EX-4.4
THIS WARRANT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
AND IS NOT TRANSFERABLE
EXCEPT AS PROVIDED HEREIN
SmartPros Ltd.
PURCHASE WARRANT
Issued to:
XXXXXXX INVESTMENT COMPANY, INC.
Exercisable to Purchase
90,000 UNITS
of
SMARTPROS LTD.
Void after ___________, 2009
This is to certify that, for value received and subject to the terms and
conditions set forth below, the Warrantholder (hereinafter defined) is entitled
to purchase, and the Company promises and agrees to sell and issue to the
Warrantholder, at any time on or after [____________], 2005 and on or before
[____________], 2009, up to 90,000 Units (hereinafter defined) at the Exercise
Price (hereinafter defined).
This Warrant Certificate is issued subject to the following terms and
conditions:
1. DEFINITIONS OF CERTAIN TERMS. Except as may be otherwise clearly
required by the context, the following terms have the following meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Cashless Exercise" means an exercise of Warrants in which,
in lieu of payment of the Exercise Price, the Holder elects to receive a lesser
number of Securities such that the value of the Securities that such Holder
would otherwise have been entitled to receive but has agreed not to receive, as
determined by the closing price of such Securities on the date of exercise or,
if such date is not a trading day, on the next prior trading day, is equal to
the Exercise Price with respect to such exercise. A Holder may only elect a
Cashless Exercise if Securities issuable by the Company on such exercise are
publicly traded securities.
(c) "Closing Date" means the date on which the Offering is
closed.
(d) "Commission" means the Securities and Exchange Commission.
(e) "Common Stock" means the common stock, par value $0.0001,
of the Company.
(f) "Company" means SmartPros Ltd., a Delaware corporation.
(g) "Company's Expenses" means any and all expenses payable by
the Company or the Warrantholder in connection with an offering described in
Section 6 hereof, except Warrantholder's Expenses.
(h) "Effective Date" means the date on which the Registration
Statement is declared effective by the Commission.
(i) "Exercise Price" means the price at which the Warrantholder
may purchase one Unit upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof. The initial Exercise Price is $[_____] per
Unit.
(j) "Offering" means the public offering of Units made pursuant
to the Registration Statement.
(k) "Participating Underwriter" means any underwriter
participating in the sale of the Securities pursuant to a registration under
Section 6 of this Warrant Certificate.
(l) "Registration Statement" means the Company's registration
statement (File No. 333-[__________]) as amended on the Closing Date.
(m) "Rules and Regulations" means the rules and regulations of
the Commission adopted under the Act.
(n) "Securities" means the securities obtained or obtainable
upon exercise of the Warrant or securities obtained or obtainable upon exercise,
exchange, or conversion of such securities.
(o) "Unit" means two shares of Common Stock and one Unit
Warrant.
(p) "Unit Warrant" means a warrant to purchase one share of
Common Stock issued pursuant to the Warrant Agreement.
(q) "Warrant Agreement" means that certain Warrant Agreement,
dated as of [__________], 2004, by and between the Company and American Stock
Transfer and Trust Company relating to the issuance of Unit Warrants.
(r) "Warrant Certificate" means a certificate evidencing the
Warrant.
(s) "Warrantholder" means a record holder of the Warrant or
Securities. The initial Warrantholder is Xxxxxxx Investment Company, Inc.
(t) "Warrantholder's Expenses" means the sum of (i) the
aggregate amount of cash payments made to an underwriter, underwriting
syndicate, or agent in connection with an offering described in Section 6 hereof
multiplied by a fraction the numerator of which is the aggregate sales price of
the Securities sold by such underwriter, underwriting syndicate, or agent in
such offering and the denominator of which is the aggregate sales price of all
of the securities sold by such underwriter, underwriting syndicate, or agent in
such offering and (ii) all out-of-pocket expenses of the Warrantholder, except
for the fees and disbursements of one firm retained as legal counsel for the
Warrantholder that will be paid by the Company.
(u) "Warrant" means the warrant evidenced by this certificate,
any similar certificate issued in connection with the Offering, or any
certificate obtained upon transfer or partial exercise of the Warrant evidenced
by any such certificate.
