ASHA CORPORATION
and
X.X. XXXXXX & CO., INC.
REPRESENTATIVE'S WARRANT AGREEMENT
Dated as of _______________ __, 1997
REPRESENTATIVE'S WARRANT AGREEMENT
THIS REPRESENTATIVE'S WARRANT AGREEMENT (the "Agreement"), dated as
of
___________ ___, 1997, is made and entered into by and between ASHA
CORPORATION, a Delaware corporation (the "Company"), and X.X. XXXXXX & CO.,
INC., a Delaware corporation (the "Warrantholder").
The Company agrees to issue and sell, and the Warrantholder agrees to
purchase, for an aggregate purchase price of Five Dollars ($5.00), warrants,
as hereinafter described (the "Warrants"), to purchase up to an aggregate of
____ shares, (subject to adjustment pursuant to Section 8 hereof) (the
"Shares") of the Company's Common Stock, $____ par value (the "Common Stock").
in connection with a public offering by the Company of _______ Shares pursuant
to an underwriting agreement (the "Underwriting Agreement"), dated ___________
___, 1997, among the Company and the Warrantholder, as representative (the
"Representative") of the several Underwriters named in the Underwriting
Agreement. The purchase and sale of the Warrants shall occur on the First
Closing Date, as defined in the Underwriting Agreement, and shall be subject
to the conditions to the Underwriters' obligations to purchase Shares
thereunder.
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder, the Company and the Warrantholder, for value received, hereby
agree as follows:
Section 1. Transferability and Form of Warrants.
1.1 Registration. The Warrants shall be numbered and regis-
tered on the books of the Company when issued.
1.2 Transfer. The Warrants shall be transferable only on the
books of the Company maintained at its principal office, wherever its
principal office may then be located, upon delivery thereof duly endorsed by
the Warrantholder or by its duly authorized attorney or representative,
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any registration of transfer, the Company shall execute and
deliver new Warrants to the person entitled thereto.
1.3 Limitations on Transfer of the Warrants. Subject to the
provisions of Section 11 of this Agreement, the Warrants shall not be sold,
transferred, assigned or hypothecated by the Warrantholder until ____________.
1998 except to (i) one or more persons, each of whom on the date of transfer
is an officer of the Warrantholder; (ii) any of the several Underwriters set
forth on Schedule I to the Underwriting Agreement or members of the selling
group and/or the officers or partners thereof; (iii) a successor to the
Warrantholder in merger or consolidation; (iv) a purchaser of all or
substantially all of the Warrantholder's assets; or (v) any person receiving
the Warrants from one or more of the persons listed in this subsection 1.3 at
such person's or persons' death pursuant to will, trust or the laws of
intestate succession. The Warrants may be divided or combined, upon request
to the Company by the Warrantholder, into a certificate or certificates
representing the right to purchase the same aggregate number of Shares.
Unless the context indicates otherwise, the term "Warrantholder" shall include
any transferee or transferees of the Warrants pursuant to this subsection 1.3,
and the term "Warrants" shall include any and all 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 Warrants. The text of the Warrants and of the
form
of election to purchase Shares shall be substantially as set forth in Exhibit
"A" attached hereto. The number of shares issuable upon exercise of the
Warrants is subject to adjustment upon the occurrence of certain events, all
as hereinafter provided. The Warrants shall be executed on behalf of the
Company by its Chief Executive Officer or by a Vice President, attested to by
its Secretary or an Assistant Secretary. A Warrant bearing the signature of
an individual who was at any time the proper officer of the Company shall bind
the Company notwithstanding that such individual shall have ceased to hold
such office prior to the delivery of such Warrant or did not hold such office
on the date of this Agreement.
The Warrants shall be dated as of the date of signature thereof by the
Company either upon initial issuance or upon division, exchange, substitution
or transfer.
1.5 Legend on Shares and Warrants. Each certificate for Shares
initially issued upon exercise of the Warrants shall bear the following
legend, unless, at the time of exercise, such Shares are subject to a
currently effective Registration Statement under the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD, EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER EXCEPT
IN COMPLIANCE WITH SECTION 11 OF THE AGREEMENT PURSUANT TO WHICH THEY
WERE ISSUED."
