THIS WARRANT WAS ORIGINALLY ISSUED ON AUGUST 28, 2006, AND SUCH
ISSUANCE WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY COMPARABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT
NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE
SAME IS REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS
OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE
COMPANY HAS RECEIVED EVIDENCE OF SUCH EXEMPTION REASONABLY
SATISFACTORY TO IT.
CHARYS HOLDING COMPANY, INC.
STOCK PURCHASE WARRANT
----------------------
Date of Issuance: August 28, 2006 Certificate No. W-2006-1
FOR VALUE RECEIVED, CHARYS HOLDING COMPANY, INC., a Delaware corporation
(the "COMPANY"), hereby grants to NEW STREAM COMMERCIAL FINANCE, LLC, a Delaware
limited liability company, or its registered successors and/or assigns (the
"REGISTERED HOLDERS") the right to purchase from the Company 2,000,000 shares
(the "WARRANT QUANTITY") of its Common Stock, at a price per share of four and
80/100 ($4.80) dollars (the "EXERCISE PRICE"). Certain capitalized terms used
herein are defined in Section 1 hereof. The amount and kind of securities
obtainable pursuant to the rights granted hereunder and the purchase price for
such securities are subject to adjustment pursuant to the provisions contained
in this Warrant.
This Warrant is subject to the following provisions:
SECTION 1. DEFINITIONS
-----------
"ADDITIONAL SHARES OF COMMON STOCK" means all shares (including treasury
shares) of Common Stock issued or sold (or deemed to be issued) by the Company
after the date hereof, whether or not subsequently reacquired or retired by the
Company, other than:
(a) shares issued on the exercise of this Warrant;
(b) such number of additional shares as may become issuable on the
exercise of this Warrant by reason of adjustments required pursuant to the
anti-dilution provisions applicable to this Warrant as in effect on the date
hereof;
(c) shares, warrants, options and other securities issued by the
Company at any time to the Registered Holder or any affiliate thereof;
(d) in connection with an Approved Share Plan; and
(e) issued upon exercise of any Options or Convertible Securities
that are outstanding on the date immediately preceding the date hereof.
"APPROVED SHARE PLAN" means any employee benefit plan that has been
approved by the Company's board of directors, pursuant to which the Company's
equity securities may be issued to any employee, officer, consultant or director
for services provided to the Company.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
"COMMON STOCK" means the Company's common stock, par value $0.001 per share
and any other stock into which such common stock shall have been changed or any
stock resulting from any reclassification of such common stock, and all other
stock of any class or classes (however designated) of the Company the holders of
which have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
"CONVERTIBLE SECURITIES" means any evidences of indebtedness, shares of
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
"CURRENT MARKET PRICE" means, on any date specified herein, the average of
the daily Market Price during the 10 consecutive trading days commencing 15
trading days before such date, except that, if on any such date the shares of
Common Stock are not listed or admitted for trading on any national securities
exchange or quoted in the over-the-counter market, the Current Market Price
shall be the Market Price on such date.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"FAIR VALUE" means, on any date specified herein (i) in the case of cash,
the dollar amount thereof, (ii) in the case of a security, the Current Market
Price, and (iii) in all other cases, the fair value thereof (as of a date which
is within 20 days of the date as of which the determination is to be made)
determined in good faith by the Company; provided that if the Registered Holders
provide written notice to the Company that they do not agree with the Company's
determination of Fair Value within a reasonable period of time after receipt of
such valuation and the documentation on which it is based, such Fair Value shall
be determined by an appraiser jointly selected by the Company and the Registered
Holders or, if that selection cannot be made within 10 days, by an appraiser
selected by the American Arbitration Association in
2
accordance with its rules. The determination of such appraiser shall be final
and binding on the Company and the Registered Holders, and the fees and expenses
of such appraiser shall be paid by the Company.
"MARKET PRICE" means as to any security the average of the closing prices
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any 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 day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading. If
at any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ System or the domestic over-the-counter market, the "Market
Price" shall be the Fair Value thereof.
"OPTIONS" means any rights, options or warrants to subscribe for, purchase
or otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
"OTHER SECURITIES" means any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
holders of this Warrant at any time shall be entitled to receive, or shall have
received, upon the exercise of this Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
"PERSON" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"REGISTRABLE SECURITIES" means (i) any of the shares of Common Stock
issuable on the exercise of this Warrant and (ii) any shares of Common Stock
issued or to be issued with respect to the Common Stock issuable on the exercise
of this Warrant by way of a stock dividend or stock split. As to any particular
Registrable Security, such security will cease to be a Registrable Security when
it (A) has been effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering such security, (B) has
been transferred through a broker-dealer in an open market transaction pursuant
to Rule 144 (or any similar provision then in force) or (C) is eligible for sale
pursuant to Rule 144(k) (or any similar provision then in force).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
3
SECTION 2. EXERCISE OF WARRANT
---------------------
2A. Exercise Period. A Registered Holder may exercise, in whole or in
----------------
part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time after the Date of
Issuance until 5:00 p.m., Eastern Time, on August 28, 2011 (the "EXERCISE
PERIOD").
