this section 9, each Warrant (including each Warrant
issued upon the transfer of any Warrant) shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"This Warrant and any shares acquired upon
15
the exercise of this Warrant have not been registered under the Securities
Act of 1933, as amended, and may not be transferred, sold or otherwise
disposed of except while a registration under such Act is in effect or
pursuant to an exemption therefrom under such Act. This Warrant and such
shares may be transferred only in compliance with the conditions specified
in this Warrant."
Except as otherwise permitted by this section 9, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
may be transferred only in compliance with the conditions specified in
that certain Common Stock Purchase Warrant, dated July 9, 1997, between
Synbiotics Corporation and Banque Paribas. A complete and correct copy of
the form of such Warrant is available for inspection at the principal
office of Synbiotics Corporation or at the office or agency maintained by
Synbiotics Corporation as provided in such Warrants and will be furnished
to the holder of such shares upon written request and without charge."
9.2. Notice of Proposed Transfer; Opinions of Counsel. Prior to any
------------------------------------------------
transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this section 9.2. Each
such notice (a) shall describe the manner and circumstances of the proposed
-
transfer in sufficient detail to enable counsel to render the opinions referred
to below, and (b) shall designate counsel for the holder giving such notice (who
-
may be house counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice and the Company
will promptly submit a copy thereof to its counsel. The following provisions
shall then apply:
(i) If (A) in the opinion of such counsel
-
16
for the holder the proposed transfer may be effected without
registration of such Restricted Securities under the Securities Act,
and (B) counsel for the Company shall not have rendered an opinion
-
within 15 days after the receipt by the Company of such written notice
that such registration is required, such holder shall thereupon be
entitled to transfer such securities in accordance with the terms of
the notice delivered by such holder to the Company. Each warrant or
certificate, if any, representing such securities issued upon or in
connection with such transfer shall bear the appropriate restrictive
legend required by section 9.1, unless in the opinion of each such
counsel such legend is no longer required to insure compliance with
the Securities Act. If for any reason counsel for the Company (after
having been furnished with the information required to be furnished by
clause (a) of this section 9.2) shall fail to deliver an opinion to
the Company as aforesaid, then for all purposes of this Warrant the
opinion of counsel for the Company shall be deemed to be the same as
the opinion of counsel for such holders.
(ii) If in the opinion of either of or both such counsel the
proposed transfer may not legally be effected without registration of
such Restricted Securities under the Securities Act (such opinion or
opinions to state the basis of the legal conclusions reached therein),
the Company will promptly so notify the holder thereof and thereafter
such holder shall not be entitled to transfer such Restricted
Securities until either (x) receipt by the Company of a further notice
-
from such holder pursuant to the foregoing provisions of this section
9.2 and fulfillment of the provisions of clause (i) above or (y) such
-
shares have been effectively registered under the Securities Act.
Notwithstanding the foregoing provisions of this section 9.2(ii), the purchaser
of the Warrants shall be permitted to transfer any Restricted Securities to a
limited number of institutional investors, provided that (A) each such investor
-------- -
represents in writing that it is acquiring such Restricted Securities for
investment and not with a view to the distribution thereof (subject, however, to
any requirement of law that the disposition thereof shall at all times be within
the control of such transferee), (B) each such investor agrees in writing
-
to be bound by all
17
the restrictions on transfer of such Restricted Securities contained in this
section 9.2 and (C) the purchaser of the Warrants delivers to the Company an
-
opinion of counsel satisfactory to the Company, stating that such transfer may
be effected without registration under the Securities Act. The Company will pay
the reasonable fees and disbursements of counsel (other than in-house counsel)
for any holder of Restricted Securities and of counsel for the Company in
connection with all opinions rendered by them pursuant to this section 9.2 and
pursuant to section 9.3.
9.3. Termination of Restrictions. The restrictions imposed by this
---------------------------
section 9 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when such securities
-
shall have been effectively registered under the Securities Act, or (b) when, in
-
the opinions of both counsel for the holder thereof and counsel for the Company,
such restrictions are no longer required in order to insure compliance with the
Securities Act. Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense (other than applicable transfer taxes, if any), new
securities of like tenor not bearing the applicable legends required by section
9.1.
10. Availability of Information. So long as the Company shall not
---------------------------
have filed a registration statement pursuant to section 12 of the Exchange Act
or a registration statement pursuant to the requirements of the Securities
Act, the Company shall, at any time and from time to time, upon the request of
any holder of Registrable Securities and upon the request of any Person
designated by such holder as a prospective purchaser of any Registrable
Securities, furnish in writing to such holder or such prospective purchaser, as
the case may be, a statement as of a date not earlier than 12 months prior to
the date of such request of the nature of the business of the Company and the
products and services it offers and copies of the Company's most recent balance
sheet and profit and loss and retained earnings statements, together with
similar financial statements for such part of the two preceding fiscal years as
the Company shall have been in operation, all such financial statements to be
audited to the extent audited statements are reasonably available, provided
--------
that, in any event the most recent financial statements so furnished shall
include a balance sheet as of a date less than 16 months prior to the date of
such request, statements of profit and loss and retained earnings for the 12
months preceding the date of such balance sheet, and, if such balance sheet is
not as of a
18
date less than 6 months prior to the date of such request, additional statements
of profit and loss and retained earnings for the period from the date of such
balance sheet to a date less than 6 months prior to the date of such request. If
the Company shall have filed a registration statement pursuant to the
requirements of section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act, the Company shall timely
file the reports required to be filed by it under the Securities Act and the
Exchange Act (including but not limited to the reports under sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 adopted by
the Commission under the Securities Act) and the rules and regulations adopted
by the Commission thereunder (or, if the Company is not required to file such
reports, will, upon the request of any holder of Registrable Securities, make
publicly available other information) and will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
-
be amended from time to time, or (b) any similar rule or regulation hereafter
-
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with the requirements of this section 10.