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 a registration statement under
the Securities Act of 1933, as amended (the "Act"), of the securities
represented thereby) shall also bear the above legend unless, in the opinion
of the Company's counsel, the securities represented thereby need no longer be
subject to such restrictions.
Section 2. Exchange of Warrant Certificate. Any Warrant certificate
may be exchanged for another certificate or certificates entitling the
Warrantholder to purchase a like aggregate number of Shares as the certificate
or certificates surrendered then entitled such Warrantholder to purchase. Any
Warrantholder desiring to exchange a Warrant certificate shall make such
request in writing delivered to the Company, and shall surrender, properly
endorsed, with signatures guaranteed, the certificate evidencing the Warrant
to be so exchanged. Thereupon, the Company shall execute and deliver to the
person entitled thereto a new Warrant certificate as so requested.
Section 3. Term of Warrants; Exercise of Warrants.
(a) Subject to the terms of this Agreement, the Warrantholder
shall have the right, at any time during the period commencing at 9:00 a.m.,
New York City Time, on ____________, 1998 and ending at 5:00 p.m., New York
City Time, on ____________, 2002 (the "Termination Date"), to purchase from
the Company up to the number of fully paid and nonassessable Shares which the
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrants to be exercised, together with the
purchase form on the reverse thereof duly filled in and signed, with
signatures guaranteed, and upon payment to the Company
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of the Warrant Price (as defined in and determined in accordance with the
provisions of this section 3 and sections 7 and 8 hereof), for the number of
Shares in respect of which such Warrants are then exercised, but in no event
for less than 100 Shares (unless less than an aggregate of 100 Shares are then
purchasable under all outstanding Warrants held by a Warrantholder).
(b) Except as otherwise provided for in this Section, payment of
the aggregate Warrant Price shall be made in cash or by check, or any
combination thereof. No Warrant may be exercised by the Warrantholder after
5:00 p.m., New York City Time, on ____________, 2002. Subject to the terms of
this Agreement, each Warrant may be exercised to purchase one Share of Common
Stock at a price of $__________ (the "Warrant Price") [120% of the Share
Offering price]. The Warrant Price is further subject to adjustment as
provided for in Section 7 of this Agreement.
Upon such surrender of the Warrants and payment of such 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 Warrantholder and in
such name or names as the Warrantholder may designate a certificate or
certificates for the number of full Shares so purchased upon the exercise of
the Warrant, together with cash, as provided in Section 9 hereof, in respect
of any fractional Shares 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 securities as of the date of surrender of the Warrants and
payment of the Warrant Price, as aforesaid, notwithstanding that the
certificate or certificates representing such securities shall not actually
have been delivered or that the stock transfer books of the Company shall then
be closed. The Warrants shall be exercisable, at the election of the
Warrantholder, either in full or from time to time in part, and, in the event
that a certificate evidencing the Warrants is exercised in respect of less
than all of the Shares specified therein at any time prior to the Termination
Date, a new certificate evidencing the remaining portion of the Warrants will
be issued by the Company.
(c) Notwithstanding the provisions of Section 1(b) with respect to the
payment of the aggregate Warrant Price to the contrary, the Holder may elect
to exercise this Warrant, in whole or in part, by receiving Shares equal to
the value (as herein determined) of the portion of this Warrant then being
exercised, in which event the Company shall issue to the Holder the number of
Shares determined by using the following formula:
X = Y(A-B)
A
where: X = the number of Shares to be issued to the Holder under the
provisions of this Section 1(c).
Y = the number of Shares that would otherwise be issued upon
such exercise.
A = the Current Fair Market Value (as hereinafter defined) of
one Share calculated as of the last trading day immediately
preceding such exercise.