2B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "EXERCISE TIME"):
(a) a completed Exercise Agreement, as described in Section 2C
below and in the form set forth in Exhibit I hereto, executed by the
Person exercising all or part of the purchase rights represented by this
Warrant (the "PURCHASER");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in
Exhibit II hereto evidencing the assignment of this Warrant to the
-----------
Purchaser together with reasonably requested supporting documentation
and/or information relating thereto, if theretofore requested, in which
case the Registered Holder shall have complied with the provisions set
forth in Section 7 hereof; and
(d) either (1) a check payable to the Company in an amount
equal to the product of the Exercise Price multiplied by the number of
shares of Common Stock being purchased upon such exercise (the "AGGREGATE
EXERCISE PRICE"), (2) if (A) the Commission does not declare effective a
registration statement contemplated by Section 5B of this Warrant on or
before the date that is 180 days after the date of this Warrant or (B) if
the Company has not filed a registration statement with respect to the
Registrable Securities on or before the date that is 90 days after the date
of this Warrant and the Initiating Holder (as defined below) requests that
the Company file a registration statement in accordance with Section 5A of
this Warrant and the Commission does not declare that registration
statement effective on or before a date that is 180 days after the date of
such request (the circumstances described in subsections 2B(i)(d)(2)(A) and
2B(i)(d)(2)(B) of this Warrant being herein called "TRIGGERING EVENTS"),
the surrender to the Company of debt or equity securities of the Company or
any of its wholly-owned subsidiaries having a Market Price equal to the
Aggregate Exercise Price of the Common Stock being purchased upon such
exercise (provided that for purposes of this subsection, the Market Price
of any note or other debt security or any preferred stock shall be deemed
to be equal to the aggregate outstanding principal amount or liquidation
value thereof plus all accrued and unpaid interest thereon or accrued or
declared and unpaid dividends thereon) or (3) if a Triggering Event occurs,
a written notice to the Company that the
4
Purchaser is exercising the Warrant (or a portion thereof) by authorizing
the Company to withhold from issuance a number of shares of Common Stock
issuable upon such exercise of the Warrant which when multiplied by the
Market Price of the Common Stock is equal to the Aggregate Exercise Price
(and such withheld shares shall no longer be issuable under this Warrant).
(ii) Certificates for shares of Common Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
within 10 business days after the date of the Exercise Time. Unless this Warrant
has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall, within such 10 business day period,
deliver such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(iii) The Common Stock issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
record holder of such Common Stock at the Exercise Time, but if the Company
shall have notified the Purchaser, in writing, that additional documentation
and/or information is required to effect the exercise of this Warrant, for the
purpose of Section 2B(i)(c), the "Exercise Time" shall be the time when the
Company receives such documentation and/or information.
(iv) The issuance of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the Registered
Holder or the Purchaser for any issuance tax in respect thereof or other cost
incurred by the Company in connection with such exercise and the related
issuance of shares of Common Stock. Each share of Common Stock issuable upon
exercise of this Warrant shall upon payment of the Exercise Price therefor, be
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
(v) The Company shall not close its books against the transfer
of this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as may
be necessary to assure that the par value per share of the unissued Common Stock
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of a Registered Holder hereof, be conditioned on
the consummation of the public offering or sale of the Company in
5
which case such exercise shall not be deemed to be effective until the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. The Company shall
take all such actions as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon each such
issuance). The Company shall not take any action which would cause the number of
authorized but unissued shares of Common Stock to be less than the number of
such shares required to be reserved hereunder for issuance upon exercise of the
Warrants.
(ix) Upon any exercise of this Warrant, the Company may require
customary investment representations from a Registered Holder and the Purchaser
to assure that the issuance of the Common Stock hereunder shall not require
registration or qualification under the Securities Act or any applicable state
securities laws and such Registered Holder or the Purchaser, as the case may be,
agrees promptly to provide such investment representations to the Company.
2C. Exercise Agreement. Upon any exercise of this Warrant, the
-------------------
Exercise Agreement shall be substantially in the form set forth in Exhibit I
---------
hereto, except that if the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued, and if the number of shares of
Common Stock to be issued does not include all the shares of Common Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Such Exercise Agreement shall be dated the actual date of execution thereof.
2D. Fractional Shares. If a fractional share of Common Stock would,
------------------
but for the provisions of paragraph 2A, be issuable on exercise of the rights
represented by this Warrant, the Company shall, within 10 business days after
the date of the Exercise Time, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the difference
between Market Price of such fractional share as of the date of the Exercise
Time and the Exercise Price of such fractional share.
SECTION 3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In
------------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Warrant
Quantity shall be subject to adjustment from time to time as provided in this
Section 3.
