EXHIBIT 10.27
STOCK AND WARRANT PURCHASE
AND REDEMPTION AGREEMENT
This STOCK AND WARRANT PURCHASE AND REDEMPTION AGREEMENT, dated as of
February 12, 2002 (the "AGREEMENT"), is entered into by and among THANE
INTERNATIONAL, INC., a Delaware corporation (the "COMPANY"), PARIBAS NORTH
AMERICA, INC. ("PARIBAS NORTH AMERICA"), PARIBAS CAPITAL FUNDING LLC ("PARIBAS
CAPITAL FUNDING" and, together with Paribas North America, the "PARIBAS
ENTITIES"), and H.I.G. DIRECT MARKETING HOLDINGS, INC. (f/k/a H.I.G. Infomercial
Company), a Cayman Islands company ("H.I.G.").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in connection with (i) that certain Credit Agreement, dated as
of June 10, 1999 (as amended, the "CREDIT AGREEMENT"), by and among the Company,
the banks party thereto and BNP Paribas (f/k/a Paribas), an affiliate of the
Paribas Entities, as Agent, and (ii) that certain Senior Subordinated Loan
Agreement, dated as of June 10, 1999 (as amended, the "SUBORDINATED LOAN
AGREEMENT"), by and among the Company, Paribas Capital Funding and the banks
party thereto, the Company issued to the Paribas Entities certain common stock
purchase warrants (the "PARIBAS WARRANTS") to purchase, in the aggregate,
123,889 shares of the Company's Class B Common Stock, par value $.0001 per share
(the "CLASS B COMMON STOCK"); and
WHEREAS, the Paribas Entities wish for the Company and its affiliates
to enter into certain financing arrangements with Congress Financial Corporation
(Florida) (the "REFINANCING ARRANGEMENTS"), pursuant to which all outstanding
debt obligations of the Company and its affiliates under the Credit Agreement
and the Subordinated Loan Agreement will be paid in full in advance of maturity;
and
WHEREAS, as an inducement to the Company to enter into the Refinancing
Arrangements, the Paribas Entities have agreed to sell, and the Company has
agreed to purchase, all of the Paribas Warrants in exchange for the
consideration set forth herein; and
WHEREAS, H.I.G. currently owns 707,994 shares of the Company's Class A
Common Stock, par value $.0001 per share (the "CLASS A COMMON STOCK"), of which
123,889 shares are subject to that certain Redemption Agreement, dated as of
June 10, 1999 (the "REDEMPTION AGREEMENT"), by and between the Company and
H.I.G.; and
WHEREAS, as an inducement to the Company to enter into the Refinancing
Arrangements and in satisfaction in full of its obligations under the Redemption
Agreement, H.I.G. has agreed to allow the Company to redeem 99,111 of its shares
of Class A Common Stock.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, the adequacy and sufficiency of which are hereby acknowledged,
the Parties hereby agree as follows:
ARTICLE I
PURCHASE OF THE PARIBAS WARRANTS
1.1 PURCHASE OF THE PARIBAS WARRANTS. Subject to the terms and
conditions set forth in this Agreement, at the Closing (as hereinafter defined):
(a) Paribas North America agrees to sell to the Company, and
the Company agrees to purchase from Paribas North America, all of the Paribas
Warrants that were issued or issuable to Paribas North America pursuant to that
certain Warrant Agreement, dated as of June 10, 1999 (as amended, the "PARIBAS
NORTH AMERICA WARRANT AGREEMENT"), by and between the Company and Paribas North
America.
(b) Paribas Capital Funding agrees to sell to the Company, and
the Company agrees to purchase from Paribas Capital Funding, all of the Paribas
Warrants that were issued or issuable to Paribas Capital Funding pursuant to
that certain Warrant Agreement, dated as of June 10, 1999 (as amended, the
"PARIBAS CAPITAL FUNDING WARRANT AGREEMENT" and, together with the Paribas North
America Warrant Agreement, the "WARRANT AGREEMENTS"), by and between the Company
and Paribas Capital Funding.
1.2 PURCHASE PRICE. In full consideration for the sale of all of the
Paribas Warrants to the Company by the Paribas Entities:
(a) The Company shall pay to the Paribas Entities a cash
amount equal to $4,000,000 (the "CASH PURCHASE PRICE"). The Cash Purchase Price
shall be payable on the date of the Closing by wire transfer of immediately
available funds to an account or accounts specified by the Paribas Entities. The
Cash Purchase Price shall be allocated $2,886, 656 to Paribas North America and
$1,113,344 to Paribas Capital Funding.
(b) The Company shall issue to the Paribas Entities certain
common stock purchase warrants (the "NEW WARRANTS") to purchase, in the
aggregate, 24,778 shares of Class B Common Stock. The New Warrants shall be
issued pursuant to that certain Warrant Agreement, substantially in the form
attached hereto as EXHIBIT A (the "NEW WARRANT AGREEMENT"), and shall be subject
to all of the rights and obligations pertaining to the New Warrants set forth
therein. The New Warrants shall be allocated 17,881 to Paribas North America and
6,897 to Paribas Capital Funding. The Company anticipates completing a 32 for 1
stock split immediately prior to its acquisition of Reliant Interactive Media
Corp. ("RELIANT"), and the number of shares of Class B Common Stock issuable
upon the exercise of the New Warrants shall be adjusted in number to reflect
such stock split. In addition, the Company has filed a registration statement on
Form S-4 with the Securities and Exchange Commission in connection with the
acquisition of Reliant, a copy of which is attached hereto as EXHIBIT B. Upon
the closing of the acquisition of Reliant, the Company will (i) complete a
reorganization of its capital stock pursuant to which all of its shares of Class
A Common Stock and Class B Common Stock will become shares of the Company's
Common Stock, par value $.001 per share (the "COMMON STOCK"), and all
securities, options or warrants that prior to such reorganization were
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convertible into, or represented the right to acquire, shares of Class A Common
Stock or Class B Common Stock will become convertible into, or represent the
right to acquire, shares of Common Stock, and (ii) become subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended. The
Paribas Entities hereby agree that upon the consummation of the aforementioned
reorganization, the New Warrants and the New Warrant Agreement shall be replaced
with warrants and a warrant agreement with identical terms except that they
shall reflect the right to receive Common Stock in lieu of Class B Common Stock
so long as, at the time of such reorganization, the Paribas Entities shall hold
less than five percent (5%) of the Common Stock, and the Paribas Entities will
not be prohibited from holding Common Stock by Regulation Y of the Board of
Governors of the Federal Reserve Board or any other law, statute, regulation or
rule of any governmental authority.
1.3 TERMINATION OF THE PARIBAS WARRANTS AND THE WARRANT AGREEMENTS.
Upon the payment of the Purchase Price and the issuance of the New Warrants on
the date of the Closing, the Company and the Paribas Entities hereby agree that
(a) the Paribas Warrants shall be terminated and of no further force and effect,
(b) the certificates representing the Paribas Warrants shall be cancelled,
whether or not such certificates have been surrendered to the Company, and (c)
the Warrant Agreements shall be terminated and of no further force or effect,
and the Company and the Paribas Entities waive all of their respective rights
and claims thereunder.
1.4 CLOSING. The purchase and sale referred to in Section 1.1 (the
"CLOSING") shall take place simultaneously with, and at the same location as,
the consummation of the transactions contemplated by the Refinancing
Arrangements.
ARTICLE II
STOCK REDEMPTION
2.1 STOCK REDEMPTION. Subject to the terms and conditions set forth in
this Agreement, at the Closing H.I.G. shall transfer 99,111 of its shares of
Class A Common Stock (the "H.I.G. STOCK") to the Company, and the Company shall
redeem the H.I.G. Stock from H.I.G. in exchange for the Redemption Price (as
hereinafter defined). The redeemed shares of H.I.G. Stock shall be held as
treasury stock of the Company in full satisfaction of H.I.G.'s obligations under
the Redemption Agreement.
2.2 REDEMPTION PRICE. In full consideration for the redemption of the
H.I.G. Stock, the Company shall pay to H.I.G. a cash amount equal to $0.0001 per
share of H.I.G. Stock redeemed hereunder (the "REDEMPTION PRICE"). Such amount
shall be payable on the date of the Closing by wire transfer of immediately
available funds to an account or accounts specified by H.I.G.
2.3 TERMINATION OF THE REDEMPTION AGREEMENT. Upon the payment of the
Redemption Price on the date of the Closing, the Company and H.I.G. hereby agree
that the Redemption Agreement will be terminated and of no further force or
effect, and the Company and H.I.G. hereby waive all of their respective rights
thereunder.
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ARTICLE III
CONDITIONS TO THE OBLIGATIONS
OF THE COMPANY, THE PARIBAS ENTITIES AND H.I.G.
3.1 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, THE PARIBAS ENTITIES
AND H.I.G. The obligations of the Company, the Paribas Entities and H.I.G.
hereunder are conditioned upon the consummation of the transactions contemplated
by the Refinancing Arrangements on or prior to March 15, 2002.
ARTICLE IV
MISCELLANEOUS
4.1 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of Delaware applicable to agreements executed and to be performed solely
within such State.
4.2 CAPTIONS. The Article and Section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
4.3 NOTICES. Any notice or other communication required or permitted
under this Agreement shall be sufficiently given if delivered in person or sent
by telecopy or by registered or certified mail, postage prepaid, addressed to
each of the parties hereto at the address set forth next to their name on the
signature pages hereto or such other address or number as shall be furnished in
writing by any such party, and such notice or communication shall be deemed to
have been given as of the date so delivered, sent by facsimile or mailed.
4.4 PARTIES IN INTEREST. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
4.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
4.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter contained herein and
therein and this Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
4.7 AMENDMENTS. This Agreement may not be changed orally, but only by
an agreement in writing signed by the Company, the Paribas Entities and H.I.G.
4.8 SEVERABILITY. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof will not in any way be affected or impaired
thereby.
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4.9 THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Stock and
Warrant Purchase and Redemption Agreement to be duly executed by their
respective officers thereunto duly authorized as of the day and year first above
written.
NOTICE ADDRESS: THANE INTERNATIONAL, INC.
00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, XX 00000 By: /s/ Xxxxxxx X. Xxx
Attention: Xxxxxxx X. Xxx -----------------------------
Xxxxx Xxx Xxxxx, Esq. Name: Xxxxxxx X. Xxx
Telephone: (000) 000-0000 Title: President
Facsimile: (000) 000-0000
with a copy to:
H.I.G. Direct Marketing Holdings, Inc.
c/o HIG Capital Management, L.L.C.
0000 Xxxxxxxx Xxx Xxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and a copy to:
White & Case LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
[STOCK AND WARRANT PURCHASE AND REDEMPTION AGREEMENT SIGNATURE PAGE]
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NOTICE ADDRESS: PARIBAS NORTH AMERICA, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: Xxxxxx Xxxxx ------------------------------
Telephone: (000) 000-0000 Name: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000 Title: Vice President
with a copy to:
O'Melveny & Xxxxx LLP
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
NOTICE ADDRESS: PARIBAS CAPITAL FUNDING LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 By /s/ Xxxxx Xxxxxxxxx
Attention: Xxxxxxx Xxxxxxxx ------------------------------
Telephone: (000) 000-0000 Name: Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000 Title: Director
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
[STOCK AND WARRANT PURCHASE AND REDEMPTION AGREEMENT SIGNATURE PAGE]
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NOTICE ADDRESS: H.I.G. DIRECT MARKETING
HOLDINGS, INC.
c/o HIG Capital Management, L.L.C.
0000 Xxxxxxxx Xxx Xxxxx, 00xx Floor By: Xxxxxxx X. Tamer
Xxxxx, Xxxxxxx 00000 -----------------------
Attention: Xxxxxx Xxxxxxxx Name: Xxxxxxx X. Tamer
Telephone: (000) 000-0000 Title: President
Facsimile: (000) 000-0000
with a copy to:
White & Case LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
[STOCK AND WARRANT PURCHASE AND REDEMPTION AGREEMENT SIGNATURE PAGE]
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EXHIBIT A
WARRANT AGREEMENT
by and between
THANE INTERNATIONAL, INC.,
PARIBAS NORTH AMERICA, INC.
and
PARIBAS CAPITAL FUNDING LLC
dated as of ____________, 2002
WARRANT AGREEMENT
THIS WARRANT AGREEMENT, dated as of ____________, 2002 (as
amended, modified and supplemented from time to time, this "AGREEMENT"), is
entered into by and between THANE INTERNATIONAL, INC., a Delaware corporation
(the "COMPANY"), PARIBAS NORTH AMERICA, INC. ("PARIBAS NORTH AMERICA"), and
PARIBAS CAPITAL FUNDING LLC ("PARIBAS CAPITAL FUNDING" and, together with
Paribas North America, the "PURCHASERS").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on February ___, 2002, the Company, the Purchasers
and H.I.G. Direct Marketing Holdings, Inc. ("H.I.G."), entered into that certain
Stock and Warrant Purchase and Redemption Agreement (the "REPURCHASE
AGREEMENT"), pursuant to which the Company repurchased from the Purchasers those
certain common stock purchase warrants to purchase, in the aggregate, 123,889
Class B Shares of the Company (the "OLD WARRANTS"); and
WHEREAS, as partial consideration for the repurchase of the
Old Warrants, the Company has agreed to issue and sell to the Purchasers, on the
date hereof, certain common stock purchase warrants, as hereinafter described
(the "WARRANTS"), to purchase initially, in the aggregate, 24,778 Class B Shares
of the Company, subject to adjustment as set forth herein and in the Warrant
Certificates (as hereinafter defined), and with all rights and obligations
thereto as set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1.
