EXHIBIT 4.2
WARRANT AGREEMENT
AGREEMENT, dated as of this 14th day of November, 1996,
by and among Food Court Entertainment Network, Inc., a Delaware
corporation ("Company"), American Stock Transfer & Trust Company,
as Warrant Agent (the "Warrant Agent"), and X.X. XXXXX
INVESTMENT BANKING CORP., a New York corporation (the
"Underwriter").
W I T N E S S E T H
WHEREAS, in connection with a private placement (the
"Private Placement") of a minimum of thirty (30) and a maximum of
ninety (90) units ("Units"), each unit consisting of 31,746
units identical to those sold by the Company in its initial
public offering ("IPO") in October 1995 ("IPO Units"), each IPO
Unit consisting of one (1) share of the Company's Series A Common
Stock, $.01 par value ("Series A Common Stock"), one (1)
redeemable Class A Warrant ("Class A Warrants") and one (1)
redeemable Class B Warrant ("Class B Warrants") pursuant to an
agency agreement (the "Agency Agreement") dated November 14, 1996
between the Company and Xxxxx and the issuance to Xxxxx or its
designees of Unit Purchase Options to purchase an aggregate of
thirty-one and one-half (31-1/2) additional Units (the "Unit
Purchase Options"), the Company may issue up to 4,341,741 Class A
Warrants and 4,336,862 Class B Warrants (the Class A Warrants and
Class B Warrants may be collectively referred to as "Warrants");
and
WHEREAS, each Class A Warrant initially entitles the
Registered Holder thereof to purchase one (1) share of Series A
Common Stock and one (1) Class B Warrant, and accordingly, the
Company may issue up to an additional 3,341,742 Class B Warrants;
and
WHEREAS, each Class B Warrant initially entitles the
Registered Holder thereof to purchase one (1) share of Series A
Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company, and the Warrant Agent is willing to so
act, in connection with the issuance, registration, transfer
exchange and redemption of the Warrants, the issuance of
certificates representing the Warrants, the exercise of the
Warrants, and the rights of the Registered Holders thereof;
NOW THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth and for the purpose of
defining the terms and provisions of the Warrants and the
certificates representing the Warrants and the respective rights
and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the
parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the
following terms shall have the following meanings, unless the
context shall otherwise require:
(a) "Aggregate Per Share Price" shall mean the
Purchase Price per share multiplied by the number of shares of
Common Stock purchasable upon the exercise of a Warrant.
(b) "Class A Aggregate Per Share Price" shall mean
$5.13.
(c) "Class B Aggregate Per Share Price" shall mean
$6.85.
(d) "Common Stock" shall mean stock of the Company of
any class, whether now or hereafter authorized, which has the
right to participate in the distribution of earnings and assets
of the Company without limit as to amount or percentage, which at
the date hereof consists of 200,000,000 shares of Series A Common
Stock, $.01 par value and 1,250,000 shares of Series B Common
Stock, $.01 par value.
(e) "Corporate Office" shall mean the office of the
Warrant Agent (or its successor) at which at any particular time
its principal business shall be administered, which office is
located at the date hereof at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
(f) "Exercise Date" shall mean, as to any Warrant, the
date on which the Warrant Agent shall have received both (a) the
Warrant Certificate representing such Warrant, with the exercise
form thereon duly executed by the Registered Holder thereof or
his attorney duly authorized in writing, and (b) payment in cash,
or by official bank or certified check made payable to the
Company, of an amount in lawful money of the United States of
America equal to the applicable Purchase Price.
(g) "Initial Warrant Exercise Date" shall mean as to
each Class A Warrant and Class B Warrant November 14, 1996.
(h) "Purchase Price" shall mean the purchase price to
be paid upon exercise of each Class A Warrant or Class B Warrant
in accordance with the terms hereof, which price shall be $5.13
as to the Class A Warrants and $6.85 as to the Class B Warrants,
subject to adjustment from time to time pursuant to the
provisions of Section 9 hereof, and subject to the Company's
right to reduce the Purchase Price upon notice to all Registered
Holders of Warrants.
(i) "Redemption Price" shall mean the price at which
the Company may, at its option in accordance with the terms
hereof, redeem the Class A Warrants and/or Class B Warrants,
which price shall be $0.05 per Warrant.
(j) "Registered Holder" shall mean as to any Warrant
and as of any particular date, the person in whose name the
certificate representing the Warrant shall be registered on that
date on the books maintained by the Warrant Agent pursuant to
Section 6.
(k) "Transfer Agent" shall mean American Stock
Transfer & Trust Company, as the Company's transfer agent, or its
authorized successor, as such.
(l) "Warrant Expiration Date" shall mean 5:00 P.M.
(New York time) on October 11, 2000 or, with respect to Warrants
which are outstanding as of the applicable Redemption Date (as
defined in Section 8) and specifically excluding Warrants
issuable upon exercise of Unit Purchase Options if the Unit
Purchase Options have not been exercised, the Redemption Date,
whichever is earlier; provided that if such date shall in the
State of New York be a holiday or a day on which banks are
authorized or required to close, then 5:00 P.M. (New York time)
on the next following day which in the State of New York is not a
holiday or a day on which banks are authorized or required to
close. Upon notice to all Registered Holders, the Company shall
have the right to extend the Warrant Expiration Date.
SECTION 2. Warrants and Issuance of Warrant
Certificates.
(a) A Class A Warrant initially shall entitle the
Registered Holder of the Warrant Certificate representing such
Warrant to purchase one share of Series A Common Stock and one
Class B Warrant upon the exercise thereof, in accordance with the
terms hereof, subject to modification and adjustment as provided
in Section 9.
(b) A Class B Warrant initially shall entitle the
Registered Holder of the Warrant Certificate representing such
Warrant to purchase one share of Series A Common Stock upon the
exercise thereof, in accordance with the terms hereof, subject to
modification and adjustment as provided in Section 9.
(c) The Class A Warrants and Class B Warrants included
in the offering of Units will be detachable and separately
transferable immediately from the shares of Series A Common Stock
constituting part of the IPO Units. The Class B Warrants will
also be detachable and separately transferable immediately from
the shares of Series A Common Stock issued upon exercise of the
Class A Warrants.
(d) Upon execution of this Agreement, Warrant
Certificates representing the number of Class A Warrants and
Class B Warrants sold pursuant to the Agency Agreement shall be
executed by the Company and delivered to the Warrant Agent. Upon
written order of the Company signed by its President or Chairman
or a Vice President and by its Secretary or an Assistant
Secretary, the Warrant Certificates shall be countersigned,
issued and delivered by the Warrant Agent as part of the Units.
(e) From time to time, up to the Warrant Expiration
Date, the Transfer Agent shall countersign and deliver stock
certificates in required whole number denominations representing
up to an aggregate of 13,020,344 shares of Series A Common Stock,
subject to adjustment as described herein, upon the exercise of
Warrants in accordance with this Agreement.
(f) From time to time, up to the Warrant Expiration
Date, the Warrant Agent shall countersign and deliver Warrant
Certificates in required whole number denominations to the
persons entitled thereto in connection with any transfer or
exchange permitted under this Agreement; provided that no Warrant
Certificates shall be issued except (i) those initially issued
hereunder, (ii) those issued on or after the Initial Warrant
Exercise Date, upon the exercise of fewer than all Warrants
represented by any Warrant Certificate, to evidence any
unexercised Warrants held by the exercising Registered Holder,
(iii) those issued upon any transfer or exchange pursuant to
Section 6; (iv) those issued in replacement of lost, stolen,
destroyed or mutilated Warrant Certificates pursuant to
Section 7; (v) those issued pursuant to the Unit Purchase Option;
(vi) at the option of the Company, in such form as may be
approved by the its Board of Directors, to reflect any adjustment
or change in the Purchase Price, the number of shares of Common
Stock purchasable upon exercise of the Warrants or the Target
Price(s) therefor made pursuant to Section 8 hereof; and
(vii) those Class B Warrants issued upon exercise of Class A
Warrants.