11. Reservation of Stock, etc. The Company will at all times reserve
--------------------------
and keep available, solely for issuance and delivery upon exercise of the
Warrants, the number of shares of Common Stock (or Other Securities) from time
to time issuable upon exercise of all Warrants at the time outstanding. All
shares of Common Stock (or Other Securities) issuable upon exercise of any
Warrants shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof.
12. Registration and Transfer of Warrants, etc.
-------------------------------------------
12.1. Warrant Register; Ownership of Warrants. The Company will keep
---------------------------------------
at its principal office a register in which the Company will provide for the
registration of Warrants and the registration of transfers of Warrants. The
Company may treat the Person in whose name any Warrant is registered on such
register as the owner thereof for
19
all other purposes, and the Company shall not be affected by any notice to the
contrary, except that, if and when any Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer thereof as the
owner of such Warrant for all purposes. Subject to section 9, a Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
12.2. Transfer and Exchange of Warrants. Upon surrender of any
---------------------------------
Warrant for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will (subject to compliance with
section 9, if applicable) execute and deliver in exchange therefor a new Warrant
or Warrants 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 on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants so surrendered.
12.3. Replacement of Warrants. Upon receipt of evidence reasonably
-----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
upon delivery of an indemnity bond in such reason able amount as the Company may
determine (or, in the case of any Warrant held by any Institutional Holder or
its nominee, of an indemnity agreement from such Institutional Holder reasonably
satisfactory to the Company), or, in the case of any such mutilation, upon the
surrender of such Warrant for cancellation to the Company at its principal
office, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
13. Registration under Securities Act, etc.
---------------------------------------
13.1. Registration on Request.
-----------------------
(a) Request. At any time after July 9, 1997, upon the written request
-------
of the majority of the Initiating Holders, requesting that the Company
effect the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities and specifying the intended
method of disposition thereof, the Company will, subject to the terms of
this Agreement, promptly give written notice of such requested registration
to all registered holders of Registrable Securities, and thereupon the
Company will effect the registration under the Securities Act of
20
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request, and
(ii) all other Registrable Securities the holders of which shall
have made a written request to the Company for registration thereof
within 30 days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition of
such Registrable Securities), and
(iii) all shares of Common Stock which the Company may elect to
register in connection with the offering of Registrable Securities
pursuant to this section 13.1,
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any so to be registered. The Holder shall
be entitled to one, and only one, registration, under this Section 13.1.
(b) Registration Statement Form. Registrations under this section
---------------------------
13.1 shall be on such appropriate registration form of the Commission (i)
-
as shall be selected by the Company and as shall be reasonably acceptable
to the holders of more than 50% (by number of shares) of the Registrable
Securities so to be registered and (ii) as shall permit the disposition of
--
such Registrable Securities in accordance with the intended method or
methods of disposition specified in their request for such registration.
The Company agrees to include in any such registration statement all
information which holders of Registrable Securities being registered shall
reasonably request.
(c) Expenses. The Company will pay all Registration Expenses in
--------
connection with any registration requested pursuant to this section 13.1 by
any Initiating Holders of Registrable Securities. The Registration
Expenses (and underwriting discounts and commissions and transfer taxes, if
any) in connection with each other registration requested under this
section 13.1 shall be allocated pro rata among all Persons on whose behalf
securities of the Company are included in such registration, on the basis
of the respective amounts of the securities then being
21
registered on their behalf.
(d) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this section 13.1 shall not be deemed to have been effected (i)
-
unless a registration statement with respect thereto has become effective,
provided that a registration which does not become effective after the
--------
Company has filed a registration statement with respect thereto solely by
reason of the refusal to proceed of the Initiating Holders (other than a
refusal to proceed based upon the advice of counsel relating to a matter
with respect to the Company) shall be deemed to have been effected by the
Company at the request of such Initiating Holders unless the Initiating
Holders shall have elected to pay all Registration Expenses in connection
with such registration, (ii) if, after it has become effective, such
--
registration becomes subject to any stop order, injunction or other order
or requirement of the Commission or other governmental agency or court for
any reason, or (iii) the conditions to closing specified in the purchase
---
agreement or underwriting agreement entered into in connection with such
registration are not satisfied, other than by reason of some act or
omission by such Initiating Holders.
(e) Selection of Underwriters. If a requested registration pursuant
-------------------------
to this section 13.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the holders of at least a
majority (by number of shares) of the Registrable Securities as to which
registration has been requested, subject to the Company's consent (which
shall not be unreasonably withheld).
(f) Priority in Requested Registrations. If a requested registration
-----------------------------------
pursuant to this section 13.1 involves an underwritten offering, and the
managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering within a
price range acceptable to the holders of a majority of the Registrable
Securities requested to be included in such registration, the Company will
include in such registration, to the extent of the number which the Company
is so advised can be sold in such offering, Registrable Securities
requested to be included in such registration by the holder or holders of
Registrable Securities, pro rata
--- ----
22
among the holders thereof such holders requesting such registration on the
basis of the number of such securities requested to be included by such
holders. In connection with any such registration, no securities other
than Registrable Securities shall be covered by such registration.