DEFINED TERMS
The following terms when used in this Agreement, including its
preamble and recitals, shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ADDITIONAL SHARES" shall mean any shares of Common Stock
issued after the date hereof except (i) Common Stock issued upon the exercise of
any Warrant, (ii) securities issued by the Company on or prior to the Closing
Date (and securities issued upon the direct or indirect conversion or exercise
of any securities issued by the Company on or prior to the Closing Date), (iii)
shares of Common Stock (including shares issuable upon the exercise or exchange
of warrants or options to acquire shares of Common Stock) issued solely to the
Company's (or any of its subsidiaries') employees or directors pursuant to a
stock option or ownership plan or program or any stock issuance arrangement
2
adopted by the Company's Board of Directors on or prior to the date hereof up
to, and including, five percent (5%) of the Company's total common equity
determined on a Fully Diluted Basis as of the date hereof, (iv) Equity
Securities issued pursuant to Section 10 of this Agreement, (v) securities
issued by the Company in connection with its acquisition of Reliant, including
but not limited to securities issued by the Company pursuant to any incentive
compensation arrangements with the stockholders of Reliant, and (vi) shares to
be issued by the Company in connection with its Initial Public Offering.
"AFFILIATE" shall mean, as applied to any Person, any other
Person directly or indirectly controlling (including, but not limited to, all
directors and officers of such Person), controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to "control"
another Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" shall have the meaning provided in the preamble of
this Agreement.
"APPLICABLE LAW" shall mean all provisions of laws, statutes,
ordinances, rules, regulations, permits or certificates of any Governmental
Authority applicable to such Person or any of its assets or property, and all
judgments, injunctions, orders and decrees of all courts, arbitrators or
Governmental Authorities in proceedings or actions in which such Person is a
party or by which any of its assets or properties are bound.
"AUTHORIZED OFFICER" shall mean the Chief Executive Officer or
the Chief Financial Officer of the Company.
"BOARD" shall have the meaning set forth in Section 9(a).
"BUSINESS DAY" shall mean any day except Saturday, Sunday and
any day which in the City of New York shall be a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close.
"CERTIFICATE" shall mean the Certificate of Incorporation of
the Company, as amended through the date hereof.
"CLASS A SHARES" shall mean the Company's Class A Voting
Common Stock, par value $.0001 per share.
"CLASS B SHARES" shall mean the Company's Class B Non-Voting
Common Stock, par value $.0001 per share.
"CLOSING DATE" shall mean the initial date of issuance of
Warrants under this Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the 1933 Act.
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"COMMON STOCK" shall mean the Class A Shares, the Class B
Shares and any other equity of the Company which is not limited to a fixed sum
or stated value in respect of the rights of the holders thereof to participate
in dividends or distributions or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company or any other securities of
the Company into which such Common Stock or such other securities shall be
reclassified or changed, including by reason of a merger, consolidation,
reorganization or recapitalization.
"COMMON STOCK PER SHARE MARKET VALUE" shall mean the price per
share of Common Stock obtained by dividing (A) the Market Value by (B) the
number of shares of Common Stock outstanding (on a Fully-Diluted Basis) at the
time of determination.
"COMPANY" shall have the meaning provided in the preamble of
this Agreement.
"DEMAND REQUEST" has the meaning set forth in Section 15.1(a).
"DEMAND REGISTRATION" shall mean any registration requested
pursuant to Section 15.1 by the Purchasers.
"EQUITYHOLDERS AGREEMENT" shall mean that certain
Equityholders Agreement, dated as of June 10, 1999, by and among the Company,
the Purchasers and the investors party thereto (as amended, modified and
supplemented from time to time).
"EQUITY SECURITIES" shall mean (i) all shares of capital stock
of the Company, including all Common Stock, (ii) all securities (debt or equity)
convertible into or exchangeable for shares of capital stock of the Company and
(iii) all options, warrants, and other rights to purchase or otherwise acquire
from the Company (A) shares of capital stock of the Company or (B) securities
convertible into or exchangeable for shares of capital stock of the Company, now
or hereafter issued by the Company (including any Equity Securities issued or
issuable with respect thereto, whether by dividend, split, combination of
shares, recapitalization, merger, consolidation, or other corporate
reorganization, or upon conversion or exchange therefor).
"EQUIVALENT NONVOTING SECURITY" shall mean, with respect to
any security issued or to be issued by any Person, a security of such Person
that is identical in rights and benefits to such first security, except that (a)
the equivalent security shall not be entitled to vote on any matter on which
holders of voting securities of such Person are entitled to vote, other than as
required by Applicable Law or with respect to any amendment or repeal of any
provision of the Organizational Documents of such Person or any other agreement
or instrument pursuant to which the equivalent security was issued which
provision specifically affects such equivalent security, (b) subject to such
reasonable restrictions as any affected Regulated Holder may request (including
any restriction necessary to prevent the violation by such Regulated Holder of
any provision of Applicable Law with respect to its ownership of voting
securities), the equivalent security shall be convertible in a one-to-one ratio
into the first security and (c) the terms of the equivalent security shall
include such provisions requested by any affected Regulated Holder as are
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reasonable and equitable to ensure that (i) the equivalent security is treated
comparably to the first security with respect to dividends, distributions, stock
or unit splits, reclassifications, capital reorganizations, mergers,
consolidations and other similar events and transactions, (ii) the conversion
right provided in clause (b) above is equitably protected and (iii) the
acquisition of the equivalent security will not cause such Regulated Holder to
violate Applicable Law.
"EXERCISE PRICE" shall have the meaning provided in Section 5.
"EXPIRATION DATE" shall have the meaning provided in Section
5.
"FULLY DILUTED BASIS" shall mean, as applied to the
calculation of the total number of shares of Common Stock outstanding at any
time, after giving effect to (a) all shares of Common Stock outstanding at the
time of determination and (b) without duplication, all shares of Common Stock
issuable upon the exercise, exchange or conversion of Equity Securities to
purchase or exchangeable or convertible into Common Stock which are outstanding
at the time of determination and then so convertible or exchangeable at a
conversion or exchange price equal to or less than the Market Price at such
time.
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or foreign.
"H.I.G." shall have the meaning provided in the recitals of
this Agreement.
"HOLDER" means any Purchaser (so long as it holds of record
any Warrants or Warrant Shares) and any other registered holder of any of the
Warrants or Warrant Shares.
"INDEPENDENT FINANCIAL EXPERT" means a nationally recognized
investment banking firm (a) that does not (and whose directors, officers,
employees and Affiliates do not) have a direct or indirect material financial
interest in the Company, (b) that has not been, and, at the time it is called
upon to serve as an Independent Financial Expert under this Agreement is not
(and none of whose directors, officers, employees or Affiliates is) a promoter,
director or officer of the Company, (c) that has not been retained during the
preceding two years by the Company for any purpose, and (d) that is otherwise
qualified to serve as an independent financial advisor. Any such Person may
receive customary compensation and indemnification by the Company for opinions
or services it provides as an Independent Financial Expert.
"INITIAL PUBLIC OFFERING" means the Company's first
underwritten public offering pursuant to an effective registration statement
under the 1933 Act covering the offer and sale of Common Stock to the public.
"LOSSES" shall have the meaning provided in Section 15.6(a).
"MARKET PRICE" shall mean, with respect to a share of Common
Stock on any Business Day:
(a) if the Common Stock is Publicly Traded at the time of
determination, the average of the closing prices on such day of the
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Common Stock on all domestic securities exchanges on which the Common
Stock is then listed, or, if there have been no sales on any such
exchange on such day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day or, if on any such
day the Common Stock is not so listed, the average of the
representative bid and asked prices quoted on NASDAQ as of 4:00 P.M.,
New York time, on such day, or if on any day such security is not
quoted on NASDAQ, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported
by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 20
days consisting of the day as of which "Market Price" is being
determined and the nineteen consecutive Business Days prior to such
day; or
(b) if the Common Stock is not Publicly Traded at the time of
determination, the Common Stock Per Share Market Value.
"MARKET VALUE" shall mean the price that would be paid for the
entire common equity of the Company on a going-concern basis in an arm's-length
transaction between a willing buyer and a willing seller (neither acting under
compulsion), using valuation techniques then prevailing in the securities
industry (but without giving effect to any discount in respect of a minority
interest and giving effect to any value attributed to the rights of the Holders
to receive dividends and distributions as provided in Section 10 hereof) and
determined in accordance with the Valuation Procedure, and assuming full
disclosure and understanding of all relevant information and a reasonable period
of time for effectuating such sale. For the purposes of determining the Market
Value, (a) the exercise price of options or warrants to acquire Common Stock
which are deemed to have been exercised for the purpose of determining the
number of shares of Common Stock outstanding on a Fully-Diluted Basis, shall be
deemed to have been received by the Company and (b)(i) the liquidation
preference or indebtedness, as the case may be, represented by securities which
are deemed exercised for or converted into Common Stock for the purpose of
determining the number of shares of Common Stock outstanding on a Fully-Diluted
Basis and (ii) any contractual limitation in respect of the shares of Common
Stock relating to voting rights, shall be deemed to have been eliminated or
canceled.
"MISSTATEMENT/OMISSION" shall have the meaning provided in
Section 15.6(a).
"NASDAQ" shall mean the National Association of Securities
Dealers, Inc., Automated Quotation System.
"NEW COMMON STOCK" shall have the meaning provided in Section
11(a).
"OLD WARRANTS" shall have the meaning provided in the recitals
of this Agreement.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any Person,
each instrument or other document that (a) defines the existence of such Person,
including its articles or certificate of incorporation or certificate of
formation, as filed or recorded with an applicable Governmental Authority or (b)
governs the internal affairs of such Person, including its bylaws, operating
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agreement, regulations or partnership agreement, in each case as amended,
supplemented or restated.
"PARIBAS CAPITAL FUNDING" shall have the meaning provided in
the preamble of this Agreement.
"PARIBAS NORTH AMERICA" shall have the meaning provided in the
preamble of this Agreement.
"PERMITTED TRANSFEREE" shall mean any Affiliate of any Holder
or any officer, director, partner or employee of any Holder.
"PERSON" or "PERSONS" means and includes natural persons,
corporations, limited partnerships, general partnerships, limited liability
companies, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"PIGGYBACK REGISTRATION" shall have the meaning provided in
Section 15.2(a).
"PUBLICLY TRADED" means, with respect to any security, that
such security is (a) listed on a domestic securities exchange, (b) quoted on
NASDAQ or (c) traded in the domestic over-the-counter market, which trades are
reported by the National Quotation Bureau, Incorporated.
"PURCHASERS" shall have the meaning provided in the preamble
of this Agreement.
"REGISTRABLE SECURITIES" means (i) any and all shares of
Common Stock issued or issuable upon the exercise of the Warrants pursuant to
this Agreement, and (ii) any securities issued or issuable with respect to such
Common Stock referred to in clause (i) above by way of dividends or splits or in
connection with a combination of units, membership interests, securities,
shares, recapitalization, merger, consolidation, or other reorganization or
otherwise. As to any particular Registrable Securities, such securities will
cease to be Registrable Securities when they have been distributed to the public
pursuant to an offering registered under the 1933 Act even if thereafter they
are reacquired by the Purchasers or any of their respective Affiliates or sold
to the public through a broker, dealer or market maker in compliance with Rule
144(k) under the 1933 Act or any successor rule. The foregoing notwithstanding,
a security will not cease to be a Registrable Security until all stop transfer
instructions or notations and, if requested by the registered Holder,
restrictive legends with respect to such security have been lifted or removed.
For purposes of this Agreement, a Person will be deemed to be a holder of
Registrable Securities whenever such Person has the rights to acquire directly
or indirectly such Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected and such Person shall be entitled to
exercise the rights of a holder of Registrable Securities hereunder.
7
"REGISTRATION STATEMENT" means any registration statement
(including a shelf registration) under the 1933 Act of the Company that covers
any of the Registrable Securities pursuant to the provisions of this Agreement,
including the related prospectus, all amendments and supplements to such
registration statement, including pre- and post-effective amendments, all
exhibits thereto and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"REGULATED HOLDER" means any Holder (i) that, directly or
indirectly because of its ownership by an entity that is subject to Regulation
Y, is subject to the provisions of Regulation Y and (ii) that holds shares of
Common Stock or Warrants to purchase shares of Common Stock.
"REGULATION Y" means Regulation Y of the Board of Governors of
the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such
Regulation).
"RELIANT" shall mean Reliant Interactive Media Corp., a Nevada
corporation.
"REORGANIZATIONS" shall have the meaning provided in Section
9(d).