(g) Pursuant to the terms of the Unit Purchase Option,
Xxxxx may purchase up to 999,999 IPO Units, which include up to
999,999 Class A Warrants and 1,999,998 Class B Warrants.
Notwithstanding anything to the contrary contained herein, the
Warrants underlying the Unit Purchase Option shall not be subject
to redemption by the Company except under the terms and
conditions set forth in the Unit Purchase Option.
SECTION 3. Form and Execution of Warrant
Certificates.
(a) The Warrant Certificates shall be substantially in
the form annexed hereto as Exhibit A as to the Class A Warrants
and Exhibit B as to the Class B Warrants (the provisions of which
are hereby incorporated herein) and may have such letters,
numbers or other marks of identification or designation and such
legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may
be required to comply with any law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock
exchange on which the Class A Warrants or Class B Warrants may be
listed, or to conform to usage or to the requirements of
Section 2(d). The Warrant Certificates shall be dated the date
of issuance thereof (whether upon initial issuance, transfer,
exchange or in lieu of mutilated, lost, stolen, or destroyed
Warrant Certificates) and issued in registered form. Warrant
Certificates shall be numbered serially with the letters AW on
Class A Warrants of all denominations and the letters BW on
Class B Warrants of all denominations.
(b) Warrant Certificates shall be executed on behalf
of the Company by its Chairman of the Board, President or any
Vice President and by its Secretary or an Assistant Secretary, by
manual signatures or by facsimile signatures printed thereon, and
shall have imprinted thereon a facsimile of the Company's seal.
Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be an
officer of the Company or to hold the particular office
referenced in the Warrant Certificate before the date of issuance
of the Warrant Certificates or before countersignature by the
Warrant Agent and issue and delivery thereof, such Warrant
Certificates may nevertheless be countersigned by the Warrant
Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not
ceased to be an officer of the Company or to hold such office.
After countersignature by the Warrant Agent, Warrant Certificates
shall be delivered by the Warrant Agent to the Registered Holder
without further action by the Company, except as otherwise
provided by Section 4(a) hereof.
SECTION 4. Exercise.
(a) Each Warrant may be exercised by the Registered
Holder thereof at any time on or after the Initial Exercise Date,
but not after the Warrant Expiration Date, upon the terms and
subject to the conditions set forth herein and in the applicable
Warrant Certificate. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the
Exercise Date and the person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes
as the holder of those securities upon the exercise of the
Warrant as of the close of business on the Exercise Date. As
soon as practicable on or after the Exercise Date, the Warrant
Agent shall deposit the proceeds received from the exercise of a
Warrant and shall notify the Company in writing of the exercise
of the Warrants. Promptly following, and in any event within
five days after the date of such notice from the Warrant Agent,
the Warrant Agent, on behalf of the Company, shall cause to be
issued and delivered by the Transfer Agent, to the person or
persons entitled to receive the same, a certificate or
certificates for the securities deliverable upon such exercise,
(plus a Warrant Certificate for any remaining unexercised
Warrants of the Registered Holder) unless prior to the date of
issuance of such certificates the Company shall instruct the
Warrant Agent to refrain from causing such issuance of
certificates pending clearance of checks received in payment of
the Purchase Price pursuant to such Warrants. Notwithstanding
the foregoing, in the case of payment made in the form of a check
drawn on an account of Xxxxx or such other investment banks and
brokerage houses as the Company shall approve in writing to the
Warrant Agent, certificates shall immediately be issued without
prior notice to the Company or any delay. Upon the exercise of
any Warrant and clearance of the funds received, the Warrant
Agent shall promptly remit the payment received for the Warrant
(the "Warrant Proceeds") to the Company or as the Company may
direct in writing, subject to the provisions of Sections 4(b) and
4(c) hereof.
(b) If, at the Exercise Date in respect of the
exercise of any Warrant, (i) the market price of the Company's
Series A Common Stock is greater than the then Purchase Price of
the Warrant, (ii) the exercise of the Warrant was solicited by a
member of the National Association of Securities Dealers, Inc.
("NASD") as designated in writing on the Warrant Certificate
Subscription Form, (iii) the Warrant was not held in a
discretionary account, (iv) disclosure of compensation
arrangements was made both at the time of the original offering
and at the time of exercise; and (v) the solicitation of the
exercise of the Warrant was not in violation of Rule 10b-6 (as
such rule or any successor rule may be in effect as of such time
of exercise) promulgated under the Securities Exchange Act of
1934, then the Warrant Agent, simultaneously with the
distribution of the Warrant Proceeds to the Company shall, on
behalf of the Company, pay from the Warrant Proceeds, a fee of 5%
(the "Xxxxx Fee") of the Purchase Price to Xxxxx (of which a
portion may be reallowed to the dealer who solicited the
exercise, which may also be Xxxxx or X.X. Xxxxx & Co., Inc.).
In the event the Xxxxx Fee is not received within five days of
the date on which the Company receives Warrant Proceeds, then the
Xxxxx Exercise Fee shall begin accruing interest at an annual
rate of prime plus four (4)%, payable by the Company to the Xxxxx
at the time Xxxxx receives the Xxxxx Fee. Within five days after
exercise the Warrant Agent shall send to Xxxxx a copy of the
reverse side of each Warrant exercised. Xxxxx shall reimburse
the Warrant Agent, upon request, for its reasonable expenses
relating to compliance with this section 4(b). In addition,
Xxxxx and the Company may at any time during business hours,
examine the records of the Warrant Agent, including its ledger of
original Warrant Certificates returned to the Warrant Agent upon
exercise of Warrants. The provisions of this paragraph may not
be modified, amended or deleted without the prior written consent
of Xxxxx.
(c) In order to enforce the provisions of Section 4(b)
above, in the event there is any dispute or question as to the
amount or payment of the Xxxxx Fee, the Warrant Agent is hereby
expressly authorized to withhold payment to the Company of the
Warrant Proceeds unless and until the Company establishes an
escrow account for the purpose of depositing the entire amount of
the Xxxxx Fee, which amount will be deducted from the net Warrant
Proceeds to be paid to the Company. The funds placed in the
escrow account may not be released to the Company without a
written agreement from Xxxxx that the required Xxxxx Fee has been
received by Xxxxx.
SECTION 5. Reservation of Shares; Listing; Payment of
Taxes; etc.
(a) The Company covenants that it will at all times
reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exercise of Warrants, such
number of shares of Series A Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The
Company covenants that all shares of Series A Common Stock which
shall be issuable upon exercise of the Warrants shall, at the
time of delivery, be duly and validly issued, fully paid,
nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, (other than those which the Company
shall promptly pay or discharge) and that upon issuance such
shares shall be listed on each national securities exchange, on
which the other shares of outstanding Common Stock of the Company
are then listed or shall be eligible for inclusion in the Nasdaq
National Market or the Nasdaq SmallCap Market if the other shares
of outstanding Common Stock of the Company are so included.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Warrants hereunder
require registration with, or approval of, any governmental
authority under any federal securities law before such securities
may be validly issued or delivered upon such exercise, then the
Company will in good faith and as expeditiously as reasonably
possible, endeavor to secure such registration or approval. The
Company will use reasonable efforts to obtain appropriate
approvals or registrations under state "blue sky" securities
laws. With respect to any such securities, however, Warrants may
not be exercised by, or shares of Series A Common Stock issued
to, any Registered Holder in any state in which such exercise
would be unlawful.