B = the Exercise Price
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As used herein, the "Current Fair Market Value" of the Share as of a
specified date shall mean with respect to each Share, (i) the aggregate of the
average of the last reported sales price regular way of the Common Stock
issuable pursuant to this Agreement sold on all securities exchanges on which
such securities may at the time be listed, or (ii) if there have been no sales
on any such exchange on such day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or (iii) if on such
day such securities are not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 p.m., New York time,
or (iv) if on such day such securities are not quoted in the NASDAQ System,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Current Fair
Market Value is being determined and the 20 consecutive business days prior to
such day. If on the Date for which Current Fair Market Value is to be
determined such securities are not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, then Current Fair Market
Value of such securities shall be the highest price per share and per warrant
which the Company could then obtain from a willing buyer (not a current
employee or director) for such securities sold by the Company for such
securities, as determined in good faith by the Board of Directors of the
Company, unless prior to such date the Company has become subject to a merger,
consolidation, reorganization, acquisition or other similar transaction
pursuant to which the Company is not the surviving entity, in which case the
Current Fair Market Value of the securities shall be deemed to be the per
share value received or to be received in such transaction by the holder of
such securities.
Section 4. Payment of Taxes. The Company shall pay all documentary
stamp taxes, if any, attributable to the initial issuance of the Warrants and
the Shares issuable upon exercise of the Warrants; provided, however, the
Company shall not be required to pay any tax which may be payable in respect
of any secondary transfer of the Warrants or the Shares.
Section 5. Mutilated or Missing Warrants. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the
mutilated certificate or certificates, or in lieu of and substitution for the
certificate or certificates lost, stolen or destroyed, a new Warrant
certificate or certificates 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 Warrant and a bond of indemnity, if
requested, also satisfactory in form and amount at the applicant's cost.
Applicants for such substitute Warrants certificates shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
Section 6. Reservation of Shares. There have been reserved, and the
Company shall at all times keep reserved so long as the Warrants remain
outstanding, out of its authorized Common Stock, such number of shares of
Common Stock as shall be subject to purchase under the Warrants. Every
transfer agent for the Common Stock and other securities of the Company
issuable upon the exercise of the Warrants shall be irrevocably authorized and
directed at all times to reserve such number of authorized shares and other
securities as shall be requisite for such purpose. The Company shall keep a
copy of this Agreement and the Warrant Agreement on file with every transfer
agent for the Common Stock
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and other securities of the Company issuable upon the exercise of the
Warrants. The Company shall supply every such transfer agent with duly
executed stock and other certificates, as appropriate, for such purpose and
will provide or otherwise make available any cash which may be payable as
provided in Section 8 hereof.
Section 7. Adjustment of Number of Shares. The number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
7.1 Adjustments. The number of Shares purchasable upon the
exercise of the Warrants shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common
Stock or make a distribution in Common Stock, (ii) subdivide its outstanding
Common Stock, (iii) combine its outstanding Common Stock into a smaller number
of shares of Common Stock, or (iv) issue by reclassification of its Common
Stock other securities of the Company, the number of Shares purchasable upon
exercise of the Warrants immediately prior thereto shall be adjusted so that
the Warrantholder shall be entitled to receive the kind and number of Shares
or other securities of the Company which it would have owned or would have
been entitled to receive immediately after the happening of any of the events
described above, had the Warrants been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subsection 7.l(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 fix a record date for the
issuance of rights or warrants to all holders of its Common Stock entitling
them to subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price (or having a conversion price per
share) less than the Initial Price (defined as $______ per share of Common
Stock), the Warrant Price shall be adjusted so that it shall equal the price
determined by multiplying the number of shares as to which the Warrant is then
exercisable by the Warrant Price in effect immediately prior to the date of
such issuance, multiplied by a fraction, the numerator of which shall be the
sum of the number of shares of Common Stock outstanding on the record date
mentioned below plus the number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so
offered (or the aggregate conversion price of the convertible securities so
offered) would purchase at the Initial Price, and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding on such
record date and the number of additional shares of Common Stock offered for
subscription or purchase (or into which the convertible securities so offered
are convertible). Such adjustment shall be made successively whenever such
rights or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants; and to the extent that shares of Common Stock are not
delivered (or securities convertible into Common Stock are not delivered)
after the expiration of such rights or warrants, the Warrant Price shall be
readjusted to the Warrant Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made upon
the basis of delivery of only the number of shares of Common Stock (or
securities convertible into Common Stock) actually delivered.
