Exhibit 4.1
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND
MUST BE HELD INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR DISPOSED
OF PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
COMMON STOCK PURCHASE WARRANT
Dated September 20, 1994
--------------------------
Void After May 26, 1999
The Xxxxxx Companies, Inc., a Delaware California corporation (the
"Company"), hereby certifies that, for value received the adequacy and receipt
of which are hereby acknowledged, Foothill Capital Corporation, a California
corporation, or its registered assigns (the "Warrantholders"), is entitled,
subject to the terms and conditions set forth in this Warrant (said Warrant and
any warrants issued in exchange herefor or transfer or replacements hereof are
collectively referred to as the "Warrants"), to purchase from the Company, for
cash, Eighty Thousand (80,000) fully paid and nonassessable shares of Common
Stock of the Company, par value $.10 per share (the "Common Stock," which term
is further defined in Paragraph 4(i) hereof), on September 21, 1997 or any time
or from time to time thereafter until 5 p.m. California local time on May 26,
1999 ("Exercise Period") at an exercise price of $1.875 per share (the "Exercise
Price"), the number of such shares of Common Stock and the Exercise Price being
subject to adjustment as provided herein.
1. Exercise Warrant. The rights represented by this Warrant may be
exercised by the Warrantholders, in whole or in part (but not as to a fractional
share of Common Stock), during the exercise Period by the presentation and
surrender of this Warrant with written notice of Warrantholders' election to
purchase, at the principal executive office of the Company, or at such other
address as the Company may designate by notice in writing to the Warrantholders
at the address of such Warrantholders appearing on the books of the Company, and
upon payment to the Company of the Exercise Price for such shares of Common
Stock. Such payment shall be made by certified or cashier's check to the order
of the Company. The Company agrees that the shares so purchased (the "Warrant
Shares") shall be deemed to have been issued to the Warrantholders as the record
owner of such Warrant Shares as of the close of business on the date on which
this Warrant shall have been surrendered together with the aforementioned
written notice of election to purchase, and payment for such Warrant Shares
shall have been made as aforesaid. Certificates for the Warrant Shares so
purchased shall be delivered to the Warrantholders within a reasonable time, not
exceeding five (5) business days, after the rights represented by this Warrant
shall have been so exercised, and, unless this Warrant has expired, a new
Warrant representing the number of shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the
Warrantholders within such time.
2. Exercise Price. Warrant shares shall be purchased at the Exercise
Price set forth above, subject to adjustment as provided herein.
3. Warrantholders Not Deemed Stockholders. The Warrantholders shall not
be entitled to vote or receive dividends or be deemed the holders of Common
Stock, nor shall anything contained herein be construed to confer upon the
Warrantholders, as holders of Warrants, any of the rights of a stockholder of
the Company or any right to vote upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issue of stock, reclassification of stock,
change of par value or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends, except as otherwise provided herein, until this Warrant shall have
been exercised and the Warrant Shares receivable upon the exercise hereof shall
have become deliverable as provided in Paragraph 1 above.
4. Adjustment of Number of Shares, Exercise Price and Nature of
Securities Issuable Upon Exercise of Warrants.
(a) Exercise Price: Adjustment of Number of Shares. The Exercise
Price shall be subject to adjustment from time to time as hereinafter provided.
Upon each adjustment of the Exercise Price, the Warrantholders shall thereafter
be entitled to purchase, at the Exercise Price resulting from such adjustment, a
number of shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Adjustment of Exercise Price Upon Issuance of Common Stock. If
and whenever after the date hereof the Company shall issue or sell Additional
Shares of Common Stock (as defined below) without consideration or for a
consideration per share less than the Current Market Price or the Exercise Price
then in effect immediately prior to the issuance or sale of such shares, then
the Exercise Price in effect immediately prior to such issuance or sale of such
shares shall be reduced by dividing an amount equal to the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Exercise Price plus (2) the aggregate
consideration, if any, received by the Company upon such issue or sale, by (B)
the total number of shares of Common Stock outstanding immediately after such
issue or sale.
No adjustment of the Exercise Price, however, shall be made in an amount
less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried forward, shall amount
to $.01 per share or more.
The provisions of this Paragraph 4(b) shall not apply to any Additional
Shares of Common Stock which are (i) distributed to holders of Common Stock
pursuant to a stock split
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for which an adjustment is provided for under Paragraph 4(f), or (ii) issued
upon conversion of any convertible securities of the Company, or upon exercise
of any warrants, options or rights to purchase Common Stock, or securities
convertible into Common Stock, of the Company, outstanding on the date hereof or
issuable pursuant to an existing employee or director benefit plan as identified
on Schedule A hereto.
As used in this Warrant, the following terms shall have the following
meanings:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued or issuable by the Company after September 20, 1994.
"Fair Value" means the Fair Value of the appropriate security, property,
assets, business or entity as determined in accordance with the following
procedure: The Company and the holders of the Warrants and Warrant Shares, as
applicable, shall use their best efforts to mutually agree to a determination of
Fair Value within ten (10) days of the date of the event requiring that such a
determination be made. If the Company and such holders are unable to reach
agreement within said ten (10) day period, the Company shall within ten (10)
days of the expiration of the ten (10) day period above referred to retain an
independent nationally recognized investment banking or appraisal firm approved
by a majority of the holders of Warrants and Warrant Shares (which appraisal
firm shall not be the investment banking firm regularly retained by the Company
or any of such holders). Such firm shall determine (within thirty (30) days of
their being retained) the Fair Value of the security, property, assets, business
or entity, as the case may be, in question and delivery their opinion in writing
to the Company and to such holders, which determination shall be conclusive and
binding on the Company and such holders. The fees and expenses of any such
determination made by any such independent investment banking or appraisal firm
shall be paid by the Company.
"Current Market Price" of a share of Common Stock or of any other
security on any date specified herein means the average of the daily closing
prices for the thirty (30) trading days before such date. The closing price for
each day shall be (i) the last sale price of shares of Common Stock or such
other security, regular way, on such 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 the same are then listed or admitted to trading, or (ii) if no
shares of Common Stock or if no securities of the same class as such other
security are then listed or admitted to trading on any national securities
exchange, the average of the reported closing bid and asked prices thereof on
such date in the over-the-counter market as shown by the National Association of
Securities Dealers automated quotation system or, if no shares of Common Stock
or if no securities of the same class as such other security are then quoted in
such system, as published by the National quotation Bureau, Incorporated or any
similar successor organization, then in either case as reported by any member
firm of the New York Stock Exchange selected by the Company.
(c) Further Provisions for Adjustment of Exercise Price Upon Issuance
of Additional Shares of Common Stock and Convertible Securities. For purposes of
Paragraph 4(b), the following provisions shall also be applicable:
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(i) In case at any time on or after the date hereof, the Company
shall declare any dividend, or order any other distribution, upon any stock of
the Company of any class, payable in Additional Shares of Common Stock or by the
issuance of evidence of indebtedness, shares of stock or other securities which
are at any time directly or indirectly convertible into or exchangeable for
Additional Shares of Common Stock (all such indebtedness and securities are
referred to as "Convertible Securities") such declaration or distribution shall
be deemed to have been issued or sold (as of the record date) without
consideration and shall thereby cause an adjustment in the Exercise Price as
required by Paragraph 4(b).