(c) The Company shall pay all documentary, stamp or
similar taxes and other governmental charges that may be imposed
with respect to the issuance of Warrants, or the issuance or
delivery of any shares or Class B Warrants upon exercise of the
Class A Warrants, or the issuance or delivery of any shares upon
exercise of the Class B Warrants; provided, however, that if the
shares of Series A Common Stock or Class B Warrants, as the case
may be, are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any
Warrant being exercised, then no such delivery shall be made
unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto,
if any.
(d) The Warrant Agent is hereby irrevocably authorized
to requisition the Company's Transfer Agent from time to time for
certificates representing shares of Series A Common Stock
issuable upon exercise of the Warrants, and the Company will
authorize the Transfer Agent to comply with all such proper
requisitions. The Company will file with the Warrant Agent a
statement setting forth the name and address of the Transfer
Agent of the Company for shares of Common Stock issuable upon
exercise of the Warrants.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other
Warrant Certificates representing an equal aggregate number of
Warrants of the same class or may be transferred in whole or in
part. Warrant Certificates to be exchanged shall be surrendered
to the Warrant Agent at its Corporate Office, and upon
satisfaction of the terms and provisions hereof, the Company
shall execute and the Warrant Agent shall countersign, issue and
deliver in exchange therefor the Warrant Certificate or
Certificates which the Registered Holder making the exchange
shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books
in which, subject to such reasonable regulations as it may
prescribe, it shall register Warrant Certificates and the
transfer thereof in accordance with its regular practice. Upon
due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the
Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented
for registration or transfer, or for exchange or exercise, the
subscription form on the reverse thereof shall be duly endorsed,
or be accompanied by a written instrument or instruments of
transfer and subscription, in form satisfactory to the Company
and the Warrant Agent, duly executed by the Registered Holder or
his attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the Warrant
Agent for any exchange or registration of transfer of Warrant
Certificates. In addition, the Company may require payment by
such holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise
or for exchange in case of mutilated Warrant Certificates shall
be promptly cancelled by the Warrant Agent and thereafter
retained by the Warrant Agent until termination of this Agreement
or resignation as Warrant Agent, or, with the prior written
consent of the Underwriter, disposed of or destroyed, at the
direction of the Company.
(f) Prior to due presentment for registration of
transfer thereof, the Company and the Warrant Agent may deem and
treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof and of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon
made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary. The Warrants, which are
being offered in the IPO Units with shares of Series A Common
Stock pursuant to the Agreement, will be immediately detachable
from the Series A Common Stock and transferable separately
therefrom.
SECTION 7. Loss or Mutilation. Upon receipt by the
Company and the Warrant Agent of evidence satisfactory to them of
the ownership of and loss, theft, destruction or mutilation of
any Warrant Certificate and (in case of loss, theft or
destruction) of indemnity satisfactory to them, and (in the case
of mutilation) upon surrender and cancellation thereof, the
Company shall execute and the Warrant Agent shall ( in the
absence of notice to the Company and/or Warrant Agent that the
Warrant Certificate has been acquired by a bona fide purchaser)
countersign and deliver to the Registered Holder in lieu thereof
a new Warrant Certificate of like tenor representing an equal
aggregate number of Class A Warrants or Class B Warrants.
Applicants for a substitute Warrant Certificate shall comply with
such other reasonable regulations and pay such other reasonable
charges as the Warrant Agent may prescribe.
SECTION 8. Redemption.
(a) Subject to the provisions of paragraph 2(g)
hereof, on not less than thirty (30) days notice (the "Redemption
Notice"), to Registered Holders of the Warrants, the Warrants may
be redeemed, at the option of the Company, at a redemption price
of $0.05 per Warrant, provided the Market Price of the Common
Stock receivable upon exercise of such Warrants shall exceed
$9.00 with respect to the Class A Warrants and $12.00 with
respect to the Class B Warrants (the "Target Prices"), subject to
adjustment as set forth in Section 8(f), below. Market Price
shall mean (i) the average closing bid price of the Common Stock,
for thirty (30) consecutive business days ending on the
Calculation Date (as hereinafter defined) as reported by Nasdaq,
if the Common Stock is traded on the Nasdaq SmallCap Market, or
(ii) the average last reported sale price of the Common Stock,
for thirty (30) consecutive business days ending on the
Calculation Date, as reported by the primary exchange on which
the Common Stock is traded, if the Common Stock is traded on a
national securities exchange, or by Nasdaq, if the Common Stock
is traded on the Nasdaq National Market. All Warrants of a class
must be redeemed if any of that class are redeemed, provided that
the Warrants underlying the Unit Purchase Option may only be
redeemed in compliance with and subject to the terms and
conditions of the Unit Purchase Option. For purposes of this
Section 8, the Calculation Date shall mean a date within 5 days
of the mailing of the Redemption Notice. The date fixed for
redemption of the Warrants is referred to herein as the
"Redemption Date". The Class B Warrant Redemption Date may not
be earlier than thirty-one (31) days after the Class A Warrant
Redemption Date.
(b) If the conditions set forth in Section 8(a) are
met, and the Company desires to exercise its right to redeem the
Warrants, it shall request the Underwriter to mail a Redemption
Notice to each of the Registered Holders of the Warrants to be
redeemed, first class, postage prepaid, not later than the
thirtieth day before the date fixed for redemption, at their last
address as shall appear on the records maintained pursuant to
Section 6(b). Any notice mailed in the manner provided herein
shall be conclusively presumed to have been duly given whether or
not the Registered Holder receives such notice.
(c) The Redemption Notice shall specify (i) the
redemption price, (ii) the Redemption Date, (iii) the place where
the Warrant Certificates shall be delivered and the redemption
price paid, (iv) that the Underwriter will assist each Registered
Holder of a Warrant in connection with the exercise thereof and
(v) that the right to exercise the Warrant shall terminate at
5:00 P.M. (New York time) on the business day immediately
preceding the Redemption Date. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to a
Registered Holder (a) to whom notice was not mailed or (b) whose
notice was defective. An affidavit of the Warrant Agent or of
the Secretary or an Assistant Secretary of Xxxxx or the Company
that notice of redemption has been mailed shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at
5:00 P.M. (New York time) on the business day immediately
preceding the Redemption Date. On and after the Redemption Date,
Registered Holders of the Warrants shall have no further rights
except to receive, upon surrender of the Warrant, the Redemption
Price.
(e) From and after the Redemption Date, the Company
shall, at the place specified in the Redemption Notice, upon
presentation and surrender to the Company by or on behalf of the
Registered Holder thereof of one or more Warrant Certificates
evidencing Warrants to be redeemed, deliver or cause to be
delivered to or upon the written order of such Registered Holder
a sum in cash equal to the Redemption Price of each such Warrant.
From and after the Redemption Date and upon the deposit or
setting aside by the Company of a sum sufficient to redeem all
the Warrants called for redemption, such Warrants shall expire
and become void and all rights hereunder and under the Warrant
Certificates, except the right to receive payment of the
Redemption Price, shall cease.
(f) If the shares of the Company's Common Stock are
subdivided or combined into a greater or smaller number of shares
of Common Stock, the Target Prices shall be proportionally
adjusted by the ratio which the total number of shares of Common
Stock outstanding immediately prior to such event bears to the
total number of shares of Common Stock to be outstanding
immediately after such event.
SECTION 9. Adjustment of Exercise Price and Number of
Shares of Common Stock or Warrants.