3A. Adjustment of Number of Shares upon Certain Issuances. Subject to
-------------------------------------------------------
the other provisions of this Section 3, in case the Company at any time or from
time to time after the date hereof shall issue or sell Additional Shares of
Common Stock (including Additional Shares of
6
Common Stock deemed to be issued pursuant to Section 3B) without consideration
or for consideration per share less than the Current Market Price in effect
immediately prior to such issue or sale, then, in each such case, the Warrant
Quantity shall be increased, concurrently with such issue or sale, to an amount
determined by multiplying such Warrant Quantity by a fraction:
(i) the numerator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale, provided that,
---------
for the purposes of this Section 3A(i), (i) immediately after any Additional
Shares of Common Stock are deemed to have been issued pursuant to Section 3B,
such Additional Shares shall be deemed to be outstanding, and (ii) treasury
shares shall not be deemed to be outstanding, and
(ii) the denominator of which shall be the sum of (x) the number
of shares of Common Stock outstanding immediately prior to such issue or sale
and (y) the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of Common
Stock so issued or sold would purchase at such Current Market Price.
3B. Treatment of Options and Convertible Securities. In case the
----------------------------------------------------
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (whether or not the rights thereunder are
immediately exercisable), then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), provided, that, such
--------
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Section 3D) of such shares
would be less than the Current Market Price in effect on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be, and provided, further, that in any such case in
-------- --------
which Additional Shares of Common Stock are deemed to be issued:
(i) whether or not the Additional Shares of Common Stock
underlying such Options or Convertible Securities are deemed to be issued, no
further adjustment of the Warrant Quantity shall be made upon the subsequent
issue or sale of Convertible Securities or shares of Common Stock upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities, except in the case of any such Options or Convertible Securities
which contain provisions requiring an adjustment, subsequent to the date of the
issue or sale thereof, of the number of Additional Shares of Common Stock
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities by reason of (x) a change of control of the Company, (y)
the acquisition by any Person or group of Persons of any specified number or
7
percentage of the voting securities of the Company or (z) any similar event or
occurrence, each such case to be deemed hereunder to involve a separate issuance
of Additional Shares of Common Stock, Options or Convertible Securities, as the
case may be;
(ii) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of Additional
Shares of Common Stock issuable, upon the exercise, conversion or exchange
thereof (by change of rate or otherwise), the Warrant Quantity computed upon the
original issue, sale, grant or assumption thereof (or upon the occurrence of the
record date, or date prior to the commencement of ex-dividend trading, as the
case may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such
Options, or the rights of conversion or exchange under such Convertible
Securities, which are outstanding at such time;
(iii) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have been
exercised or the expiration of any rights of conversion or exchange under any
such Convertible Securities which (or purchase by the Company and cancellation
or retirement of any such Convertible Securities the rights of conversion or
exchange under which) shall not have been exercised, the Warrant Quantity
computed upon the original issue, sale, grant or assumption thereof (or upon the
occurrence of the record date, or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such cancellation or
retirement, as the case may be), be recomputed as if:
(a) in the case of Options for Common Stock or Convertible
Securities, the only Additional Shares of Common Stock issued or sold
were the Additional Shares of Common Stock, if any, actually issued or sold
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was the
consideration actually received by the Company for the issue, sale, grant
or assumption of all such Options, whether or not exercised, plus the
consideration actually received by the Company upon such exercise, or for
the issue or sale of all such Convertible Securities which were actually
converted or exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(b) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued or sold upon the
exercise of such Options were issued at the time of the issue or sale,
grant or assumption of such Options, and the consideration received by the
Company for the Additional Shares of Common Stock deemed to have then been
issued was the consideration actually received by the Company for the
issue, sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the
Company (pursuant to Section 3D) upon the issue or sale of such Convertible
Securities with respect to which such Options were actually exercised;
8
(iv) no readjustment pursuant to subdivision (ii) or (iii) above
shall have the effect of decreasing the Warrant Quantity by an amount in excess
of the amount of the adjustment thereof originally made in respect of the issue,
sale, grant or assumption of such Options or Convertible Securities; and
(v) in the case of any such Options which expire by their terms
not more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Quantity shall be made until the
expiration or exercise of all such Options, whereupon such adjustment shall be
made in the manner provided in subdivision (iii) above.
3C. Stock Dividends, Splits, etc. In case the Company at any time or
------------------------------
from time to time after the date hereof shall declare or pay any dividend on the
Common Stock payable in Common Stock, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in Common
Stock), then, and in each such case, Additional Shares of Common Stock shall be
deemed to have been issued (a) in the case of any such dividend, immediately
after the close of business on the record date for the determination of holders
of any class of securities entitled to receive such dividend, or (b) in the case
of any such subdivision, at the close of business on the day immediately prior
to the day upon which such corporate action becomes effective.
3D. Computation of Consideration. For the purposes of this Section 3,
----------------------------
the consideration for the issue or sale of any Additional Shares of Common Stock
shall, irrespective of the accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed at the amount of
cash received by the Company, without deducting any expenses paid or incurred by
the Company or any commissions or compensations paid or concessions or discounts
allowed to underwriters, dealers or others performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property (including securities)
other than cash, be computed at the Fair Value thereof at the time of such issue
or sale, and
(iii) in case Additional Shares of Common Stock are issued or sold
together with other stock or securities or other assets of the Company for a
consideration which covers both, the portion of such consideration so received,
computed as provided in clauses (i) and (ii) above, allocable to such Additional
Shares of Common Stock, such allocation to be determined in the same manner that
the Fair Value of property not consisting of cash or securities, is to be
determined as provided in the definition of Fair Value herein;
(iv) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 3B, relating to Options and Convertible Securities, shall be
deemed to have been issued for a consideration per share determined by dividing:
(a) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible
9
Securities in question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon the exercise in full of
such Options or the conversion or exchange of such Convertible Securities
or, in the case of Options for Convertible Securities, the exercise of such
Options for Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such consideration as
provided in this subsection (a),
by
(b) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities; and
(v) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 3C, relating to stock dividends, stock splits, etc., shall
be deemed to have been issued for no consideration.