"REPURCHASE AGREEMENT" shall have the meaning provided in the
recitals of this Agreement.
"REQUISITE HOLDERS" means Holders holding Warrants and/or
Warrant Shares representing at least a majority of all Warrant Shares issued or
issuable upon exercise of Warrants outstanding on the date of determination.
"SECTION 11(d) TRANSACTION" shall have the meaning provided in
Section 11(d).
"VALUATION PROCEDURE" means, with respect to the determination
of any amount or value required to be determined in accordance with such
procedure, a determination (which shall be final and binding on the Company and
the Holders) made (i) by agreement among the Company and the Requisite Holders
within 20 days following the event requiring such determination or (ii) in the
absence of such an agreement, by an Independent Financial Expert selected in
accordance with the further provisions of this definition. If required, an
Independent Financial Expert shall be selected within five days following the
expiration of the 20-day period referred to above, either by agreement among the
Company and the Requisite Holders or, in the absence of such agreement, by lot
from a list of four potential Independent Financial Experts remaining after the
Company nominates three, the Requisite Holders nominate three, and each side
eliminates one potential Independent Financial Expert. The Independent Financial
Expert shall be instructed by the Company and the Requisite Holders to make its
determination within 20 days of its selection. The fees and expenses of an
Independent Financial Expert selected hereunder shall be paid by the Company
unless the Independent Financial Expert's determination pursuant to the
Valuation Procedure is within 10% of the amount proposed by the Company in
connection with the Valuation Procedure and not agreed to by the Requisite
Holders, in which case such fees and expenses shall be paid 50% by the Holders
(on a PRO RATA basis) participating in the transaction to which the
determination relates and 50% by the Company.
8
"WARRANT CERTIFICATES" shall have the meaning provided in
Section 2.
"WARRANT DOCUMENTS" means this Agreement and the Warrant
Certificates.
"WARRANT NUMBER" shall have the meaning provided in Section 9.
"WARRANT SHARES" means (a) the shares of Common Stock issued
or issuable upon exercise of a Warrant in accordance with Section 5 or upon
exchange of a Warrant in accordance with Section 5 and shares of Common Stock
issuable upon a future exercise or exchange for such securities, (b) all other
securities or other property issued or issuable upon any such exercise or
exchange in accordance with this Agreement and (c) any securities of the Company
distributed with respect to, or issued upon the conversion of, the securities
referred to in the preceding clauses (a) and (b).
"WARRANTS" shall have the meaning provided in the recitals of
this Agreement.
SECTION 2.
SALE AND ISSUANCE OF WARRANTS; WARRANT SHARES
The Company hereby sells to the Purchasers and the Purchasers
hereby purchase from the Company, subject to the conditions and restrictions
contained in this Agreement, the Warrants for good and valuable consideration,
receipt of which is hereby acknowledged. The Company will issue and deliver on
the date hereof certificates evidencing the Warrants (the "WARRANT
CERTIFICATES"). Warrant Certificates shall be dated the date of issuance by the
Company. Each Warrant to be issued on the date hereof under this Agreement shall
entitle the Holder thereof to exercise such Warrant for one Class B Share.
SECTION 3.
EXECUTION OF WARRANT CERTIFICATES;
MUTILATED OR MISSING WARRANT CERTIFICATES
Each Warrant Certificate shall be manually signed on behalf of
the Company by (a) its President or a Vice President and (b) its Secretary or an
Assistant Secretary.
In case any of the Warrant Certificates shall be mutilated,
lost, stolen or destroyed, the Company shall, upon request of the Holder of any
such Warrant Certificate, issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate.
9
SECTION 4.
REGISTRATION/RESERVATION OF WARRANT SHARES
The Company shall number and register the Warrant Certificates
in a register as they are issued. The Company may deem and treat the registered
Holders of the Warrant Certificates as the absolute owners thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes and shall not be affected by any notice to the
contrary. The Warrants shall be registered initially in such name or names as
the Purchasers shall designate.
The Company shall at all times reserve and keep available
shares of each class of Common Stock, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon exercise of
Warrants and the subsequent conversion of such Warrant Shares, the maximum
number of Class A Shares and Class B Shares which may then be deliverable upon
the exercise of all outstanding options, warrants (including the Warrants) or
other securities convertible into or exchangeable for Common Stock.
The Company covenants that all Warrant Shares and other equity
interests issued upon exercise of Warrants or upon conversion of Warrant Shares
will, upon payment of the Exercise Price therefor (in the case of an exercise of
Warrants) and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof.
If and so long as any outstanding Common Stock may be listed
on any securities exchange in the United States or quoted NASDAQ, the Company
shall use its best efforts to cause all reserved Warrant Shares to be listed or
quoted on each such exchange upon official notice of issuance upon such
exercise.
SECTION 5.
WARRANTS; EXERCISE OF WARRANTS
Subject to the terms of this Agreement, each Holder shall have
the right, which may be exercised at any time or from time to time during the
period commencing on the date hereof and ending at 5:00 p.m., New York time, on
____________, 2012 (the "EXPIRATION DATE"), to receive from the Company the
number of fully paid Warrant Shares which the Holder may at the time be entitled
to receive on exercise of the Warrants and payment of the Exercise Price then in
effect for such Warrant Shares. Each Warrant not exercised prior to 5:00 p.m.,
New York time, on the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time; PROVIDED that the occurrence of the Expiration Date shall not
relieve the Company of any obligation to any Holder which arose pursuant to the
terms of this Agreement prior to such date.
The price at which each Warrant shall be exercisable (the
"EXERCISE PRICE") shall be an amount per Warrant Share equal to the par value
per Class B Share.
10
A Warrant may be exercised upon surrender to the Company, at
its address set forth on the signature pages hereto, of the Warrant Certificate
or Warrant Certificates to be exercised with the form of election to purchase
attached thereto duly completed and signed, and upon payment to the Company of
the Exercise Price for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price may be
made, at the option of the applicable Holder, (i) by cash, certified or bank
cashier's check or wire transfer, (ii) by surrendering to the Company the number
of Warrants which, when exercised, would entitle the Holder thereof to that
number of Warrant Shares which is equal to (A) such aggregate Exercise Price
divided by (B) the Market Price, (iii) by surrendering to the Company the number
of shares of Common Stock which is equal to (A) such aggregate Exercise Price
divided by (B) the Market Price or (iv) any combination of the foregoing.
Subject to the provisions of Sections 6 and 8, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the Holder and in such name or names as such Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants (and such other consideration as may be
deliverable upon exercise of such Warrants) together with, at the sole option of
the Holder, cash for fractional Warrant Shares as provided in Section 7. Such
certificate or certificates shall be deemed to have been issued and the Person
so named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and the purchase
form attached thereto and payment of the Exercise Price, irrespective of the
date of delivery of such certificate or certificates for Warrant Shares.
Upon receipt by the Company of such Warrant and such purchase
form attached thereto, together with the Exercise Price, at the office of the
Company, in proper form for exercise, the Holder thereof shall be deemed to be
the holder of record of the shares of Common Stock specified in such purchase
form, notwithstanding that the transfer books of the Company shall then be
closed or that certificates (if any) representing the Warrant Shares shall not
then be actually delivered to the Holder.
Each Warrant shall be exercisable, at the election of the
Holder thereof, either in full or from time to time in part and, in the event
that a Warrant Certificate is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section 5 and of Section 2.
All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled and disposed of by the Company. The Company shall keep copies
of this Agreement and any notices given or received hereunder available for
inspection by the Holders during normal business hours at its office.
11
SECTION 6.
PAYMENT OF TAXES
The Company will pay all taxes and other governmental charges
(including all documentary stamp taxes, but excluding all foreign, federal,
state or local income taxes payable by a Holder) in connection with the issuance
or delivery of the Warrants hereunder, including all such taxes attributable to
the initial issuance or delivery of Warrant Shares upon the exercise of Warrants
and payment of the Exercise Price. The Company shall not, however, be required
to pay any tax that may be payable in respect of any subsequent transfer of the
Warrants or any transfer involved in the issuance and delivery of Warrant Shares
in a name other than that in which the Warrants to which such issuance relates
were registered, and, if any such tax would otherwise be payable by the Company,
no such issuance or delivery shall be made unless and until the Person
requesting such issuance has paid to the Company the amount of any such tax, or
it is established to the reasonable satisfaction of the Company that any such
tax has been paid.
SECTION 7.
FRACTIONAL INTERESTS
The Company shall not be required to issue fractional Warrant
Shares on the exercise of Warrants. If more than one Warrant shall be presented
for exercise in full at the same time by the same Holder, the number of full
Warrant Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of the Warrants so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 7, be issuable on the exercise of any
Warrants (or specified portion thereof), the Company shall, at the Holder's
option, pay an amount in cash equal to the fair market value (as agreed upon by
the Company and the Holder based upon (a) if any shares of Common Stock are then
Publicly Traded, the current market price per share of Common Stock, or (b)
otherwise, the price per share that would be paid by a willing buyer to a
willing seller for the entire common equity of the Company, using valuation
techniques then prevailing in the securities industry.
SECTION 8.
LIMITATIONS ON CERTAIN HOLDERS
Notwithstanding anything in this Agreement or any Warrant
Certificate to the contrary, no Regulated Holder and no transferee of such
Regulated Holder, may exercise the Warrants for a number of Warrant Shares which
would permit such Regulated Holder, together with its Affiliates and
transferees, to own or control a number of Warrant Shares greater than that
permitted by Applicable Law including, without limitation, Regulation Y.
SECTION 9.
ADJUSTMENT OF NUMBER OF
WARRANT SHARES ISSUABLE AND EXERCISE PRICE
The number of Warrant Shares issuable upon the exercise of
each Warrant (the "WARRANT NUMBER") is initially one. The Warrant Number is
subject to adjustment from time to time upon the occurrence of any event
enumerated in, or as otherwise provided in, this Section 9.
(a) ADJUSTMENT FOR CHANGE IN EQUITY. If the Company:
12
(i) subdivides or reclassifies its outstanding shares
of Common Stock into a greater number of shares of capital
stock or declares a stock dividend on its Common Stock in
shares of its capital stock;
(ii) combines or reclassifies its outstanding shares
of Common Stock into a smaller number of shares; or
(iii) issues, by reclassification of its Common
Stock, any capital stock;
then the Warrant Number in effect immediately prior to such action shall be
adjusted so that the Holder of any Warrant thereafter exercised may receive, at
no additional cost to such Holder, the aggregate number and kind of shares of
capital stock of the Company which it would have owned immediately following
such action if such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification and shall become
effective immediately after the record date in the case of a dividend. Such
adjustment shall be made successively whenever any event listed above shall
occur. If, as a result of an adjustment made pursuant to this paragraph, the
Holder of any Warrant thereafter exercised shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company (the "BOARD") shall in good faith determine the
allocation of each adjusted Exercise Price between or among shares of such
classes of capital stock, which shall be reasonably approved by the Requisite
Holders.
(b) ADDITIONAL ISSUANCE. If the Company at any time shall
issue any Additional Shares at a price less than the Market Price or any other
Equity Securities which are exercisable or convertible for, exchangeable into or
otherwise providing the right to acquire Additional Shares at an exercise or
conversion, exchange or other effective price less than the Market Price, the
Warrant Number after such issuance shall be determined by multiplying the
Warrant Number by a fraction, (i) the denominator of which shall be the number
of shares of Common Stock on a Fully Diluted Basis immediately prior to such
issuance plus the number of shares that the aggregate consideration to be
received by the Company for the total number of such Additional Shares issued or
to be issued in connection with the conversion or exercise of other Equity
Securities (including the issue price of any such other Equity Securities) would
purchase at the Market Price and (ii) the numerator of which shall be the number
of shares of Common Stock on a Fully Diluted Basis immediately after such
issuance. Shares of Common Stock owned by or held for the account of the Company
or any Subsidiary of the Company on such date shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be effective
immediately after such issuance. Such adjustment shall be made successively
whenever any such event shall occur. If the Company at any time shall issue two
or more securities as a unit and one or more of such securities shall be
Additional Shares or other Equity Securities subject to this subsection (b), the
consideration allocated to each such security shall be determined in good faith
by the Board of Directors of the Company.
(c) WHEN DE MINIMIS ADJUSTMENT DEFERRED. No adjustment in the
Warrant Number need be made unless the adjustment would require an increase or
decrease of at least one-tenth of one percent in the Warrant Number. Any
13
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment, provided that no such adjustment shall be deferred
beyond the date on which a Warrant is exercised. All calculations under this
Section 9 shall be made to the nearest 1/10th of a share.
(d) NOTICE OF ADJUSTMENT. Whenever the Warrant Number is
adjusted, the Company shall provide the notices required by subsection 11(a)
hereof. Whenever the Warrant Number is required to be adjusted, as herein
provided, the Company shall mail by first class, postage prepaid, to each
Holder, notice of such adjustment or adjustments and a certificate of a firm of
nationally recognized independent public accountants selected by the Board (who
may be the regular accountants employed by the Company) setting forth the
Warrant Number after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made.