(a) Subject to the exceptions referred to in
Section 9(g) below, in the event the Company shall, at any time
or from time to time after the date hereof, sell any shares of
Common Stock for a consideration per share less than the Market
Price of the Common Stock (as defined in Section 8, except that
for purposes of Section 9, the Calculation Date shall mean the
date of the sale or other transaction referred to in this Section
9) on the date of the sale or issue any shares of Common Stock as
a stock dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater or
lesser number of shares (any such sale, issuance, subdivision or
combination being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Purchase Price
in effect immediately prior to such Change of Shares shall be
changed to a price (including any applicable fraction of a cent)
determined by multiplying the Purchase Price in effect
immediately prior thereto by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional
shares and the number of shares of Common Stock which the
aggregate consideration received (determined as provided in
subsection 9(f)(F) below) for the issuance of such additional
shares would purchase at the Market Price and the denominator of
which shall be the sum of the number of shares of Common Stock
outstanding immediately after the issuance of such additional
shares. Such adjustment shall be made successively whenever such
an issuance is made.
Upon each adjustment of the Purchase Price
pursuant to this Section 9, the total number of shares of Common
Stock purchasable upon the exercise of each Class A Warrant or
the total number of shares of Common Stock purchasable upon
exercise of each Class B Warrant, as applicable, shall (subject
to the provisions contained in Section 9(b) hereof) be such
number of shares (calculated to the nearest one-hundredth;
provided, however, that in no event shall the Class A Aggregate
Per Share Price or the Class B Aggregate Per Share Price as
applicable, increase as a result of such rounding calculation)
purchasable at the Purchase Price in effect immediately prior to
such adjustment multiplied by a fraction, the numerator of which
shall be the Purchase Price in effect immediately prior to such
adjustment and the denominator of which shall be the Purchase
Price in effect immediately after such adjustment.
(b) The Company may elect, upon any adjustment of the
Purchase Price hereunder, to adjust the number of Class A
Warrants or Class B Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable
upon the exercise of each Warrant as hereinabove provided, so
that each Class A Warrant outstanding after such adjustment shall
represent the right to purchase one share of Common Stock and one
Class B Warrant, and each Class B Warrant outstanding after such
adjustment shall represent the right to purchase one share of
Common Stock. Each Warrant held of record prior to such
adjustment of the number of Warrants shall become that number of
Warrants (calculated to the nearest tenth) determined by
multiplying the number one by a fraction, the numerator of which
shall be the Purchase Price in effect immediately prior to such
adjustment and the denominator of which shall be the Purchase
Price in effect immediately after such adjustment. Upon each
adjustment of the number of Warrants pursuant to this Section 9,
the Company shall, as promptly as practicable, cause to be
distributed to each Registered Holder of Warrant Certificates on
the date of such adjustment Warrant Certificates evidencing,
subject to Section 10 hereof, the number of additional Warrants
to which such Holder shall be entitled as a result of such
adjustment or, at the option of the Company, cause to be
distributed to such Holder in substitution and replacement for
the Warrant Certificates held by him prior to the date of
adjustment (and upon surrender thereof, if required by the
Company) new Warrant Certificates evidencing the number of
Warrants to which such Holder shall be entitled after such
adjustment.
(c) In case of any reclassification, capital
reorganization or other change of outstanding shares of Common
Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common
Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as, or substantially
as, an entirety (other than a sale/leaseback, mortgage or other
financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising such
Warrant, to purchase the kind and number of shares of stock or
other securities or property (including cash) receivable upon
such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock that might have been purchased
upon exercise of such Warrant immediately prior to such
reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for
in this Section 9. The Company shall not effect any such
consolidation, merger or sale unless prior to or simultaneously
with the consummation thereof the successor (if other than the
Company) resulting from such consolidation or merger or the
corporation purchasing assets or other appropriate corporation or
entity shall assume, by written instrument executed and delivered
to the Warrant Agent, the obligation to deliver to the holder of
each Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations of the Company
under this Agreement. The foregoing provisions shall similarly
apply to successive reclassifications, capital reorganizations
and other changes of outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the
Purchase Price or the number of shares of Common Stock
purchasable upon exercise of the Warrants, the Warrant
Certificates theretofore and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrant
Certificates pursuant to Section 2(f) hereof, continue to express
the Purchase Price per share, the number of shares purchasable
thereunder and the Redemption Price therefor as the Purchase
Price per share, and the number of shares purchasable and the
Redemption Price therefor were expressed in the Warrant
Certificates when the same were originally issued.
(e) After each adjustment of the Purchase Price
pursuant to this Section 9, the Company will promptly prepare a
certificate signed by the Chairman or President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of
Common Stock purchasable upon exercise of each Warrant after such
adjustment and, if the Company shall have elected to adjust the
number of Warrants, the number of Warrants to which the
Registered Holder of each Warrant shall then be entitled, and the
adjustment in Redemption Price resulting therefrom, and (iii) a
statement showing in detail the method of calculation and the
facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or to be
received by the Company for any securities issued or sold or
deemed to have been issued, (b) the number of shares of Common
Stock outstanding or deemed to be outstanding, and (c) the
Purchase Price in effect immediately prior to such issue or sale
and as adjusted and readjusted (if required by Section 9) on
account thereof. The Company will promptly file such certificate
with the Warrant Agent and furnish a copy thereof to be sent by
ordinary first class mail to Xxxxx and to each Registered Holder
of Warrants at his last address as it shall appear on the
registry books of the Warrant Agent. No failure to mail such
notice nor any defect therein or in the mailing thereof shall
affect the validity thereof except as to the holder to whom the
Company failed to mail such notice, or except as to the holder
whose notice was defective. The Company will, upon the written
request at any time of Xxxxx, furnish to Xxxxx a report by
Xxxxxxx X. Xxxxxx & Company, L.L.P., or other independent public
accountants of recognized national standing (which may be the
regular auditors of the Company) selected by the Company to
verify such computation and setting forth such adjustment or
readjustment and showing in detail the method of calculation and
the facts upon which such adjustment or readjustment is based.
The Company will also keep copies of all such certificates and
reports at its principal office.
(f) For purposes of Section 9(a) and 9(b) hereof, the
following provisions (A) to (G) shall also be applicable:
(A) The number of shares of Common Stock
outstanding at any given time shall include shares of
Common Stock owned or held by or for the account of the
Company and the sale or issuance of such treasury
shares or the distribution of any such treasury shares
shall not be considered a Change of Shares for purposes
of said sections.
(B) No adjustment of the Purchase Price shall
be made unless such adjustment would require an
increase or decrease of at least $.10 in the Purchase
Price; provided that any adjustments which by reason of
this clause (B) are not required to be made shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment(s) so carried forward,
shall require an increase or decrease of at least $.10
in the Purchase Price then in effect hereunder.
(C) In case of (1) the sale by the Company for
cash (or as a component of a unit being sold for cash)
of any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or any
securities convertible into or exchangeable for Common
Stock without the payment of any further consideration
other than cash, if any (such securities convertible,
exercisable or exchangeable into Common Stock being
herein called "Convertible Securities"), or (2) the
issuance by the Company, without the receipt by the
Company of any consideration therefor, of any rights or
warrants to subscribe for or purchase, or any options
for the purchase of, Common Stock or Convertible
Securities, in each case, if (and only if) the
consideration payable to the Company upon the exercise
of such rights, warrants or options shall consist of
cash, whether or not such rights, warrants or options,
or the right to convert or exchange such Convertible
Securities, are immediately exercisable, and the price
per share for which Common Stock is issuable upon the
exercise of such rights, warrants or options or upon
the conversion or exchange of such Convertible
Securities (determined by dividing (x) the minimum
aggregate consideration payable to the Company upon the
exercise of such rights, warrants or options, plus the
consideration, if any, received by the Company for the
issuance or sale of such rights, warrants or options,
plus, in the case of such Convertible Securities, the
minimum aggregate amount of additional consideration,
other than such Convertible Securities, payable upon
the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon
the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible
Securities issuable upon the exercise of such rights,
warrants or options) is less than the Market Price of
the Common Stock on the date of the issuance or sale of
such rights, warrants or options, then the total
maximum number of shares of Common Stock issuable upon
the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible
Securities (as of the date of the issuance or sale of
such rights, warrants or options) shall be deemed to be
outstanding shares of Common Stock for purposes of
Sections 9(a) and 9(b) hereof and shall be deemed to
have been sold for cash in an amount equal to such
price per share.