3E. Adjustments for Combinations, etc. In case the outstanding shares
----------------------------------
of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Quantity
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately decreased.
3F. Dilution in Case of Other Securities. In case any Other Securities
------------------------------------
shall be issued or sold or shall become subject to issue or sale upon the
conversion or exchange of any stock (or Other Securities) of the Company (or any
issuer of Other Securities or any other Person referred to in Section 1) or to
subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this Section 3, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this Section 3 with respect to the Warrant Quantity shall be
made as nearly as possible in the manner so provided and applied to determine
the amount of Other Securities from time to time receivable upon the exercise of
this Warrant, so as to protect the Registered Holders of this Warrant against
the effect of such dilution.
3G. De Minimis Adjustments. If the amount of any adjustment of the
------------------------
Warrant Quantity required pursuant to this Section 3 would be less than 0.5% of
the Warrant Quantity in effect at the time such adjustment is otherwise so
required to be made, such amount shall be carried forward and adjustment with
respect thereto made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate a change in the Warrant Quantity of at least 0.5% of
such Warrant Quantity. All calculations under this Warrant shall be made to the
nearest 1/10 of a share.
10
3H. Abandoned Dividend or Distribution. If the Company shall take a
-------------------------------------
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution (which results in an adjustment to the
Warrant Quantity under the terms of this Warrant) and shall, thereafter, and
before such dividend or distribution is paid or delivered to shareholders
entitled thereto, legally abandon its plan to pay or deliver such dividend or
distribution, then any adjustment made to the Warrant Quantity by reason of the
taking of such record shall be reversed, and any subsequent adjustments, based
thereon, shall be recomputed.
3I. Reorganization, Reclassification, Consolidation, Merger or Sale .
-----------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation, merger or
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "ORGANIC CHANGE". Prior to the consummation of any Organic
Change, the Company shall make appropriate provision (in form and substance
satisfactory to the Registered Holders of the Warrants representing a majority
of the Common Stock obtainable upon exercise of all Warrants then outstanding)
to insure that each of the Registered Holders of the Warrants shall thereafter
have the right to acquire and receive, in lieu of or addition to (as the case
may be) the shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such Registered Holder's Warrant, such shares of
stock, securities or assets as would have been issued or payable in such Organic
Change (if the Registered Holder had exercised this Warrant immediately prior to
such Organic Change) with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
such Registered Holder's Warrant had such Organic Change not taken place. In
any such case, the Company shall make provision (in form and substance
commercially reasonably satisfactory to the Registered Holders of the Warrants
representing a majority of the Common Stock obtainable upon exercise of all
Warrants then outstanding) with respect to such Registered Holders' rights and
interests to insure that the provisions of this Section 3 and Section 4 hereof
shall thereafter apply to the Warrants. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance commercially reasonably satisfactory to the Registered
Holders of Warrants representing a majority of the Common Stock obtainable upon
exercise of all of the Warrants then outstanding), the obligation to deliver to
each such Registered Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Registered Holder may be entitled
to acquire.
3J. Certain Events . If any event occurs of the type contemplated by
---------------
the provisions of this Section 3 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's board of directors shall make an appropriate adjustment in the Warrant
Quantity so as to protect the rights of the Registered Holders of the Warrants;
provided that no such adjustment shall decrease the number of shares of Common
Stock obtainable as otherwise determined pursuant to this Section 3.
3K. Notices.
-------
11
(i) Immediately upon any adjustment of the Warrant Quantity, the
Company shall give written notice thereof to the Registered Holders, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any pro rata subscription offer to holders
of Common Stock or (B) for determining rights to vote with respect to any
Organic Change, dissolution or liquidation.
SECTION 4. PURCHASE RIGHTS .If at any time the Company issues or sells
---------------
any Options, Convertible Securities or rights to purchase stock, warrants or
equity securities pro rata to the record holders of any class of Common Stock
(the "PURCHASE RIGHTS"), then the Registered Holders of this Warrant shall be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such Registered Holder could have acquired if
such Registered Holder had held the number of shares of Common Stock acquirable
on complete exercise of this Warrant immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights;
provided that such Registered Holder provides the Company with written notice of
its election to acquire such Purchase Rights within 5 business days of receipt
of notice thereof by the Company.