(e) REORGANIZATIONS. In case of any capital reorganization or
the consolidation or merger of the Company with or into another Person (other
than a merger or consolidation in which the Company is the surviving entity and
which does not result in any reclassification of the outstanding shares of
Common Stock into shares of other stock or other securities or property), or the
sale of all or substantially all of the property or assets of the Company
(collectively, such actions being hereinafter referred to as "REORGANIZATIONS"),
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of Warrant Shares theretofore deliverable) the number of shares of
stock, units, membership or partnership interests or other securities or
property to which a Holder of the number of Warrant Shares that would otherwise
have been deliverable upon the exercise of such Warrant, would have been
entitled upon such Reorganization if such Warrant had been exercised in full
immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board, whose
determination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions herein set forth with respect to the rights and interests of
Holders so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any shares or other securities or property
thereafter deliverable upon exercise of Warrants. The Company shall not effect
or permit any such Reorganization unless (i) the successor entity resulting from
such Reorganization or the Person purchasing such assets is a corporation duly
organized and validly existing under the laws of a state of the United States
and (ii) prior to or simultaneously with the consummation of such Reorganization
the successor entity (if other than the Company) resulting from such
Reorganization or the Person purchasing such assets shall expressly assume, by a
supplemental Warrant Agreement or other acknowledgment executed and delivered to
the Holder(s) in a form substantially similar hereto, the obligation to deliver
to each such Holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such Holder may be entitled to purchase, and all
other obligations and liabilities under this Agreement. No non-cash
distributions of Equity Securities shall be made to a Regulated Holder or its
Affiliate or transferee which would cause such Regulated Holder, Affiliate or
transferee to be in violation of any Applicable Law.
14
(f) FORM OF WARRANTS. Irrespective of any adjustments in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrant Certificates initially
issuable pursuant to this Agreement.
(g) ADJUSTMENTS IN OTHER SECURITIES. If as a result of any
event or for any other reason, any adjustment is made which increases the number
of shares of Common Stock issuable upon conversion, exercise or exchange of, or
in the conversion or exercise price or exchange ratio applicable to, any Equity
Securities outstanding on the Closing Date, then a corresponding adjustment
shall be made hereunder to adjust the number of shares of Common Stock issuable
upon exercise of the Warrants, but only to the extent that no such adjustment
has been made pursuant to subsection 9(a) with respect to such event or for such
other reason.
(h) OTHER DILUTIVE EVENTS. If any company action shall occur
as to which the provisions of this Section 9 are not strictly applicable but as
to which the failure to make any adjustment would adversely affect the purchase
rights or value represented by the Warrants in accordance with the essential
intent and principles of this Section 9 (which are to place the Holder in a
position as nearly equal as possible to the position the Holder would have
occupied had the Holder purchased shares of Common Stock on the date hereof (and
holders of Class A Shares and Class B Shares are to be treated equally except
with respect to voting rights)) then, in each such case, the Company shall
appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company) to give
their written advice upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Section 9, necessary to
preserve, without dilution, the purchase rights represented by Warrants. Upon
receipt of such written advice, the Company will promptly mail a copy thereof to
Holders and will make the adjustments described therein.
(i) EXERCISE PRICE ADJUSTMENT. Whenever the Warrant Number is
adjusted as herein provided, the Exercise Price payable upon exercise of each
Warrant shall be adjusted in accordance with the principles set forth in Section
5.
(j) DISSOLUTION, LIQUIDATION OR WINDING UP. Notwithstanding
any other provision of this Agreement, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, each Holder
shall be entitled to share, with respect to the Warrant Shares issuable upon
exercise of the Holder's Warrants, equally and ratably in any cash or non-cash
distributions payable to holders of Common Stock, less the aggregate Exercise
Price payable upon the exercise of such Warrants. The Company shall give notice
to each Holder at the earliest practicable time (and, in any event, not less
than 20 days before the date of such dissolution, liquidation or winding-up, as
the case may be) and each Holder of outstanding Warrants shall be entitled to
share equally and ratably in any cash or noncash distributions payable to
holders of Common Stock. In case of any such voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall hold in
escrow any funds or other property which a Holder is entitled to receive in
respect of such Holder's Warrant Shares at the time of any distribution. No such
Holder will be entitled to receive payment of any such distribution until such
15
Holder has surrendered the Warrant Certificates evidencing such Warrant to the
Company. From and after such voluntary or involuntary dissolution, liquidation
or winding up with respect to the Company, all rights of the Holders, except the
right to receive such distribution, without interest, upon the surrender of the
Warrant Certificates, shall cease and terminate and such Warrants shall not
thereafter be transferred (except with the consent of the Company) and such
Warrants shall not be deemed to be outstanding for any other purpose whatsoever.
For the purposes of this Agreement, neither the voluntary sale, lease,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Company, nor the consolidation or merger of the Company with one or more other
corporations, shall be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, with respect to the Company.
(k) MISCELLANEOUS. In the event that at any time, as a result
of an adjustment made pursuant to this Section 9, the Holders shall become
entitled to purchase any securities of the Company other than, or in addition
to, Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in this Section 9, and
the provisions of Sections 5, 6, 7 and 8 with respect to the Warrant Shares or
the Common Stock shall apply on like terms to any such other securities.
(l) REGULATED HOLDERS. If the receipt by such Regulated Holder
of Warrant Shares (or any security included therein) upon any exercise or
exchange pursuant to this Section 9 or the receipt of any dividend or
distribution pursuant to Section 10 would cause such Regulated Holder to violate
any provision of Applicable Law with respect to its ownership of securities of
the Company, then at the option of such Holder (i) the Company shall cooperate
with such Regulated Holder in any efforts by such Regulated Holder to dispose of
some or all of such securities in a prompt and orderly manner, including
providing (and authorizing such Regulated Holder to provide) financial and other
information concerning the Company to any prospective purchaser of such
securities sufficient in the written opinion of counsel to such Regulated Holder
(which may be internal counsel) needed to prevent such exercise or exchange or
the receipt of such dividend or distribution from causing the ownership of the
equity or voting securities of such Regulated Holder to exceed the quantity of
such equity as such Regulated Holder is permitted under Applicable Law to own,
or (ii) the Company will use its best efforts (including using its best efforts
to cause its Certificate to be amended) to create an Equivalent Nonvoting
Security with respect to Warrant Shares (or any such security included therein)
which would not cause the Regulated Holder to violate any provision of
Applicable Law, and such Regulated Holder shall be entitled to receive upon such
exercise or exchange, in lieu of such number (as it shall specify) of shares of
Common Stock or other Warrant Shares (or any such security included therein)
otherwise receivable by such Regulated Holder, the same number of shares or
other units of such Equivalent Nonvoting Security.
16
SECTION 10.
PAYMENTS IN RESPECT OF DIVIDENDS AND DISTRIBUTIONS
If the Company pays any dividend or makes any distribution
(whether in cash, property or securities of the Company) payable to the holders
of Common Stock, then the Company shall simultaneously pay to each Holder of
Warrants, other than to any Holder of Warrants delivering a written notice to
the Company within 10 Business Days of the notice delivered to such Holder
pursuant to Section 11(d) hereof, an amount equal to the dividend or
distribution which would have been paid to such Holder on the Warrant Shares
receivable upon the exercise in full of such Warrant had such Warrant been fully
exercised immediately prior to the record date for such dividend or distribution
(and any Class B Share had been immediately converted into a Class A Share) or,
if no record is taken, the date as of which the record holders of Common Stock
entitled to such dividend or distribution are to be determined; PROVIDED
HOWEVER, that in the event the receipt by any Holder of any such asset
distribution would result in a violation of Applicable Law applicable to such
Holder, such Holder shall be entitled to receive an amount of cash in lieu of
such asset distribution equal to the fair market value of the asset distribution
which would otherwise be received by such Holder.
SECTION 11.
COVENANTS
(a) NOTICES OF CERTAIN ACTIONS. In the event that the Company:
(i) shall have authorized the issuance of rights or warrants
to subscribe for or purchase capital stock of the Company since the
last notice delivered pursuant to this Section 11(a)(i) or the date
hereof, whichever is later, or of any other subscription rights or
warrants to purchase capital stock to holders of any type of capital
stock of the Company since the last notice delivered pursuant to this
Section 11(a)(i) or the date hereof, whichever is later; or
(ii) shall authorize a dividend or other distribution of
evidences of its indebtedness, cash or other property or assets to
holders of any type of capital stock of the Company; or
(iii) proposes to become a party to any consolidation or
merger for which approval of any Stockholders of the Company will be
required, or to a conveyance or transfer of all or substantially all of
the properties and assets of the Company or of any capital
reorganization or reclassification or change of any type of capital
stock of the Company; or
(iv) commences a voluntary or involuntary dissolution,
liquidation or winding up; or
(v) commences the Initial Public Offering; or
(vi) fails to comply with the provisions of this Agreement; or
(vii) proposes to take any other action which would require an
adjustment pursuant to Section 9; or
17
(viii) sends any notice or information to the holders of
Common Stock of the Company;
then the Company shall provide a written notice to each Holder stating (i) the
date as of which the holders of record of capital stock are to be entitled to
receive any such dividends, distributions, rights or warrants to subscribe for
or purchase capital stock of the Company, (ii) the record date of such dividend
or other distribution of evidence of its indebtedness, cash or other property or
assets, (iii) the material terms of any such consolidation or merger and the
expected effective date thereof, and the material terms of any such conveyance
or transfer, and the date on which any such conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of capital stock will
be entitled to exchange their capital stock for securities or other property, if
any, deliverable upon such reclassification, conveyance, transfer, dissolution,
liquidation or winding up, (iv) the material terms of the Initial Public
Offering (including a copy of any prospectus, registration statement or offering
statement) and the expected effective date thereof, (v) the nature of the lack
of compliance, any corrective action taken and any rights or remedies which such
lack of compliance has bestowed on the Holders, and (vi) a notice as is required
by Section 9(f). Such notice shall be given not later than ten (10) Business
Days prior to the effective date (or the applicable record date, if earlier) of
such event. Notwithstanding the foregoing or any other provision herein to the
contrary, the parties hereto acknowledge and agree that the Company may
consummate a reorganization of its Class A Shares and Class B Shares into shares
of Company Common Stock, par value $.001 per share ("NEW COMMON STOCK"), in
connection with the Company becoming subject to the reporting requirements of
the 1934 Act, and the Warrants, at such time, shall become the right to purchase
shares of New Common Stock without any further action by any party hereto so
long as such transaction shall not be a Section 11(d) Transaction.
(b) FINANCIAL STATEMENTS AND REPORTS. At any time that any Purchaser
holds any Warrants and/or Warrant Shares, the Company shall furnish to the
Purchasers, at any time that the Common Stock is not Publicly Traded:
(i) QUARTERLY REPORTS. Within 45 days after the end of each of
the first three fiscal quarters of each fiscal year, the consolidated
balance sheet of the Company and its subsidiaries as at the end of such
fiscal quarter and the related consolidated statements of income and
retained earnings and cash flows for such fiscal quarter and for the
elapsed portion of the fiscal year ended with the last day of such
fiscal quarter, in each case setting forth comparative figures for the
corresponding fiscal quarter and elapsed portion of the prior fiscal
year and comparable budgeted figures for such period, all of which
shall be certified by an Authorized Officer, subject to normal year-end
audit adjustments and the absence of footnotes.
(ii) ANNUAL REPORTS. Within 120 days after the close of each
fiscal year of the Company, (A) the consolidated and consolidating
balance sheets of the Company and its subsidiaries as at the end of
such fiscal year and the related consolidated and consolidating
statements of income and retained earnings and cash flows for such
fiscal year, in each case setting forth comparative figures for the
preceding fiscal year and comparable budgeted figures for such period
and certified (x) in the case of the consolidating statements, an
18
Authorized Officer, and (y) in the case of the consolidated statements
of the Company and its subsidiaries, by any of the "big six" or "big
four" or other independent certified public accountants of recognized
national standing selected by the Company in its sole and absolute
discretion, and (B) a management discussion and analysis of the results
and operations and financial condition with respect to such period.
(c) INFORMATION RIGHTS AND ACCESS RIGHTS. Each Holder shall have
the right, whether or not such Holder has exercised or exchanged any Warrants,
to receive lists of stockholders or other information respecting the Company and
its subsidiaries as such Holder shall reasonably request, to inspect the books
and records of the Company and its subsidiaries and to visit the properties of
the Company and its subsidiaries, and to discuss the affairs, finances and
accounts of the Company or its subsidiaries with, and be advised as to the same,
by its and their officers. Nothing contained in this Agreement shall be
construed as conferring upon any Holder, prior to its exercise of any Warrant,
the right to vote or to consent or to receive notice as stockholders in respect
of any meetings of stockholders or the election of directors of the Company or
any other matter regarding the Company, or any rights whatsoever as stockholders
of the Company, except as expressly provided hereunder or under Applicable Law.
(d) REGULATED HOLDERS.