(ii) (A) In case at any time on or after the date hereof, the
Company shall in any manner issue or sell any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
there shall be determined the price per share for which Additional Shares of
Common Stock are issuable upon the conversion or exchange thereof, such
determination to be made by dividing (a) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof by (b) the
maximum aggregate number of Additional Shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities for such minimum
aggregate amount of additional consideration; and such issue or sale shall be
deemed to be an issue or sale for cash (as of the date of issue or sale of such
Convertible Securities) of such maximum number of Additional Shares of Common
Stock at the price per share so determined, and shall thereby cause an
adjustment in the Exercise Price, if such an adjustment is required by Paragraph
4(b) hereof.
(B) If such Convertible Securities shall by their terms provide
for an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Company, or in the rate of
exchange upon the conversion or exchange thereof, the adjusted Exercise Price
shall, upon any such increase becoming effective, be increased to such Exercise
Price as would have been in effect had the adjustments made upon the issuance of
such Convertible Securities been made upon the basis of (and the total
consideration received therefor) (a) the issuance of the number of shares of
Common Stock theretofore actually delivered upon the exercise of such
Convertible Securities, (b) the issuance of all Common Stock, all Convertible
Securities and all rights and options to purchase Common Stock issued after the
issuance of such Convertible Securities, and (c) the original issuance at the
time of such change of any such Convertible Securities then still outstanding;
provided, however, that any such increase or increases shall not exceed, in the
aggregate, the amount of the original reduction of the Exercise Price
attributable to the Convertible Securities.
(C) If any rights of conversion or exchange evidenced by such
Convertible Securities shall expire without having been exercised, the adjusted
Exercise Price shall forthwith be readjusted to such Exercise Price as would
have been in effect had an adjustment with respect to such Convertible
Securities been made on the basis that the only Additional Shares of Common
Stock issued or sold were those issued upon the conversion or exchange of such
Convertible Securities, and that they were issued or sold for the consideration
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actually received by the Company upon such exercise, plus the consideration, if
any, actually received by the Company for the granting of such Convertible
Securities.
(iii) (A) In case at any time on or after the date hereof, the
Company shall in any manner grant or issue any rights or options to subscribe
for, purchase or otherwise acquire Additional Shares of Common Stock, whether or
not such rights or options are immediately exercisable, there shall be
determined the price per share for which Additional Shares of Common Stock are
issuable upon the exercise of such rights or options, such determination to be
made by dividing (a) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options if the maximum number of
Additional Shares were issued pursuant to such rights or options for such
minimum aggregate amount of additional consideration, by (b) the maximum number
of Additional Shares of Common Stock of the Company issuable upon the exercise
of all such rights or options for such minimum aggregate amount of additional
consideration; and the granting of such rights or options shall be deemed to be
an issue or sale for cash (as of the date of the granting of such rights or
options) of such maximum number of Additional Shares of Common Stock at the
price per share so determined, and shall thereby cause an adjustment in the
Exercise Price, if such an adjustment is required by Paragraph 4(b) hereof.
(B) If such rights or options shall by their terms provide for an
increase or increases, with passage of time, in the amount of additional
consideration payable to the Company upon the exercise thereof, the adjusted
Exercise Price shall, upon any such increases becoming effective, be increased
to such Exercise Price as would have been in effect had the adjustments made
upon the issuance of such rights or options been made upon the basis of (and the
total consideration received therefor) (a) the issuance of the number of shares
of Common Stock theretofore actually delivered upon the exercise of such rights
or options, (b) the issuance of all Common Stock, all rights and options and all
Convertible Securities issued after the issuance of such rights and options, and
(c) the original issuance at the time of such change of any such rights or
options then still outstanding; provided, however, that any such increase or
increases in the Exercise Price shall not exceed, in the aggregate, the amount
of the original reduction of the Exercise Price attributable to the grant of
such rights or options.
(C) If any such rights or options shall expire without having
been exercised, the adjusted Exercise Price shall forthwith be readjusted to
such Exercise Price as would have been in effect had an adjustment with respect
to such rights or options been made on the basis that the only Additional Shares
of Common Stock so issued or sold were those issued or sold upon the exercise of
such rights or options and that they were 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 granting of such rights or
options.
(iv) (A) In case at any time on or after the date hereof, the
Company shall grant any rights or options to subscribe for, purchase or
otherwise acquired Convertible Securities, there shall be determined the price
per share for which Additional Shares of Common Stock are issuable upon the
exchange or conversion of such Convertible Securities if
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such rights or options were exercised, such determination to be made by dividing
(a) the total amount, if any, received or receivable by the Company as
consideration for the issuance of such rights or options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of such rights or options if the maximum number of Convertible
Securities were issued pursuant to such rights or options for such minimum
aggregate amount of additional consideration, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the exchange or
conversion of such Convertible Securities if the maximum number of Additional
Shares were issued pursuant to such Convertible Securities for such minimum
aggregate amount of additional consideration, by (b) the maximum aggregate
number of Additional Shares of Common Stock issuable upon the exchange or
conversion of the Convertible Securities for such minimum aggregate amount of
additional consideration; and the issue or sale of such rights or options shall
be deemed to be an issue or sale for cash (as of the date of the granting of
such rights or options) of such maximum number of Additional Shares of Common
Stock at the price per share so determined, and thereby shall cause an
adjustment in the Exercise Price, if such an adjustment is required by Paragraph
4(b).
(B) If such rights or options to subscribe for or otherwise
acquire Convertible Securities shall by their terms provide for an increase or
increases, with the passage of time, in the amount of additional consideration
payable to the Company upon the exercise, exchange or conversion thereof, the
adjusted Exercise Price shall , forthwith upon any such increase becoming
effective, be increased to such Exercise Price as would have been in effect had
the adjustments made upon the issuances of such rights or options been made upon
the basis of (and the total consideration received therefor) (a) the issuance of
the number of shares of Common Stock theretofore actually delivered upon the
exchange or conversion of such Convertible Securities (b) the issuances of all
Common Stock and all rights, options and Convertible Securities issued after the
issuance of such rights and options and (c) the original issuances at the time
of such change of any such rights, options and Convertible Securities issued
upon exercise of such rights or options which are then still outstanding;
provided, however, that any such increase or increases shall not exceed, in the
aggregate, the amount of the original reduction of the Exercise Price
attributable to the grant of such rights or options.
(C) If any such rights, options or rights of conversion or
exchange of such Convertible Securities shall expire without having been
exercised, exchanged or converted, the adjusted Exercise Price shall forthwith
be readjusted to such Exercise Price as would have been in effect had an
adjustment been made with respect to such rights, options or rights of
conversion or exchange of such Convertible Securities on the basis that the only
Additional Shares of Common Stock so issued or sold were those issued or sold
upon the exercise of such rights or options and exchange or conversion of such
Convertible Securities and that they were issued or sold for the consideration
actually received by the Company upon exercise of such rights and options and
exchange or conversion of such Convertible Securities, plus the consideration,
if any, actually received by the Company for the granting of such rights,
options or Convertible Securities.