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(c) In case the Company shall hereafter distribute to all
holders of its Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions and dividends or distributions referred to in
Subsection (a) above) or subscription rights or warrants (excluding those
referred to in Subsection (b) above), then in each such case the Warrant Price
in effect thereafter shall be determined by multiplying the number of shares
as to which the Warrant is then exercisable by the Warrant Price in effect
immediately prior thereto, multiplied by a fraction, the numerator of which
shall be the total number of shares of Common Stock then outstanding
multiplied by the Initial Price, less the fair market value (as determined by
the Company's Board of Directors) of said assets, or evidences of indebtedness
so distributed or of such rights or warrants, and the denominator of which
shall be the total number of shares of Common Stock outstanding multiplied by
such Initial Price. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive such
distribution.
(d) Whenever the Warrant Price payable pursuant to this
Agreement is adjusted pursuant to Subsections (a), (b) or (c) above, the
number of Shares purchasable hereunder shall simultaneously be adjusted by
multiplying the number of Shares issuable upon exercise of the Warrants by the
Warrant Price in effect on the date hereof and dividing the product so
obtained by the Warrant Price, as adjusted.
(e) Whenever the number of Shares purchasable upon the
exercise of the Warrants is adjusted as herein provided, the Company shall
cause to be promptly mailed to the Warrantholder by first class mail, postage
prepaid, notice of such adjustment and a certificate of the chief financial
officer of the Company setting forth the number of Shares purchasable upon the
exercise of the Warrants after such adjustment, a brief statement of the facts
requiring such adjustment and the computation by which such adjustment was
made.
(f) For the purpose of this subsection 7.1 the term
"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 Common
Stock 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 made pursuant to this Section 7, the Warrantholder
shall become entitled to purchase any securities of the Company other than
Common Stock, (i) if the Warrantholder's right to purchase is on any other
basis than that available to all holders of the Company's Common Stock, the
Company shall obtain an opinion of an independent investment banking firm
valuing such other securities and (ii) thereafter the number of such other
securities so purchasable upon exercise of the Warrants 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 this
Section 7.
(i) Upon the expiration of any rights, options, warrants or
conversion privileges, if such shall not have been exercised, the number of
Shares purchasable upon exercise of the Warrants, to the extent the Warrants
have not then been exercised, shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may
be) on the basis of (A) the fact that 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 privileges, and
(B) the fact that such
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shares of Common Stock, if any, 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 issuance, sale or grant of all
such rights, options, warrants or conversion privileges whether or not
exercised; provided, however, that no such readjustment shall have the effect
of decreasing the number of Shares purchasable upon exercise of the Warrants
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
conversion privileges.
7.2 No Adjustment for Dividends. Except as provided in
subsection 8.1, no adjustment in respect of any dividends or distributions out
of earnings shall be made during the terms of the Warrants or upon the
exercise of Warrants.
7.3 No Adjustment in Certain Cases. No adjustment shall be made
pursuant to Sections 3 or 7 hereof in connection with the issuance of Shares
sold as part of the public sale and issuance of Shares pursuant to the
Underwriting Agreement or the issuance of Shares upon exercise of the
Warrants. No adjustment in the Warrant Price shall be required if such
adjustment is less than $.05; provided, however, that any adjustments which by
reason of this Section 7.3 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 7 shall be made to the nearest cent or to the nearest one-
thousandth of a share, as the case may be.
7.4 Preservation of Purchase Rights upon Reclassification,
Consolidations. In case of any consolidation of the Company with, or merger
of the Company into, another corporation or in case of any sale or conveyance
to another corporation 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, as the case may be, shall execute with the
Warrantholder an agreement that the Warrantholder shall have the right
thereafter upon payment of the Warrant Price in effect immediately prior to
such action to purchase, upon exercise of the Warrants, the kind and amount of
shares and other securities and property which it would have owned or have
been entitled to receive after the happening of such consolidation, merger,
sale or conveyance had the Warrants (and each underlying security) been
exercised immediately prior to such action. In the event of a merger
described in Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended, in which the Company is the surviving corporation, the right to
purchase Shares under the Warrants shall terminate on the date of such merger
and thereupon the Warrants shall become null and void, but only if the
controlling corporation shall agree to substitute for the Warrants its warrant
which entitles the holder thereof to purchase upon its exercise the kind and
amount of shares and other securities and property which it would have owned
or been entitled to receive had the Warrants been exercised immediately prior
to such merger. Any such agreements referred to in this subsection 7.4 shall
provide for adjustment, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section 7 hereof. The
provisions of this subsection 7.4 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
7.5 Par Value of Shares of Common Stock. Before taking any
action
which would cause an adjustment effectively reducing the portion of the
Warrant Price allocable to each Share below the then par value per share of
the Common Stock issuable upon exercise of the Warrants, the Company shall
take any corporate action which, in the opinion of its counsel, may be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Common Stock upon exercise of the Warrants.