2. EXERCISE OF WARRANT. All or any part of the Warrant represented by
this Warrant Certificate may be exercised commencing 180 days after the
Effective Date and ending at 5 p.m. Pacific Time on the fifth anniversary of the
Effective Date by surrendering this Warrant Certificate, together with
appropriate instructions, duly executed by the Warrantholder or by its duly
authorized attorney, at the office of the Company at SmartPros Ltd., 00 Xxxxxxx
Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000, Attention: President; or at such other office
or agency as the Company may designate. The date on which such instructions are
received by the Company shall be the date of exercise. If the Holder has elected
a Cashless Exercise, such instructions shall so state. Upon receipt of notice of
exercise, the Company shall immediately instruct its transfer agent to prepare
certificates for the Securities to be received by the Warrantholder upon
completion of the Warrant exercise. When such certificates are prepared, the
Company shall
notify the Warrantholder and deliver such certificates to the Warrantholder or
as per the Warrantholder's instructions immediately upon payment in full by the
Warrantholder, in lawful money of the United States, of the Exercise Price
payable with respect to the Securities being purchased, if any. If the
Warrantholder shall represent and warrant that all applicable registration and
prospectus delivery requirements for their sale have been complied with upon
sale of the Securities received upon exercise of the Warrant, such certificates
shall not bear a legend with respect to the Securities Act of 1933, as amended.
If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.
3. ADJUSTMENTS IN CERTAIN EVENTS. The number, class, and price of
Securities for which this Warrant Certificate may be exercised are subject to
adjustment from time to time upon the happening of certain events as follows:
(a) If the outstanding shares of the Company's Common Stock are
divided into a greater number of shares or a dividend in stock is paid on the
Common Stock, the number of shares of Common Stock for which the Warrant is then
exercisable will be proportionately increased and the Exercise Price will be
proportionately reduced; and, conversely, if the outstanding shares of Common
Stock are combined into a smaller number of shares of Common Stock, the number
of shares of Common Stock for which the Warrant is then exercisable will be
proportionately reduced and the Exercise Price will be proportionately
increased. The increases and reductions provided for in this Section 3(a) will
be made with the intent and, as nearly as practicable, the effect that neither
the percentage of the total equity of the Company obtainable on exercise of the
Warrants nor the price payable for such percentage upon such exercise will be
affected by any event described in this Section 3(a).
(b) In case of any change in the Common Stock through merger,
consolidation, reclassification, reorganization, partial or complete
liquidation, purchase of substantially all the assets of the Company, or other
change in the capital structure of the Company, other than changes in par value,
then, as a condition of such change, lawful and adequate provision will be made
so that the holder of this Warrant Certificate will have the right thereafter to
receive upon the exercise of the Warrant the kind and amount of shares of stock
or other securities or property to which he would have been entitled if,
immediately prior to such event, he had held the number of shares of Common
Stock obtainable upon the exercise of the Warrant. In any such case, appropriate
adjustment will be made in the application of the provisions set forth herein
with respect to the rights and interest thereafter of the Warrantholder, to the
end that the provisions set forth herein will thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the exercise of the Warrant. The Company
will not permit any change in its capital structure to occur unless the issuer
of the shares of stock or other securities to be received by the
holder of this Warrant Certificate, if not the Company, agrees to be bound by
and comply with the provisions of this Warrant Certificate.
(c) When any adjustment is required to be made in the number of
shares of Common Stock, other securities, or the property purchasable upon
exercise of the Warrant, the Company will promptly determine the new number of
such shares or other securities or property purchasable upon exercise of the
Warrant and (i) prepare and retain on file a statement describing in reasonable
detail the method used in arriving at the new number of such shares or other
securities or property purchasable upon exercise of the Warrant and (ii) cause a
copy of such statement to be mailed to the Warrantholder within thirty (30) days
after the date of the event giving rise to the adjustment.
(d) No fractional shares of Common Stock or other securities
will be issued in connection with the exercise of the Warrant, but the Company
will pay, in lieu of fractional shares, a cash payment therefor on the basis of
the mean between the bid and asked prices of the Common Stock in the
over-the-counter market or the last sale price of the Common Stock on the
principal exchange or other trading facility on which the Common Stock is traded
on the day immediately prior to exercise.
(e) If securities of the Company or securities of any
subsidiary of the Company are distributed pro rata to holders of Common Stock,
such number of securities will be distributed to the Warrantholder or its
assignee upon exercise of its rights hereunder as such Warrantholder or assignee
would have been entitled to if this Warrant Certificate had been exercised prior
to the record date for such distribution. The provisions with respect to
adjustment of the Common Stock provided in this Section 3 will also apply to the
securities to which the Warrantholder or its assignee is entitled under this
Section 3(e).