(i) Notwithstanding any other provision of this Agreement to
the contrary, except as provided in this subsection 11(d), without the
prior written consent of any Regulated Holder, the Company shall not,
directly or indirectly, redeem, purchase or otherwise acquire, convert
or take any action (including any amendment to the Certificate) with
respect to the voting rights of, or undertake any other action or
transaction (including any merger, consolidation or recapitalization)
affecting, any shares of its capital stock or other voting securities
if the result of the foregoing would be to cause the ownership of the
capital stock of the Company by such Regulated Holder, or the ownership
of voting securities of the Company (or any class thereof) by such
Regulated Holder, to exceed the quantity of such capital stock or
voting securities (or any class thereof) that such Regulated Holder is
permitted under Applicable Law to own. Any action or transaction
referred to in the preceding sentence shall be referred to herein as a
"SECTION 11(d) TRANSACTION." If the Company proposes to undertake any
action or transaction which could constitute a Section 11(d)
Transaction, it shall provide the Holders at least 15 days prior
written notice thereof. If such action or transaction constitutes a
Section 11(d) Transaction with respect to such Regulated Holder, then
the Company shall delay undertaking such Section 11(d) Transaction for
the purpose of using its best efforts to agree on a manner in which to
restructure such action or transaction in a manner reasonably
satisfactory to the Company and such Regulated Holder so that it no
longer would constitute a Section 11(d) Transaction. If the Company and
such Regulated Holder are unable to agree, within 20 days of the
19
delivery of such written notice, upon a manner in which to so
restructure such Section 11(d) Transaction, and such Section 11(d)
Transaction is a bona fide action or transaction proposed by the
Company in good faith, then the Company shall be permitted to undertake
such Section 11(d) Transaction if prior to or concurrently with doing
so, the Company shall, at the election of such Regulated Holder, (i)
cooperate with such Regulated Holder in any efforts by such Regulated
Holder to dispose of some or all of such Warrants or Warrant Shares in
a prompt and orderly manner, including providing (and authorizing such
Regulated Holder to provide) financial and other information concerning
the Company to any prospective purchaser of such Warrants or Warrant
Shares sufficient to prevent such Section 11(d) Transaction from
causing the ownership of the capital stock or voting securities of such
Regulated Holder to exceed the quantity of such capital stock as such
Regulated Holder is permitted under Applicable Law to own or (ii)
provide or cause to be provided for such Regulated Holder in connection
with any such action or transaction a number of shares or other units
of Equivalent Nonvoting Securities equal to the same number of Warrant
Shares.
(ii) If it becomes unlawful for any Regulated Holder to
continue to hold some or all of the Warrants or Warrant Shares held by
it, or restrictions are imposed on any Regulated Holder by Applicable
Law which, in the reasonable judgment of such Regulated Holder, make it
unduly burdensome to continue to hold such Warrants or Warrant Shares,
the Company shall (i) cooperate with such Regulated Holder in any
efforts by such Regulated Holder to dispose of some or all of such
Warrants or Warrant Shares in a prompt and orderly manner, including
providing (and authorizing such Regulated Holder to provide) financial
and other information concerning the Company to any prospective
purchaser of such Warrants or Warrant Shares and (ii) at the request of
such Regulated Holder, take all steps (including using its best efforts
to cause its Certificate to be amended) necessary to create an
Equivalent Nonvoting Security with respect to the Warrant Shares then
held by such Regulated Holder and permit such Regulated Holder to
exchange Warrant Shares for the same number of shares or other units of
such Equivalent Nonvoting Security.
(e) CURRENT PUBLIC INFORMATION. The Company will file all reports
required to be filed by it under the 1933 Act and the 1934 Act and the rules and
regulations adopted by the Commission thereunder, and will take such further
action as any Holder may reasonably request, all to the extent required to
enable such Holder to sell Warrant Shares pursuant to Rule 144 or Rule 144A
adopted by the Commission under the 1933 Act. Upon request, the Company will
deliver to any such Holder a written statement as to whether it has complied
with such requirements.
(f) PUBLIC DISCLOSURES. The Company will not disclose any Holder's
name or identity as an investor in the Company in any press release or other
public announcement, unless such disclosure is required by Applicable Law or
governmental regulations (including in connection with any filings under the
1933 Act and the 0000 Xxx) or by order of a court of competent jurisdiction in
which case prior to making such disclosure the Company will give written notice
to such Holder describing in reasonable detail the proposed content of such
disclosure and will permit the Holder to review and comment upon the form and
substance of such disclosure.
20
(g) CERTAIN RESTRICTIONS. The Company will not without the consent of
the Requisite Holders, take any action, corporate or otherwise, the effect of
which would be to alter, impair or affect adversely either the rights of the
Holders or the duties and obligations of the Company under the Warrant
Documents.
(h) SPECIFIC PERFORMANCE. Each Holder shall have the right to specific
performance by the Company of the provisions of this Agreement, in addition to
any other remedies it may have at law or in equity. The Company hereby
irrevocably waives, to the extent that it may do so under Applicable Law, any
defense based on the adequacy of a remedy at law which may be asserted as a bar
to the remedy of specific performance in any action brought against the Company
for specific performance of this Agreement by any Holder of the Warrants or
Warrant Shares.
SECTION 12.
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Holders the
following:
(a) CORPORATE POWER AND AUTHORITY. The Company has the corporate power
to execute, deliver and perform the terms and provisions of this Agreement and
has taken all necessary corporate action to authorize the execution, delivery
and performance by it of this Agreement. The Company has duly executed and
delivered this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
except as the enforceability hereof may be limited by bankruptcy,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by general equitable principles (regardless of whether the
issue of enforceability is considered in a proceeding in equity or at law).
(b) NO VIOLATION. Neither the execution, delivery or performance by the
Company of this Agreement, nor compliance by it with the terms and provisions
hereof, (i) will contravene any provision of any Applicable Law, (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument to which the Company is a party or by which any of its
property or assets is bound or to which it may be subject, or (iii) will violate
any provision of the organizational documents of the Company.
(c) CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of (i) 1,700,000 Class A Shares, (ii) 200,000 Class B
Shares and (iii) 100,000 shares of preferred stock of the Company, par value
$1.00 per share. As of the date hereof, of the 2,000,000 aggregate shares of the
Company's capital stock authorized, (i) 918,922 Class A Shares are issued and
outstanding, and (ii)(a) 90,000 Class A Shares are reserved for issuance
pursuant to outstanding options granted under existing employee stock option
plans and (b) 24,778 Class B Shares are reserved for issuance pursuant to
outstanding warrants to purchase Class B Shares. As of the date hereof, there
are no outstanding Class B Shares or preferred stock. As of the date hereof, not
21
including the transactions contemplated by this Agreement, the only securities
convertible, exchangeable or exercisable into shares of Common Stock, including
outstanding options and warrants, are as described in detail on SCHEDULE 12(C),
which Schedule includes the number and exercise prices of such convertible
securities. As of the date hereof, each share of Common Stock that is issued and
outstanding will be duly authorized, validly issued, fully paid and
nonassessable and will not be subject to nor issued in violation of any
preemptive rights, and no Equity Securities were issued in violation of the 1933
Act, any state "blue sky" law or any other applicable securities laws.
SECTION 13.
AMENDMENTS AND WAIVERS
(a) CONSENT OF HOLDERS. No amendment, modification, termination or
waiver of any provision of this Agreement and the Warrant Certificates or
consent to any departure by the Company therefrom, shall in any event be
effective without the written concurrence of the Requisite Holders; PROVIDED,
HOWEVER, that without the consent of each Holder affected, no amendment,
modification, termination or waiver may:
(i) make any change to the definition of "REQUISITE HOLDERS";
(ii) make any change that adversely affects any Holder; or
(iii) make any change in the foregoing amendment and waiver
provisions; or
(iv) make any change to Section 9 or 15 and the definitions
relating thereto.
In connection with any amendment, modification, termination or waiver
under this Section 13, the Company may offer, but shall not be obligated to
offer, to any Holder who consents to such amendment, modification, termination
or waiver, consideration for such Holder's consent, so long as such
consideration is offered PRO RATA to all Holders.
(b) SOLICITATION OF HOLDERS. The Company will not effect any proposed
amendment, modification, termination or waiver of any of the provisions of this
Agreement or the Warrant Certificates unless each Holder (irrespective of the
amount of Warrants or Warrant Shares then owned by it) shall be informed thereof
by the Company prior to the effectuation thereof and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
information which is sufficient in the Company's reasonable discretion to enable
such Holder to make an informed decision with respect thereto. Executed or true
and correct copies of any amendment, modification, termination or waiver
effected pursuant to the provisions of this Section 12 shall be delivered by the
Company to each Holder of outstanding Warrants or Warrant Shares forthwith
following the date on which the same shall have been executed and delivered by
the Holder or Holders of the requisite percentage of outstanding Warrant Shares.
Any failure by the Company to deliver such copies shall not, however, in any way
impair or affect the validity of any such amendment, modification, termination
or waiver.
22
(c) REVOCATION AND EFFECT OF CONSENTS. Until an amendment,
modification, termination or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of a
Warrant or Warrant Shares, even if notation of the consent is not made on any
Warrant Certificate or stock certificate. However, any such Holder or subsequent
Holder may revoke any such consent by notice to the Company received before the
date on which the Requisite Holders have consented (and not theretofore revoked
such consent) to such amendment, modification, termination or waiver.
(d) The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
modification, termination or waiver, which record date shall be at least ten
(10) Business Days prior to the first solicitation of such consent. If a record
date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than ninety (90) days after such record date.
SECTION 14.
TRANSFERS
(a) PERMITTED TRANSFEREES. Each Holder shall be permitted, subject to
the provisions of subsection 14(c) below and Applicable Law, to transfer any
Warrants or Warrant Shares (and the rights relating thereto under this Agreement
and the other Warrant Documents) to any Permitted Transferee.
(b) LIMITATIONS ON TRANSFERS. In addition to the rights of transfer
under Section 14(a), each Holder, subject to the provisions of subsections 14(c)
below, shall be permitted to transfer any Warrants or Warrant Shares (and the
rights relating thereto under this Agreement and the other Warrant Documents) to
any other Person; PROVIDED that:
(i) such transfer is made pursuant to a registration statement
under the 1933 Act or Rule 144 promulgated under the 1933 Act; or
(ii) such transfer is made to a Person pursuant to an
exemption from the registration requirements of the 1933 Act; PROVIDED,
that if such transfer is being made pursuant to an exemption from such
registration requirements, then:
(A) the applicable transferee (or, in the case of an
account manager, the managed account on behalf of which the
account manager is acting) is an "accredited investor" as
defined in Regulation D promulgated under the 1933 Act; and
(B) such transferee represents to the Company in
writing that it is acquiring such Warrants or Warrant Shares
solely for its own account (or in the case of account
managers, on behalf of managed accounts) and not as nominee or
agent for any other Person (other than for such managed
accounts, if applicable) and not with a view to, or for offer
or sale in connection with, any distribution thereof (within
the meaning of the 1933 Act), without prejudice, however, to
its right at all times to sell or otherwise dispose of all or
any part of said Warrants or Warrant Shares pursuant to a
23
registration statement under the 1933 Act or pursuant to an
exemption from the registration requirements of the 1933 Act,
and subject, nevertheless, to the disposition of its property
being at all times within its control.
(c) WARRANT REGISTER. The Company shall promptly register the transfer
of any outstanding Warrants in the Warrant register and any outstanding Warrant
Shares in a share register to be maintained by the Company upon surrender
thereof accompanied by a written instrument or instruments of transfer in form
reasonably satisfactory to the Company, duly executed by the registered Holder
or Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Upon any such registration of transfer, a new Warrant
or Warrant Share, as the case may be, shall be issued and delivered with all
reasonable dispatch to the transferee(s) and such transferee(s) shall be deemed
to have become the Holder(s) of record of such Warrant or Warrant Share, as the
case may be, and the surrendered Warrant or Warrant Share, as the case may be,
shall be canceled and disposed of by the Company.
(d) TRANSFEREES TO BE BOUND. Each transferee acquiring Warrants or
Warrant Shares pursuant to this Agreement shall agree (so long as any such
Warrant Shares would continue to be Warrant Shares upon the consummation of such
transfer) in writing to be bound by the provisions of this Agreement prior to or
concurrently with any such acquisition of Warrants or Warrant Shares.
SECTION 15.
REGISTRATION RIGHTS
Section 15.1 DEMAND REGISTRATION.
(a) REGISTRATION ON REQUEST.
(i) At any time following the earlier of the first anniversary
of the Closing Date or 180 days following the effective date of the
registration statement for an Initial Public Offering, upon the written
request of the Purchasers for a registration of Registrable Securities
(a "DEMAND REQUEST"), the Company will promptly give written notice of
such requested registration to all registered holders of Registrable
Securities, and thereupon the Company, in accordance with the
provisions of Section 15.4 hereof, will use its best efforts to effect
the registration under the 1933 Act of the Registrable Securities of
the Purchasers which the Company has been so requested to register in
accordance with such Demand Request for disposition in accordance with
the intended method or methods of disposition stated in such request,
all to the extent required to permit the disposition (in accordance
24
with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered. The Purchasers may not request the
Company to effect registration of Registrable Securities pursuant to
this Section 15.1 on more than one occasion; provided that a
registration shall not count as having been requested by the Purchasers
until it has become effective. The Demand Request shall specify the
approximate number of Registrable Securities of the Purchasers
requested to be registered and the intended method or methods of
disposition of such Registrable Securities.