(D) In case of the sale by the Company for
cash of any Convertible Securities, whether or not the
right of conversion or exchange thereunder is
immediately exercisable, and the price per share for
which Common Stock is issuable upon the conversion or
exchange of such Convertible Securities (determined by
dividing (x) the total amount of consideration received
by the Company for the sale of such Convertible
Securities, plus the minimum aggregate amount of
additional consideration, if any, other than such
Convertible Securities, payable upon the conversion or
exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities) is less than
the Market Price of the Common Stock on the date of the
sale of such Convertible Securities, then the total
maximum number of shares of Common Stock issuable upon
the conversion or exchange of such Convertible
Securities (as of the date of the sale of such
Convertible Securities) shall be deemed to be
outstanding shares of Common Stock for purposes of
Sections 9(a) and 9(b) hereof and shall be deemed to
have been sold for cash in an amount equal to such
price per share.
(E) In case the Company shall modify the
rights of conversion, exchange or exercise of any of
the securities referred to in (C) or (D) above or any
other securities of the Company convertible,
exchangeable or exercisable for shares of Common Stock,
for any reason other than an event that would require
adjustment to prevent dilution, so that the
consideration per share received by the Company after
such modification is less than the Market Price on the
date prior to such modification, the Purchase Price to
be in effect after such modification shall be
determined by multiplying the Purchase Price in effect
immediately prior to such event by a fraction, of which
the numerator shall be the number of shares of Common
Stock outstanding on the date prior to the modification
plus the number of shares of Common Stock which the
aggregate consideration receivable by the Company for
the securities affected by the modification would
purchase at the Market Price and of which the
denominator shall be the number of shares of Common
Stock outstanding on such date plus the number of
shares of Common Stock to be issued upon conversion,
exchange or exercise of the modified securities at the
modified rate. Such adjustment shall become effective
as of the date upon which such modification shall take
effect. On the expiration of any such right, warrant
or option or the termination of any such right to
convert or exchange any such Convertible Securities
referred to in Paragraph (C) or (D) above, the Purchase
Price then in effect hereunder shall forthwith be
readjusted to such Purchase Price as would have
obtained (a) had the adjustments made upon the issuance
or sale of such rights, warrants, options or
Convertible Securities been made upon the basis of the
issuance of only the number of shares of Common Stock
theretofore actually delivered (and the total
consideration received therefor) upon the exercise of
such rights, warrants or options or upon the conversion
or exchange of such Convertible Securities and (b) had
adjustments been made on the basis of the Purchase
Price as adjusted under clause (a) for all transactions
(which would have affected such adjusted Purchase
Price) made after the issuance or sale of such rights,
warrants, options or Convertible Securities.
(F) In case of the sale for cash of any shares
of Common Stock, any Convertible Securities, any rights
or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or
Convertible Securities, the consideration received by
the Company therefore shall be deemed to be the gross
sales price therefor without deducting therefrom any
expense paid or incurred by the Company or any
underwriting discounts or commissions or concessions
paid or allowed by the Company in connection therewith.
(G) In case any event shall occur as to which
the provisions of Section 9 are not strictly applicable
but the failure to make any adjustment would not fairly
protect the purchase rights represented by the Warrants
in accordance with the essential intent and principles
of Section 9, then, in each such case, the Board of
Directors of the Company shall in good faith by
resolution provide for the adjustment, if any, on a
basis consistent with the essential intent and
principles established in Section 9, necessary to
preserve, without dilution, the purchase rights
represented by the Warrants. The Company will promptly
make the adjustments described therein.
(g) No adjustment to the Purchase Price of the
Warrants or to the number of shares of Common Stock purchasable
upon the exercise of each Warrant will be made, however,
(i) upon the exercise of any of the options
presently outstanding under the Company's stock option
plan for officers, directors and certain other key
personnel of the Company and the Consultants and
Advisors Stock Option Plan (the "Plan"); or
(ii) upon the issuance or exercise of any other
securities which may hereafter be granted or exercised
under the Plans or under any other employee benefit
plan of the Company; or
(iii) upon the sale or exercise of the Warrants,
including without limitation the sale or exercise of
any of the Warrants comprising the Unit Purchase Option
or upon the sale or exercise of the Unit Purchase
Option; or
(iv) upon the sale of any shares of Common
Stock or Convertible Securities in a firm commitment
underwritten public offering, including, without
limitation, shares sold upon the exercise of any
overallotment option granted to the underwriters in
connection with such offering; or
(v) upon the issuance or sale of Common Stock
or Convertible Securities upon the exercise of any
rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or
Convertible Securities, whether or not such rights,
warrants or options were outstanding on the date of the
original sale of the Warrants or were thereafter issued
or sold; or
(vi) upon the issuance or sale of Common Stock
upon conversion or exchange of any Convertible
Securities, whether or not any adjustment in the
Purchase Price was made or required to be made upon the
issuance or sale of such Convertible Securities and
whether or not such Convertible Securities were
outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold.
(h) As used in this Section 9, the term "Common Stock"
shall mean and include the Company's Common Stock authorized on
the date of the original issue of the Units and shall also
include any capital stock of any class of the Company thereafter
authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon
the voluntary liquidation, dissolution or winding up of the
Company; provided, however, that the shares issuable upon
exercise of the Warrants shall include only shares of such class
designated in the Company's Certificate of Incorporation as
Common Stock on the date of the original issue of the Units or
(i), in the case of any reclassification, change, consolidation,
merger, sale or conveyance of the character referred to in
Section 9(c) hereof, the stock, securities or property provided
for in such section or (ii), in the case of any reclassification
or change in the outstanding shares of Common Stock issuable upon
exercise of the Warrants as a result of a subdivision or
combination or consisting of a change in par value, or from par
value to no par value, or from no par value to par value, such
shares of Common Stock as so reclassified or changed.
(i) Any determination as to whether an adjustment in
the Purchase Price in effect hereunder is required pursuant to
Section 9, or as to the amount of any such adjustment, if
required, shall be binding upon the holders of the Warrants and
the Company if made in good faith by the Board of Directors of
the Company.
(j) If and whenever the Company shall grant to the
holders of Common Stock, as such, rights or warrants to subscribe
for or to purchase, or any options for the purchase of, Common
Stock or securities convertible into or exchangeable for or
carrying a right, warrant or option to purchase Common Stock, the
Company shall concurrently therewith grant to each Registered
Holder as of the record date for such transaction of the Warrants
then outstanding, the rights, warrants or options to which each
Registered Holder would have been entitled if, on the record date
used to determine the stockholders entitled to the rights,
warrants or options being granted by the Company, the Registered
Holder were the holder of record of the number of whole shares of
Common Stock then issuable upon exercise (assuming, for purposes
of this Section 9(j), that exercise of Warrants is permissible
during periods prior to the Initial Warrant Exercise Date) of his
Warrants. Such grant by the Company to the holders of the
Warrants shall be in lieu of any adjustment which otherwise might
be called for pursuant to this Section 9.