(f) Notwithstanding anything herein to the contrary, there will
be no adjustment made hereunder on account of the sale by the Company of the
Common Stock or other Securities purchasable upon exercise of the Warrant.
(g) If, immediately prior to any exercise of Warrants, there
shall be outstanding no securities of a class or series that, but for the
provisions of this Section 3, would be issuable upon such exercise (the
"FORMERLY ISSUABLE SECURITIES"), then, upon such exercise, and in lieu of the
Formerly Issuable Securities, the Company shall issue that number and kind of
other securities or property for which the Formerly Issuable Securities were
most recently exercisable or into which the Formerly Issuable Securities were
most recently convertible, as the case may be.
4. RESERVATION OF SECURITIES. The Company agrees that the number of
shares of Common Stock or other Securities sufficient to provide for the
exercise of the Warrant upon the basis set forth above will at all times during
the term of the Warrant be reserved for exercise.
5. VALIDITY OF SECURITIES. All Securities delivered upon the exercise
of the Warrant will be duly and validly issued in accordance with their terms,
and the Company will pay all documentary and transfer taxes, if any, in respect
of the original issuance thereof upon exercise of the Warrant.
6. REGISTRATION OF SECURITIES ISSUABLE ON EXERCISE OF WARRANT
CERTIFICATE.
(a) The Company will register the Securities on Form S-3 or any
successor form with the Commission pursuant to the Act so as to allow the
unrestricted sale of the Securities to the public from time to time commencing
on the first anniversary of the Effective Date and ending at 5:00 p.m. Pacific
Time on the fifth anniversary of the Effective Date (the "REGISTRATION PERIOD").
The Company will also file such applications and other documents necessary to
permit the sale of the Securities to the public during the Registration Period
in those states in which the Warrantholders reside or such other states as to
which the Company and the Warrantholder agree. In order to comply with the
provisions of this Section 6(a), the Company is not required to file more than
one registration statement. No registration right of any kind, "piggyback" or
otherwise, will last longer than five years from the Effective Date.
(b) The Company will pay all of the Company's Expenses and each
Warrantholder will pay its pro rata share of the Warrantholder's Expenses
relating to the registration, offer, and sale of the Securities.
(c) Except as specifically provided herein, the manner and
conduct of the registration, including the contents of the registration
statement, will be entirely in the control and at the discretion of the Company.
The Company will file such post-effective amendments and supplements as may be
necessary to maintain the currency of the registration statement during the
period of its use. In addition, if the Warrantholder participating in the
registration is advised by counsel that the registration statement, in their
opinion, is deficient in any material respect, the Company will use its best
efforts to cause the registration statement to be amended to eliminate the
concerns raised.
(d) The Company will furnish to the Warrantholder the number of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Act, and such other documents as it may reasonably
request in order to facilitate the disposition of Securities owned by it.
(e) The Company will, at the request of Warrantholders holding
at least 50 percent of the then outstanding Warrants: (i) furnish an opinion of
the counsel representing the Company for the purposes of the registration
pursuant to this Section 6, addressed to the Warrantholders and any
Participating Underwriter; (ii) furnish an appropriate letter from the
independent public accountants of the Company, addressed to the Warrantholders
and any Participating Underwriter; and (iii) make such representations and
warranties to the Warrantholders and any Participating Underwriter as are
customarily given to underwriters of public offerings of equity securities in
connection with such offerings. A request pursuant to this subsection (e) may be
made on three occasions. The documents required to be delivered pursuant to this
subsection (e) will be dated within ten days of the request and will be, in form
and substance, equivalent to similar documents furnished to the underwriters in
connection with the Offering, with such changes as may be appropriate in light
of changed circumstances.