(ii) EFFECTIVE REGISTRATION STATEMENT. A registration
requested pursuant to this Section 15.1 shall not be deemed to be
effected (A) if a Registration Statement with respect thereto shall not
have become effective, (B) if, after it has become effective, such
registration is interfered with for any reason by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or any court, and the result of such interference
is to prevent the holders of Registrable Securities to be sold
thereunder from disposing thereof in accordance with the intended
methods of disposition, (C) if the conditions to closing specified in
the purchase agreement or underwriting agreement entered into in
connection with any underwritten registration shall not be satisfied or
waived with the consent of the underwriters of such Registrable
Securities that were to have been sold thereunder, other than as a
result of any breach by any such holder of its obligations thereunder
or hereunder or (D) if the registration statement with respect thereto
shall not have remained effective for a period of 180 days unless all
of the Registrable Securities requested to be registered by the
Purchasers have been sold prior to the expiration of such 180-day
period.
(iii) REGISTRATION STATEMENT FORM. Registrations under this
Section 15.1 shall be on such appropriate registration form of the
Commission, including an offering on a continuous or delayed basis in
the future of all or some portion of the Registrable Securities to the
extent and under the terms and conditions set forth in the 1933 Act (a
"SHELF REGISTRATION"), as shall be selected by the Company and as shall
permit the disposition of the Registrable Securities so to be
registered in accordance with the intended method or methods of
disposition specified in the Demand Request of the Purchasers. The
Company agrees to include in any such registration statement all
information which the holders of Registrable Securities being
registered shall reasonably request. In the event the Company is not
permitted to file a Demand Registration as a Shelf Registration or on
Form S-3 because it is not current with its Commission filings or for
any other reason, then the Company shall file such Demand Registration
on Form S-1. If a Demand Registration is filed as a Shelf Registration,
then the Company will use its best efforts keep such Shelf Registration
filed pursuant to this Section 15.1 continuously effective for the
period beginning on the date on which the Shelf Registration is
declared effective and ending on the earlier of (a) the first date that
there are no Registrable Securities and (b) the date as of which the
Shelf Registration Statement has been effective for 180 days. During
the period during which the Shelf Registration is effective, the
Company shall supplement or make amendments to the Shelf Registration,
if required by the 1933 Act and the policies, rules and regulations of
the Commission as announced from time to time, or if reasonably
requested by any holder of Registrable Securities or an underwriter of
Registrable Securities, relating to any specific plan of distribution
or method of sale, and shall use its best efforts to have such
supplements and amendments declared effective, if required, as soon as
practicable after filing.
25
(iv) SELECTION OF UNDERWRITERS. If a requested registration
pursuant to this Section 15.1 involves an underwritten offering, the
managing underwriter or underwriters shall be selected by the
Purchasers, such underwriter to be reasonably satisfactory to the
Company.
(v) PRIORITY IN REQUESTED REGISTRATIONS. If a Demand
Registration involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy to each
Person requesting registration of Registrable Securities) that, in its
opinion, the number of securities requested to be included in such
Demand Registration exceeds the number which can be sold in such
offering within a price range acceptable to the Purchasers, the Company
will include in such Demand Registration to the extent of the number
which the Company is so advised can be sold in such offering such
securities in the following order: (A) FIRST, all Equity Securities
(including any Registrable Securities which are proposed to be included
in such registration by the Purchasers) requested to be included in
such registration by holders of Equity Securities on the date hereof
with registration rights, PRO RATA among such holders on the basis of
the ratio which the amount of such Equity Securities requested to be
included in such registration by each such holder thereof bears to the
total amount of Equity Securities requested to be included in such
registration by all of such holders; and (B) SECOND, all other Equity
Securities requested by other Persons to be included such registration.
(vi) RESTRICTIONS ON DEMAND REGISTRATION. If, while a Demand
Request is pending pursuant to this Section 15.1, the Company has been
advised by legal counsel that the filing of a registration statement
would require the disclosure of a material transaction and the Company
(as determined by its Board) reasonably determines in good faith that
such disclosure would have a material adverse effect on the Company,
then the Company shall not be required to effect (but shall be required
to prepare) a registration pursuant to this Section 15.1 until the
earlier of (A) the date upon which such material transaction is
otherwise disclosed to the public or ceases to be material and (B)
ninety (90) days after the Company makes such good faith determination,
PROVIDED that the Company shall not be permitted to delay a requested
registration more than once in any 12-month period and PROVIDED,
FURTHER, that in the event the Company exercises its rights under this
Section 15.1(a)(vi), the registration shall not be counted as a Demand
Registration for purposes of Section 15.1(a)(i) hereof until actually
effected. The Company shall be obligated to pay all Registration
Expenses in connection with all such withdrawn or delayed
registrations.
(b) RESCISSION. A requested registration under this Section 15.1 may be
rescinded by written notice to the Company by the Purchasers prior to the
registration statement related thereto being declared effective by the
Commission. Such rescinded registration shall not count as a registration
statement initiated pursuant to this Section 15.1 for purposes of clause (a)(i)
above, provided that, subject to the following provisions of this clause (b) and
as otherwise provided in Section 15.1(a)(vi), the Company shall not be required
to pay the Registration Expenses of any registration proceeding begun pursuant
to Section 15.1, the request of which has been subsequently withdrawn by the
Purchasers. In such case, (i) the Purchasers shall bear all such Registration
26
Expenses, and (ii) the Company shall be deemed not to have effected a
registration pursuant Section 15.1; unless, however, the Purchasers agree to
forfeit their right to a Demand Request pursuant to Section 15.1, in which case
all Registration Expenses shall be borne by the Company. Notwithstanding the
foregoing, however, if at the time of the withdrawal, the Purchasers have
learned of a material adverse change in the condition or business of the Company
from that known to the Purchasers at the time of its Demand Request, then the
Purchasers shall not be required to pay any of said Registration Expenses (and
shall not forfeit their Demand Request) and the Company shall pay all such
Registration Expenses.
Section 15.2 PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any
of its equity securities under the 1933 Act (other than pursuant to a
transaction described in Rule 145 of the 1933 Act or on Form S-4 or S-8),
whether or not for sale for its own account, the Company will each time give
prompt written notice of such proposed filing to the Purchasers (i) in all cases
at least 30 days before the anticipated effective date and (ii) in the case of a
proposed registration in connection with the exercise of any demand registration
rights (other than the demand registration rights under Section 15.1 hereof)
within five (5) Business Days after the Company receives notice of such demand.
Such notice shall offer the Purchasers the opportunity to register such amount
of their Registrable Securities as they shall request (a "PIGGYBACK
REGISTRATION") subject to Sections 15.2(b) and 15.2(c) hereof. Subject to
Sections 15.2(b) and 15.2(c) hereof, the Company shall include in each such
Piggyback Registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within fifteen (15)
days after such notice has been given by the Company to the Purchasers; provided
that the Company (as determined by the Board) may at any time withdraw or cease
proceeding with any such registration if it shall at the same time withdraw or
cease proceeding with the registration of all other securities originally
proposed to be registered thereunder (but shall still be obligated to pay all
Registration Expenses in connection therewith), PROVIDED, HOWEVER, that any such
withdrawal or termination shall be without prejudice to the rights of the
Purchasers to cause such registration to be effected pursuant to a registration
under Section 15.1 hereof. If the Registration Statement relating to the
Piggyback Registration is to cover an underwritten offering, such Registrable
Securities shall be included in the underwriting on the same terms and
conditions as the securities otherwise being sold through the underwriters. The
Purchasers shall be permitted to withdraw all or part of the Registrable
Securities from a Piggyback Registration at any time prior to the effective time
of such Piggyback Registration unless the Purchasers have otherwise agreed with
the underwriters of such offering.
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company by or through one
or more underwriters and the managing underwriters thereof advise the Company in
writing that in their good faith judgment the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering without materially and adversely affecting the marketability of the
offering, then the Company will include in the Registration Statement relating
27
to such registration (i) FIRST, the securities the Company proposes to sell,
(ii) SECOND, the Registrable Securities requested to be included in such
registration by the Purchasers and Equity Securities (other than Registrable
Securities) requested to be included in such registration by holders of Equity
Securities on the date hereof with registration rights, reduced, if necessary,
on a PRO RATA basis, based on the ratio which the amount of such Equity
Securities requested to be included in such registration by each Purchaser or
other securityholder bears to the total amount of Equity Securities requested to
be included in such registration by all such securityholders, and (iii) THIRD,
all other Equity Securities requested by other Persons to be included in such
registration provided that, if such registration contemplates an "over-allotment
option" on the part of underwriters, to the extent such over-allotment option is
exercised and the Purchasers were excluded from registering any of the
Registrable Securities they requested be included in such registration (the
"EXCLUDED REGISTRABLE SECURITIES") pursuant to the priority provisions of
Section 15.2(b) or 15.2(c), then the over-allotment option shall be fulfilled
through the registration and sale of the Excluded Registrable Securities,
subject to the priority provisions of Section 15.2(b)(ii) above.
(c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is
an underwritten secondary registration on behalf of any holders of Equity
Securities (other than the holders of Registrable Securities), by or through one
or more underwriters and the managing underwriters advise the Company in writing
that in their good faith judgment the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering without materially and adversely affecting the marketability of the
offering, the Company will include in such registration, (i) FIRST, the
securities proposed to be sold by the Person initiating such registration, (ii)
SECOND, the Registrable Securities requested to be included in such registration
by the Purchasers and Equity Securities owned by such other securityholders
exercising piggyback rights granted by the Company to such securityholders,
based on the ratio which the amount of such Equity Securities requested to be
included in such registration by each Purchaser or other securityholder bears to
the total amount of Equity Securities requested to be included in such
registration by all such securityholders and (iii) THIRD, all other Equity
Securities requested by other Persons to be included in such registration.
Section 15.3 HOLDBACK AGREEMENTS: PARTICIPATION IN UNDERWRITTEN
REGISTRATIONS.
(a) HOLDBACK AGREEMENT OF EQUITYHOLDERS OF REGISTRABLE SECURITIES. If
the Company shall at any time register securities under the 1933 Act (whether or
not for its own account and including any registration pursuant to Sections 15.1
and 15.2 hereof), each Purchaser agrees, if so requested (pursuant to timely
notice) by the managing underwriter of an underwritten registration not to
effect any public sale or public distribution of any Equity Securities, other
than those securities included in a registration pursuant Sections 15.1 or 15.2
hereof which originally triggered the obligations under this Section 15.3(a)
without the prior written consent of such managing underwriter, during the
thirty (30) days prior to the effective date of such registration and until the
earlier of (i) the end of the 90-day period or, in the case of the Initial
Public Offering, 180-day period, beginning on the effective date of such
registration and (ii) the abandonment of such offering. Notwithstanding the
28
provisions of the preceding sentence, a the Purchasers may sell any or all of
their Registrable Securities in a private sale. The Company may legend and
impose stop transfer instructions on any certificate evidencing securities
relating to the restrictions provided in this Section 15.3(a).
None of the foregoing provisions of this Section 15.3(a) shall apply to
the Purchasers if they are prevented by applicable statute or regulation from
entering into any such agreement or must otherwise dispose of their securities
as a consequence of a regulatory issue; PROVIDED, that the Purchasers shall
undertake not to effect any public sale or public distribution of the applicable
class of Registrable Securities unless they have provided 45 days' prior written
notice of such sale or distribution to the underwriter or underwriters.
(b) HOLDBACK AGREEMENT OF THE COMPANY. During the period (x) beginning
30 days prior to the effective date of any registration statement filed with
respect to Registrable Securities pursuant to a Demand Registration or Piggyback
Registration and such registration is an underwritten public offering and (y)
ending 90 days or, in the case of the Initial Public Offering, 180 days after
the effective date of any such registration statement (if such lock-up period is
required by the underwriters), the Company shall not (except as part of such
registration) effect any public sale or public distribution of any of its Equity
Securities for its own account (other than in connection with any employee stock
option or other benefit plan). The Company shall use its reasonable best efforts
to cause each of its directors, members of management and other stockholders who
are not a party hereto to agree in writing to be bound to provisions
substantially similar to those set forth in this Section 15.3(b) except with
respect to sales made pursuant to any plan implemented in accordance with Rule
10b5-1 of the 1934 Act.
(c) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. Neither Purchaser may
participate in any registration hereunder which is underwritten unless such
Purchaser (i) agrees to sell such Purchaser's securities on the basis provided
in any underwriting arrangements approved by such Persons entitled hereunder to
approve such arrangements and (ii) timely completes and executes all
questionnaires, customary powers of attorney, customary indemnities, customary
underwriting agreements and other customary documents required under the terms
of such underwriting arrangements; PROVIDED, that no Purchaser included in any
underwritten registration shall be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties, on a several but not joint basis, regarding such Purchaser, its
ownership of Registrable Securities, such Purchaser's intended method of
distribution and any information requested to be included in the registration
statement in writing by the Purchasers.