23
13.2. Incidental Registration.
-----------------------
24
(a) Right to Include Registrable Securities. If the Company at any
---------------------------------------
time proposes to register any of its securities under the Securities Act
(other than by a registration on Form S-4 or S-8 or any successor or
similar forms and other than pursuant to section 13.1), whether or not for
sale for its own account, it will each such time give prompt written notice
to all holders of Registrable Securities of its intention to do so and of
such holders' rights under this section 13.2. Upon the written request of
any such holder made within 30 days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be
disposed of by such holder and the intended method of disposition thereof),
the Company will, subject to the terms of this Agreement, effect the
registration under the Securities Act of all Registrable Securities which
the Company has been so requested to register by the holders thereof, to
the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to
be registered, by inclusion of such Registrable Securities in the
registration statement which covers the securities which the Company
proposes to register, provided that if, at any time after giving written
--------
notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason either not to
register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination
-
not to register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights of any holder or holders of
Registrable Securities entitled to do so to request that such registration
be effected as a registration under section 13.1, and (ii) in the case of a
--
determination to delay registering, shall be permitted to delay registering
any Registrable Securities, for the same period as the delay in registering
such other securities. No registration effected under this section 13.2
shall relieve the Company of its obligation to effect any registration upon
request under section 13.1 nor shall any such registration hereunder be
deemed to have been effected pursuant to section 13.1. The Company will pay
all Registration Expenses
25
in connection with each registration of Registrable Securities requested
pursuant to this section 13.2.
(b) Priority in Incidental Registrations. If (i) a registration
------------------------------------ -
pursuant to this section 13.2 involves an underwritten offering of the
securities so being registered, whether or not for sale for the account of
the Company, to be distributed (on a firm commitment basis) by or through
one or more underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (ii) the Registrable Securities so
--
requested to be registered for sale for the account of holders of
Registrable Securities are not also to be included in such under written
offering (either because the Company has not been requested so to include
such Registrable Securities pursuant to section 13.4(b) or, if requested
to do so, is not obligated to do so under section 13.4(b)), and (iii) the
---
managing underwriter of such underwritten offering shall inform the Company
and holders of the Registrable Securities requesting such registration by
letter of its belief that the distribution of all or a specified number of
such Registrable Securities concurrently with the securities being
distributed by such underwriters would interfere with the successful
marketing of the securities being distributed by such underwriters (such
writing to state the basis of such belief and the approximate number of
such Registrable Securities which may be distributed without such effect),
then the Company may, upon written notice to all holders of such
Registrable Securities, reduce pro rata (if and to the extent stated by
--------
such managing underwriter to be necessary to eliminate such effect) the
number of such Registrable Securities the registration of which shall have
been requested by each holder of Registrable Securities so that the
resultant aggregate number of such Registrable Securities so included in
such registration shall be equal to the number of shares stated in such
managing underwriter's letter.
13.3. Registration Procedures. If and whenever (a) the Company is
----------------------- -
required to effect the registration of any Registrable Securities under the
Securities Act as provided in sections 13.1 and 13.2 or (b) there is a
-
Requesting Holder in connection with any other proposed registration by the
Company under the Securities Act, the Company shall, as expeditiously as
possible:
(i) prepare and (within 60 days after the end of the period
within which requests for
26
registration may be given to the Company or in any event as soon
thereafter as possible) (in the case of a registration pursuant to
section 13.1, such filing to be made within 60 days after the initial
request of one or more Initiating Holders of Registrable Securities
or in any event as soon thereafter as possible) file with the
Commission the requisite registration statement to effect such
registration (including such audited financial statements as may be
required by the Securities Act or the rules and regulations
promulgated thereunder) and there after use its best efforts to cause
such registration statement to become and remain effective, provided,
--------
however, that the Company may discontinue any registration of its
securities which are not Registrable Securities (and, under the
circumstances specified in section 13.2(a), its securities which are
Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement until the earlier of such time
as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set
forth in such registration statement or (i) in the case of a
-
registration pursuant to section 13.1, the expiration of 180 days
after such registration statement becomes effective, or (ii) in the
--
case of a registration pursuant to section 13.2, the expiration of 90
days after such registration statement becomes effective;
(iii) furnish to each seller of Registrable Securities covered
by such registration statement and each Requesting Holder and each
underwriter, if any, of the securities being sold by such seller such
number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary
27
prospectus and any summary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller and underwriter, if any, may reasonably request in order to
facilitate the public sale or other disposition of the Registrable
Securities owned by such seller;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities laws or blue sky laws of such
jurisdictions as any seller thereof and any underwriter of the
securities being sold by such seller and any Requesting Holder shall
reasonably request, to keep such registrations or qualifications in
effect for so long as such registration statement remains in effect,
and take any other action which may be reasonably necessary or
advisable to enable such seller and underwriter to consummate the
disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the requirements of
this subdivision (iv) be obligated to be so qualified, to subject
itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities and each
Requesting Holder a signed counterpart, addressed to such seller, such
Requesting Holder and the underwriters, if any, an opinion of counsel
for the Company, dated the effective date of such registration
statement (or, if such registration includes an underwritten public
offering, an opinion dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and
28
substance to such seller,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten public
offerings of securities (with, in the case of an "agreed upon procedures"
letter, such modifications or deletions as may be required under Statement on
Auditing Standards No. 35) and, in the case of the accountants' letter, such
other financial matters, and, in the case of the legal opinion, such other
legal matters, as such seller or such Requesting Holder (or the underwriters, if
any) may reasonably request;
(vii) notify the holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly and confirm
such advice in writing promptly thereafter:
(v) when the registration statement, the prospectus or any prospectus