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(v) In any case where an adjustment has been made in the Exercise
Price upon the issuance of Convertible Securities or any rights or options to
purchase Convertible Securities or Additional Shares of Common Stock pursuant to
this Paragraph 4(c), no further adjustment shall be made at the time of the
conversion of any such Convertible Securities or at the time of the exercise of
any such rights or options.
(vi) In case at any time on or after the issuance of this Warrant
any shares of Common Stock or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the consideration other than
cash, the amount of the consideration other than cash payable to the Company
shall be deemed to be the Fair Value of such consideration. Whether or not the
consideration so received is cash, the amount thereof shall be determined
without deducting therefrom any expenses incurred or any underwriting
commissions or concessions or discounts paid or allowed by the Company in
connection therewith.
(vii) In case at any time the Company shall fix a record date of
the holders of its Common Stock for the purpose of entitling them (a) to receive
a dividend or other distribution payable in Common Stock, Convertible Securities
or rights or options to purchase either thereof, or (b) to subscribe for or
purchase Common Stock, Convertible Securities or rights or options to purchase
either thereof, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed, pursuant to this Paragraph
4(c), to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be provided, however, that the Company
may elect to defer until the occurrence of such event (i) issuing to the holder
of any Warrant exercised after such record date the Warrant Shares and other
securities of the Company, if any, issuable upon such exercise over and above
the Warrant Shares and other securities of the Company, if any, issuable upon
such exercise on the basis of the Exercise Price prior to such adjustment and
(ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 6 provided, however, that the Company deliver to such holder
a due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional Warrant Shares, other securities and cash upon the
occurrence of the event requiring such adjustment.
(viii) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of this Paragraph 4(c).
(d) Reorganization, Reclassification, Consolidation, Merger or Sale.
If any capital reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive cash, stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions shall be made
whereby the Warrantholders shall thereafter have the right to purchase and
receive upon the basis and upon
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the terms and conditions specified in this Warrant upon exercise of this Warrant
and in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such cash, shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of Common Stock equal t the number or shares of such Common Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, and in any such case appropriate provision shall be
made with respect to the rights and interest of the Warrantholders to the end
that the provisions hereof (including, without limitation, provisions for
adjustments of the Exercise Price and of the number of shares purchasable and
receivable upon the exercise of this Warrant) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Company shall not effect
any consolidation, merger or sale of all or substantially all of the assets of
the Company unless prior to or simultaneous with the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation, merger or purchase of such assets shall assume, by written
instrument executed and mailed or delivered to the Warrantholders, the
obligation to deliver to such Warrantholders such cash (or cash equivalent),
shares of stock, securities or assets as, in accordance with the foregoing
provisions, the Warrantholders may be entitled to receive and containing the
express assumption of such successor corporation of the due and punctual
performance and observance of each provision of this Warrant to be performed and
observed by the Company and of all liabilities and obligations of the Company
hereunder; provided, however, in the case of any consolidation or merger of the
Company with another corporation or the sale of all or substantially all of its
assets to another corporation effected in such a manner that the holders of
Common Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common stock, then, at the election of each
Warrantholder, in lieu of receiving such stock, securities or assets, such
Warrantholder shall receive cash equal to the Fair Value of the Common Stock
issuable upon exercise of the Warrant, less the Exercise Price payable upon
exercise thereof.
In case any Additional Shares of Common Stock or Convertible
Securities or any rights or options to purchase any Additional Shares of Common
Stock or Convertible Securities shall be issued in connection with any merger of
another corporation into the Company, the amount of consideration therefor shall
be deemed to be the Fair Value of such portion of the assets of such merged
corporation as the Board of Directors of the Company shall in good faith
determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities or rights or options, as the case may be, and the
Exercise Price shall be adjusted in accordance with this Paragraph 4(d).
(e) Company to Prevent Dilution. In case at any time or from time to
time conditions arise by reason of action taken by the Company which are not
adequately covered by the provisions of this Section 4, and which would
materially and adversely affect the exercise rights of the Warrantholders under
any provision of this Warrant, unless the adjustment necessary shall be agreed
upon by the Company and the Warrantholders, the Board of Directors of the
Company shall appoint a firm of independent certified public accountants of
recognized standing, acceptable to the Warrantholders, who at the Company's
expense shall give their opinion upon the Adjustment, if any, on a basis
consistent with the standards established in the
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other provisions of this Paragraph 4, necessary with respect to the Exercise
Price and the number of shares purchasable upon exercise of the Warrants, so as
to preserve, without dilution, the exercise rights of the Warrantholders. Upon
receipt of such opinion, such Board of Directors shall forthwith make the
adjustments described therein.
(f) Stock Splits and Reverse Splits. In case at any time the Company
shall subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of shares of Common Stock purchasable
pursuant to this Warrant immediately prior to such subdivision shall be
proportionately increased, and conversely, in case at any time the Company shall
combine its outstanding shares of Common Stock into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Common Stock purchasable
upon the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced.
(g) Dissolution, Liquidation and Wind-Up. In case the Company shall,
at any time prior to the expiration of this Warrant and prior to the exercise
thereof, dissolve, liquidate or wind up its affairs, the Warrantholders shall be
entitled, upon the exercise of this Warrant, to receive, in lieu of the shares
of Common Stock of the Company which such Warrantholders would have been
entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to such Warrantholders upon any such dissolution,
liquidation or winding up with respect to such shares of Common Stock of the
Company, had such Warrantholders been the holders of record of the Warrant
Shares receivable upon the exercise of this Warrant on the record date for the
determination of those persons entitled to receive any such liquidating
distribution. After any such dissolution, liquidation or winding up which shall
result in any cash distribution in excess of the Exercise Price provided for by
this Warrant, the Warrantholders may, at each such Warrantholder's option,
exercise the same without making payment of the Exercise Price, and in such case
the Company shall, upon the distribution to said Warrantholders, consider that
said Exercise Price has been paid in full to it and in making settlement to said
Warrantholders, shall deduct from the amount payable to such Warrantholders an
amount equal to such Exercise Price.
(h) Accountants' Certificates. In each case of an adjustment in the
number of shares of Common Stock or other stock, securities or property
receivable on the exercise of the Warrants, the Company at its expense shall
cause independent public accountants of recognized national standing selected by
the Company, who may be the regular independent auditors of the Company, to
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of (a) the consideration
received or to be received by the Company for any Additional Shares of Common
Stock, rights, options or Convertible Securities issued or sold or deemed to
have been issued or sold, (b) the number of shares of Common Stock of each class
outstanding or deemed to be outstanding, (c) the adjusted Exercise Price and (d)
the number of shares issuable upon exercise of this Warrant. The Company will
forthwith mail a copy of each such certificate to each Warrantholder.