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7.6 Independent Public Accountants. The Company may retain a firm
of independent public accountants of recognized national standing (which may
be any such firm regularly employed by the Company) to make any computation
required under this Section 7, and a certificate signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Section 7.
7.7 Statement on Warrant Certificates. Irrespective of any
adjustments in the number of securities issuable upon exercise of Warrants,
Warrant certificates theretofore or thereafter issued may continue to express
the same number of securities as are stated in the similar Warrant
certificates initially issuable pursuant to this Agreement. However, the
Company, at any time in its sole discretion (which shall be conclusive), may
make any change in the form of Warrant certificate that it may deem
appropriate and that does not affect the substance thereof and any Warrant
certificate thereafter issued, whether upon registration of transfer of, or in
exchange or substitution for, an outstanding Warrant certificate, may be in
the form so changed.
Section 8. Fractional Interests; Current Market Price. The
Company shall not be required to issue fractional Shares on the exercise of
the Warrants. If any fraction of a Share would, except for the provisions of
this Section 8, be issuable on the exercise of the Warrants (or specified
portion thereof), the Company shall pay an amount in cash equal to the then
Current Market Price multiplied by such fraction. For purposes of this
Agreement, the term "Current Market Price" shall mean (i) if the Common Stock
is traded in the NASDAQ SmallCap Market and not in the NASDAQ National Market
System nor on any national securities exchange, the average, of the per share
closing bid prices of the Common Stock on the thirty (30) consecutive trading
days immediately preceding the date in question, as reported by NASDAQ or an
equivalent generally accepted reporting service, or (ii) if the Common Stock
is traded in the NASDAQ National Market System or on a national securities
exchange, the average for the thirty (30) consecutive trading days immediately
preceding the date in question, of the daily per share closing prices of the
Common Stock in the NASDAQ National Market System or on the principal stock
exchange on which it is listed, as the case may be. For purposes of clause (i)
above, if trading in the Common Stock is not reported by NASDAQ, the bid price
referred to in said clause shall be the lowest bid price as reported in the
"pink sheets" published by National Quotation Bureau, Incorporated. The
closing price referred to in clause (ii) above shall be the last reported sale
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 in the NASDAQ
National Market System or on the national securities exchange on which the
Common Stock is then listed.
Section 10. No Rights as Stockholder; Notices to Warrantholder.
Nothing contained in this Agreement or in the Warrants shall be construed as
conferring upon the Warrantholder or its transferees any rights as a
stockholder of the Company, including the right to vote, receive dividends,
consent or receive notices as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrants and prior to
their exercise, any one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to
Section 7.1; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property,
assets and business as an entirety or substantially as an entirety) shall be
proposed;
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then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 13 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 any relevant
dividend, distribution, subscription rights or other 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 date
of closing the transfer books, as the case may be. Failure to mail or receive
such notice or any defect therein shall not affect the validity of any action
taken with respect thereto.
Section 11. Restrictions on Transfer; Registration Rights.
(a) The Warrantholder agrees that prior to making any
disposition of the Warrants or the Shares other than to persons or entities
identified in clauses (i) through (v), inclusive, of Section 1.3, the
Warrantholder 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 the Warrantholder that
in the opinion of counsel reasonably satisfactory to the Warrantholder a
registration statement or other notification or post-effective amendment
thereto (hereinafter collectively a "Registration Statement") under the Act is
required with respect to such disposition and no such Registration Statement
has been filed by the Company with, and declared effective, if necessary, by
the Securities and Exchange Commission (the "Commission").