SECTION 5. REGISTRATION RIGHTS
--------------------
5A. Required Registration. If the Company has not filed a registration
---------------------
statement with respect to the Registrable Securities on or before the date that
is 90 days after the date of this Warrant, at any time thereafter and after
receipt of a written request from the Registered Holder (the "INITIATING
HOLDER"), asking the Company to effect a registration (provided that the Company
has previously not been required to effect a registration as provided below) of
Registrable Securities owned by the Initiating Holders under the Securities Act
and specifying the intended method or methods of disposition thereof and the
number of Registrable Securities sought to be registered, the Company shall
promptly notify all Registered Holders of Registrable Securities in writing of
the receipt of such request and each Registered Holder may elect (by written
notice sent to the Company within 10 Business Days from the date of such
Registered Holder's receipt of the aforementioned Company's notice) to have its
shares of Registrable Securities included in such registration thereof pursuant
to this Section 5A, but the Company shall only be required to proceed with a
registration pursuant to this Section 5A if the number of Registrable Securities
that the Registered Holders and the Company shall have elected to include in
such registration pursuant to this Section 5A have an aggregate Market Price in
excess of $5,000,000, before deducting any underwriter commissions or discounts.
Thereupon the Company shall, as expeditiously as possible, file a registration
statement with respect to, and use its best efforts to effect the registration
under the Securities Act of, all shares of Registrable Securities that the
Company has been so asked by such Registered Holders, subject to the next
paragraph, to register for sale, all to the extent required to permit the
disposition (in accordance with the intended method or methods thereof, as
aforesaid) of the Registrable Securities so
12
registered. Except as otherwise provided in Section 5D the Company shall bear
all expenses of such registration.
The Company shall not be required to effect more than one registration
pursuant to this Section 5A; but the right of the Registered Holders under this
Section 5A to require the Company to effect a registration shall not be deemed
to have been exercised if (x) a registration statement filed pursuant to this
Section 5A shall not have become effective under the Securities Act other than
at the request of the Registered Holders or as a result of any action on the
part of the Registered Holders or (y) if a registration statement pursuant to
this Section 5A shall have become effective under the Securities Act and the
underwriters, in the case of an underwritten offering, shall not purchase any
Registrable Securities because of a failure of a condition contained in the
underwriting agreement (other than a condition to be performed by the Registered
Holders) relating to the offering covered by the registration statement or the
sale of the Registrable Securities pursuant to the registration statement is not
effected due to any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court (other than a stop order,
injunction, other order or requirement directly attributable to any action or
inaction on the part of the Registered Holders).
If a registration pursuant to this Section 5A is underwritten and the
managing underwriter or underwriters advise the Company and the Initiating
Holder in writing that, in their good faith opinion, the number of Registrable
Securities requested to be included would adversely affect the marketing or
price of the Registrable Securities to be sold, the Company will include in such
registration pursuant to this Section 5A (i) first, the Registrable Securities
requested to be included in such registration by the Initiating Holder, (ii)
second, the Registrable Securities requested to be included in such registration
by any other Registered Holders and (iii) third, any other securities that the
Company desires to include. A registration shall not be considered to be a
registration pursuant to this Section 5A, and the Company shall nevertheless pay
the expenses of such registration, if (x) as a result of the foregoing
allocation, the requesting Registered Holders are not able to register and sell
in the registration at least 75% of the Registrable Securities sought to be
included in the registration, as specified in the notices by which the demand
was made or (y) the registration statement requested by the Initiating Holder
does not become effective for any reason other than at the request of the
Registered Holders.
The Company will not be obligated to effect any registration pursuant
to this Section 5A within 9 months after the effective date of any previous
registration statement. In addition, the Company will not be obligated to
effect any registration pursuant to this Section 5A if, at the time of such
request, the filing of such registration statement would, as determined in good
faith by a majority of the Company's board of directors, be materially
detrimental to the Company or materially adversely affect a material Company
financing project or a material proposed or pending acquisition, merger or other
material corporate transaction to which the Company or any of its subsidiaries
is or expects to be a party, but the Company may exercise such right to delay a
request for registration not more than once for not more than 6 months in any
12-month period.
5B. Piggyback Registration Rights. Until such time as the Registrable
------------------------------
Securities may be sold in accordance with Rule 144(k) of the Commission under
the Securities Act, if the
13
Company at any time proposes to file on its behalf and/or on behalf of any of
its security holders (the "DEMANDING SECURITY HOLDERS") a registration statement
under the Securities Act on any form (other than a registration statement on
Form S-4 or S-8 or any successor form or to the Company's employees pursuant to
any employee benefit plan, respectively) for the general registration of
securities to be sold for cash with respect to the Common Stock, it will give
written notice to the Registered Holders at least 30 days before the initial
filing with the Commission of the registration statement (or, in the case of a
registration statement that has already been filed with the Commission but has
not yet been declared effective, within 30 days before the filing of an
amendment to the registration statement), which notice shall set forth the
intended method of disposition of the securities that the Company proposes to
register. The notice shall offer to include in such filing the aggregate number
of Registrable Securities as the Registered Holder may request. Nothing in this
Section 5B shall preclude the Company from discontinuing the registration of its
securities being effected on its behalf under this Section 5B at any time and
for any reason before the effective date of the registration relating thereto;
but, in that event, the Company shall notify the Registered Holders of such
discontinuation of the registration.