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(i) Definition of Common Stock. As used herein, the term "Common
Stock" shall mean and include the Company's authorized common stock of any class
or classes, and shall also include any capital stock of any class of the Company
hereafter authorized which shall not be limited to a fixed sum or percentage of
par value in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company, and shall include any
common stock of any class or classes resulting from any reclassification or
reclassifications thereof.
5. Special Agreements of the Company.
(a) Reservation of Shares. The Company covenants and agrees that all
Warrant Shares will, upon issuance, be validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder, and from
all taxes, liens and charges with respect to the issue thereof (other than taxes
in respect to any transfer occurring contemporaneously with such issue). The
Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant. The
Company hereby covenants and agrees to take all such action as may be necessary
to assure that the par value per share of the Common Stock is at all times equal
to or less than the Exercise Price.
(b) Avoidance of Certain Actions. The Company will not, by amendment
of its Certificates of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, issue or sale of securities or otherwise, avoid
or take any action which would have the effect of avoiding the observance or
performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in carrying out all of the
provisions of this Warrant and in taking all of such action as may be necessary
or appropriate in order to protect the rights of the Warrantholders against
dilution or other impairment of their rights hereunder.
(c) Securing Governmental Approvals. If any shares of Common Stock
required to be reserved for the purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal
law (other than the Securities Act of 1933, as amended (the "Securities Act"))
or under any state law before such shares may be issued upon exercise of this
Warrant, the Company will, at its expense, as expeditiously as possible, use its
best efforts to cause such shares to be duly registered or approved, as the case
may be.
(d) Listing on Securities Exchanges; Registration. If, and so long
as, any class of the Company's Common Stock shall be listed on any national
securities exchange (as defined in the Securities Exchange Act of 1934 (the
"Exchange Act")), the Company will, at its expense obtain and maintain the
approval for listing upon official notice of issuance of all Warrant Shares
receivable upon the exercise of Warrants at the time outstanding and maintain
the listing of Warrant Shares after their issuance; and the Company will so list
on such national
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securities exchange, will register under the Exchange Act (or any similar
statute then in effect), and will maintain such listing of, any other securities
that at any time are issuable upon exercise of this Warrant if and at the time
any securities of the same class shall be listed on such national securities
exchange by the Company.
(e) Communication to Shareholders. Any notice, document or other
written communication given or made by the Company to all holders of Common
Stock as such shall at the same time be provided to the Warrantholders.
(f) Restrictions on Public Sale by the Company. The Company will not
effect any public or private sale or distribution of its convertible debt or
equity securities, including a sale pursuant to Regulation D under the
Securities Act, during the five (5) day period prior to, and during the fifteen
(15) day period beginning on, the closing date of each underwritten offering by
the Company made pursuant to a registration statement filed pursuant to
Paragraphs 10(b) or 10(c); and, except as may be required under agreements
entered into by the Company prior to the date hereof, the Company shall cause
each holder of its privately placed convertible debt or equity securities issued
by it at any time on or after the date of this Warrant to agree not to effect
any public sale or distribution of any such securities during such period,
including a sale pursuant to Rule 144 or Rule 144A under the Securities Act.
(g) Compliance with Law. The Company shall comply with all material
applicable laws, rules and regulations of the United States and of all states,
municipalities and agencies and of any other jurisdiction applicable to the
Company, the violation of which would have a material adverse effect on the
Company and its subsidiaries taken as a whole, and shall do all things necessary
to preserve, renew and keep in full force and effect and in good standing its
corporate existence and authority necessary to continue its business.
6. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon exercise hereof, the Company
shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the Current Market Value of one share of Common Stock.
7. Notices of Stock Dividends, Subscriptions, Reclassifications,
Consolidations, Mergers, etc. If at any time: (i) the Company shall declare a
cash dividend (or an increase in the then existing dividend rate), or declare a
dividend on Common Stock payable otherwise than in cash out of its net earnings
after taxes for the prior fiscal year; or (ii) the Company shall authorize the
granting to the holders of Common Stock of rights to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or (iii) there
shall be any capital reorganization, or reclassification, or redemption of the
capital stock of the Company, or consolidation or merger of the Company with, or
sale of all or substantially all of its assets to, another corporation or firm;
or (iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company, then the Company shall give to the Warrantholders at
the addresses of such Warrantholders as shown on the books of the Company, at
least twenty (20 days prior to the applicable record date hereinafter specified,
a written notice summarizing such
11
action or event and stating the record date for any such dividend or rights (or,
if a record date is not to be selected, the date as of which the holders of
Common Stock of record entitled to such dividend or rights are to be
determined), the date on which any such reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected the
holders of Common Stock of record shall be entitled to effect any exchange of
their shares of Common Stock for cash (or cash equivalent) securities or other
property deliverable upon any such reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding up.
The failure to give the notice required by this Section 7 or any defect therein
shall not affect the legality or validity of any such action or event, or the
vote upon any such action.
8. Registered Holder; Transfer of Warrants or Warrant Shares.
(a) Maintenance of Registration Books; Ownership of this Warrant. The
Company shall keep at its principal office a register in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration, transfer and exchange of this Warrant. The Company shall not at
any time, except upon the dissolution, liquidation or winding-up of the Company,
close such register so as to result in preventing or delaying the exercise or
transfer of this Warrant.
The Company may deem and treat the person in whose name this
Warrant is registered as the holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration or transfer as provided in this
Paragraph 8.
(b) Exchange and Replacement. This Warrant is exchangeable upon
surrender hereof by the registered holder to the Company at its principal office
for new Warrants of like tenor and date representing in the aggregate the right
to purchase the number of shares purchasable hereunder, each of such new
Warrants to represent the right to purchase such number of shares as shall be
designated by said registered holder at the time of surrender. Subject to
compliance with the provisions of Paragraphs 8 and 9, this Warrant and all
rights hereunder are transferable in whole or in part upon books of the Company
by the registered holder hereof in person or by duly authorized attorney, and a
new Warrant shall be made and delivered by the Company, of the same tenor and
date as this Warrant but registered in the name of the transferee, upon
surrender of this Warrant, duly endorsed, to said office of the Company. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor, in lieu of this Warrant, without requiring the
posting of any bond or the giving of any other security. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange, transfer or replacement. The Company shall pay all expenses, taxes
and other charges payable in connection with the preparation, execution and
delivery of Warrants pursuant to this Paragraph 8.
12
(c) Warrants and Warrant Shares Not Registered. The holder of this
Warrant, by accepting this Warrant, by accepting this Warrant, represents and
acknowledges that this Warrant and the Warrant Shares are not being registered
under the Securities Act on the grounds that the issuance of this Warrant and
the offering and sale of such Warrant Shares are exempt from registration under
Section 4(2) of the Securities Act as not involving any public offering.
Notwithstanding any provisions contained in this Warrant to the
contrary, this Warrant and the Warrant Shares shall not be transferable except
upon the conditions specified in Paragraphs 8 and 9, which conditions are
intended, among other things, to insure compliance with the provisions of the
Securities Act in respect of the transfer of this Warrant or of such Warrant
Shares.
9. Restrictions on Transfer.
(a) Each Warrant shall be stamped or otherwise imprinted with the
legend set forth on the first page of this Warrant.