(b) The Company shall be obligated to the owners of the Warrants
and the Shares to file a Registration Statement as follows:
(i) Whenever during the four-year period beginning on
___________, 1998 and ending on ___________, 2002, the Company proposes to
file with the Commission a Registration Statement (other than as to securities
issued pursuant to an employee benefit plan or as to a transaction subject to
Rule 145 promulgated under the Act or which a Form S-4 Registration Statement
could be used), it shall, at least twenty (20) days prior to each filing, give
written notice of such proposed filing to the Warrantholder and each holder of
Shares, at their respective addresses as they appear on the records of the
Company, and shall offer to include and shall include in such filing any
proposed disposition of the Shares upon receipt by the Company, not less than
ten (10) days prior to the proposed filing date, of a request therefor setting
forth the facts with respect to such proposed disposition and all other
information with respect to such person reasonably necessary to be included in
such Registration Statement. In the event that the managing underwriter, if
any, for said offering advises the Company in writing that the inclusion of
such securities in the offering would be detrimental to the offering, such
securities shall nevertheless be included in the Registration Statement
provided that the Warrantholder and each holder of Warrants and Shares
desiring to have such securities included in the Registration Statement agrees
in writing, for a period of thirty (30) days following such offering not to
sell or otherwise dispose of such securities pursuant to such Registration
Statement, which Registration Statement the Company shall keep effective for a
period of at least nine months following the expiration of such thirty (30)
day period.
(ii) In addition to any Registration Statement pursuant to
subparagraph (i) above, during the four-year period beginning on
_______________, 1998 and ending on ________, 2002, the Company, as promptly
as practicable (but in any event within sixty (60) days) after written request
(the "Request") by
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X.X. XXXXXX & CO., INC., or by a person or persons holding (or having the
right to acquire by virtue of holding the Warrants) at least 50% of the shares
of Common Stock which have been (or may be) issued upon exercise of the
Warrants, will prepare and file at its own expense a Registration Statement
with the Commission and appropriate Blue Sky authorities sufficient to permit
the public offering of the Shares, 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 Registration Statement to become
effective as promptly as practicable and to maintain such effectiveness so as
to permit resale of the Shares covered by the Request until the earlier of the
time that all such Shares have been sold or the expiration of nine months
following days from the effective date of the Registration Statement;
provided, however, that the Company shall only be obligated to file a
Registration Statement under this Section 1 l(b)(ii) on two occasions.
(c) Except as set forth in the last sentence of this
paragraph, all fees, disbursements and out-of-pocket expenses (other than the
Warrantholder's brokerage fees and commissions and legal fees of counsel to
the Warrantholder, if any) in connection with the filing of any Registration
Statement under Section 10) (or obtaining the opinion of counsel and any no-
action position of the Commission with respect to sales under Rule 144) and in
complying with applicable securities and Blue Sky laws shall be borne by the
Company. The Company at its expense will supply any Warrantholder and any
holder of Shares with copies of such Registration Statement and the prospectus
included therein and other related documents and opinions and no-action
letters in such quantities as may be reasonably requested by the Warrantholder
or holder of Shares. Notwithstanding the foregoing, all costs and expenses of
a second Registration Statement filed pursuant to Section 10(b)(ii) shall be
borne by the holders of the securities included therein.
(d) The Company shall not be required by this Section 10
to file such Registration Statement if, in the opinion of counsel for the
Warrantholders and holders of Shares, and the Company (or, should they not
agree, in the opinion of another counsel experienced in securities law matters
acceptable to counsel for such holders and the Company), the proposed public
offering or other transfer as to which such Registration Statement 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 Shares have been
sold under a Registration Statement 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 of such securities to sell the same
under Rule 144.
Section 11. Indemnification.
(a) In the event of the filing of any Registration
Statement with respect to Warrants or the Shares pursuant to Section 10
hereof, the Company agrees to indemnify and hold harmless the Warrantholder or
any holder of such Shares and each person, if any, who controls the
Warrantholder or any holder of any Shares within the meaning of the Act,
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all reasonable attorneys' fees), to
which the Warrantholder or any holder of such Shares or such controlling
person may become subject, under the Act or
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otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any such
Registration Statement, or any related preliminary prospectus, final
prospectus, or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Warrantholder or the holder of such Shares specifically for use in the
preparation thereof. This indemnity will be in addition to any liability
which the Company may otherwise have.