supplement related thereto or post-effective amendment to the registration
statement has been filed, and, with respect to the registration statement or any
post-effective amendment thereto, when the same has become effective;
(w) of any request by the Commission for amendments or supplements to
the registration statement or the prospectus or for additional information;
(x) of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement or the initiation of any
proceedings by any Person for that purpose;
(y) if at any time the representations and warranties of the Company
made as contemplated by section 2.4 below cease to be true and correct;
(z) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose;
(viii) notify each seller of Registrable Securities covered by
such registration statement and each Requesting Holder, at any time
29
when a prospectus relating thereto is required to be delivered under
the Securities Act, upon the Company's discovery that, or upon the
happening of any event as a result of which, the prospectus included
in such registration statement, as then in effect, 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 not misleading in the light of the circumstances then existing
under which they were made, and at the request of any such seller or
Requesting Holder promptly prepare and furnish to such seller or
Requesting Holder and each underwriter, if any, a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing under which they were
made;
(ix) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first day of the Company's
first full calendar month quarter after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, and will furnish to each such seller and each Requesting
Holder at least five business days prior to the filing thereof a copy
of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such seller or
any Requesting Holder shall have reasonably objected on the grounds
that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the rules
or regulations thereunder;
(x) make available for inspection by a representative or
representatives of the holders of Registrable Securities, each such
representative
30
representing the holders of not less than a majority of the
Registrable Securities included in the registration, any underwriter
participating in any disposition pursuant to the registration
statement and any attorney or accountant retained by such selling
holders or underwriter (each, an "Inspector"), all financial and
other records, pertinent corporate documents and properties of the
Company (the "Records"), and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
such Inspector in connection with such registration in order to permit
a reasonable investigation within the meaning of Section 11 of the
Securities Act, provided that the Company shall not be required to
--------
comply with this subdivision (xi) if there is a reasonable likelihood,
in the judgment of the Company, that such delivery could result in the
loss of any attorney-client privilege related thereto; and provided
--------
further that Records which the Company determines, in good faith, to
-------
be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors (other than to any holder of
Registrable Securities) unless (x) such Records have become generally
-
available to the public or (y) the disclosure of such Records may be
-
necessary or appropriate (A) in compliance with any law, rule,
-
regulation or order applicable to any such Inspectors or holder of
Registrable Securities, (B) in response to any subpoena or other
-
legal process or (C) in connection with any litigation to which such
-
Inspectors or any holder of Registrable Securities is a party;
(xi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement;
(xii) enter into such agreements and take such other actions as
sellers of such Registrable Securities holding 51% of the shares so
to be sold shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(xiii) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on
31
which any of the securities of the same class as the Registrable
Securities are then listed; and
(xiv) use its best efforts to provide a CUSIP number for the
Registrable Securities, not later than the effective date of the
registration statement.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in subdivision (vii) of this
section 13.3, such holder will forthwith discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement relating to
such Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
section 13.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph (ii) of
this section 13.3 shall be extended by the length of the period from and
including the date when each seller of any Registrable Securities covered by
such registration statement shall have received such notice to the date on which
each such seller has received the copies of the supplemented or amended
prospectus contemplated by paragraph (vii) of this section 13.3.
If any such registration or comparable statement refers to any holder
of Registrable Securities by name or otherwise as the holder of any securities
of the Company then such holder shall have the right to require (i) the
-
insertion therein of language, in form and substance satisfactory to such
holder, to the effect that the holding by such holder of such securities is not
to be construed as a recommendation by such holder of the investment quality of
the Company's securities covered thereby and that such holding does not imply
that such holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such holder by name or
--
otherwise is not
32
required by the Securities Act or any similar federal statute then in force, the
deletion of the reference to such holder.
13.4. Underwritten Offerings.
----------------------
(a) Requested Underwritten Offerings. If requested by the
--------------------------------
underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under section 13.1, the
Company will enter into an underwriting agreement with such underwriters
for such offering, such agreement to be satisfactory in substance and form
to the Company, each such holder and the underwriters, and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in section
13.7. The holders of the Registrable Securities will cooperate with the
Company in the negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company regarding the
form thereof, provided that nothing herein contained shall diminish the
foregoing obligations of the Company. The holders of Registrable Securities
to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of such holders of Registrable Securities. Any such holder
of Registrable Securities shall not be required to make any representations
or warranties to or agreements with the Company or the underwriters other
than representations and warranties contained in a writing furnished by
such holder expressly for use in such registration statement or agreements
regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation
required by law.
(b) Incidental Underwritten Offerings. If the Company at any time
---------------------------------
proposes to register any of its securities under the Securities Act as
contemplated by section 13.2 and such securities are to be
33
distributed by or through one or more underwriters, the Company will, if
requested by any holder of Registrable Securities as provided in section
13.2 and subject to the provisions of section 13.2(b), use its best efforts
to arrange for such underwriters to include all the Registrable Securities
to be offered and sold by such holder among the securities to be
distributed by such underwriters. The holders of Registrable Securities to
be distributed by such underwriters shall be parties to the underwriting
agreement between the Company and such underwriters and may, at their
option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such
holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities. Any such holder of Registrable Securities shall not
be required to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and
such holder's intended method of distribution and any other representation
required by law.