SECTION 10. Registration Under The Securities Act of
1933. The Company agrees to register for resale the Warrants and
the shares of Series A Common Stock issued or issuable upon
exercise of the Warrants under the Securities Act of 1933, as
amended (the "Act") no later than March 14, 1997, as more fully
set forth in Section IV of the Subscription Agreement between the
Company and each of the investors in the Private Placement,
subject to certain contractual restrictions applicable to the
Holder.
SECTION 11. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Series A Common Stock
purchasable upon the exercise of each Warrant is adjusted
pursuant to Section 9 hereof, the Company nevertheless shall not
be required to issue fractions of shares, upon exercise of the
Warrants or otherwise, or to distribute certificates that
evidence fractional shares. With respect to any fraction of a
share called for upon the exercise of any Warrant, the Company
shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share,
determined as follows:
(1) If the Series A Common Stock is listed on
a national securities exchange or admitted to unlisted
trading privileges on such exchange or is traded on the
Nasdaq National Market, the current market value shall
be the last reported sale price of the Common Stock on
such exchange or market on the last business day prior
to the date of exercise of this Warrant or if no such
sale is made on such day, the average of the closing
bid and asked prices for such day on such exchange or
market; or
(2) If the Series A Common Stock is not listed
or admitted to unlisted trading privileges on a
national securities exchange or is not traded on the
Nasdaq National Market, the current market value shall
be the mean of the last reported bid and asked prices
reported by the Nasdaq SmallCap Market or, if not
traded thereon, by the National Quotation Bureau, Inc.
on the last business day prior to the date of the
exercise of this Warrant; or
(3) If the Series A Common Stock is not so
listed or admitted to unlisted trading privileges and
bid and asked prices are not so reported, the current
market value shall be an amount determined in such
reasonable manner as may be prescribed by the Board of
Directors of the Company.
SECTION 12. Warrant Holders Not Deemed Stockholders.
No holder of Warrants shall, as such, be entitled to vote or to
receive dividends or be deemed the holder of Series A Common
Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained
herein be construed to confer upon the holder of Warrants, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or 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 or reclassification of stock, change of
par value or change of stock to no par value, consolidation,
merger or conveyance or otherwise), or to receive notice of
meetings, or to receive dividends or subscription rights, until
such holder shall have exercised such Warrants and been issued
shares of Series A Common Stock in accordance with the provisions
hereof.
SECTION 13. Rights of Action. All rights of action
with respect to this Agreement are vested in the respective
Registered Holders of the Warrants, and any Registered Holder of
a Warrant, without consent of the Warrant Agent or of the holder
of any other Warrant, may, in his own behalf and for his own
benefit, enforce against the Company his right to exercise his
Warrants for the purchase of shares of Series A Common Stock in
the manner provided in the Warrant Certificate and this
Agreement.
SECTION 14. Agreement of Warrant Holders. Every
holder of a Warrant, by his acceptance thereof, consents and
agrees with the Company, the Warrant Agent and every other holder
of a Warrant that:
(a) The Warrants are transferable only on the registry
books of the Warrant Agent by the Registered Holder thereof in
person or by his attorney duly authorized in writing and only if
the Warrant Certificates representing such Warrants are
surrendered at the office of the Warrant Agent, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to
the Warrant Agent and the Company in their sole discretion,
together with payment of any applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and
treat the person in whose name the Warrant Certificate is
registered as the holder and as the absolute, true and lawful
owner of the Warrants represented thereby for all purposes, and
neither the Company nor the Warrant Agent shall be affected by
any notice or knowledge to the contrary, except as otherwise
expressly provided in Section 7 hereof.
SECTION 15. Cancellation of Warrant Certificates. If
the Company shall purchase or acquire any Warrant or Warrants,
the Warrant Certificate or Warrant Certificates evidencing the
same shall thereupon be delivered to the Warrant Agent and
cancelled by it and retired. The Warrant Agent shall also cancel
the Warrant Certificate or Warrant Certificates following
exercise of any or all of the Warrants represented thereby or
delivered to it for transfer or exchange.
SECTION 16. Concerning the Warrant Agent. The Warrant
Agent acts hereunder as agent and in a ministerial capacity for
the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and
delivering Warrant Certificates or by any other act hereunder be
deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Warrants
represented thereby or of any securities or other property
delivered upon exercise of any Warrant or whether any stock
issued upon exercise of any Warrant is fully paid and
nonassessable.
The Warrant Agent shall not at any time be under
any duty or responsibility to any holder of Warrant Certificates
to make or cause to be made any adjustment of the Purchase Price
or the Redemption Price provided in this Agreement, or to
determine whether any fact exists which may require any such
adjustments, or with respect to the nature or extent of any such
adjustment, when made, or with respect to the method employed in
making the same. It shall not (i) be liable for any recital or
statement of facts contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate
or other document or instrument believed by it in good faith to
be genuine and to have been signed or presented by the proper
party or parties, (ii) be responsible for any failure on the part
of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant
Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or
wilful misconduct.
The Warrant Agent may at any time consult with
counsel satisfactory to it (who may be counsel for the Company)
and shall incur no liability or responsibility for any action
taken, suffered or omitted by it in good faith in accordance with
the opinion or advice of such counsel.
Any notice, statement, instruction, request,
direction, order or demand of the Company shall be sufficiently
evidenced by an instrument signed by the Chairman of the Board,
President, any Vice President, its Secretary, or Assistant
Secretary, (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable
for any action taken, suffered or omitted by it in accordance
with such notice, statement, instruction, request, direction,
order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent
reasonable compensation for its services hereunder and to
reimburse it for its reasonable expenses hereunder; it further
agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted
by the Warrant Agent in the execution of its duties and powers
hereunder except losses, expenses and liabilities arising as a
result of the Warrant Agent's negligence or wilful misconduct.
The Warrant Agent may resign its duties and be
discharged from all further duties and liabilities hereunder
(except liabilities arising as a result of the Warrant Agent's
own negligence or wilful misconduct), after giving 30 days' prior
written notice to the Company. At least 15 days prior to the
date such resignation is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation to be mailed to
the Registered Holder of each Warrant Certificate at the
Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall
appoint a new warrant agent in writing. If the Company shall
fail to make such appointment within a period of 15 days after it
has been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant
Certificate may apply to any court of competent jurisdiction for
the appointment of a new warrant agent. Any new warrant agent,
whether appointed by the Company or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by
its last published report to its stockholders, of not less than
$10,000,000 or a stock transfer company that is a registered
transfer agent under the Securities Exchange Act of 1934. After
acceptance in writing of such appointment by the new warrant
agent is received by the Company, such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities
as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if
for any reason it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same
shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment
the Company shall file notice thereof with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or
any new warrant agent may be converted or merged or any
corporation resulting from any consolidation to which the Warrant
Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without
any further act, provided that such corporation is eligible for
appointment as successor to the Warrant Agent under the
provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed to the Company and to the Registered
Holder of each Warrant Certificate.
The Warrant Agent, its subsidiaries and
affiliates, and any of its or their officers or directors, may
buy and hold or sell Warrants or other securities of the Company
and otherwise deal with the Company in the same manner and to the
same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other
legal entity.