(b) Each stock certificate representing Warrant Shares shall be
stamped or otherwise imprinted with the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MUST BE
HELD INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER SAID
ACT AND LAWS OR DISPOSED OF PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
(c) The Warrantholders agree that prior to any transfer of this
Warrant each Warrantholder with give written notice to the Company of its
intention to effect such a transfer, describing such intended transfer, and that
such Warrantholder will not sell or transfer any or all of this Warrant without
first delivering to the Company (i) an opinion of counsel for the Company or an
opinion, reasonably satisfactory to counsel for the Company, of Buchalter,
Nemer, Fields & younger, a Professional Corporation, or other counsel skilled in
securities matters (selected by such Warrantholder and reasonably satisfactory
to the Company), to the effect that such sale or transfer will be exempt from
the registration and prospectus delivery requirements of the Securities Act and
in compliance with applicable state securities laws or (ii) an interpretative
letter from the Securities and Exchange Commission (the "Commission") to the
effect that the proposed transfer may be made without registration under the
Securities Act; and (iii) an agreement by the transferee to be bound by the
provisions of this Warrant, including, without limitation, this Section 9
relating to transfers, and restrictions on transfers, of the Warrants and
Warrant Shares; provided, however, that the provisions of this Paragraph 9 shall
not apply with respect to any Warrants as to which there is a registration
statement in effect under the Securities Act at the time of the proposed
transfer.
13
10. Registration.
(a) Registrable Stock. As used in this Paragraph 10, the term
"Registrable Stock" shall mean all Warrant Shares acquired by the Warrantholders
upon exercise of the Warrants which may not be sold or transferred pursuant to
Rule 144(k) of the Securities Act. For purposes of this Xxxxxxxxx 00, Xxxxxxx
Shares shall include shares of Common Stock, whether or not such securities have
in fact been issued, and stock or other securities of the Company issued upon
conversion of, in a stock split or reclassification of, or a stock dividend or
other distribution on, or in substitution or exchange for, or otherwise in
connection with, such Warrant Shares or in a merger or consolidation involving
the Company's assets. For the purpose of this Paragraph 01, a Warrantholder of
record shall be treated as the record holder of the related Warrant Shares then
issuable upon the conversion or exercise thereof. The only class of securities
which the Company is obligated to register under this Paragraph 10 is Common
Stock issuable upon exercise of the Warrant.
(b) Required Registration. Whenever the Company shall receive a
written request therefor from any holder or holders on or after September 20,
1997 of at least 40,000 shares of Registrable Stock, the Company shall promptly
prepare and file a registration statement under the Securities Act covering the
Registrable Stock which is the subject of such request and shall use its best
efforts to cause such registration statement to become effective as
expeditiously as possible. Upon the receipt of such request, the Company shall
promptly give written notice to all holders of Registrable Stock that such
registration is to be effected. The Company shall include in such registration
statement such Registrable Stock for which it has received written requests to
register such shares by the holders thereof within thirty (30) days after the
effectiveness of the Company's written notice to such other holders. The Company
shall be obligated to prepare, file and cause to become effective only one (1)
registration statement (excluding therefrom any registration statement which is
withdrawn prior to the effectiveness or otherwise or abandoned at the request of
the holders of a majority of the Registrable Stock sought to be registered in
such registration statement, provided, however, that such holders have elected
to pay and have paid to the Company in full the registration expenses theretofor
incurred by the Company and otherwise payable by the Company pursuant to
paragraph (e) of this Section 10. Except as hereinafter expressly provided,
without the written consent of the holders of a majority of the shares of
Registrable Stock for which registration has been requested pursuant to this
Paragraph, neither the Company nor any other holder of securities of the Company
may include securities in such registration. If, in the good faith judgment of
the managing underwriter, if any, of such public offering, the inclusion of all
of the Registrable Stock covered by requests for registration pursuant to this
Paragraph 10 (b) would materially and adversely affect the successful marketing
of a lesser amount of Registrable Stock, after giving priority to the shares of
Registrable Stock over all other persons who may participate in such
registration, the number of shares of Registrable Stock otherwise to be included
in the underwritten public offering shall be reduced to the required level with
the participation in such offering to be pro rata among the holders of
Registrable Stock requesting such registration, based upon the number of shares
of Registrable Stock owned by such holders; and those shares which are excluded
from the underwritten public offering shall be withheld from the market by the
holders thereof for a period, not to exceed ninety (90) days, which the managing
underwriter
14
reasonably determines is necessary in order to effect the underwritten public
offering. The managing underwriter or underwriters of any underwritten public
offering requested pursuant to this Paragraph 10 (b) shall be selected by the
Company. Notwithstanding anything to the contrary herein, the Company shall have
the right, from time to time, by written notice to any holder of Registrable
Stock who has made a registration demand pursuant to this Section 10 or had
Registrable Stock included in an effective registration statement, as
applicable, (i) to delay the filing of a registration statement pursuant to this
Section 10 or (ii) to request that any selling holder of Registrable Stock under
an effective registration statement discontinue dispositions of Registrable
Stock pursuant to the registration statement covering such Registrable Stock
pursuant to the registration statement covering such Registrable Stock until
further notice, in writing, from the Company (and each such selling holder
hereby agrees to discontinue any distributions forthwith), if in the good faith
judgment of the Company's Board of Directors it would be adverse to the Company
for such registration statement to be filed, or for an effective registration
statement to be amended (by incorporation by reference to other documents or
otherwise) in order to continue to permit dispositions of Registrable Stock in
compliance with applicable securities laws, because such filing or amendment
would interfere with any bona fide financing, acquisition, corporate
reorganization or other material transaction involving the Company or any of its
subsidiaries or would compel premature disclosure thereof or of any other
significant corporate development; provided, however, that the Company shall not
have the right to defer such filing or to require discontinuance of such
dispositions of Registrable Stock for a period or periods exceeding 120 days in
the aggregate in any one calendar year during which the registration rights
provided in this Section 10 are in effect.
(c) Incidental Registration. Each time the Company shall determine
to file a registration statement under the Securities Act (other than on Form
S-8 or Form S-4) in connection with the proposed offer and sale for money of any
of its securities by it or, pursuant to registration rights granted after the
date hereof, by any of its security holders the Company will give written notice
of its determination to all holders of Registrable Stock. Upon the written
request of a holder of any Registrable Stock, the Company will cause all such
Registrable Stock, the holders of which have so requested registration thereof,
to be included in such registration statement, all to the extent requisite to
permit the sale or other disposition by the prospective seller or sellers of the
Registrable Stock to be so registered in accordance with the terms of the
proposed offering. If the registration statement is to cover an underwritten
distribution, the Company shall use its best efforts to cause the Registrable
Stock requested for inclusion pursuant to this Paragraph 10 (c) to be included
in the underwriting on the same terms and conditions as the securities otherwise
being sold through the underwriters. If, in the good faith judgment of the
managing underwriter of such public offering, the inclusion of all of the
Registrable Stock requested to be registered would be reasonably likely to
adversely affect the successful marketing of the other shares proposed to e
offered, then the amount of the Registrable Stock to be included in the offering
shall be reduced to such number of shares of Registrable Stock that, in the
opinion of such underwriter or underwriters, can be sold without an adverse
effect on the price, timing or distribution of the securities to be included,
selected pro rata among the holders of Registrable Stock which have requested to
be included in such registration, based on the fully diluted ownership of
Registrable Stock of such holders.