Each Registered Holder desiring to have Registrable Securities
registered under this Section 5B shall advise the Company in writing within 20
days after the date of receipt of such offer from the Company, setting forth the
amount of Registrable Securities for which registration is being requested. The
Company shall thereupon include in such filing the number of shares of
Registrable Securities for which registration is so requested, subject to the
next sentence. If the managing underwriter or underwriters of the proposed
public offering shall advise the Company in writing that, in their good faith
opinion, the number of securities to be included in such registration would
materially and adversely affect the marketing or price of such securities to be
sold, the Company will allocate the securities to be included in such
registration first, the securities to be included in such registration by the
holder or holders initiating the registration and the Registrable Securities
requested to be included in such registration by the Registered Holders and
securities proposed to be sold by the Company for its own account or requested
to be included in such registration by holders of securities other than the
Registered Holders (pro rata based on the number of securities proposed to be
sold by all Registered Holders and the Company). Except as otherwise provided in
Section 5D, the Company shall bear all expenses of such registration.
If any registration pursuant to this Section 5B is underwritten, the
Company will select investment banker(s) and manager(s) and make other decisions
regarding the underwriting arrangements for the offering.
The Company has not entered into, and on or after the date of this
Warrant, will not enter into, any agreement that is inconsistent with the rights
granted to the Registered Holders in this Warrant or that otherwise conflicts
with its provisions. The rights granted to the Registered Holders under this
Warrant do not in any way conflict with and are not inconsistent with the rights
granted to the holders of the Company's other issued and outstanding securities
under any such agreements. Without limiting the generality of the foregoing,
the Company shall not grant to any Person the right to request it to register
any of its securities under the Securities
14
Act unless the rights so granted are not in conflict with or inconsistent with
the provisions of this Warrant.
Unless otherwise consented to in writing by the managing underwriter
or underwriters, neither the Company nor any holder of Registrable Securities
will effect any public sale or distribution of its Common Stock or its
Convertible Securities during the 10 day period before, and during the 60 day
period beginning on, the closing date of each underwritten offering by the
Company made pursuant to a registration statement filed pursuant to this Section
5B or Section 5A (except as part of such underwritten registration) whether or
not the holder participates in such registration; and, except as may be required
under agreements that the Company enters into before the date hereof, the
Company shall cause each holder of its privately placed Common Stock or
Convertible Securities issued by it at any time on or after the date of this
Warrant to agree not to effect any public sale or distribution of any such
securities during such period, including a sale pursuant to Rule 144 or Rule
144A of the Commission under the Securities Act.
5C. Registration Procedures. If the Company is required by the
------------------------
provisions of this Section 5 to use its commercially reasonable efforts (best
efforts if the registration is pursuant to Section 5A) to effect the
registration of any of its Registrable Securities under the Securities Act, the
Company will, as expeditiously as possible:
(i) prepare and file with the Commission a registration statement
with respect to such securities and use its commercially reasonable efforts
(best efforts if the registration is pursuant to Section 5A) to cause the
registration statement to become effective and remain effective until the
earliest to occur of (1) the date on which all of the securities registered
thereunder have been sold, (2) the expiration of the Exercise Period or (3) the
date on which the Registered Holders may sell the Registrable Securities
pursuant to Rule 144(k) of the Commission under the Securities Act (the
"EFFECTIVENESS PERIOD");
(ii) prepare and file with the Commission such amendments and
supplements to the registration statement and the prospectus used in connection
therewith as may be necessary to keep the registration statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by the registration statement during
the Effectiveness Period;
(iii) furnish to such selling security holders such number of
copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such selling security holders may reasonably request;
(iv) use its reasonable efforts to register or qualify the
securities covered by the registration statement under such other securities or
blue sky laws of such jurisdictions as each holder of such securities shall
request (but, the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it is not
then qualified or to file any general consent to service or process or to
subject itself to taxation in any jurisdiction), and do such other reasonable
acts and things as may be required of it to enable such
15
security holder to consummate the disposition in such jurisdiction of the
securities covered by the registration statement
(v) use its reasonable efforts to cause the securities covered by
the registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable such security
holder to consummate the disposition of the securities covered by the
registration statement;
(vi) notify each security holder of any securities covered by the
registration statement, promptly at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the occurrence of a
Discontinuation Event (as defined below) and each Registered Holder agrees by
its acquisition of such Registrable Securities that, upon receipt of a notice
from the Company of the occurrence of a Discontinuation Event, such Registered
Holder will forthwith discontinue disposition of such Registrable Securities
under the applicable registration statement until such Registered Holder's
receipt of the copies of the supplemented prospectus and/or amended registration
statement or until it is advised in writing by the Company that the use of the
applicable prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such prospectus or registration statement. For
purposes of this Section 5C(vi), a "DISCONTINUATION EVENT" shall mean (1) when
the Commission notifies the Company that there will be a "review" of such
registration statement and whenever the Commission comments in writing on such
registration statement and until the Company has addressed the comments in a
supplemented prospectus and/or amended registration statement and/or
supplementally; (2) any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to such registration
statement or prospectus or for additional information and until the request has
been responded to; (3) the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement covering any or all
of the Registrable Securities or the initiation of any proceedings for that
purpose; (4) the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening, in writing, of any proceeding for such purpose; and/or (5) the
occurrence of any event or passage of time that makes the financial statements
included in such registration statement ineligible for inclusion therein or any
statement made in such registration statement or prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such registration statement,