(c) Holdback Agreements.
-------------------
(i) Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities, if so required by the managing under
writer, not to sell, make any short sale of, loan, grant any option
for the purchase of, effect any public sale or distribution of or
otherwise dispose of any equity securities of the Company, during the
seven days prior to and the 90 days after any underwritten
registration pursuant to section 13.1 or 13.2 has become effective,
except as part of such underwritten registration. Notwithstanding the
foregoing sentence, each holder of Registrable Securities subject to
the foregoing sentence shall be entitled to sell during the foregoing
period securities in a private sale.
(ii) The Company agrees (x) if so required by the managing
-
underwriter not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or
34
distribution of or otherwise dispose of its equity securities or
securities convertible into or exchangeable or exercisable for any of
such securities during the seven days prior to and the 90 days after
any underwritten registration pursuant to section 13.1 or 13.2 has
become effective, except as part of such underwritten registration
and except pursuant to registrations on Form X-0, X-0 or any successor
or similar forms thereto, and (y) to cause each holder of its equity
securities or any securities convertible into or exchangeable or
exercisable for any of such securities, in each case purchased
directly from the Company at any time after the date of this Agreement
(other than in a public offering) to agree not to sell, make any short
sale of, loan, grant any option for the purchase of, effect any such
public sale or distribution of or otherwise dispose of such securities
during such period except as part of such underwritten registration.
(d) Participation in Underwritten Offerings. No Person may
----------------------------------------
participate in any underwritten offering hereunder unless such Person (i) agrees
-
to sell such Person's securities on the basis provided in any underwriting
arrangements approved, subject to the terms and conditions hereof, by the
Company and the holders of a majority of Registrable Securities to be included
in such underwritten offering and (ii) completes and executes all
--
questionnaires, indemnities, underwriting agreements and other documents (other
than powers of attorney) required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no underwriting agreement (or other
agreement in connection with such offering) shall require any holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations and
warranties contained in a writing furnished by such holder expressly for use in
the related registration statement or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
13.5. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, each Requesting Holder and their respective counsel and accountants, the
35
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
13.6. Rights of Requesting Holders. The Company will not file any
----------------------------
registration statement under the Securities Act (other than by a registration
on Form S-8), unless it shall first have given to each holder of Registrable
Securities at the time outstanding (other than any such Person who acquired all
such securities held by such Person in a public offering registered under the
Securities Act or as the direct or indirect transferee of shares initially
issued in such an offering), at least 30 days prior written notice thereof. Any
such Person who shall so request within 30 days after such notice (a "Requesting
Holder") shall have the rights of a Requesting Holder provided in sections 13.3,
13.5 and 13.7. In addition, if any such registration statement refers to any
Requesting Holder by name or otherwise as the holder of any securities
of the Company, then such holder shall have the right to require (a) the
-
insertion therein of language, in form and substance satisfactory to such
holder, to the effect that the holding by such holder of such securities does
not necessarily make such holder a "controlling person" of the Company within
the meaning of the Securities Act and is not to be construed as recommendation
by such holder of the investment quality of the Company's debt or equity
securities covered thereby and that such holding does not imply that such holder
will assist in meeting any future financial requirements of the Company, or (b)
-
in the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to such holder.
13.7. Indemnification.
---------------
(a) Indemnification by the Company. In the event of any registration
------------------------------
of any securities of the Company under the Securities Act, the Company
will, and hereby does, indemnify and hold harmless (i) in the case of any
-
registration statement filed pursuant to section 13.1 or 13.2, the holder
of any Registrable Securities covered by such registration
36
statement, its directors and officers, each other Person who participates
as an underwriter in the offering or sale of such securities and each other
Person, if any, who controls such holder or any such underwriter within the
meaning of the Securities Act, and (ii) in the case of any registration
--
statement of the Company, any Requesting Holder, its directors and officers
and each other Person, if any, who controls such Requesting Holder within
the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or Requesting Holder or
any such director or officer or underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company will reimburse such
holder, such Requesting Holder and each such director, officer, underwriter
and controlling person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, liability, action or proceeding, provided that the Company
--------
shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by such holder or Requesting Holder, as the case may be,
specifically stating that it is for use in the preparation thereof and,
provided, further that the Company shall not be liable to any Person who
-------- -------
participates as an underwriter, in the offering or sale of Registrable
Securities or to any other Person, if any, who controls such underwriter
within the meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage,
37
liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, within the
time required by the Securities Act to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to
such Person if such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such holder or such Requesting
Holder or any such director, officer, underwriter or controlling person and
shall survive the transfer of such securities by such holder.
(b) Indemnification by the Sellers. The Company may require, as a
------------------------------
condition to including any Registrable Securities in any registration
statement filed pursuant to section 13.3, that the Company shall have
received an undertaking satisfactory to it from the prospective seller of
such Registrable Securities, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this
section 13.7) the Company, each director of the Company, each officer of
the Company and each other person, if any, who controls the Company within
the meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if
such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by such seller
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Any such indemnity shall remain in
full force and effect, regardless of any investigation made by or on behalf
of the Company or any such director, officer or controlling person and
shall survive the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of
38
this section 13.7, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to
the latter of the commencement of such action, provided that the failure of
any indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under the preceding subdivisions
of this section 13.7, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to
the extent that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the consent of
the indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability, or a covenant not to xxx, in respect
to such claim or litigation. No indemnified party shall consent to entry of
any judgment or enter into any settlement of any such action the defense of
which has been assumed by an indemnifying party without the consent of such
indemnifying party.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding subdivisions of this section 13.7 (with appropriate
modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any Federal or state law or regulation of
any governmental authority, other than the Securities Act.