(b) The Warrantholders and the holder of the Shares agree
that they will indemnify and hold harmless the Company, each other person
referred to in subparts (1), (2) and (3) of Section 11(a) of the Act in
respect of the Registration Statement and each person, if any, who controls
the Company within the meaning of the Act, against any losses, claims, damages
or liabilities (which shall, for all purposes of this Agreement, include but
not be limited to, all costs of defense and investigation and all attorneys'
fees) to which the Company or any such director, officer or controlling person
may become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in such Registration Statement, or any related preliminary
prospectus, final prospectus or amendment or supplement thereto, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which they
were made, but in each case only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
Registration Statement, preliminary prospectus, final prospectus or amendment
or supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by the Warrantholder or such holder of
Shares specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the Warrantholder or such
holder of Shares may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 11 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 11, notify the indemnifying party of the
commencement thereof, but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have
to any indemnified party otherwise than as to the particular item as to which
indemnification is then being sought solely pursuant to this Section 11. In
case any such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, reasonably
assume the defense thereof, subject to the provisions herein stated, and upon
a notice from the indemnifying party to such indemnified party of its election
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 11 for any legal or other expenses,
subsequently incurred by such indemnified party in
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connection with the defense thereof, other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action to
its final conclusion. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the indemnified party; provided
that if the indemnified party shall have been advised by its counsel that
there may be one or more legal defenses available to the indemnifying party
which differ from those available to the indemnified party the indemnifying
party shall be liable for reasonable legal and other expense incurred by the
indemnified party in connection with the defense of the action (in which case
the indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party, it being understood, however, that
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of more than one separate firm of attorneys
for the indemnified party, which firm shall be designated in writing by a
majority in interest of such holders and controlling persons based upon the
value of the securities included in the Registration Statement. No settlement
of any action against an indemnified party shall be made without the consent
of the indemnified and the indemnifying parties, which shall not be
unreasonably withheld in light of all factors of importance to such parties.
Section 12. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 11 hereof
provide for indemnification in such case or (ii) contribution under the Act
may be required on the part of any Warrantholder or any holder of the Shares
or controlling person, then the Company and any Warrantholder or any such
holder of Shares, or controlling person shall contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees), in either such
case (after contribution from others) on the basis of relative fault as well
as any other relevant equitable considerations. 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 related to information supplied by the Company on the
one hand or a Warrantholder or holder of Shares or controlling person 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
such holders of such securities and such controlling persons agree that it
would not be just and equitable if contribution pursuant to this Section 12
were determined by pro rata allocation or by any other method which does not
take account of the equitable considerations referred to in this Section 12.
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 Section 12 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. No person guilty of
fraudulent misrepresentation (within the meaning of Section 1l(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
-12-
Section 13. Notices. Any notice pursuant to this Agreement by the
Company or by a Warrantholder or to a holder of Shares shall be in writing and
shall be deemed to have been duly given if delivered or mailed by certified
mail, return receipt requested:
(a) If to a Warrantholder or a holder of Shares, addressed to X.X.
XXXXXX & CO., INC., 0000 Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000;
Attention: Corporate Finance Department.
(b) If to the Company addressed to it at 000 X Xxxx Xxxxx, Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive Officer.
Each party may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance herewith to
the other party.
Section 14. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Warrantholders, or the
holders of the Shares shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 15. Merger or Consolidation of the Company. The Company shall
not merge or consolidate with or any other corporation or sell all or
substantially all of its property to another corporation, unless the
provisions of Section 7.4 are complied with.
Section 16. Survival of Representations and Warranties. All statements
contained in any schedule, exhibit, certificate or other instrument delivered
by or on behalf of the parties hereto, or in connection with the 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.
Section 17. Applicable Law. This Agreement 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, the Warrantholders and the holders of Shares any legal or equitable
right, remedy or claim under this Agreement. This Agreement shall be for the
sole and exclusive benefit of the Company, the Warrantholders and the holders
of Shares.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the date and year first above written.