7. INDEMNIFICATION IN CONNECTION WITH REGISTRATION.
(a) If any of the Securities are registered, the Company will
indemnify and hold harmless each selling Warrantholder, any person who controls
any selling Warrantholder within the meaning of the Act, and any Participating
Underwriter against any losses, claims, damages, or liabilities, joint or
several, to which any Warrantholder, controlling person, or Participating
Underwriter may be subject under the Act or otherwise; and it will reimburse
each Warrantholder, each controlling person, and each Participating Underwriter
for any legal or other expenses reasonably incurred by the Warrantholder,
controlling person, or Participating Underwriter in connection with
investigating or defending any such loss, claim, damage, liability, or action,
insofar as such losses, claims, damages, or liabilities, joint or several (or
actions in respect thereof), arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained, on the effective
date thereof, in any such registration statement or any preliminary prospectus
or final prospectus, or any 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; provided, however, that the Company will not be liable in any case
to the extent that any loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement, preliminary prospectus,
final prospectus, or any amendment or supplement thereto, in reliance upon and
in conformity with written information furnished by a Warrantholder for use in
the preparation thereof. The indemnity agreement contained in this subparagraph
(a) will not apply to amounts paid to any claimant in settlement of any suit or
claim unless such payment is first approved by the Company, such approval not to
be unreasonably withheld.
(b) Each selling Warrantholder, as a condition of the Company's
registration obligation, will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed any registration statement
or other filing or any amendment or supplement thereto, and any person who
controls the Company within the meaning of the Act, against any losses, claims,
damages, or liabilities to which the Company or any such director, officer, or
controlling person may become subject under the Act or otherwise, and will
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, or controlling person in connection with investigating
or defending any such loss, claim, damage, liability, or action, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in said registration statement, any preliminary or final
prospectus, or other filing, or any 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, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in said
registration statement, preliminary or final prospectus, or other filing, or
amendment or supplement, in reliance upon and in conformity with written
information furnished by such Warrantholder for use in the preparation thereof;
provided, however, that the indemnity agreement contained in this subparagraph
(b) will not apply to amounts paid to any claimant in settlement of any suit or
claim unless such payment is first approved by the Warrantholder, such approval
not to be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under
subparagraphs (a) or (b) above of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, notify the indemnifying party of the commencement thereof;
but the omission to notify the indemnifying party will not relieve it from any
liability that it may have to any indemnified party otherwise than under
subparagraphs (a) and (b), except to the extent it was prejudiced by such
failure to notify.
(d) If any such action is brought against any indemnified party
and it notifies an 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, to
assume the defense thereof, with counsel satisfactory to such indemnified party;
and after 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 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
8. RESTRICTIONS ON TRANSFER. This Warrant Certificate and the Warrant
may not be sold, transferred, pledged, assigned or hypothecated, or be the
subject of any hedging, short sale, derivative, put or call transaction that
would result in the effective economic disposition of the Warrant or the
underlying securities, for a period of one hundred eighty (180) days following
the Effective Date, except to an individual who is an officer or partner of the
underwriters of the Offering and members of the selling group, or by operation
of law, but only if all securities so transferred remain subject to the lock-up
restriction for the remainder of the 180 day time period. The Warrant may be
divided or combined, upon request to the Company by the Warrantholder, into a
certificate or certificates evidencing the same aggregate number of Warrants.
9. NO RIGHTS AS A SHAREHOLDER. Except as otherwise provided herein,
the Warrantholder will not, by virtue of ownership of the Warrant, be entitled
to any rights of a shareholder of the Company but will, upon written request to
the Company, be entitled to receive such quarterly or annual reports as the
Company distributes to its shareholders.
10. NOTICE. Any notices required or permitted to be given hereunder
will be in writing and may be served personally or by mail; and if served will
be addressed as follows:
If to the Company:
SmartPros Ltd.
00 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: President
If to the Warrantholder:
AT THE ADDRESS FURNISHED
BY THE WARRANTHOLDER TO THE
COMPANY FOR THE PURPOSE OF
NOTICE.
15
Any notice so given by mail will be deemed effectively given 48 hours
after mailing when deposited in the United States mail, registered or certified
mail, return receipt requested, postage prepaid and addressed as specified
above. Any party may by written notice to the other specify a different address
for notice purposes.
11. APPLICABLE LAW. This Warrant Certificate will be governed by and
construed in accordance with the laws of the State of Oregon, without reference
to conflict of laws principles thereunder. All disputes relating to this Warrant
Certificate shall be tried before the courts of Oregon located in Multnomah
County, Oregon to the exclusion of all other courts that might have
jurisdiction.
Dated as of ______________, 2004
SMARTPROS LTD.
By: ______________________________________
Name:
Title:
Agreed and Accepted as of _______________, 2004
XXXXXXX INVESTMENT COMPANY, INC.
By: ______________________________________
Name:
Title:
