UNDERWRITER'S UNIT WARRANT AGREEMENT
dated as of 1999 between
xxxxxxxXX.XXX, Inc., a Delaware
corporation (the "Company"), and
WESTMINSTER SECURITIES CORPORATION,
a New York corporation (the
"Underwriter").
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The Company proposes to issue to the Underwriter and its designees,
warrants (the "Underwriter's Unit Warrants") to purchase units (the "Units"),
each Unit consisting of one (1) share of Common Stock, par value $.01 per share,
of the Company (the "Common Stock") and one (1) Common Stock Purchase Warrant
(the "Underwriter's Common Stock Warrants"), each Underwriter's Common Stock
Warrant exercisable to purchase one (1) additional share of Common Stock at
$9.00 per share, at any time and from time to time commencing on , 2000
and expiring on , 2004 at a price of $9.60 per Unit, in an amount equal to
ten percent (10%) of the units sold in connection with a public offering by the
Company (the "Public Offering") under Registration Statement No. 333-71733 (the
"Registration Statement"), up to a maximum of 170,000 Units. The Units, which
have been included in the Registration Statement, are similar but not identical
to the units sold in the Public Offering (the "Public Units") and neither the
Underwriter's Unit Warrants nor the Underwriter's Common Stock Warrants
comprising a portion thereof are redeemable by the Company. The Common Stock
and the shares of Common Stock issuable upon exercise of the Underwriter's
Common Stock Warrants are hereinafter collectively referred to as the "Shares".
NOW, THEREFORE, in consideration of the foregoing and for the purpose
of defining the terms and provisions of the Underwriter's Unit Warrants and the
respective rights and obligations thereunder of the Company, the Underwriter and
any subsequent Holder as provided in Section 1.3 hereof, the Company and the
Underwriter hereby agree as follows:
Section 1. Transferability and Form of Warrant.
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1.1. Registration. The Underwriter's Unit Warrants shall be numbered
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and shall be registered on the books of the Company when issued.
1.2. Transfer. The Underwriter's Unit Warrants shall be registered
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for transfer only on the books of the Company maintained at its then principal
office, presently located in New York, New York, upon delivery thereof duly
endorsed by a Holder (as defined below) thereof or by its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. Upon any registration of transfer, the
Company shall execute and deliver new Underwriter's Unit Warrants to the person
entitled thereto.
1.3. Limitations on Transfer of the Warrants. For a period of one (1)
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year from the date hereof, the Underwriter's designees for the purposes of
acquiring Underwriter's Unit Warrants shall be limited to, and the Underwriter's
Unit Warrants shall not be sold, transferred, assigned or hypothecated by the
Underwriter or its designees except to (i) one
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or more persons, each of whom on the date of transfer is an officer of the
Underwriter; (ii) a partnership or partnerships, the general Partners of which
are the Underwriter and one or more persons, each of whom on the date of
transfer is an officer of the Underwriter; (iii) one or more members of the
selling group assembled by the Underwriter for the Public Offering, or any
officers or partners thereof, or (iv) any person receiving the Underwriter's
Unit Warrants from one or more of the persons listed in this Section 1.3 at such
person's or persons' death pursuant to will, trust or the laws of intestate
succession. The Underwriter's Unit Warrants may be divided or combined, upon
request to the Company by a Holder thereof, into a certificate or certificates
evidencing the same aggregate number of Shares issuable thereunder. Unless the
context indicates otherwise, the term "Holder" shall mean and include the
Underwriter and any transferee or transferees of Underwriter's Unit Warrants
pursuant to this Section 1.3, and the term "Underwriter's Unit Warrants" shall
include any and all Underwriter's Unit Warrants outstanding pursuant to this
Agreement, including those evidenced by a certificate or certificates issued
upon division, exchange, substitution or transfer pursuant to this Agreement.
1.4. Form of Underwriter's Unit Warrants. The text of the
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Underwriter's Unit Warrants and of the form of election to purchase Units shall
be substantially as set forth in Exhibit A attached hereto. The price of Shares
and the number of Shares issuable upon
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exercise of Underwriter's Unit Warrants are subject to adjustment upon the
occurrence of certain events, all as herein-after provided. The Underwriter's
Unit Warrants shall be executed on behalf of the Company by its President or one
of its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or an Assistant Secretary.
Underwriter's Unit Warrants bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company, shall
bind the Company, notwithstanding that such individuals or any one of them shall
have ceased to hold such offices prior to the delivery of such Underwriter's
Unit Warrants or did not hold such office on the date of this Agreement.
Underwriter's Unit Warrants shall be dated as of the date of
countersignature thereof by the Company either upon initial issuance or upon
division, exchange, substitution or transfer.
1.5. Legend on Underwriter's Unit Warrant Shares. Each certificate
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for Shares initially issued upon exercise of an Underwriter's Unit Warrant,
unless at the time of exercise such Shares are subject to a currently effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
shall bear the following legend:
"The securities represented by this certificate have not been registered under
the Securities Act of 1933 and may not be sold, exchanged, hypothecated or
transferred in any manner except in compliance with Section 11 of the
Underwriter's Warrant Agreement pursuant to which they were issued."