ASHA CORPORATION
By:_______________________________
Alain X-X Xxxxxx,
Chief Executive Officer
X.X. XXXXXX & CO., INC.
By:_______________________________
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EXHIBIT A
Warrant Certificate No. HJ-1
REPRESENTATIVE'S WARRANTS TO PURCHASE _______ SHARES
VOID AFTER 5:00 P.M.,
NEW YORK CITY TIME, ON _______________, 2002
ASHA CORPORATION
This certifies that, for value received, X.X. XXXXXX & CO., INC. the
registered holder hereof or its assigns (the "Warrantholder"), is entitled to
purchase from ASHA CORPORATION (the "Company"), at any time during the period
commencing at 9:00 a.m., Eastern Standard Time, on ____________, 1998, and
before 5:00 p.m., Eastern Standard Time, on ____________, 2002, at the
purchase price per Share of $_____ (the "Warrant Price"), the number of Shares
of the Company set forth above (the "Shares"). The number of shares of Common
Stock of the Company purchasable upon exercise of each Warrant evidenced
hereby shall be subject to adjustment from time to time as set forth in the
Representative's Warrant Agreement referred to below.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached
hereto duly executed (with a signature guarantee as provided thereon) and
simultaneous payment of the Warrant Price at the principal office of the
Company. Payment of such price shall be made at the option of the
Warrantholder in cash, by check or as provided for in Section 3(c) of the
Representative's Warrant Agreement.
The Warrants evidenced hereby are one of a series representing the right
to purchase an aggregate of up to _______ Shares and are issued under and in
accordance with a Representative's Warrant Agreement, dated as of ___________
___, 1997 (the "Representative's Warrant Agreement"), between the Company and
X.X. XXXXXX & CO., INC., and are subject to the terms and provisions contained
in the Representative's Warrant Agreement, to all of which the Warrantholder
by acceptance hereof consents.
Upon any partial exercise of the Warrants evidenced hereby, there shall
be signed and issued to the Warrantholder a new Warrant Certificate in respect
of the Shares as to which the Warrants evidenced hereby shall not have been
exercised. These Warrants may be exchanged at the office of the Company by
surrender of this Warrant Certificate properly endorsed for one or more new
Warrants of the same aggregate number of Shares as are evidenced by the
Warrant or Warrants exchanged. No fractional Shares 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. These
Warrants are transferable at the office of the Company in the manner and
subject to the limitations set forth in the Representative's Warrant
Agreement.
[balance of this page intentionally left blank]
This Warrant Certificate does not entitle any Warrantholder to any of the
rights of a stockholder of the Company.
ASHA CORPORATION
By:_______________________________
Alain X-X Xxxxxx,
Chief Executive Officer
Dated: ___________ ___, 1997
ATTEST:
________________________________
Xxxx X. XxXxxxxxx, Secretary
[Corporate Seal]
ASHA CORPORATION
PURCHASE FORM
ASHA CORPORATION
000 X Xxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, __ Shares (the "Shares") provided for therein, and requests that
certificates for the Shares be issued in the name of:
________________________________________________
(Please Print or Type Name, Address and Social Security Number)
_______________________________________________
_______________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant Certificate for the balance of the Shares
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Warrantholder 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 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 these Warrants have been assigned.
Signature Guaranteed:_______________________________________
(Signature must be guaranteed by a bank or trust company having an officer or
correspondent in the United States or by a member firm or a registered
securities exchange or the National Association of Securities Dealers, Inc.)
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Name and Address of Assignee Must Be Printed or Typewritten)
_______________________________________________
_______________________________________________
_______________________________________________
The within Warrants, hereby irrevocably constituting and appointing
_________________ Attorney to transfer said Warrants on the books of the
Company, with full power of substitution in the premises.
Dated:________ ____________________________________________
Signature or Registered Holder
Note: The signature on this assignment must correspond with the name as it
appears upon the face of the within Warrant Certificate in every particular,
without alteration or enlargement or any change whatever
Signature Guaranteed:___________________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association or Securities Dealers, Inc.)