(e) Indemnification Payments. The indemnification required by this
------------------------
section 13.7 shall be made by periodic payments of the amount thereof
during the
39
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in the
------------
preceding subdivisions of this section 13.7 is unavailable to an
indemnified party in respect of any expense, loss, claim, damage or
liability referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such expense, loss, claim,
damage or liability (i) in such proportion as is appropriate to reflect the
-
relative benefits received by the Company on the one hand and the holder or
underwriter, as the case may be, on the other from the distribution of the
Registrable Securities or (ii) if the allocation provided by clause (i)
--
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of
the holder or underwriter, as the case may be, on the other in connection
with the statements or omissions which resulted in such expense, loss,
damage or liability, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the holder or underwriter, as the case may be, on the other in
connection with the distribution of the Registrable Securities shall be
deemed to be in the same proportion as the total net proceeds received by
the Company from the initial sale of the Registrable Securities by the
Company to the purchasers pursuant to the Credit Agreement bear to the
gain, if any, realized by the selling holder or the underwriting discounts
and commissions received by the underwriter, as the case may be. The
relative fault of the Company on the one hand and of the holder or
underwriter, as the case may be, on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state a material fact relates
to information supplied by the Company, by the holder or by the underwriter
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, provided that
--------
the foregoing contribution agreement shall not inure to the benefit of any
indemnified party if indemnification would be unavailable to such
indemnified party by reason of the provisions contained in the
40
first sentence of subdivision (a) of this section 13.7, and in no event
shall the obligation of any indemnifying party to contribute under this
subdivision (f) exceed the amount that such indemnifying party would have
been obligated to pay by way of indemnification if the indemnification
provided for under subdivisions (a) or (b) of this section 13.7 had been
available under the circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this
subdivision (f) were determined by pro rata allocation (even if the
--- ----
holders, Requesting Holders and any underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in the preceding sentence and subdivision (c) of this
section 13.7, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim.
Notwithstanding the provisions of this subdivision (f), no holder of
Registrable Securities or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the case of any such holder,
-
the net proceeds received by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at which
--
the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any
damages that such holder or underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
14. Definitions. As used herein, unless the context otherwise
-----------
requires, the following terms have the following respective meanings:
Acquiring Person: With reference to the
41
transactions referred to in clauses (a) through (d) of section 3.1, the
continuing or surviving corporation of a consolidation or merger with the
Company (if other than the Company), the transferee of substantially all of the
properties of the Company, the corporation consolidating with or merging into
the Company in a consolidation or merger in connection with which the Common
Stock is changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or, in the case of a capital
reorganization or reclassification, the Company.
Acquisition Price: As applied to the Common Stock, (a) the Market
----------------- -
Price on the date immediately preceding the date on which any transaction to
which section 3 applies is consummated, or (b) if a purchase, tender or exchange
-
offer is made by the Acquiring Person (or by any of its affiliates) to the
holders of the Common Stock and such offer is accepted by the holders of more
than 50% of the outstanding shares of Common Stock, the greater of (i) the price
-
determined in accordance with the provisions of the foregoing clause (a) of this
sentence and (ii) the Market Price on the date immediately preceding the
--
acceptance of such offer by the holders of more than 50% of the outstanding
shares of Common Stock.
Additional Shares of Common Stock: All shares (including treasury
---------------------------------
shares) of Common Stock issued or sold (or, pursuant to section 2.3 or 2.4,
deemed to be issued) by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company.
Business Day: Any day other than a Saturday or a Sunday or a day
------------
on which commercial banking institutions in the City of New York are authorized
by law to be closed. Any reference to "days" (unless Business Days are
specified) shall mean calendar days.
Commission: The Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act.
Common Stock: As defined in the introduction to this Warrant,
------------
such term to include any stock into which such Common Stock shall have been
changed or any stock resulting from any reclassification of such Common Stock,
and all other stock of any class or classes (however designated) of the Company
the holders of which have the right, without limitation as to amount, either to
all or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference.
42
Company: As defined in the introduction to this Warrant, such
-------
term to include any corporation which shall succeed to or assume the obligations
of the Company hereunder in compliance with section 3.
Convertible Securities: Any evidences of indebtedness, shares of
----------------------
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
Credit Agreement: As defined in the introduction to this Warrant.
----------------
Current Market Price: On any date specified herein, the average
--------------------
daily Market Price during the period of the most recent 20 days, ending on such
date, on which the national securities exchanges were open for trading, except
that if no Common Stock is then listed or admitted to trading on any national
securities exchange or quoted in the over-the-counter market, the Current Market
Price shall be the Market Price on such date.
Exchange Act: The Securities Exchange Act of 1934, or any similar
------------
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Initiating Holders: Any holder or holders of Registrable
------------------
Securities holding at least (a) on or prior to the effective date of the
-
registration statement under the Securities Act of the Company's initial public
offering, 25% of the Registrable Securities (by number of shares at the time
issued and outstanding), and (b) at any time thereafter, 25% of the Registrable
-
Securities (by number of shares at the time issued and outstanding), and
initiating a request pursuant to section 13.1 for the registration of all or
part of such holder's or holders' Registrable Securities.