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Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to an effective registration statement under
the Act of the securities represented thereby) shall also bear the above legend
unless in the opinion of Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C., or
such other counsel as shall be reasonably acceptable to the Company, the
securities represented thereby need no longer be subject to such restrictions.
Section 2. Exchange of Underwriter's Unit Warrant Certificates.
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Underwriter's Unit Warrant certificates may be exchanged for another certificate
or certificates entitling the Holder thereof to purchase a like aggregate number
of Units as the certificate or certificates surrendered then entitle such Holder
to purchase. Any Holder of an Underwriter's Unit Warrant desiring to exchange
Underwriter's Unit Warrant certificates shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, the
certificate or certificates evidencing the Underwriter's Unit Warrant or
Underwriter's Unit Warrants to be so exchanged. Thereupon, the Company shall
execute and deliver to the person entitled thereto a new Underwriter's Unit
Warrant certificate or certificates, as the case may be, as so requested.
Section 3. Term of Underwriter's Unit Warrants; Exercise of Underwriter's
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Unit Warrants. Subject to the terms of this
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Agreement, each Holder shall have the right, at any time during the period
commencing at 9:00 A.M., New York City time, on , 2000 until 5:30 P.M.,
New York City time on , 2004 (the "Termination Date"), to purchase
from the Company that number of Units to which the Holder may at the time be
entitled to purchase pursuant to such Underwriter's Unit Warrants, upon
surrender to the Company at its then principal office, of the certificate or
certificates evidencing the Underwriter's Unit Warrants to be exercised,
together with the form of election to purchase on the reverse thereof duly
completed and signed, and upon payment to the Company of the Underwriter's
Warrant Price (as defined in and determined in accordance with the provisions of
Sections 7 and 8 hereof), for the number of Units in respect of which such
Underwriter's Unit Warrants are then exercised. Payment of the aggregate
Underwriter's Warrant Price shall be made in cash or by certified or bank
cashier's check.
Subject to Section 4 hereof, upon such surrender of Underwriter's Unit
Warrants and payment of the Underwriter's Warrant Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Holder and in such name or names as the Holder may
designate, a certificate or certificates for the number of full Shares and
Underwriter's Common Stock Warrants so purchased upon the exercise of such
Underwriter's Unit Warrants, together with cash, as provided in
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Section 9 hereof, in respect of any fractional Shares and Underwriter's Common
Stock Warrants otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Shares and Underwriter's Common Stock Warrants as of the date of the surrender
of such Underwriter's Unit Warrants and payment of the Underwriter's Warrant
Price, as aforesaid; provided, however, that if, at the date of surrender of
such Underwriter's Unit Warrants and payment of such Underwriter's Warrant
Price, the transfer books for the Shares or other class of securities
purchasable upon the exercise of such Underwriter's Unit Warrants shall be
closed, the certificates for the Shares and Underwriter's Common Stock Warrants
in respect of which such Underwriter's Unit Warrants are then exercised shall be
issuable as of the date on which such books shall next be opened (whether before
or after the Termination Date) and until such date the Company shall be under no
duty to deliver any certificate for such Shares and Underwriter's Common Stock
Warrants; provided further, however, that the transfer books of record, unless
otherwise required by law, shall not be closed at any one time for a period
longer than twenty (20) days. The rights of purchase represented by the
Underwriter's Unit Warrants shall be exercisable at the election of the Holders
thereof either in full or from time to time in part and, in the event that a
certificate evidencing Underwriter's Unit Warrants is exercised in
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respect of less than all of the Shares and Underwriter's Common Stock Warrants
specified therein at any time prior to the date of expiration of the
Underwriter's Unit Warrants, a new certificate evidencing the remaining
Underwriter's Unit Warrant or Warrants will be issued.
Section 4. Payment of Taxes. The Company will pay all documentary
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stamp taxes, if any, attributable to the initial issuance of Shares issuable
upon the exercise of Underwriter's Unit Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of any Underwriter's
Unit Warrants or certificates for Shares.
Section 5. Mutilated or Missing Warrants. In case any of the
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certificates evidencing the Underwriter's Unit Warrants shall be mutilated,
lost, stolen or destroyed, the Company may, in its discretion, issue and deliver
in exchange and substitution for and upon cancellation of the mutilated
Underwriter's Unit Warrant certificate, or in lieu of and substitution for the
Underwriter's Unit Warrant certificate lost, stolen or destroyed, a new
Underwriter's Unit Warrant certificate of like tenor and representing an
equivalent right or interest; but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Underwriter's Unit
Warrant and indemnity, if requested, also satisfactory to it.
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Section 6. Reservation of Shares. There have been reserved, and the
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Company shall at all times keep reserved, out of its authorized Common Stock
that number of shares of Common Stock sufficient to provide for the exercise of
the rights of purchase represented by the outstanding Underwriter's Unit
Warrants (including the rights of purchase represented by the Underwriter's
Common Stock Warrants comprising a portion of the Underwriter's Unit Warrants).