prospectus or other documents so that, in the case of such registration
statement or prospectus, as the case may be, 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, not misleading;
(vii) furnish, at the request of any selling security holder
requesting registration of Registrable Securities pursuant to Section 5A, on the
date that such Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date that the registration statement with
respect to such Registrable Securities becomes effective, (1) an opinion, dated
such date, of the independent counsel representing the Company for the purposes
of such registration, addressed
16
to the underwriters, or if such Registrable Securities are not being sold
through underwriters, then to any selling security holder making such request,
reasonably satisfactory in form and substance to such underwriters and to such
selling security holder and (2) a letter dated such date from the Company's
independent certified public accountants, addressed to the underwriters, or if
such Registrable Securities are not being sold through underwriters, then to the
Company and, if feasible, to the selling security holder making such request
substantially to the effect that they are independent certified public
accountants within the meaning of the Securities Act and that, in the opinion
of such accountants, the Company's financial statements and other financial data
included in the registration statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material respects with the
applicable accounting requirements of the Securities Act. Such letter from the
independent certified public accountants shall additionally cover such other
financial matters (including information as to the period ending not more than 5
business days prior to the date of such letter) with respect to the registration
in respect of which such letter is being given as is customarily given in an
underwritten public offering;
(viii) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities;
(ix) make available for inspection by any selling security holder,
by any underwriter participating in any disposition to be effected pursuant to
the registration statement and by any attorney, accountant or other agent
retained by any such selling security holder or any such underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by such selling
security holder, underwriter, attorney, accountant or agent in connection with
such registration statement; and
(x) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than 18
months after the effective date of the registration statement, an earnings
statement covering the period of at least 12 months beginning with the first
full month after the effective date of the registration statement, which
earnings statements shall satisfy the provisions of Section 11(a) of the
Securities Act.
It shall be a condition precedent to the Company's obligation to take
any action pursuant to this Section 5 in respect of the securities that are to
be registered at the request of any Registered Holder that such Registered
Holder shall furnish to the Company such information regarding the securities
held by such Registered Holder, the intended method of disposition thereof and
any other information as the Company shall reasonably request and as shall be
required in connection with the action taken by the Company. No Registered
Holder may participate in any underwritten registration pursuant to this Warrant
unless it (a) agrees to sell its securities on the basis provided in any
underwriting arrangements approved by the Persons entitled under this Warrant to
approve such arrangements; (b) completes and executes all questionnaires, powers
of attorney, lock-up agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements
and
17
(c) provides all such information reasonably requested by the Company in
connection with such registration.
5D. Expenses. All expenses incurred in complying with Section 5,
--------
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD, printing expenses, fees and
disbursements of counsel for the Company and its independent public accountants,
including, without limitation, expenses of any special audits incident to or
required by any such registration, fees and expenses incurred in connection with
the listing of the securities on any securities exchange on which the Common
Stock is then listed, the reasonable fees and expenses of one counsel for the
selling security holders (selected by those holding a majority of the
Registrable Securities being registered), fees and expenses of complying with
the securities or blue sky laws of any jurisdictions pursuant to subsection
5C(iv) and any fees and disbursements of underwriters customarily paid by the
issuers or sellers of securities, shall be paid by the Company, except that the
Company shall not be liable for any underwriting discounts or commissions or any
transfer taxes.
5E. Indemnification and Contribution. In the event of any registration
--------------------------------
of any Registrable Securities under the Securities Act pursuant to this Section
5,
(i) the Company shall indemnify and hold harmless the holder of
such Registrable Securities, such holder's directors and officers, each
underwriter who participated in the offering of such Registrable Securities and
each other Person, if any, who controls such holder or underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder, such director or officer or
underwriter or controlling Person may become subject under the Securities Act or
any other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based on any
alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or any
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
such holder or such director, officer, underwriter or controlling Person for any
legal or any other expenses reasonably incurred by such holder or such director,
officer, underwriter or controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or action; but the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based on (i) any alleged untrue
statement or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance on and in
conformity with written information furnished to the Company by such holder,
director, officer, underwriter or controlling Person, as the case may be,
specifically for use therein or (ii) a failure by the indemnified party to
deliver a copy of the registration statement or prospectus or an amendment or
supplement thereto after the Company has furnished the indemnified party with a
sufficient number of copies of the same. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
holder or such director, officer, underwriter or controlling Person, and shall
survive the transfer of such securities by such holder.
18
(ii) Each holder of any Registrable Securities, by acceptance
thereof, agrees to indemnify and hold harmless the Company, its directors and
officers and each other Person, if any, who controls the Company within the
meaning of the Securities Act against any losses, claims, liabilities, joint or
several, to which the Company, any such director or officer or any such Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, liabilities (or actions in respect thereof)
arise out of or are based on information in writing provided to the Company by
such holder of such Registrable Securities contained, on the effective date
thereof, in any registration statement under which securities were registered
under the Securities Act at the request of such holder, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto; but such holder's indemnification obligations under this subsection
5E(ii) shall be limited to an amount equal to the net proceeds actually received
by the holder from the sale of Registrable Securities covered by the applicable
registration statement.