Institutional Holder: Any original purchaser of any Warrant, any
--------------------
insurance company, pension fund, mutual fund, investment company, bank, savings
bank, savings and loan association, broker-dealer, investment adviser,
investment banking company, trust company or any finance or credit company, any
portfolio or any investment fund managed by any of the foregoing, any other
institutional investor and any nominee of any of the foregoing.
Market Price: On any date specified herein, the amount per share
------------
of the Common Stock, equal to (a) the last sale price of such Common Stock,
-
regular way, on such
43
date or, if no such sale takes place on such date, the average of the closing
bid and asked prices thereof on such date, in each case as officially reported
on the principal national securities exchange on which such Common Stock is then
listed or admitted to trading, or (b) if such Common Stock is not then listed or
-
admitted to trading on any national securities exchange but is designated as a
national market system security by the NASD, the last trading price of the
Common Stock on such date, or (c) if there shall have been no trading on such
-
date or if the Common Stock is not so designated, the average of the closing bid
and asked prices of the Common Stock on such date as shown by the NASD automated
quotation system, or (d) if such Common Stock is not then listed or admitted to
-
trading on any national exchange or quoted in the over-the-counter market, the
higher of (x) the book value thereof as determined by any firm of independent
-
public accountants of recognized standing selected by the Board of Directors of
the Company as of the last day of any month ending within 60 days preceding the
date as of which the determination is to be made or (y) the fair value thereof
-
determined in good faith by the Board of Directors of the Company as of a date
which is within 18 days of the date as of which the determination is to be made.
Market Value: Per share of common stock (or equivalent equity
------------
interests) of the Acquiring Person or its Parent on any date specified herein,
(a) the average of the last sale prices, regular way, on the 20 consecutive
--
business days immediately preceding such date or, if there shall have been no
sale on any such day, the average of the closing bid and asked prices on such
date, in each case as officially reported on the principal national securities
exchange on which such common stock is at the time listed or admitted to
trading, or (b) if such common stock is not then listed or admitted to trading
-
on any national securities exchange, but is designated as a national market
system security by the NASD, the last trading price of the common stock on such
date, or if there shall have been no trading on such date or if the common stock
is not so designated, the average of the reported closing bid and asked prices
on such 20 days as shown by the NASD automated quotation system.
NASD: The National Association of Securities Dealers, Inc.
----
Notes: Collectively, the Tranche A Notes, due May 31, 2002, of
-----
the Company originally issued in the aggregate principal amount of $5 million,
the Tranche B Notes, due May 31, 2003, of the Company originally issued
44
in the aggregate amount of $5 million, and the Revolving Notes, issued
originally due May 31, 2002, of the Company in the aggregate amount of $5
million, in each case issued pursuant to the Credit Agreement, and such term to
include any such notes issued in substitution for such notes.
Options: Rights, options or warrants to subscribe for, purchase
-------
or otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
Other Securities: Any stock (other than Common Stock) and other
----------------
securities of the Company or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
section 3 or otherwise.
Parent: As to any Acquiring Person any corporation which (a)
------ -
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (b) is required to include the Acquiring Person in the
-
consolidated financial statements contained in such Parent's Annual Report on
Form 10-K and (c) is not itself included in the consolidated financial
-
statements of any other person (other than its consolidated subsidiaries).
Person: A corporation, an association, a partnership, an
------
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
Purchaser: As defined in the introduction to this Warrant.
---------
Registrable Securities: (a) Any shares of Common Stock or Other
---------------------- -
Securities issued or issuable upon exercise of this Warrant and (b) any
-
securities issued or issuable with respect to any securities referred to in the
foregoing subdivision by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (a) a
-
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall have
-
been
45
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (c) they shall have been otherwise transferred, new
-
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, or (d) they shall have ceased to be
-
outstanding.
Registration Expenses: All expenses incident to the Company's
---------------------
performance of or compliance with section 13, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, the fees and disbursements of one counsel
and accountants retained by the holder or holders of more than 25% of the
Registrable Securities being registered, premiums and other costs of policies
of insurance against liabilities arising out of the public offering of the
Registrable Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but excluding
underwriting discounts and commissions and transfer taxes, if any, provided
--------
that, in any case where Registration Expenses are not to be borne by the
Company, such expenses shall not include salaries of Company personnel or
general overhead expenses of the Company, auditing fees, premiums or other
expenses relating to liability insurance required by underwriters of the Company
or other expenses for the preparation of financial statements or other data
normally prepared by the Company in the ordinary course of its business or which
the Company would have incurred in any event.
Requesting Holder: As defined in section 13.6.
-----------------
Restricted Securities: (a) any Warrants bearing the applicable
--------------------- -
legend set forth in section 9.2, (b) any shares of Common Stock (or Other
-
Securities) issued upon the exercise of Warrants which are evidenced by a
certificate or certificates bearing the applicable legend set forth in such
section, (c) any shares of Common Stock (or Other Securities) issued subsequent
-
to the exercise of any of the Warrants as a dividend or other distribution with
respect to, or resulting from a subdivision of the out standing shares of Common
Stock (or Other Securities) into
46
a greater number of shares by reclassification, stock splits or otherwise, or in
exchange for or in replacement of the Common Stock (or Other Securities) issued
upon such exercise, which are evidenced by a certificate or certificates
bearing the applicable legend set forth in such section, and (d) unless the
-
context otherwise requires, any shares of Common Stock (or Other Securities)
issuable upon the exercise of Warrants, which, when so issued, will be evidenced
by a certificate or certificates bearing the applicable legend set forth in such
section.