The Transfer Agent for the Common Stock and every subsequent transfer agent for
any shares of the Company's capital stock issuable upon the exercise of any of
the rights of purchase aforesaid will be irrevocably authorized and directed at
all times to reserve such number of authorized shares as shall be requisite for
such purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent for the Common Stock and with every subsequent transfer agent for
any shares of the Company's capital stock issuable upon the exercise of the
rights of purchase represented by the Underwriter's Unit Warrants and the
Underwriter's Common Stock Warrants. The Company will supply such Transfer Agent
with duly executed stock certificates for such purpose and will provide or
otherwise make available any cash which may be payable as provided in Section 9
hereof.
Section 7. Underwriter's Unit Warrant Price. The initial price at
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which Units shall be purchasable upon exercise of Underwriter's Unit Warrants
shall be $6.60 per Unit (the
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"Underwriter's Warrant Price"), subject in each case to adjustment pursuant to
Section 8 hereof as if such price had been the Underwriter's Warrant Price on
the date the Underwriter's Unit Warrants were first issued.
Section 8. Adjustments. The number and kind of securities
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purchasable upon the exercise of each Underwriter's Unit Warrant (assuming for
the purposes of this Section 8 the concurrent exercise of the Underwriter's
Common Stock Warrants) and the Underwriter's Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events, as follows:
8.1. The number of Shares purchasable upon the exercise of each
Underwriter's Unit Warrant and the Underwriter's Warrant Price shall be subject
to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of Shares purchasable upon exercise of each Underwriter's Unit
Warrant immediately prior thereto shall be adjusted so that the Holder of each
Underwriter's Unit Warrant shall be entitled to receive the kind and number of
Shares or other securities of the Company which he would have owned or have been
entitled to receive after the happening
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of any of such event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
(b) In case the Company shall issue rights, options or warrants to all
or substantially all holders of its shares of Common Stock, without any charge
to such holders, entitling them to subscribe for or purchase shares of Common
Stock at a price per share which is lower at the record date mentioned below
than the greater of the current market price per share of Common Stock (as
defined in clause (d) of this Section 8.1 below) and the then Underwriter's
Warrant Price, the number of Shares thereafter purchasable upon the exercise of
each Underwriter's Unit Warrant shall be determined by multiplying the number of
Shares theretofore purchasable upon exercise of each Underwriter's Unit Warrant
by a fraction, of which the numerator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of shares which the aggregate offering price of the total number
of shares of Common Stock so offered would purchase at the greater of such
current market price or the then existing Underwriter's Warrant
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Price. Such adjustment shall be made whenever such rights, options or warrants
are issued, and shall become effective retroactively immediately after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants.
(c) In case the Company shall distribute to all or substantially all
holders of its shares of Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions out of earnings) or rights, options
or warrants or convertible securities containing the right to subscribe for or
purchase shares of Common Stock (excluding those referred to in clause (b) of
this Section 8.1 above), then in each case the number of Shares thereafter
purchasable upon the exercise of each Underwriter's Unit Warrant shall be
determined by multiplying the number of Shares theretofore purchasable upon
exercise of the Underwriter's Unit Warrant, by a fraction, of which the
numerator shall be the then current market price per share of Common Stock (as
defined in clause (d) of this Section 8.1 below) on the date of such
distribution, and of which the denominator shall be such current market price
per share of Common Stock, less the then fair value (as determined by the Board
of Directors of the Company, whose determination shall be conclusive) of the
portion of the assets or evidences of indebtedness so distributed or of such
subscription rights, options or warrants, or of such convertible securities
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made, and
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shall become effective on the date of distribution retroactive to the record
date for the determination of shareholders entitled to receive such
distribution.
(d) For the purposes of this Agreement, the current or closing market
price per share of Common Stock of the Company at any date shall be deemed to be
(i) if the shares of Common Stock are traded in the over-the-counter market and
not on any national securities exchange and not in the NASDAQ National Market
System, the average of the mean between the bid and asked prices per share, as
reported by NASDAQ or if not available by the National Quotation Bureau,
Incorporated, or an equivalent generally accepted reporting service, for the
twenty (20) consecutive trading days immediately preceding the date for which
the determination of current or closing market price is to be made, or, (ii) if
the shares of Common Stock are traded on a national securities exchange or in
the NASDAQ National Market System, the average daily per share closing price on
the principal national securities exchange on which they are so listed or in the
NASDAQ National Market System, as the case may be, for the twenty (20)
consecutive trading days immediately preceding the date for which the
determination of current or closing market price is to be made. The closing
price referred to in subclause (ii) above shall be the last reported sales price
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices, in either case on the national
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securities exchange on which the shares of Common Stock are then listed or in
the NASDAQ National Market System.
(e) No adjustment in the number of Shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the number of Shares purchasable upon the exercise of
each Underwriter's Unit Warrant or Underwriter's Common Stock Warrant; provided,
however, that any adjustments which by reason of this clause (e) of Subsection
8.1 are not required to be made shall be carried forward and taken into account
in any subsequent adjustment.
(f) Whenever the number of Shares purchasable upon the exercise of
each Underwriter's Unit Warrant is adjusted, as herein provided, the
Underwriter's Warrant Price per Unit payable upon exercise of each Underwriter's
Unit Warrant shall be adjusted by multiplying such Underwriter's Warrant Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of Shares purchasable upon the exercise of each Underwriter's Unit
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of Shares so purchasable immediately thereafter.
(g) In case the Company shall sell and issue shares of Common Stock,
or rights, options, warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock, at a price per share of Common
Stock (determined in the case
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of such rights, options, warrants or convertible securities, by dividing (i) the
total amount received or receivable by the Company in consideration of the sale
and issuance of such rights, options, warrants or convertible securities, plus
the total consideration payable to the Company upon exercise or conversion
thereof, by (ii) the total number of shares of Common Stock covered by such
rights, options, warrants or convertible securities) lower than the greater of
the current market price (as defined in clause (d) of Section 8.1 above) in
effect immediately prior to such sale and issuance and the then Underwriter's
Warrant Price, then the Underwriter's Warrant Price shall be reduced to a price
(calculated to the nearest cent) determined by dividing (i) an amount equal to
the sum of (A) the number of shares of Common Stock outstanding immediately
prior to such sale and issuance multiplied by the greater of the current market
price and the then existing Underwriter's Warrant Price, plus (B) the
consideration received by the Company upon such sale and issuance, by (ii) the
total number of shares of Common Stock outstanding immediately after such sale
and issuance. The number of Shares purchasable upon the exercise of each
Underwriter's Unit Warrant and Underwriter's Common Stock Warrant shall be that
number determined by multiplying the number of Shares issuable upon exercise
immediately prior to such adjustment by a fraction, of which the numerator is
the Underwriter's Warrant Price in effect immediately prior to such adjustment
and the denominator is the Underwriter's
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Warrant Price as so adjusted. For the purposes of such adjustments, the shares
of Common Stock which the holders of any such rights, options, warrants or
convertible securities shall be entitled to subscribe for or purchase shall be
deemed to be issued and outstanding as of the date of such sale and issuance and
the consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such rights, options, warrants or
convertible securities, plus the consideration or premiums stated in such
rights, options, warrants or convertible securities to be paid for the shares of
Common Stock, covered thereby. In case the Company shall sell and issue shares
of Common Stock or rights, options, warrants, or convertible securities
containing the right to subscribe for or purchase shares of Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then in determining the "price per share of Common Stock" and
the "consideration received by the Company" for purposes of the first sentence
of this clause (g) of Subsection 8.1, the Board of Directors shall determine, in
its discretion, the fair value of said property and such determination, if made
in good faith, shall be binding upon all Holders of Underwriter's Unit Warrants.
There shall be no adjustment of the Underwriter's Warrant Price pursuant to this
clause (g) of Subsection 8.1 if the amount of such adjustment would be less than
$.05 per Share; provided, however, that any adjustment which by reason of this
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provision is not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(h) Whenever the number of Shares purchasable upon the exercise of
each Underwriter's Unit Warrant or the Underwriter's Warrant Price of such
Shares is adjusted, as herein provided, the Company shall cause to be promptly
mailed by first class mail, postage prepaid, to each Holder of an Underwriter's
Unit Warrant or Warrants notice of such adjustment or adjustments together with
a certificate of a firm of independent public accountants selected by the Board
of Directors of the Company (who may be the regular accountants employed by the
Company) setting forth the number of Shares purchasable upon the exercise of
each Underwriter's Unit Warrant and Underwriter's Common Stock Warrant and the
Underwriter's Warrant Price of such Shares after such adjustment, a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made. Such certificate shall be conclusive evidence of the
correctness of such adjustment.
(i) For the purpose of this Section 8.1, the term "shares of Common
Stock" shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value, In the event that at any time, as a result of an
adjustment
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made pursuant to this Section 8.1, the holders of an Underwriter's Unit Warrant
or Warrants shall become entitled to purchase any shares of the Company other
than shares of Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Underwriter's Unit Warrant and the
Underwriter's Warrant Price of such shares shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Shares contained in clauses (a) through (h),
inclusive, of this Section 8.1 above, and the provisions of Section 3 and
Sections 8.2 through 8.5, inclusive, with respect to the Shares shall apply on
like terms to any such other shares.
(j) Upon the expiration of any rights, options, warrants or conversion
privileges, if any thereof shall not have been exercised, the number of shares
purchasable upon exercise of an Underwriter's Unit Warrant or Underwriter's
Common Stock Warrant and the Underwriter's Warrant Price to the extent the
Underwriter's Unit Warrants and Underwriter's Common Stock Warrants shall not
then have been exercised, shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had it been originally adjusted (or
had the original adjustment not been required, as the case may be) on the basis
of (A) the only shares of Common Stock so issued were the shares of Common
Stock, if any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion rights and (B) such shares of Common Stock, if
any, were
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issued or sold for the consideration actually received by the Company upon such
exercise plus the consideration, if any, actually received by the Company for
the issuance, sale or grant of all of such rights, options, warrants or
conversion rights whether or not exercised; provided, further, that no such
readjustment shall have the effect of increasing the Underwriter's Warrant Price
by an amount in excess of the amount of the adjustment initially made in respect
of the issuance, sale or grant of such rights, options, warrants or convertible
rights.
8.2. No Adjustment for Dividends. Except as provided in Section 8.1,
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no adjustment in respect of any dividends shall be made during the term of the
Underwriter's Unit Warrants or upon the exercise of the Underwriter's Unit
Warrants.
8.3. No Adjustment in Certain Cases. Anything herein to the contrary
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notwithstanding, no adjustment shall be made in respect of (i) the issuance of
shares of Common Stock pursuant to the sale of Public Units as contemplated by
the Registration Statement, (ii) the issuance of shares of Common Stock pursuant
to the exercise of the Company's Redeemable Common Stock purchase warrants
comprising a portion of the Public Units, or (iii) the issuance of shares of
Common Stock upon exercise in accordance with their terms of any options, or
warrants issued on or before the date hereof, as the same may be extended or
modified subsequent hereto to increase their respective exercise prices.
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8.4. Preservation of Purchase Rights upon Reclassifica- tion,
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Consolidation, etc. In case of any consolidation of the Company with or merger
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of the Company into another corporation or in case of any sale or conveyance to
another corporation or entity of the property, assets or business of the Company
as an entirety or substantially as an entirety, the Company or such successor or
purchasing corporation or entity, as the case may be, shall execute with the
Holder of Underwriter's Unit Warrants an agreement that each Holder of an
Underwriter's Unit Warrant shall have the right thereafter upon payment of the
Underwriter's Warrant Price in effect immediately prior to such action to
purchase upon exercise of each Underwriter's Unit Warrant the kind and amount of
shares and other securities and property (including cash) which such Holder
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Underwriter's Unit Warrant
been exercised immediately prior to such action. Such agreement shall provide
for adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 8. The Company shall mail by first
class mail, postage prepaid, to the Holder of each Underwriter's Unit Warrant,
notice of the execution of any such agreement. The provisions of this Section
8.4 shall similarly apply to successive consolidations, mergers, sales or
conveyances.
8.5. Statement on Underwriter's Unit Warrants.
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Irrespective of any adjustments in the Underwriter's Warrant Price or the number
or kind of shares purchasable upon the exercise of the Underwriter's Unit
Warrants, Underwriter's Unit Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in the Underwriter's Unit Warrants initially issuable pursuant to this
Agreement.
Section 9. Fractional Interests. The Company shall not be required
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to issue fractional Shares upon the exercise of either Underwriter's Unit
Warrants or the Underwriter's Common Stock Warrants. If more than one
Underwriter's Unit Warrant or Underwriter's Common Stock Warrant shall be
presented for exercise in full at the same time by the same Holder, the number
of full Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Shares represented by the
Underwriter's Unit Warrants or Underwriter's Common Stock Warrants so presented.
If any fraction of a Share would, except for the provisions of this Section 9,
be issuable on the exercise of any Underwriter's Unit Warrant or Underwriter's
Common Stock Warrant (or specified portion thereof), the Company shall pay an
amount in cash equal to the current market price per Share (as defined in clause
(d) of Section 8.1 above) multiplied by such fraction.
Section 10. No Right as Stockholders; Notices to Underwriter's
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Warrant Holders. Nothing contained in this Agreement or in any of the
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Underwriter's Unit Warrants or the Underwriter's
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Common Stock Warrants shall be construed as conferring upon the Holders or their
transferees the right to vote or to receive dividends or to consent or to
receive notice as stockholders in respect of any meeting of stockholders for the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company. If, however, at any time prior to the
expiration of the Underwriter's Unit Warrants or the Underwriter's Common Stock
Warrants and prior to their exercise, any of the following events shall occur:
(a) any action which would require an adjustment pursuant to Sections
8.1 or 8.4, or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger, or sale of all or
substantially all of its property, assets, and business as an entirety)
shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Holders as provided in Section 14 hereof at least twenty
(20) days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such
dividend, distribution, or subscription rights, or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be.
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Section 11. Registration Rights.
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11.1. The Underwriter's Unit Warrants, the Underwriter's Common Stock
Warrants and the Shares (hereinafter collectively referred to as the
"Underwriter's Securities") have been included in the Registration Statement
filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Act. By acceptance of the Underwriter's Unit Warrants,
each Holder agrees that prior to making any disposition of any of the
Underwriter's Securities, such Holder shall give written notice to the Company
describing briefly the manner in which any such proposed disposition is to be
made; and no such disposition shall be made if the Company has notified such
Holder that in the opinion of counsel reasonably satisfactory to the Holder a
post-effective amendment to the Registration Statement or other registration or
notification under the Act is required with respect to such disposition and no
such post-effective amendment or other registration or notification has been
filed by the Company and declared effective, if necessary, by the Commission,
11.2. The Company shall be obligated to the Holders of the
Underwriter's Securities (hereinafter collectively referred to as the "Holders")
and Shares to file such post-effective amendment or other registration or
notification only as follows:
(a) Whenever during the four (4) year period commencing on the first
anniversary of the effective date of the Registration Statement (the "Effective
Date"),
23
Public Offering (the "Closing Date"), the Company proposes to file with the
Commission a post-effective amendment or other registration or notification of
its securities (other than as to the Underwriter's Securities or as to
securities issued pursuant to an employee benefit plan or as to a transaction
subject to Rule 145, promulgated under the Act), it shall, at least thirty (30)
days prior to such filing, give written notice of such proposed filing to the
Holders at the addresses appearing on the records of the Company, and shall
offer to include and shall include in such filing any proposed disposition of
the Underwriter's Securities upon receipt by the Company, not less than ten (10)
days prior to the proposed filing date, of requests from Holders therefor
setting forth the facts with respect to such proposed disposition.
If on the first occasion hereafter when the Company determines to file
a registration statement with respect to an underwritten public offering of
shares of Common Stock or other debt or equity securities of the Company, the
managing underwriter of such public offering shall furnish its written opinion
to the Holders that in its judgment inclusion of any of the Underwriter's
Securities in such offering would exceed the maximum amount of securities (as
specified in such opinion) which could then be marketed at a price reasonably
related to the then current market value of such securities and without
materially and adversely affecting such proposed offering, then, in such event,
the Company shall have the
24
option of including all or any part of the Underwriter's Securities as to which
such inclusion has been requested (i) in the registration statement filed by the
Company (in which event the Company may require that each such Holder agree that
he, she or it, as the case may be, will not sell his, her or its respective
portion of the Underwriter's Securities for ninety (90) days from the effective
date of such registration statement or such shorter period as the Company may
permit), or (ii) in a separate registration statement filed by the Company
within a period of sixty (60) days after the effective date of the Company's
registration statement contemplated by clause (i) of this Section ll.2(a).
(b) In addition to any registration rights pursuant to Section 11.2
(a) above, on any one (1) occasion during the six (6) year period commencing on
the first anniversary of the Effective Date, the Company will, upon receipt of a
written request from Holders of at least fifty percent (50%) of the Under-
writer's Securities (including for this purpose Shares issuable upon exercise of
all the Underwriter's Unit Warrants and the Underwriter's Common Stock Warrants,
whether or not theretofore exercised), prepare and file as promptly as
practicable (but in any event within sixty (60) days of any such request), at
its own expense, a post-effective amendment or such other registration or
notification
25
with the Commission sufficient to permit the public offering of all of the
Underwriter's Securities, and will use its best efforts at its own expense
through its officers, directors, auditors and counsel, in all matters necessary
or advisable, to cause such post-effective amendment or other registration or
notification to become effective as promptly as practicable.
(c) Except as specifically provided in clause (b) of Section 11.2, (i)
all fees, disbursements and out-of-pocket expenses in connection with any filing
required under this Section 11 and in complying with applicable securities and
Blue Sky laws shall be borne by the Company, excluding brokerage commissions,
transfer taxes, if any, and charges of Holders' counsel, and (ii) the Company at
its expense will supply the Holders with copies of such post-effective amendment
or other registration statement or notification and the prospectus or offering
circular included therein and other related documents in such quantities as may
be reasonably requested by such Holders.
(d) The Company shall not be required by this Section 11 to file such
post-effective amendment or registration or other notification if, in the
reasonable opinion of counsel for both the Holders and the Company (or, should
they not agree, in the opinion of another counsel experienced in securities law
matters reasonably acceptable to counsel for the Holders and the Company), the
proposed public offering or other transfer as to which such post-effective
26
amendment or other registration or notification is requested is exempt from
applicable federal and state securities laws and would result in all purchasers
or transferees obtaining securities which are not "restricted securities", as
defined in Rule 144 under the Act.
(e) The Company agrees that until all of the Underwriter's Securities
shall have been sold under a registration statement or other notification or
pursuant to Rule 144 under the Act, it will keep current in filing all materials
required to be filed with the Commission in order to permit the holders thereof
to sell such securities under such Rule 144.
Section 12. Indemnification.
---------------
12.1. In the event of the filing of any post-effective amendment or
other registration or notification with respect to the Underwriter's Securities
pursuant to Section 11 above:
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Holders and each person, if any, who controls
the Holder within the meaning of Section 15 of the Act or Section 2O(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against any
and all loss, liability, claim, damage and expense whatsoever (including, but
not limited to any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) arising out of or based upon any
27
untrue statement or alleged untrue statement of a material fact contained (x) in
any such registration statement, notification, preliminary prospectus,
prospectus or offering circular (as from time to time amended and supplemented)
or (y) in any application or other document (in this Section 12 collectively
called "application") executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Underwriter's Securities under the securities laws thereof or filed
with the Commission or any securities exchange, or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading; unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company with respect to the Holders by or on behalf of the Holders
expressly for use such registration statement, notification, preliminary
prospectus, prospectus or offering circular, or any amendment or supplement
thereto, or in any application or in any communication to the Commission, as the
case may be.
If any action is brought against any Holder or a controlling person in
respect of which indemnity may be sought against the Company pursuant to clause
(a) of this Section 12.1, such Holder shall promptly notify in writing the party
or parties against whom indemnification is to be sought of the institution of
such action and the indemnifying parties shall assume the defense of such
28
action, including the employment of counsel (reasonably satisfactory to such
Holder or such controlling person) and payment of expenses. Such Holder or such
controlling person shall have the right to employ his, her or its own counsel in
any such case, but the fees and expenses of such counsel shall be at such
Holder's expense or the expense of such controlling person unless the employment
of such counsel shall have been authorized in writing by the indemnifying
parties in connection with the defense of such action or the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action or counsel for such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to the indemnifying parties (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this clause (a) of Section 12.1 to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent. The Company agrees promptly to notify the Holders
of the commencement of any litigation or proceedings against the Company or any
of its officers or directors in connection with such registration statement,
notification, preliminary prospectus, or prospectus or offering circular, or any
amendment or supplement
29
thereto, or any such application. With respect to any untrue statement or
alleged untrue statement made in, or omission or alleged omission from, any
preliminary prospectus, the indemnity agreement contained in this clause (a) of
Section 12.1 with respect to such preliminary prospectus shall not inure to the
Holders' benefit (or the benefit of any person or persons controlling the
Holders), if the prospectus (or the prospectus as amended or supplemented if the
Company shall have made any amendments thereof or supplements thereto which
shall have been furnished to the Holders prior to the time of confirmation of
such sale) does not contain such statement, alleged statement, omission or
alleged omission, and a copy of such prospectus shall not have been sent or
given to such person at or prior to the written confirmation of such sale to
such person.
(b) Each Holder, severally and not jointly, agree to indemnify and
hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed such registration statement and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 2O(a) of the Exchange Act to the same extent as
the foregoing indemnify from the Company to such Holder but only with respect to
statements or omissions, or alleged statements or omissions, if any, made in any
such registration statement, notification, preliminary prospectus, prospectus or
any amendment or supplement thereto or any application in reliance upon, and in
conformity with, written
30
information furnished to the Company with respect to such Holder by or on behalf
of such Holder for use in any such registration statement, notification,
preliminary prospectus, prospectus or offering circular or any amendment or
supplement thereto or in any application, as the case may be. In case any action
shall be brought against the Company or any person so indemnified, based on any
registration statement, notification, preliminary prospectus, prospectus or
offering circular or any amendment or supplement thereto or any application, and
in respect of which indemnity may be sought against such Holder, that Holder
shall have the rights and duties given to the Company and the Company and each
other person so indemnified shall have the rights and duties given to that
Holder by the provisions of clause (a) of Section 12.1 above.
(c) If the indemnification provided for in this Section 12 is
unavailable or insufficient to hold harmless an indemnified party under clauses
(a) or (b) of Section 12.1 above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable to such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Holders on the
other from the offering of the Underwriter's Securities. If, however, the
allocation provided by the immediately
31
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required above in this Section 12, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Holders on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Holders on the other
shall be deemed to be in the same proportion as the total offering price of all
of the Company's securities covered by such registration statement or
notification (including such of the Underwriter's Securities as are covered
thereby) bears to the offering price of such of the Underwriter's Securities as
are covered thereby. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Holders on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Holders agree that it would not be just and equitable if contribution
pursuant to this clause (c) of Section 12.1
32
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
such clause (c). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this clause (c) of Section 12,1 shall be deemed to include
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 clause (c) of Section 12.1, the Holders
shall not be required to contribute any amount in excess of the amount by which
the offering price of all of the Underwriter's Securities covered by such
registration statement or notification exceeds the amount of any damages which
the Holders would have otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission; and no person
guilty of fraudulent misrepresentation (within the meaning of Section 11 of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
Section 13. Notices. Any notice pursuant to this Agreement by the
-------
Company or by any Holder or Holders shall be in writing and shall be deemed to
have been duly given if delivered or mailed certified mail, return receipt
requested:
(a) If to the Underwriter - addressed to Westminster Securities
Corporation, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
33
Att: President;
(b) If to the Company - addressed to it at xxxxxxxXX.XXX, 000 Xxxxx
Xxxxxx, Xxxxx 0000X, Xxx Xxxx, Xxx Xxxx 00000, Att: President; and
(c) If to the Holders addressed to such Holders at their respective
addresses on the books of the Company.
Each party hereto may from time to time change the address to which
notices to it are to be delivered or mailed hereunder by notice in accordance to
the other party.
Section 14. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Holders shall bind and
inure to the benefit of their respective successors
and assigns hereunder.
Section 15. Merger or Consolidation of the Company. The Company will
--------------------------------------
not merge or consolidate with or into any other corporation unless the
corporation resulting from such merger or consolidation (if not the Company)
shall expressly assume, by supplemental agreement satisfactory in form to the
Underwriter and duly executed and delivered to the Underwriter, the due and
punctual performance and observance of each and every covenant and condition of
this Agreement to be performed and observed by the Company.
Section 16. Survival. All statements contained in any schedule, any
--------
exhibit, certificate or other instrument delivered by or on behalf of the
parties hereto, or in connection with the
34
transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder. Notwithstanding any investigations
made by or on behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement or pursuant
hereto shall survive, except that if a party hereto has actual knowledge at the
date hereof of facts which would constitute a breach of the representations and
warranties contained herein, such breaches shall be waived by such party if such
party consummated the transactions contemplated by this Agreement.
Section 17. Applicable Law. This Agreement and each Underwriter's
--------------
Unit Warrant issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State.
Section 18. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any person or Corporation other than the Company
and the Holders of any legal or equitable right, remedy or claim under this
Agreement and this Agreement shall be for the sole and exclusive benefit of the
Company and the Holders.
Section 19. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 20. Captions. The captions of Sections and
--------
35
clauses of this Agreement have been inserted for convenience only and shall have
no substantive effect.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
Attest xxxxxxxXX.XXX, Inc.
By: _________________________
--------------------
WESTMINSTER SECURITIES CORPORATION
Attest
By: _________________________
--------------------
37
EXHIBIT A
No.
WARRANT TO PURCHASE UNITS
(Each Unit consisting of one (1) Share of Common Stock
and one (1) Common Stock Purchase Warrant, each
exercisable to purchase one (1) Additional Share
of Common Stock through , 2004)
VOID AFTER 5:30 P.M., NEW YORK CITY TIME, ON , 2004
xxxxxxxXX.xxx, Inc.
This certifies that, for value received,
, the holder hereof or registered assigns (the "Holder"), is entitled
to purchase from xxxxxxxXX.xxx, Inc., a Delaware corporation (the "Company"), at
any time during the period commencing at 9:00 A.M., New York City time, on
, 1999 and ending at 5:30 P.M., New York City time, on , 2004, at
an initial purchase price of $6.60 per Unit (the "Underwriter's Warrant Price")
up to the number of Units set forth above. The number of Units purchasable upon
exercise of this Warrant and the Underwriter's Warrant Price per share shall be
subject to adjustment from time to time as set forth in the Underwriter's Unit
Warrant Agreement referred to below.
This Warrant may be exercised in whole or in part by presentation of this
Warrant with the Purchase Form on the reverse
side hereof duly executed and simultaneous payment of the Underwriter's Warrant
Price (subject to adjustment) at the principal office of the Company. Payment of
such price shall be made at the option of the Holder hereof in cash or by
certified check or bank cashier's check.
This Warrant is one of a duly authorized issue of Warrants evidencing
the right to purchase up to a maximum of Units, each Unit consisting of
one (1) share of Common Stock, par value $.01 per share, of the Company and one
(1) Common Stock Purchase Warrant, each Common Stock Purchase Warrant
exercisable to purchase one (1) additional Share of Common Stock of the Company,
at a price of $6.60 per share through , 2004 and is issued under and in
accordance with an Underwriter's Unit Warrant Agreement dated as of
, 1999 (the "Underwriter's Unit Warrant Agreement") between the Company and
Westminster Securities Corporation and is subject to the terms and provisions
contained in the Underwriter's Unit Warrant Agreement, all of which are hereby
consented to by the Holder by acceptance hereof. A copy of the Underwriter's
Unit Warrant Agreement may be obtained for inspection by the Holder upon written
request to the Company.
Upon any partial exercise of this Warrant, there shall be
countersigned and issued to the Holder a new Warrant in respect of the Units as
to which this Warrant shall not have been exercised. This Warrant may be
exchanged at the office of the Company by surrender of this Warrant properly
endorsed either separately or in
combination with one or more other Warrants for one or more new Warrants of the
same aggregate number of Units evidenced by the Warrant or Warrants exchanged.
No fractional securities will be issued upon the exercise of rights to purchase
hereunder, but the Company shall pay the cash value of any fraction upon the
exercise of one or more Warrants. This Warrant is transferable at the office of
the Company in the manner and subject to the limitations set forth in the
Underwriter's Unit Warrant Agreement.
The Holder may be treated by the Company and all other persons dealing with
this Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby, or to the registration of
transfer hereof on the books of the Company any notice to the contrary
notwithstanding, and until such registration of transfer on such books, the
Company may treat the Holder as the owner for all purposes.
This Warrant does not entitle any Holder to any of the rights of a
stockholder of the Company.
Dated: , 1999
xxxxxxxXX.xxx, Inc.
By: ______________________________
xxxxxxxXX.xxx, Inc.
PURCHASE FORM
-------------
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
Units provided for therein, and requests that certificates for the shares of
Common Stock and Underwriter's Common Stock Warrants (as defined in the
Underwriter's Unit Warrant Agreement) comprising the Units be issued in the name
of:
--------------------------------------------------------------------------------
(please print name, address, and social security number)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
and, if said number of Units shall not be all the shares purchasable thereunder,
that a new Warrant Certificate for the balance remaining of the Units
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder or his Assignee as below indicated and delivered to the
address stated below.
DATED: ,
Name of Warrantholder
or Assignee __________________________________________
(please print)
Address Signature: __________________________________________
NOTE: THE ABOVE SIGNATURE MUST
Signature CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS
WARRANT CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE
WHATEVER, UNLESS THIS WARRANT
HAS BEEN ASSIGNED.
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto __________________________________________________
--------------------------------------------------------------------------------
(name and address of assignee must be printed or typewritten)
the within Warrant, hereby irrevocably constituting and
appointing ______________________________________________________
Attorney to transfer said Warrant on the books of the Company with
full power of substitution in the premises.
Dated: ,
------------------------------
SIGNATURE OF REGISTERED HOLDER
NOTE: THE SIGNATURE OF THIS ASSIGNMENT
Signature MUST CORRESPOND WITH THE NAME AS
Guaranteed: IT APPEARS UPON THE FACE OF THE
WITHIN WARRANT CERTIFICATE IN
EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