15
(d) Registration Procedures. If and whenever the Company is
required by the provisions of Paragraph 10(b) or 10(c) to effect the
registration of Registrable Stock under the Securities Act, the Company will, at
its expense, as expeditiously as possible:
(i) In accordance with the Securities Act and the rules and
regulations of the Securities and Exchange Commission ("Commission"), prepare
and file with the Commission a registration statement on the form of
registration statement appropriate with respect to such securities and use its
reasonable best efforts to cause such registration statement to become and
remain effective for a period of not less than 90 days or such shorter period
necessary for the securities covered by such registration statement to be sold,
and prepare and file with the Commission such amendments to such registration
statement and supplements to the prospectus contained therein as may be
necessary to keep such registration statement effective and such registration
statement and prospectus accurate and complete;
(ii) If the offering is to be underwritten, in whole or in
part, enter into a written underwriting agreement on customary terms with the
holders of the Registrable Stock participating in such offering and the
underwriter in form and substance reasonably satisfactory to the managing
underwriter of the public offering and the holders of a majority of the
Registrable Stock participating in such offering;
(iii) Furnish to the holders of securities participating in
such registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters and
holders may reasonably request in order to facilitate the public offering of
such securities;
(iv) Use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as such participating holders and underwriters may
reasonably request provided, however, that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to taxation or general
service of process in any such jurisdiction where it is not then so subject;
(v) Notify the holders participating in such registration,
promptly after it shall receive notice thereof, of the date and time when such
registration statement and each post-effective amendment thereto has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed;
(vi) Notify such holders promptly of nay request by the
Commission for the amending or supplementing of such registration statement or
prospectus or for additional information;
(vii) Prepare and file with the Commission, promptly upon the
request of a majority of such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
holders, is required under the
16
Securities Act or the rules and regulations thereunder in connection with the
distribution of the Registrable Stock by such holders;
(viii) Prepare and promptly file with the Commission, and
promptly notify such holders of the filing of, such amendments or supplements to
such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect may include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(ix) In case any of such holders or any underwriter for any
such holders is required to deliver a prospectus at a time when the prospectus
then in circulation is not in compliance with the Securities Act or the rules
and regulations of the Commission, prepare promptly upon request such amendments
or supplements to such registration statement and such prospectus as may be
necessary in order for such prospectus to comply with the requirements of the
Securities Act and such rules and regulations;
(x) Advise such holders, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of nay stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly or threatening of
any proceeding for that purpose and promptly use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal of such stop
order should be issued;
(xi) If requested by the managing underwriter or underwriters
or a holder of Registrable Stock being sold in connection with an underwritten
offering, promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority of the Registrable Stock being sold agree should be included therein
relating to the plan of distribution with respect to such Registrable Stock,
including information with respect to the Registrable Stock being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Stock to be sold in such offering; and
make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after being notified of the matters to e
incorporated in such prospectus supplement or post-effective amendment;
(xii) Cooperate with the selling holders of Registrable Stock
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Stock to be sold and not
bearing any restrictive legends; and enable such Registrable Stock to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
17
(xiii) Prepare a prospectus supplement or post-effective
amendment to the registration statement or the related prospectus or any
document incorporated therein by reference or file any other required documents
so that, as thereafter delivered to the purchasers of the Registrable Stock, the
prospectus will not contain an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(xiv) Enter into such customary agreements (including an
underwriting agreement) and take all such other actions in connection therewith
as the holders of a majority of the Registrable Stock being sold or the managing
underwriter, if any, deem necessary in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(A) make such representations and warranties to the holders
of such Registrable Stock and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in primary underwritten
offerings;
(B) if an underwriting agreement is entered into, the same
shall set forth in full the indemnification provisions and procedures of
Paragraph 10(f) hereof with respect to all parties to be indemnified pursuant to
said Paragraph; and
(C) the Company shall deliver such documents and certificates
as may be requested by the holders of the majority of the Registrable Stock
being sold and the managing underwriters, if any, to evidence compliance with
the terms of this Paragraph 10(d) and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company.
The above shall be done at each closing under such underwriting or similar
agreement or as and to the extent required thereunder;
(i) Make available for inspection by a representative of the
holders of the Registrable Stock to be included in the registration statement,
any underwriter participating in any disposition pursuant to a registration
statement, and any attorney or accountant retained by the sellers or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with the
preparation of the registration statement; provided, that any records,
information or documents that are designated by the Company in writing as
confidential shall be kept confidential by such persons unless disclosure of
such records, information or documents is required by court or administrative
order, in which event such person shall provide the Company with prompt prior
written notice of such requirement and shall cooperate with the Company so that
the Company may seek a protective order or other appropriate remedy ("Protective
Action"). In the event the Company fails to seek Protective Action, or such
Protective Action is not obtained, such persons shall exercise reasonable best
efforts to obtain assurance that confidential treatment will be accorded those
18
records, information or documents which they are required to disclose by such
court or administrative order;
(xvi) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to the Company's security holders, earning statements satisfying the provisions
of Section 11(a) of the Securities Act, no later than forty-five (45) days after
the end of any twelve (12) month period (or ninety (90) days, if such a period
is a fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Stock is sold to underwriters in an underwritten offering, or, if
not sold to underwriters in such an offering, (ii) beginning with the first
month of the Company's first fiscal quarter commencing after the effective date
of a registration statement;
(xvii) Not file any amendment or supplement to such
registration statement or prospectus to which a majority in interest of such
holders has objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the Securities Act or
the rules and regulations thereunder, after having been furnished with a copy
thereof at least three (3) business days prior to the filing thereof; provided,
however, that the failure of such holders or their counsel to review or object
to any amendment or supplement to such registration statement or prospectus
shall not affect the rights of such holders or any controlling person or persons
thereof or any underwriter or underwriters therefor under Paragraph 10(f)
hereof; and
(xviii) At the request of any such holder (i) furnish to such
holder on the effective date of the registration statement or, if such
registration includes an underwritten public offering, at the closing provided
for in the counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the holder or
holders making such request, covering such matters with respect to the
registration statement, the prospectus and each amendment or supplement thereto,
proceedings under state and federal securities laws, other matters relating to
the Company, the securities being registered and the offer and sale of such
securities as are customarily the subject of opinions of issuer's counsel
provided to underwriters in underwritten public offerings, and (ii) use its best
effort to furnish to such holder letters in customary form dated each such
effective date and such closing date, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and to the
holder or holders making such request, stating that they are independent
certified public accountants within the meaning of the Securities Act and
dealing with such matters of the type customarily covered by such "cold comfort
letters" as the underwriters may reasonably request, or, if the offering is not
underwritten, as such requesting holder or holders may reasonably request.