SECTION 17. Modification of Agreement. Subject to the
provisions of Section 4(b), the parties hereto and the Company
may by supplemental agreement make any changes or corrections in
this Agreement (i) that they shall deem appropriate to cure any
ambiguity or to correct any defective or inconsistent provision
or manifest mistake or error herein contained; (ii) to reflect an
increase in the number of Class A or Class B Warrants which are
to be governed by this Agreement resulting from (a) a subsequent
public offering of Company securities which includes Class A or
Class B Warrants or (b) a subsequent private placement of Company
securities which includes Class A or Class B Warrants, in either
case having the same terms and conditions as the Class A or Class
B Warrants, respectively, originally covered by or subsequently
added to this Agreement under this Section 17, provided, however,
that in the case of a private placement, the amendment to this
Agreement will be effective only at such time as the resale of
such Warrants, as well as the securities underlying such Warrants
is covered by an effective registration statement under the Act;
or (iii) that they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of
Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any
respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than 50% of
the Warrants then outstanding; and provided, further, that no
change in the number or nature of the securities purchasable upon
the exercise of any Warrant, or the Purchase Price therefor, or
the acceleration of the Warrant Expiration Date, shall be made
without the consent in writing of the Registered Holder of the
Warrant Certificate representing such Warrant, other than such
changes as are specifically prescribed by this Agreement as
originally executed or are made in compliance with applicable
law.
SECTION 18. Notices. All notices, requests, consents
and other communications hereunder shall be in writing and shall
be deemed to have been made when delivered or mailed first class
registered or certified mail, postage prepaid as follows: if to
the Registered Holder of a Warrant Certificate, at the address of
such holder as shown on the registry books maintained by the
Warrant Agent; if to the Company, at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxx, or at such other
address as may have been furnished to the Warrant Agent in
writing by the Company; if to the Warrant Agent, at its Corporate
Office; if to Xxxxx, at X.X. Xxxxx Investment Banking Corp., 00
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
SECTION 19. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, without reference to principles of conflict of
laws.
SECTION 20. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Company and, the
Warrant Agent and their respective successors and assigns, and
the holders from time to time of Warrant Certificates . Nothing
in this Agreement is intended or shall be construed to confer
upon any other person any right, remedy or claim, in equity or at
law, or to impose upon any other person any duty, liability or
obligation.
SECTION 21. Termination. This Agreement shall
terminate at the close of business on the earlier of the Warrant
Expiration Date or the date upon which all Warrants (including
the warrants issuable upon exercise of the Unit Purchase Option)
have been exercised, except that the Warrant Agent shall account
to the Company for cash held by it and the provisions of
Section 16 hereof shall survive such termination.
SECTION 22. Counterparts. This Agreement may be
executed in several counterparts, which taken together shall
constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
FOOD COURT ENTERTAINMENT NETWORK, INC.
By: ______________________________
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: ______________________________
Authorized Officer
X.X. XXXXX INVESTMENT BANKING CORP.
By: ______________________________
Authorized Officer
EXHIBIT A
[FORM OF FACE OF CLASS A WARRANT CERTIFICATE]
No. AW Class A Warrants
VOID AFTER OCTOBER 11, 2000
CLASS A WARRANT CERTIFICATE FOR PURCHASE
OF SERIES A COMMON STOCK AND REDEEMABLE CLASS B WARRANTS
FOOD COURT ENTERTAINMENT NETWORK, INC.
This certifies that FOR VALUE RECEIVED
__________________ or registered assigns (the "Registered
Holder") is the owner of the number of Class A Warrants ("Class A
Warrants") specified above. Each Class A Warrant represented
hereby initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Warrant
Certificate and the Warrant Agreement (as hereinafter defined),
one fully paid and nonassessable share of Series A Common Stock,
$.01 value ("Common Stock"), of ) Food Court Entertainment
Network, Inc., a Delaware corporation (the "Company"), and one
Class B Warrant of the Company at any time between November 14,
1996, and the Expiration Date (as hereinafter defined), upon the
presentation and surrender of this Warrant Certificate with the
Subscription Form on the reverse hereof duly executed, at the
corporate office of American Stock Transfer & Trust Company as
Warrant Agent, or its successor (the "Warrant Agent"),
accompanied by payment of $5.13 (the "Purchase Price") in lawful
money of the United States of America in cash or by official bank
or certified check made payable to Food Court Entertainment
Network, Inc.
This Warrant Certificate and each Class A Warrant
represented hereby are issued pursuant to and are subject in all
respects to the terms and conditions set forth in either the
Warrant Agreement dated October 11, 1995 or the Warrant Agreement
dated November 14, 1996, (together, the "Warrant Agreement"), in
each case by and among the Company, the Warrant Agent and X.X.
Xxxxx Investment Banking Corp.
In the event of certain contingencies provided for in
the Warrant Agreement, the Purchase Price or the number of shares
of Common Stock and Class B Warrants subject to purchase upon the
exercise of each Class A Warrant represented hereby are subject
to modification or adjustment.
Each Class A Warrant represented hereby is exercisable
at the option of the Registered Holder, but no fractional shares
of Common Stock will be issued. In the case of the exercise of
less than all the Class A Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrant Agent shall
countersign, for the balance of such Class A Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New
York time) on October 11, 2000, or such earlier date as the
Class A Warrants shall be redeemed. If such date shall in the
State of New York be a holiday or a day on which banks are
authorized to close, then the Expiration Date shall mean 5:00
P.M. (New York time) the next following day which in the State
of New York is not a holiday or a day on which banks are
authorized to close.
The Company shall not be obligated to deliver any
securities pursuant to the exercise of the Class A Warrants
represented hereby unless a registration statement under the
Securities Act of 1933, as amended, with respect to such
securities is effective. The Company has covenanted and agreed
that it will file a registration statement and will use its best
efforts to cause the same to become effective and to keep such
registration statement current while any of the Class A Warrants
are outstanding. The Class A Warrants represented hereby shall
not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate office
of the Warrant Agent, for a new Warrant Certificate or Warrant
Certificates of like tenor representing an equal aggregate number
of Class A Warrants, each of such new Warrant Certificates to
represent such number of Class A Warrants as shall be designated
by such Registered Holder at the time of such surrender. Upon
due presentment with any applicable transfer fee per certificate
in addition to any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this
Class A Warrant Certificate at such office, a new Warrant
Certificate or Warrant Certificates representing an equal
aggregate number of Class A Warrants will be issued to the
transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Class A Warrant
represented hereby, the Registered Holder shall not be entitled
to any rights of a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of
any proceedings of the Company, except as provided in the Warrant
Agreement.
The Class A Warrants represented hereby may be redeemed
at the option of the Company, at a redemption price of $.05 per
Class A Warrant, provided the Market Price (as defined in the
Warrant Agreement) for the Common Stock shall exceed $9.00 per
share. Notice of redemption shall be given not later than the
thirtieth day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after the date fixed
for redemption, the Registered Holder shall have no rights with
respect to the Class A Warrants represented hereby except to
receive the $.05 per Class A Warrant upon surrender of this
Warrant Certificate.
Prior to due presentment for registration of transfer
hereof, the Company and the Warrant Agent may deem and treat the
Registered Holder as the absolute owner hereof and of each
Class A Warrant represented hereby (notwithstanding any notations
of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.
The Company has agreed to pay a fee of 5% of the
Purchase Price upon certain conditions as specified in the
Warrant Agreement upon the exercise of the Class A Warrants
represented hereby.
This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of New York.
This Warrant Certificate is not valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile, by two
of its officers thereunto duly authorized and a facsimile of its
corporate seal to be imprinted hereon.
FOOD COURT ENTERTAINMENT NETWORK,
INC.