Section 15.4 REGISTRATION PROCEDURES. Whenever the Company is required
to register Registrable Securities pursuant to this Agreement, the Company will
use its best efforts to effect the registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:
(a) prepare and file with the Commission as soon as practicable a
Registration Statement with respect to such Registrable Securities as prescribed
by Section 15.1 or 15.2 on a form available for the sale of the Registrable
Securities by the holders thereof in accordance with the intended method or
methods of distribution thereof and use its best efforts to cause each such
29
Registration Statement to become and remain effective for up to 180 days;
PROVIDED, HOWEVER, that before filing a Registration Statement, the Company will
furnish to the holders of the Registrable Securities covered by such
Registration Statement, the underwriters, if any, and any attorney, accountant
or other agent retained by any such holder of Registrable Securities or
underwriters (i) copies of all such documents proposed to be filed and (ii) if
requested, financial and other information required by the Commission to be
included in such Registration Statement and all financial and other records,
pertinent corporate documents and properties of the Company customarily reviewed
in connection with an underwritten registration; and shall cause the officers,
directors and employees of the Company, counsel to the Company and independent
certified public accountants of the Company, to respond to such inquiries and
supply all information, as shall be necessary, in the opinion of respective
counsel to such holders and underwriters, to conduct a reasonable investigation
within the meaning of the 1933 Act, and in the case of a Demand Registration,
will not file any Registration Statement to which the Purchasers or the
underwriters, if any, shall reasonably object;
(b) prepare and file with the Commission such amendments,
post-effective amendments and prospectus supplements to such Registration
Statement as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the 1933 Act with respect to the disposition of
all securities covered by such Registration Statement until the earlier of (i)
such time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such Registration Statement or (ii) 180 days after the effective date of such
Registration Statement; PROVIDED, that the Company shall be deemed not to have
used its best efforts to keep a Registration Statement effective during the
applicable period if it voluntarily takes any action that results in the selling
holders of the Registrable Securities covered thereby not being able to sell
such Registrable Securities during that period;
(c) furnish or make available to each selling Holder of Registrable
Securities covered by a registration statement and to each underwriter, if any,
such number of copies of such registration statement, each amendment and
post-effective amendment thereto, the prospectus included in such registration
statement (including each preliminary prospectus and any supplement to such
prospectus and any other prospectus filed under Rule 424 of the 1933 Act), in
each case including all exhibits, and such other documents as such seller may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller or to be disposed of by such underwriter (the
Company hereby consenting to the use in accordance with all Applicable Law of
each such registration statement (or amendment or post-effective amendment
thereto) and each such prospects (or preliminary prospectus or supplement
thereto) by each such seller and the underwriters, if any, in connection with
the offering and sale of the Registrable Securities covered by such registration
statement or prospectus);
(d) use its best efforts to register or qualify and, if applicable, to
cooperate with the selling holders of Registrable Securities, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of, the
securities to be included in a Registration Statement for offer and sale under
the securities or blue sky laws of such jurisdictions within the United States
of America as any such selling holder or managing underwriters (if any) shall
30
reasonably request, to keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is
required to be kept effective and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
securities covered by the applicable Registration Statement; PROVIDED that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph or (ii) consent to general service of process in any such
jurisdiction;
(e) cause all such Registrable Securities to be listed on each
securities exchange on which securities of the same class as the Registrable
Securities are then listed and, if not so listed, to be listed on the NASD
automated quotation system and, if listed on the NASD automated quotation
system, use its best efforts to secure designation of all such Registrable
Securities covered by such Registration Statement as NASDAQ "national market
system security" within the meaning of Rule 11Aa2-l under the 1934 Act or,
failing that, to secure NASDAQ authorization for such Registrable Securities
and, without limiting the generality of the foregoing, to use its best efforts
to arrange for at least two market makers to register as such with respect to
such Registrable Securities with the NASD;
(f) provide a transfer agent and registrar for all such Registrable
Securities and a CUSIP number for all such Registrable Securities not later than
the effective date of such Registration Statement;
(g) comply with all applicable rules and regulations of the Commission,
and make available to its security holders an eamings statement satisfying the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder (or any
similar rule promulgated under the 0000 Xxx) no later than 45 days after the end
of any 12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (or in each case within such extended period of time as
may be permitted by the Commission for filing the applicable report with the
Commission) (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in an underwritten offering or (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a Registration
Statement, which eamings statement shall cover said 12-month periods;
(h) permit any holder of Registrable Securities which, in its sole and
exclusive judgment, might be deemed to be an underwriter or a controlling person
of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such holder and
its counsel should be included;
(i) use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or suspending the
qualification (or exemption from qualification) of any of the securities
included therein for sale in any jurisdiction within the United States of
America, and, in the event of the issuance of any stop order suspending the
31
effectiveness of a Registration Statement, or of any order suspending the
qualification of any securities included in such Registration Statement for sale
in any jurisdiction within the United States of America, the Company will use
its best efforts promptly to obtain the withdrawal of such order at the earliest
possible moment;
(j) if the Piggyback Registration or Demand Registration is an
underwritten registration, obtain "cold comfort" letters and updates thereof
(which letters and updates (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and counsel to the selling
holders of Registrable Securities) from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters, if any, and each selling holder of Registrable Securities,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings and such other matters as the underwriters, if any, or the holders of
a majority of the Registrable Securities being sold may reasonably request;
(k) obtain opinions of independent counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and counsel to the
selling holders of the Registrable Securities being sold), addressed to each
selling holder and each of the underwriters, if any, covering the matters
customarily covered in opinions of issuer's counsel requested in underwritten
offerings, such as the effectiveness of the Registration Statement and such
other matters as may be reasonably requested by such counsel and underwriters,
if any;
(l) promptly (but in any event, within two (2) Business Days) notify
the selling holders of Registrable Securities, their counsel and the managing
underwriters, if any, and confirm such notice in writing,
(i) when a prospectus or any supplement or post-effective
amendment to such prospects has been filed, and, with respect to a
Registration Statement or any post-effective amendment thereto, when
the same has become effective,
(ii) of any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to a
Registration Statement or related prospects or for additional
information,
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any prospectus or the
initiation of any proceedings by any Person for that purpose,
(iv) if at any time the representations and warranties of the
Company contemplated by clause (i) of paragraph (q) below cease to be
true and correct in any respect,
32
(v) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable
Securities for offer or sale under the securities or blue sky laws of
any jurisdiction, or the contemplation, initiation or threatening, of
any proceeding for such purpose,
(vi) of the happening of any event that makes any statement
made in such Registration Statement untrue in any material respect or
that requires the making of any changes in such Registration Statement
so that it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made (in the case of any prospects), not
misleading, and
(vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate;
(m) if requested by the managing underwriters, if any, or a holder of
Registrable Securities being sold, promptly incorporate in a prospectus,
supplement or post-effective amendment such information as the managing
underwriters, if any, and the holders of the Registrable Securities being sold
reasonably request in writing to be included therein relating to the sale of the
Registrable Securities, including, without limitation, information with respect
to the number of shares of Registrable Securities being sold to underwriters,
the purchase price being paid therefor by such underwriters and with respect to
any other terms of the underwritten offering of the Registrable Securities to be
sold in such offering, and make all required filings of such prospects,
supplement or post-effective amendment promptly following notification of the
matters to be incorporated in such supplement or post-effective amendment;
(n) furnish to each selling holder of Registrable Securities and the
managing underwriter, without charge, at least one signed copy of the
Registration Statement;
(o) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing the Registrable Securities not bearing any
restrictive legends and in a form eligible for deposit with The Depository Trust
Company to be sold and cause such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters, if any,
or each holder of Registrable Securities may request at least three (3) Business
Days prior to any sale of Registrable Securities to the underwriters;
(p) as promptly as practicable upon the occurrence of any event
contemplated by clause (vi) of paragraph (l) above, prepare a supplement or
post-effective amendment to the Registration Statement, or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold hereunder, the prospectus will not contain an
33
untrue statement of a material fact or an omission to state a material fact
required to be stated in a Registration Statement or prospectus or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading;
(q) in connection with an underwritten registration, enter into such
agreements (including underwriting agreements in customary form, scope and
substance) and take all such other actions in connection therewith as the
holders of a majority of the Registrable Securities being sold (or in the case
of a Demand Registration, the Purchasers) or the underwriters reasonably request
in order to expedite or facilitate the registration or the disposition of such
Registrable Securities, and in such connection:
(i) make such representations and warranties to the holders of
such Registrable Securities and the underwriters with respect to the
business of the Company and the Registration Statement, in form,
substance and scope as are customarily made by issuers to underwriters
in underwritten offerings and confirm the same, if and when requested;
(ii) cause the underwriting agreement to include the
indemnification and contribution provisions and procedures
substantially similar to (and no less favorable to the selling holders
of Registrable Securities and the underwriters than) those contained in
Section 15.6 hereof with respect to all parties to be indemnified
pursuant to said Section (or, with respect to the indemnification of
such underwriters, such similar indemnification and contribution
provisions as such underwriters shall customarily require);
(iii) deliver such documents and certificates as may be
requested by the Holders of Registrable Securities being sold and
managing underwriters to evidence compliance with clause (i) above and
with any conditions contained in the underwriting agreement or other
similar agreement entered into by the Company, it being understood that
the above shall be done at each closing under such underwriting or
similar agreement or as and to the extent otherwise reasonably
requested by the holders of a majority of the Registrable Securities
being sold (or in the case of a Demand Registration, the Purchasers);
and
(iv) cause its employees and personnel to use their
commercially reasonable efforts to support the marketing of the
Registrable Securities (including, without limitation, the
participation in one (1) "road show" as requested by the Purchasers) to
the extent possible taking into account the Company's business needs
and the requirements of the marketing process.
(r) cooperate with each seller of Registrable Securities covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD; and
34
(s) use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by the Registration
Statement contemplated hereby.
Each Holder agrees by acquisition of such Registrable Securities that,
upon receipt of written notice from the Company of the happening of any event of
the kind described in Section 15.4(l)(ii), 15.4(l)(iii), 15.4(l)(v), 15.4(l)(vi)
or 15.4(l)(vii), such holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement until such
holder's receipt of the copies of the supplemented or amended Registration
Statement contemplated by Section 15.4(p), or until it is advised in writing
(the "Advice") by the Company that the use of the applicable prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such prospectus,
and, if so directed by the Company, such holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. If the Company shall give any
such notice, the time periods mentioned in Section 15.1 hereof shall be extended
by the number of days during such periods from and including the date of the
giving of such notice to and including the date when each seller of Registrable
Securities covered by such Registration Statement receives (x) the copies of the
supplemented or amended prospectus contemplated by Section 15.4(p) hereof or (y)
the Advice, as the case may be.
Section 15.5 REGISTRATION EXPENSES.
All expenses incident to the Company's performance of or compliance
with this Section 15, including without limitation (i) all registration, filing
fees and expenses (including fees with respect to filings made with NASD
(including, if applicable, the fees and expenses of any "qualified independent
underwriter", as may be required by the rules and regulations of the NASD), (ii)
fees and expenses of compliance with all Federal securities and State "blue sky"
laws (including reasonable fees and disbursements of one blue sky counsel for
the underwriters in connection with blue sky qualifications of the Registrable
Securities and determinations of their eligibility for investment under the laws
of such jurisdiction as the managing underwriters or holders of a majority of
the Registrable Securities being sold (or in the case of a Demand Registration,
the Purchasers) may designate), (iii) printing expenses (including printing
certificates for the Registrable Securities to be sold and the Registration
Statements), messenger and delivery expenses, duplication, word processing, and
telephone expenses, (iv) fees and disbursements of counsel for the Company, and
(v) fees and disbursements of all independent certified public accountants of
the Company incurred in connection with such registration (including the
expenses of any special audit and "cold comfort" letters incident to such
registration), underwriters (excluding discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities) and
other Persons retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES"), will be borne by the Company regardless of whether a
Registration Statement becomes effective; PROVIDED that the Company will, in any
event, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
35
duties), the expenses of any annual audit or quarterly review, the fees and
expenses of any Person, including special experts, retained by the Company, the
expense of any liability insurance and the reasonable fees and expenses of one
special counsel for the holders of Registrable Securities being sold chosen by
the holders of a majority of Registrable Securities being sold (or in the case
of a Demand Registration, the Purchasers), and expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated
quotation system.