(e) Expenses of Registration. All expenses incident to the
Company's performance of or compliance with this Warrant, including without
limitation:
(i) All registration and filing fees (including those with
respect to filings required to be made with the National Association of
Securities Dealers, Inc.);
19
(ii) Subject to Section 2(d) (iv), fees and expenses of
compliance with all securities or blue sky laws (including fees and
disbursements of counsel for the underwriters or selling holders in connection
with blue sky qualifications of the Registrable Stock in determination of their
eligibility for investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Stock being sold may
designate);
(iii) Printing, messenger, telephone and delivery expenses;
(iv) Fees and disbursements of counsel for the Company and for
the sellers of the Registrable Stock as hereinafter provided;
(v) Fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit and
"comfort" letters required by or incident to such performance);
(vi) Fees and disbursements of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals relating to the distribution of the
Registrable Stock or legal expenses of any person other than the Company and the
selling holders); and
(vii) Fees and expenses of other persons retained by the
Company;
will be borne by the Company, regardless of whether the registration statement
becomes effective, except as provided in paragraph (b) of this Section 10.
The Company will, in any event, pay its internal expenses
(including without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, rating agency fees and the
fees and expenses of any person, including special experts, retained by the
Company.
In connection with the registration statement required hereunder,
the Company will reimburse the holders of Registrable Stock being registered
pursuant to the registration statement for the reasonable fees and disbursements
of not more than one counsel (or more than one counsel if conflict exists among
such selling holders in the exercise of the reasonable judgment of counsel for
the selling holders and counsel for the Company) chosen by the holders of a
majority of such Registrable Stock.
(f) Indemnification.
(i) The Company hereby agrees to indemnify each of the
Warrantholders in connection with a registration of any of the securities
purchased upon exercise of the Warrants against all claims, losses, damages and
liabilities (or action in respect thereof)
20
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, preliminary or final
prospectus, or other document incident to any such registration, qualification
or compliance (or in any related registration statement, notification or the
like) 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, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and to reimburse the Warrantholders
(including officers and directors of the same and controlling persons) for any
legal and any other expenses reasonably incurred in connection with liability or
action, provided, however, that the Company will not be liable in any such case
to the extent that any such claim, loss, damage or liability arises out of or is
based on any untrue statement or omission based upon written information
furnished to the Company by a Warrantholder on their behalf.
(ii) Each Warrantholder agrees to indemnify the Company and its
officers and directors and each person, if any, who controls any thereof within
the meaning of Section 15 of the Securities Act and their respective successors
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement of a material fact
contained in any prospectus, offering circular or other document incident to any
registration, qualification or compliance relating to securities purchased
pursuant to the Warrants (or in any related registration statement, notification
or the like) 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 will reimburse the Company and each other person indemnified
pursuant to this subparagraph (ii) for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, provided, however, that this
subparagraph (ii) shall apply only if (and only to the extent that) such
statement or omission was made in reliance upon information (including, without
limitation, written negative response to inquiries) furnished to the Company by
a Warrantholder or on its behalf for use in such prospectus, or other document
(or related registration statement, notification or the like) or any amendment
or supplement thereto.
(iii) Each party entitled to indemnification hereunder (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party (at such Indemnifying Party's expense) to assume
the defense of any claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be satisfactory to the Indemnified Party, and the
Indemnified Party may participate in such defense at such party's expense, and
provided, further, that the omission by any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Paragraph 10(f) except to the extent that the omission results in a
failure of actual notice to the Indemnifying Party and such Indemnifying Party
is materially damaged solely as a result of the failure to give notice. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or entered into any settlement which does not include as an
unconditional
21
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
(iv) If the indemnification provided for in this Paragraph
10(f) is unavailable or insufficient to hold harmless an Indemnified Party in
respect of any losses, claims, damages, liabilities, expenses or actions in
respect thereof referred to herein, then the Indemnifying Party shall contribute
to the amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages, liabilities, expenses or actions in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand, and the Indemnified Party on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or actions as well as any other relevant equitable
considerations, including the failure to give the notice required hereunder. The
relative fault of the Indemnifying Party and the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact relates to information supplied by the
Indemnifying Party or the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Warrantholders agree that it would
not be just and equitable if contributions pursuant to this Paragraph 10(f) were
determined by pro rata allocation or by any other method of allocation which did
not take account of the equitable considerations referred to above. The amount
paid or payable to an Indemnified Party as a result of the losses, claims,
damages, liabilities or actions in respect thereof, referred to above, 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 contribution provisions of this Paragraph 10(f),
in no event shall the amount contributed by any seller of Registrable Stock
exceed the aggregate net offering proceeds received by such seller from the sale
of Registrable Stock to which such contribution or indemnification claim
relates. No person guilty of fraudulent misrepresentations (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation.
(v) The indemnification required by this Paragraph 10(f) shall
be made by periodic payments during the course of the investigation or defense,
as and when bills are received or expenses incurred.
(g) Reporting Requirements Under Exchange Act. The Company shall
maintain the registration of its Common Stock under Section 12 of the Exchange
Act and shall keep effective such registration and shall timely file such
information, documents and reports as the Commission may require or prescribe
under Section 13 of the Exchange Act, or otherwise. The Company shall (whether
or not it shall then be required to do so) timely file such information,
documents and reports as the Commission may require or prescribe under Section
13 or 15(d) (whichever is applicable) of the Exchange Act. The Company shall
forthwith upon request furnish any holder of Registrable Stock (i) a written
statement by the Company that it has complied with such reporting requirements,
(ii) a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents filed by the Company with the Commission
as such holder may reasonably request in availing itself of an
22
exemption for the sale of Registrable Stock without registration under the
Securities Act. The Company acknowledges and agrees that the purpose of the
requirements contained in this Paragraph 10(g) is to enable any such holder to
comply with the current public information requirement contained in paragraph
(c) of Rule 144 under the Securities Act should such holder ever wish to dispose
of any of the securities of the Company acquired by it without registration
under the Securities Act in reliance upon Rules 144 or 144A, as such rules may
be amended from time to time (or any other similar rule or regulation hereafter
adopted by the Commission). In addition, the Company shall take such other
measures and file such other information, documents and reports as shall
hereafter be required by the Commission as a condition to the availability of
Rule 144 and Rule 144A, as such rules may be amended from time to time (or any
other similar rule or regulation hereafter adopted by the Commission). In
addition, the Company shall take such other measures and file such other
information, documents and reports as shall hereafter be required by the
Commission as a condition to the availability of Rule 144 and Rule 144A under
the Securities Act (or any similar rule or regulation hereafter adopted by the
Commission).
(h) Stockholder Information. The Company may require each holder
of Registrable Stock as to which any registration is to be effected pursuant to
this Paragraph 10 to furnish the Company such information with respect to such
holder and the distribution of such Registrable Stock as the Company may from
time to time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith.