Securities Act: The Securities Act of 1933, or any similar
--------------
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Transfer: Any sale, assignment, pledge or other disposition of
--------
any security, or of any interest therein, which could constitute a "sale" as
that term is defined in section 2(3) of the Securities Act.
Voting Securities: Stock of any class or classes (or equivalent
-----------------
interests), if the holders of the stock of such class or classes (or equivalent
interests) are ordinarily, in the absence of contingencies, entitled to vote for
the election of the directors (or persons per forming similar functions) of such
business entity, even though the right so to vote has been suspended by the
happening of such a contingency.
Warrant Price: As defined in section 2.1.
-------------
Warrants: As defined in the introduction to this Warrant.
--------
Weighted Average Warrant Price: As to any holder of Restricted
------------------------------
Securities, the price determined by dividing (a) the sum of the aggregate
-
consideration previously paid by such holder upon the exercise of Warrants plus
the consideration payable upon the exercise of all Warrants held by such holder
by (b) the sum of (i) the aggregate number of shares previously received by such
- -
holder upon the exercise of Warrants plus (ii) the number of shares which would
--
be received by such holder upon the exercise of all Warrants held by such
holder, based upon the Warrant Price in effect on the effective date of the
registration statement in respect of which the Weighted Average Warrant Price is
being determined.
15. Remedies. The Company stipulates that the remedies at law of the
--------
holder of this Warrant in the event of any default or threatened default by the
Company in the
47
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
16. No Rights or Liabilities as Stockholder. Nothing contained in
---------------------------------------
this Warrant shall be construed as conferring upon the holder hereof any rights
as a stock holder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
17. Notices. All notices and other communications under this
-------
Warrant shall be in writing and shall be delivered, or mailed by registered or
certified mail, return receipt requested, by a nationally recognized overnight
courier, postage prepaid, addressed (a) if to any holder of any Warrant, at the
-
registered address of such holder as set forth in the register kept at the
principal office of the Company, or (b) if to the Company, to the attention of
-
its President at its principal office, provided that the exercise of any Warrant
--------
shall be effective in the manner provided in section 1.
18. Amendments. This Warrant and any term 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.
19. Expiration. The Company will give the holder of this Warrant not
----------
less than six weeks nor more than nine months notice of the expiration of the
right to exercise this Warrant. The right to exercise this Warrant shall expire
at 5:00 p.m., New York City time, on the later of May 31, 2007 and the date of
the effectiveness of a registration statement covering shares of Common Stock,
unless the Company shall fail to give such notice as aforesaid, in which event
the right to exercise this Warrant shall not expire until a date six weeks after
the date on which the Company shall give the holder hereof notice of the
expiration of the right to exercise this Warrant.
20. Descriptive Headings. The headings in this Agreement are for
--------------------
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
48
21. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED
------------- ---------------------------------------------
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
-------------------------------------------------------------------------------
OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
-----------------------------------------------------------------------------
22. Judicial Proceedings; Waiver of Jury. Any judicial proceeding
------------------------------------
brought against the Company with respect to this Warrant may be brought in any
court of competent jurisdiction in the State of California or of the United
States of America for the Central District of California and, by execution and
delivery of this Agreement, the Company (a) accepts, generally and
-
unconditionally, the nonexclusive jurisdiction of such courts and any related
appellate court, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Warrant, subject to any rights of appeal, and
(b) irrevocably waives any objection the Company may now or hereafter have as to
-
the venue of any such suit, action or proceeding brought in such a court or that
such court is an inconvenient forum. The Company hereby waives personal service
of process and consents, that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address specified
or determined in accordance with the provisions of section 17, and service so
made shall be deemed completed on the third Business Day after such service is
deposited in the mail or, if earlier, when delivered. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of any holder of any Warrant to bring proceedings against the
Company in the courts of any other jurisdiction. THE COMPANY HEREBY WAIVES
-------------------------
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, OR INDIRECTLY, ANY
--------------------------------------------------------------------------------
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
-------------------------------------------------------------------------------
OF, RELATED TO, OR CONNECTED WITH THIS WARRANT OR THE RELATION SHIP ESTABLISHED
-------------------------------------------------------------------------------
HEREUNDER.
---------
49
SYNBIOTICS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and Chief
Executive Officer
50
FORM OF SUBSCRIPTION
--------------------
[To be executed only upon exercise of Warrant]
To [NAME OF ISSUER]
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, ______ shares of Common
Stock of [NAME OF ISSUER] and herewith makes payment of $ therefor,
and requests that the certificates for such shares be issued in the name of, and
delivered to , whose address is .
Dated:
--------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
---------------------------
(Street Address)
---------------------------
(City)(State)(Zip Code)
51
FORM OF ASSIGNMENT
------------------
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto the right represented by
such Warrant to purchase shares of [Common Stock] of [NAME OF ISSUER] to
which such Warrant relates, and appoints Attorney to make such
transfer on the books of [NAME OF ISSUER] maintained for such purpose, with full
power of substitution in the premises.
Dated:
--------------------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
Signed in the presence of:
-------------------------
52