Dated: By: ______________________________
By: ______________________________
[seal]
Countersigned:
_________________________________
as Warrant Agent
By ___________________________
Authorized Officer
[FORM OF REVERSE OF WARRANT CERTIFICATE]
TRANSFER FEE: $_______ PER CERTIFICATE ISSUED
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably
elects to exercise _______ Class A Warrants represented by this
Warrant Certificate, and to purchase the securities issuable upon
the exercise of such Class A Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
__________________________________
__________________________________
__________________________________
[please print or type name and address]
and be delivered to
__________________________________
__________________________________
__________________________________
[please print or type name and address]
and if such number of Class A Warrants shall not be all the
Class A Warrants evidenced by this Warrant Certificate, that a
new Class A Warrant Certificate for the balance of such Class A
Warrants be registered in the name of, and delivered to, the
Registered Holder at the address stated below.
The undersigned represents that the exercise of the
Class A Warrants evidenced hereby was solicited by a member of
the National Association of Securities Dealers, Inc. If not
solicited by an NASD member, please write "unsolicited" in the
space below. Unless otherwise indicated by listing the name of
another NASD member firm, it will be assumed that the exercise
was solicited by X.X. Xxxxx Investment Banking Corp. or X.X.
Xxxxx & Co., Inc.
______________________________
(Name of NASD Member)
Dated: X ______________________________
___________________________________
___________________________________
Address
___________________________________
Taxpayer Identification Number
to transfer this Warrant Certificate on the books
of the Company, with full power of substitution in the premises.
Dated:________________ X ______________________________
Signature Guaranteed
___________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGE-
MENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER
OF THE MEDALLION STAMP PROGRAM.
EXHIBIT B
[FORM OF FACE OF CLASS B WARRANT CERTIFICATE]
No. BW __ Class B Warrants
VOID AFTER OCTOBER 11, 2000
CLASS B WARRANT CERTIFICATE FOR
PURCHASE OF SERIES A COMMON STOCK
FOOD COURT ENTERTAINMENT NETWORK, INC.
This certifies that FOR VALUE RECEIVED
or registered assigns (the "Registered
Holder") is the owner of the number of Class B Warrants specified
above. Each Class B Warrant represented hereby initially
entitles the Registered Holder to purchase, subject to the terms
and conditions set forth in this Warrant Certificate and the
Warrant Agreement (as hereinafter defined), one fully paid and
nonassessable share of Series A Common Stock, $.01 par value
("Common Stock"), of Food Court Entertainment Network, Inc., a
Delaware corporation (the "Company"), at any time between
November 14, 1996, and the Expiration Date (as hereinafter
defined), upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly
executed, at the corporate office of American Stock Transfer &
Trust Company as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $6.85 (the "Purchase Price")
in lawful money of the United States of America in cash or by
official bank or certified check made payable to Food Court
Entertainment Network, Inc.
This Warrant Certificate and each Class B Warrant
represented hereby are issued pursuant to and are subject in all
respects to the terms and conditions set forth in either the
Warrant Agreement dated October 11, 1995 or the Warrant Agreement
dated November 14, 1996, (together, the "Warrant Agreement"), in
each case by and among the Company, the Warrant Agent and X.X.
Xxxxx Investment Banking Corp.
In the event of certain contingencies provided for in
the Warrant Agreement, the Purchase Price or the number of shares
of Common Stock subject to purchase upon the exercise of each
Class B Warrant represented hereby are subject to modification or
adjustment.
Each Class B Warrant represented hereby is exercisable
at the option of the Registered Holder, but no fractional shares
of Common Stock will be issued. In the case of the exercise of
less than all the Class B Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrant Agent shall
countersign, for the balance of such Class B Warrants.
The term "Expiration Date" shall mean 5:00 P.M.
(New York time) on October 11, 2000 or such earlier date as the
Class B Warrants shall be redeemed. If such date shall in the
State of New York be a holiday or a day on which banks are
authorized to close, then the Expiration Date shall mean 5:00
P.M. (New York time) the next following day which in the State
of New York is not a holiday or a day on which banks are
authorized to close.
The Company shall not be obligated to deliver any
securities pursuant to the exercise of the Class B Warrants
represented hereby unless a registration statement under the
Securities Act of 1933, as amended, with respect to such
securities is effective. The Company has covenanted and agreed
that it will file a registration statement and will use its best
efforts to cause the same to become effective and to keep such
registration statement current while any of the Class B Warrants
are outstanding. The Class B Warrants represented hereby shall
not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate office
of the Warrant Agent, for a new Warrant Certificate or Warrant
Certificates of like tenor representing an equal aggregate number
of Class B Warrants, each of such new Warrant Certificates to
represent such number of Class B Warrants as shall be designated
by such Registered Holder at the time of such surrender. Upon
due presentment with any applicable transfer fee per certificate
in addition to any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this
Warrant Certificate at such office, a new Warrant Certificate or
Warrant Certificates representing an equal aggregate number of
Class B Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant
Agreement.
Prior to the exercise of any Class B Warrant
represented hereby, the Registered Holder shall not be entitled
to any rights of a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of
any proceedings of the Company, except as provided in the Warrant
Agreement.
The Class B Warrants represented hereby may be redeemed
at the option of the Company, at a redemption price of $.05 per
Class B Warrant, provided the Market Price (as defined in the
Warrant Agreement) for the Common Stock shall exceed $12.00 per
share. Notice of redemption shall be given not later than the
thirtieth day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after the date fixed
for redemption, the Registered Holder shall have no rights with
respect to the Class B Warrants represented hereby except to
receive the $.05 per Class B Warrant upon surrender of this
Warrant Certificate.
Prior to due presentment for registration of transfer
hereof, the Company and the Warrant Agent may deem and treat the
Registered Holder as the absolute owner hereof and of each
Class B Warrant represented hereby (notwithstanding any notations
of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.
The Company has agreed to pay a fee of 5% of the
Purchase Price upon certain conditions as specified in the
Warrant Agreement upon the exercise of the Class B Warrants
represented hereby.
This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of New York.
This Warrant Certificate is not valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile, by two
of its officers thereunto duly authorized and a facsimile of its
corporate seal to be imprinted hereon.
FOOD COURT ENTERTAINMENT NETWORK,
INC.
Dated: _________________ By: _____________________________
By: _____________________________
[seal]
Countersigned:
____________________________________
_____________________, as Warrant Agent
By: ______________________________
Authorized Officer
[FORM OF REVERSE OF WARRANT CERTIFICATE]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably
elects to exercise Class B Warrants represented by
this Warrant Certificate, and to purchase the securities issuable
upon the exercise of such Class B Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
__________________________________
__________________________________
__________________________________
[please print or type name and address]
and be delivered to
__________________________________
__________________________________
__________________________________
__________________________________
[please print or type name and address]
and if such number of Class B Warrants shall not be all the
Class B Warrants evidenced by this Warrant Certificate, that a
new Warrant Certificate for the balance of such Class B Warrants
be registered in the name of, and delivered to, the Registered
Holder at the address stated below.
The undersigned represents that the exercise of the
Class B Warrants evidenced hereby was solicited by a member of
the National Association of Securities Dealers, Inc. If not
solicited by an NASD member, please write "unsolicited" in the
space below. Unless otherwise indicated by listing the name of
another NASD member firm, it will be assumed that the exercise
was solicited by X.X. Xxxxx Investment Banking Corp.
_________________________________
(Name of NASD Member)
Dated: X ______________________________
___________________________________
___________________________________
Address
___________________________________
Taxpayer Identification Number
___________________________________
Signature Guaranteed
___________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGE-
MENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER
OF THE MEDALLION STAMP PROGRAM.
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF TRANSFEREE
__________________________________
__________________________________
__________________________________
__________________________________
[please print or type name and address]
of the Class B Warrants represented by
this Warrant Certificate, and hereby irrevocably constitutes and
appoints
Attorney to transfer
this Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
Dated: X _____________________________
Signature Guaranteed
______________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGE-
MENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER
OF THE MEDALLION STAMP PROGRAM.