11. Representation and Warranties. The Company hereby represents and
warrants to and covenants with each Warrantholder, and each holder of Warrant
Shares that:
(a) Organization and Capitalization of the Company. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. As of the date hereof, the authorized capital of
the Company consists of 100 million shares of Common Stock and 10 million shares
of Preferred Stock. No unissued shares of Common Stock are reserved for any
purpose other than for issuance upon the exercise of the Warrants and, except as
indicated on Schedule A hereto. As of the date hereof, the Company has not
issued or agreed to issue any stock purchase rights or convertible securities
other than the Warrants and, except as indicated on Schedule A hereto, and there
are no preemptive rights in effect with respect to the issuance of any shares of
Common Stock. All the outstanding shares of Common Stock and Preferred Stock
have been validly issued without violation of any preemptive or similar rights,
are fully paid and nonassessable and have been issued in compliance with all
federal and applicable state securities laws.
(b) Authority. The Company has full corporate power and authority
to execute and deliver this Warrant, to issue the shares of Common Stock
issuable upon exercise of this Warrant, and to perform all of its obligations
hereunder, and the execution, delivery and performance hereof has been duly
authorized by all necessary corporate action on its part. This Warrant has been
duly executed on behalf of the Company and constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with its terms.
23
(c) No Legal Bar. Neither the execution, delivery or performance
of this Warrant nor the issuance of the shares of Common Stock issuable upon
exercise of this Warrant will (a) conflict with or result in a violation of the
Certificate of Incorporation or By-Laws of the Company, (b) conflict with or
result in a violation of any law, statute, regulation, order or decree
applicable to the Company or any affiliate which violation would have a material
adverse effect on the Company and its subsidiaries, taken as a whole, or the
Company's ability to complete the transactions contemplated hereby, (c) require
any consent or authorization or filing with, or other act by or in respect of
any governmental authority or (d) result in a breach of, constitute a default
under or constitute an event creating rights of acceleration, termination or
cancellation under any mortgage, lease, contract, franchise, instrument or other
agreement to which the Company is a party or by which it is bound the effect of
which would have a material adverse effect on the Company and its subsidiaries
taken as a whole.
(d) Validity of Shares. When issued upon the exercise of this
Warrant as contemplated herein, the shares of Common Stock so issued will have
been validly issued and will be fully paid and nonassessable. On the date
hereof, the par value of the Common Stock is less than the Exercise Price per
share of Common Stock.
12. Continuing Validity. A holder of Warrant Shares shall continue to
be entitled to all rights to which a Warrantholder is entitled pursuant to the
provisions of this Warrant except such rights as by their terms apply solely to
a Warrantholder, notwithstanding the fact that this Warrant has been exercised
or the period of exercisability has expired. The Company will, at the time of
any exercise of this Warrant, upon the request of the holder of the Warrant
Shares issued upon exercise hereof, acknowledge in writing, in form reasonably
satisfactory to such holder, the Company's continuing obligation to afford to
such holder all rights to which such holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant; provided,
however, that if such holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to afford to such
holder all such rights.
13. Miscellaneous Provisions.
(a) Governing Law and Venue. This Warrant shall be deemed to have
been made in the State of California and the validity of this Warrant, the
construction, interpretation, and enforcement thereof, and the rights of the
parties thereto shall be determined under, governed by, and construed in
accordance with the internal laws of the State of California, without regard to
principles of conflicts of law. The parties agree that any action or proceeding
arising in connection with this Warrant shall be tried and litigated in the
state or federal courts located in the County of Los Angeles, State of
California. The Warrantholders and the Company each waive the right to a trial
by jury and any right each may have to assert the doctrine of forum non
conveniens or to object to venue to the extent any proceeding is brought in
accordance with the preceding sentence. Service of process, sufficient for
personal jurisdiction in any action against the Company, may be made by
registered or certified mail, return receipt requested, to its address indicated
in Paragraph 13(b).
24
(b) Notices. All notices hereunder shall be in writing and shall
be deemed to have been given by courier or facsimile at the time received, or
five (5) days after being mailed by certified mail, addressed to the address
below stated of the party to which notice is given, or to such changed address
as such party may have fixed by notice:
To the Company: The Xxxxxx Companies, Inc.
0 Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn.: Xxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
With copies to: Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn.: Xxxxx X. Xxxxxxxxxxx
Facsimile No.: (000) 000-0000
To the Warrantholders or holder Buchalter, Nemer, Fields, & Younger
of Warrant Shares With a copy to: 000 X. Xxxxxxxx Xxxxxx, Xxx. 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn.: Xxxxxx X. Xxxxxx
provided, however, that any notice of change of address shall be effective only
upon receipt.
(c) Successors and Assigns. This Warrant shall be binding upon and
inure to the benefit of the Company, the Warrantholders and the holders of
Warrant Shares and the successors, assigns and transferees of the Company, the
Warrantholders and the holders of Warrant Shares.
(d) Attorneys' Fees. If any legal action or other proceeding is
brought for the enforcement of this Warrant, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provision of
this Warrant, the successful or prevailing party or parties shall be entitled to
recover such reasonable attorneys' fees and other costs incurred in that action
or proceeding, in addition to any other relief to which it or they may be
entitled, as may be ordered in connection with such proceeding.
(e) Entire Agreement; Amendments and Waivers. This Warrant sets
for the entire understanding of the parties with respect to the transactions
contemplated hereby. The failure of any party to seek redress for the violation
or to insist upon the strict performance of any term of this Warrant shall not
constitute a waiver of such term and such party shall be entitled to enforce
such term without regard to such forbearance. This Warrant may be amended, the
Company may take any action herein prohibited or omit to take action herein
required to be performed by it, and any breach of or compliance with any
covenant, agreement, warranty or representation may be waived, only if the
Company has obtained the written consent or written
25
waiver of the majority in interest of the Warrantholders, and then such consent
or waiver shall be effective only in the specific instance and for the specific
purpose for which given.
(f) Severability. If any term of this Warrant as applied to any
person or to any circumstance is prohibited, void, invalid or unenforceable in
any jurisdiction, such term shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or invalidity without in any way affecting any
other term of this Warrant or affecting the validity or enforceability of this
Warrant or of such provision in any other jurisdiction.
(g) Headings. The headings in this Warrant are inserted only for
convenience of reference and shall not be used in the construction of any of its
terms.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officers on this 20th day of September, 1994.
THE XXXXXX COMPANIES, INC.,
a Delaware Corporation
By:
---------------------------------
Name:
Title:
Attest:
--------------------------------------
Sr. Vice President
Accepted:
Foothill Capital Corporation
By:
-----------------------------------
Name:
Title:
26
Exhibit 4.1
SCHEDULE A
POTENTIALLY ISSUABLE SHARES OF COMMON STOCK
No. of Shares
-------------------
Convertible Debentures - $9,280,000 principal amount
convertible at $5 per share............................... 1,856,000
Preferred Stock - Liquidation Preference Value of
$3,450,000 convertible at $1 per share.................... 3,450,000
Outstanding Stock Options................................. 589,888
Warrants - Exercise Price $.37 per share expiring
December 1995............................................. 685,950
Non-Employee Director Restricted Stock Plan shares
available for grant....................................... 45,000
1988 Long Term Incentive Plan Shares available
for grant................................................. 3,516,142
-------------------
TOTAL 10,115,980