Section 15.6 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify, to
the fullest extent permitted by law, the Purchasers and each officer, director,
employee, counsel, agent and representative of each Purchaser and each Person
who controls any such Person (within the meaning of either Section 15 of the
1933 Act or Section 20 of the 0000 Xxx) against, and hold it and them harmless
from, all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees and disbursements) and
expenses, including expenses of investigation (collectively, "LOSSES") arising
out of, caused by or based upon any untrue or alleged untrue statement of
material fact contained in any Registration Statement, or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading (a "MISSTATEMENT/OMISSION"),
except that the Company shall not be liable (i) insofar as such
Misstatement/Omission is based upon and in conformity with information furnished
in writing to the Company by the Purchasers expressly for use therein and (ii)
to the extent that any such claim arises out of or is based upon a
Misstatement/Omission made in any preliminary prospectus, (x) to the extent such
Misstatement/Omission is corrected in the final prospectus and (y) having
previously been timely furnished by or on behalf of the Company with sufficient
copies of the final prospectus, such indemnified Person thereafter fails to
deliver such prospectus prior to or concurrently with the sale to the Person who
purchased a Registrable Security from such indemnified Person and who is
asserting such claim. In connection with an underwritten offering, the Company
will indemnify such underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls (within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 0000 Xxx) such
underwriters to the same extent as provided above with respect to the
indemnification of the Purchasers. This indemnity shall be in addition to any
other indemnification arrangements to which the Company may otherwise be party.
(b) INDEMNIFICATION BY THE PURCHASERS. In connection with any
Registration Statement in which the Purchasers are participating, each such
Purchaser will furnish to the Company in writing such powers of attorney,
custody agreements and letters of direction and other information and affidavits
as the Company reasonably requests for use in connection with any such
Registration Statement, and each such Purchaser agrees to indemnify, to the
fullest extent permitted by law, the Company, its directors, officers,
employees, counsel, agents or representatives and each Person who controls the
Company (within the meaning of either Section 15 of the 1933 Act or Section 20
of the 0000 Xxx) against, and hold it and them harmless from, any Losses
resulting from any Misstatement/Omission, but only to the extent that such
36
Misstatement/Omission is based upon and in conformity with information furnished
in writing by such Purchaser expressly for use in such Registration Statement;
PROVIDED that the obligation to indemnify will be individual (several and not
joint) to each Purchaser and will be limited to the net amount of proceeds (net
of payment of all expenses) received by such Purchaser from the sale of
Registrable Securities pursuant to such Registration Statement giving rise to
such indemnification obligation.
(c) In case any action, claim or proceeding shall be brought against
any Person entitled to indemnification hereunder, such indemnified party shall
promptly notify each indemnifying party in writing, and such indemnifying party
shall assume the defense thereon including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses
incurred in connection with the defense thereof. The failure to so notify such
indemnifying party shall not affect any obligation it may have to any
indemnified party under this Agreement or otherwise except to the extent that
(as finally determined by a court of competent jurisdiction (which determination
is not subject to review or appeal)) such failure materially and adversely
prejudiced such indemnifying party. Each indemnified party shall have the right
to employ separate counsel in such action, claim or proceeding and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of each indemnified party unless: (i) such indemnifying party has
agreed to pay such expenses; (ii) such indemnifying party has failed promptly to
assume the defense and employ counsel reasonably satisfactory to such
indemnified party; or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and such indemnifying party or an Affiliate or controlling person of such
indemnifying party, and such indemnified party shall have been advised in
writing by counsel that either (x) there may be one or more legal defenses
available to it which are different from or in addition to those available to
such indemnifying party or such Affiliate or controlling person or (y) a
conflict of interest may exist if such counsel represents such indemnified party
and such indemnifying party or its Affiliate or controlling person; PROVIDED,
HOWEVER, that such indemnifying party shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel), which
counsel shall be designated by such indemnified party. If such defense is
assumed by the indemnified party as permitted hereunder, the indemnifying party
will not be subject to any liability for any settlement made by the indemnified
party without its consent (but such consent shall not be unreasonably withheld).
No indemnified party shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld).
Each indemnifying party agrees, jointly and severally, that it will not, without
the indemnified party's prior written consent (which consent shall not be
unreasonably withheld), consent to entry of any judgment or settle or compromise
any pending or threatened claim, action or proceeding in respect of which
indemnification or contribution may be sought hereunder unless the foregoing
contains an unconditional release, in form and substance reasonably satisfactory
to the indemnified parties, of the indemnified parties from all liability and
obligation arising therefrom.
37
(d) The indemnifying party's liability to any such indemnified party
hereunder shall not be extinguished solely because any other indemnified party
is not entitled to indemnity hereunder.
(e) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party, and will survive the transfer of securities.
(f) CONTRIBUTION. If the indemnification provided for in this Section
15.6 is unavailable to, or insufficient to hold harmless, an indemnified party
under Section 15.6(a) or Section 15.6(b) above in respect of any Losses referred
to in such Sections, then each applicable indemnifying party shall have an
obligation to contribute to the amount paid or payable by such indemnified party
as a result of such Losses in such proportion as is appropriate to reflect the
relative fault of the Company, on the one hand, and of the Purchasers, on the
other, in connection with the Misstatement/Omission which resulted in such
Losses, taking into account any other relevant equitable considerations. The
amount paid or payable by a party as a result of the Losses referred to above
shall be deemed to include, subject to the limitations set forth in Section
15.6(c) above, any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation, lawsuit or legal or administrative
action or proceeding.
The relative fault of the Company, on the one hand, and of the
Purchasers, on the other, shall be determined by reference to, among other
things, whether the relevant Misstatement/Omission relates to information
supplied by the Company or by the Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
Misstatement/Omission.
The Company and each Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 15.6(f) were determined by
PRO RATA allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 15.6(f), the Purchasers shall not be required to
contribute any amount in excess of the amount the Purchasers would have been
required to pay to an indemnified party if the indemnity under Section 15.6(b)
was available.
No Person who has been determined by a court of competent jurisdiction
in a final non-appealable decision to be guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any Person who was not been found by a court competent
jurisdiction to be guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
15.6 are in addition to any liability that the indemnifying parties may have to
the indemnified parties.
Section 15.7 RULES 144 AND 144A.
38
After the Initial Public Offering, the Company shall timely file the
reports required to be filed by it under the 1933 Act and the 1934 Act
(including but not limited to the reports under sections 13 and 15(d) of the
1934 Act referred to in subparagraph (c) of Rule 144 adopted by the Commission
under the 0000 Xxx) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, it will,
upon the request of any holder of Registrable Securities, make publicly
available other information) and will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the 1933 Act within the limitation of the exemptions provided
by (a) Rule 144 and Rule 144A under the 1933 Act, as such Rules may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with the filing requirements of this Section 15.7.
Section 15.8 LOCKUP AGREEMENT.
The Purchasers agree not to effect any public sale or distribution
(including sales pursuant to Rule 144) of any Equity Securities, or any
securities convertible into or exchangeable or exercisable for such securities,
until after the first anniversary of the Closing Date unless the Company
consents to such sale or distribution in writing.
Section 15.9 ALTERNATE REGISTRATION RIGHTS. Notwithstanding anything
set forth in this Section 15 to the contrary, the parties hereto agree that the
registration rights of the Purchasers with respect to the Registrable Securities
shall be governed by the provisions of Section 3 of the Equityholders Agreement.
Upon the termination of the Equityholders Agreement by the Company, the
Purchasers and the investors party thereto, the registration rights of the
Purchasers with respect to the Registrable Securities shall be as set forth in
this Section 15.
SECTION 16.
MISCELLANEOUS
(a) NOTICES. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and shall be made by personal service, telecopy, United States mail or
reputable courier service:
(i) if to the Purchasers or subsequent Holders, at the address
or telecopy number set forth on the signature pages to this Agreement,
or such other address as shall be designated in a written notice
delivered to the Company; and
(ii) if to the Company, at the address or telecopy number set
forth on the signature pages to this Agreement, or such other address
as shall be designated in a written notice delivered to the other
parties hereto.
Unless otherwise specifically provided herein, any notice or other
communication shall be deemed to have been given when delivered in person or by
39
courier service, upon receipt of telecopy, or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed.
(b) FAILURE OR INDULGENCE NOT WAIVER: REMEDIES CUMULATIVE. No failure
or delay on the part of any Holder in the exercise of any power, right or
privilege hereunder or under any other Warrant Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement and
the other Warrant Documents are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
(c) FEES AND EXPENSES. The Company acknowledges that all out-of-pocket
fees and expenses incurred by the Purchaser in connection with the transactions
contemplated by this Agreement (including, without limitation, reasonable fees
and disbursements of counsel and consultants) shall be paid for by the Company.
(d) SEVERABILITY. In case any provision in or obligation under this
Agreement or the Warrant Certificates shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
(e) HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
(f) APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the
parties hereto and their respective successors and assigns and shall insure to
the benefit of the parties hereto and the successors and assigns of each Holder.
(h) COUNTERPARTS. This Agreement and any amendments, waivers, consents
or supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
40
(i) HOLDER OF WARRANT NOT A STOCKHOLDER. Prior to the exercise of a
Warrant, no Holder, except as specifically provided herein or in the Warrant,
shall be entitled to any of the rights of, or be deemed to be, a stockholder.
* * * * *
41
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NOTICE ADDRESS: THANE INTERNATIONAL, INC.
00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, XX 00000 By:
Attention: Xxxxxxx X. Xxx -----------------------------
Xxxxx Xxx Xxxxx, Esq. Name:
Telephone: (000) 000-0000 Title:
Facsimile: (000) 000-0000
with a copy to:
H.I.G. Direct Marketing Holdings, Inc.
c/o HIG Capital Management, L.L.C.
0000 Xxxxxxxx Xxx Xxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and a copy to:
White & Case LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
[WARRANT AGREEMENT SIGNATURE PAGE]
42
NOTICE ADDRESS: PARIBAS NORTH AMERICA, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 By
Attention: Xxxxxx Xxxxx ----------------------------------
Telephone: (000) 000-0000 Name:
Facsimile: (000) 000-0000 Title:
with a copy to:
O'Melveny & Xxxxx LLP
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
NOTICE ADDRESS: PARIBAS CAPITAL FUNDING LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 By
Attention: Xxxxxxx Xxxxxxxx ----------------------------------
Telephone: (000) 000-0000 Name:
Facsimile: (000) 000-0000 Title:
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
[WARRANT AGREEMENT SIGNATURE PAGE]
43
EXHIBIT 12(c)
---------------- ------------------------------- --------------------------------- ------------------ ----------------
OPTION NUMBER OPTIONEE DATE OF ISSUANCE NUMBER OF OPTIONS OPTION PRICE
---------------- ------------------------------- --------------------------------- ------------------ ----------------
1 Xxxx Xxxxxx June 10, 1999 10,000 $8.60
---------------- ------------------------------- --------------------------------- ------------------ ----------------
2 Xxxxxx Xxxxx June 10, 1999 7,500 $8.60
---------------- ------------------------------- --------------------------------- ------------------ ----------------
3 Xxxxxx Xxxxxx October 1, 1999 5,000 $8.60
---------------- ------------------------------- --------------------------------- ------------------ ----------------
4 Xxxx Xxxxxx June 1, 2000 10,000 $30.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
5 Xxxxx Xxxxxxx July 1, 2000 5,000 $60.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
6 Xxxxxx Xxxxxxx August 1, 2000 10,000 $40.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
7 Xxxxxx Xxxxx September 1, 2000 2,500 $40.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
8 Xxxxx Xxxxx October 1, 1999 2,500 $8.60
---------------- ------------------------------- --------------------------------- ------------------ ----------------
9 Xxxx See August 5, 2001 2,500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
10 Xxxxxxxx Xxxxxxxx August 5, 2001 2,500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
11 Xxxxx Xxxxxxxx August 5, 2001 1,000 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
12 Xxxxxxxx Xxxxxxxxx August 5, 2001 2,000 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
13 Xxxxx Xxxxx August 5, 2001 2,000 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
14 Xxxxx X. Xxxxxx August 6, 2001 2,601 $200.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
15 Xxxxx X. Xxxxxx August 6, 2001 289 $200.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
16 Xxxx Xxxxxx August 6, 2001 918 $200.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
17 Xxxx Xxxxxx August 6, 2001 102 $200.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
18 Xxxxxxx X. Xxxxxx August 6, 2001 2601 $200.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
19 Xxxxxxx X. Xxxxxx August 6, 2001 289 $200.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
20 Xxxxxx Xxxxx August 6, 2001 1,530 $200.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
21 Xxxxxx Xxxxx August 6, 2001 170 $200.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
22 Xxxxxx Xxxxxx August 5, 2001 1,000 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
23 Xxxxxx Xxxxxxx August 5, 2001 5,000 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
24 Xxxxxxx Xxxxx August 5, 2001 2,500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
25 Xxxxx Xxxxxxx August 5, 2001 500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
26 Xxxxxx Xxxxx August 5, 2001 500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
27 Xxxxx Xxxxxxxx August 5, 2001 500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
28 Xxxx Xxxxxxxxx August 5, 2001 500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
29 Xxxx Xxx August 5, 2001 500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
30 Xxxxx Xxxxxx August 5, 2001 500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
31 Xxx Xxxxxx August 5, 2001 500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
32 Xxxxxxx Xxxxxxx August 5, 2001 500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
33 Xxxxx Xxxxx August 5, 2001 2,500 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
34 Xxxxxx Xxxxxx August 5, 2001 4,000 $175.00
---------------- ------------------------------- --------------------------------- ------------------ ----------------
---------------- ------------------------------- --------------------------------- ------------------ ----------------
TOTAL 90,000
---------------- ------------------------------- --------------------------------- ------------------ ----------------