(iii) If the indemnification provided for in this Section 5 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount
paid or payable by a party under this Section 5 as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this subsection 5E(iii) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(iv) If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against any holder or any
Person controlling a holder in respect of which indemnity may be sought from the
Company, such holder or controlling Person shall promptly notify the Company in
writing, and the Company shall assume the defense thereof, including the
employment of counsel satisfactory to a majority of the holders to be
indemnified and the payment of all reasonable expenses in relation thereto. All
such holders or such controlling Persons shall have the right to employ one
counsel plus additional local counsel, if reasonably required, in any such
action and to participate in the defense thereof unless, in the
19
reasonable judgment of such holders or such controlling Persons, a conflict of
interest exists and it is therefore advisable for such holders or controlling
Persons to be jointly represented by separate counsel, and in that event the
Company shall pay the reasonable fees and expenses of such separate counsel.
The Company shall not be liable for any settlement of any such action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless each holder and
any such controlling Person from and against any loss or liability by reason of
such settlement or judgment.
(v) Indemnification similar to that specified in subsections (i)
and (ii) of this Section 5E shall be given by the Company and each holder (with
such modifications as shall be appropriate) with respect to any required
registration, or other qualification of the Registrable Securities under any
Federal or state law or regulation of any governmental authority other than the
Securities Act.
5F. Public Availability of Information. From and after the date when
------------------------------------
any registration statement with respect to the Registrable Securities becomes
effective and as long as required under the Exchange Act, the Company shall
maintain the registration of its Common Stock under Section 12 of the Exchange
Act and shall keep effective such registration and shall timely file such
information, documents and reports as the Commission may require or prescribe
under Section 13 of the Exchange Act, or otherwise. From and after the date
when any registration statement of the Registrable Securities becomes effective,
the Company shall comply with the reporting requirements of Section 15(d) of the
Exchange Act (whether or not it shall be required to do so pursuant to the
provisions of said Section 15(d)) and shall comply with, all other public
information reporting requirements required by the Commission as a condition to
the availability of an exemption from the Securities Act for the sale of any
Registrable Securities, presently existing or hereafter adopted, including Rules
144 and 144A thereunder.
5G. Supplying Information. The Company shall cooperate with each
----------------------
holder of Registrable Securities in supplying such information as may be
reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Registrable Securities.
SECTION 6. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY. This Warrant
---------------------------------------------
shall not entitle the holder hereof to any rights as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the
Registered Holder to purchase Common Stock, and no enumeration herein of the
rights or privileges of the Registered Holder shall give rise to any liability
of such holder for the Exercise Price of Common Stock acquirable by exercise
hereof or as a stockholder of the Company.
SECTION 7. WARRANT TRANSFERABLE . Subject to the transfer conditions
---------------------
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit II hereto) and any other documentation
20
reasonably requested by the Company in connection therewith, at the principal
office of the Company.
SECTION 8. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
----------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. The date the Company initially issues
this Warrant shall be deemed to be the "Date of Issuance" hereof regardless of
the number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are also referred to herein as
the"WARRANTS".
SECTION 9. REPLACEMENT. Upon receipt of evidence reasonably
-----------
satisfactory to the Company of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing this Warrant, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company, or, in the case of any such mutilation upon
surrender of such certificate, the Company shall execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
SECTION 10. NOTICES. Except as otherwise expressly provided herein,
-------
all notices referred to in this Warrant shall be in writing and shall be
delivered personally, sent by reputable overnight courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered, sent
or deposited in the U.S. Mail (i) to the Company, at its principal executive
offices and (ii) to the Registered Holder of this Warrant, at such Registered
Xxxxxx's address as it appears in the records of the Company (unless otherwise
indicated by any such Registered Holder).
SECTION 11. AMENDMENT AND WAIVER. Except as otherwise provided herein,
--------------------
the provisions of this Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of Warrants representing a majority of the shares of Common
Stock obtainable upon exercise of the Warrants.
SECTION 12. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive
--------------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. All questions
concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by the internal law of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Delaware.
* * * * *
21
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer and to be dated the Date of Issuance hereof.
CHARYS HOLDING COMPANY, INC.
By: ________________________
Name: ________________________
Title:________________________
EXHIBIT I
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of
______ shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor [in the amount of $_________ (in cash)] [by
surrendering debt or equity securities of the Company or any of its wholly-owned
Subsidiaries having a Market Price equal to _____________________][by
authorizing the Company to withhold from issuance a number of shares of Common
Stock issuable upon such exercise of the Warrant which when multiplied by the
Market Price of the Common Stock is equal to _____________________ (and such
withheld shares shall no longer be issuable under this Warrant)].
The certificate(s) evidencing ____ shares of Common Stock is to be issued
in the name of _____________________________________, whose address is
________________________________________________________________________________
and whose (SS#)(FEIN#) is ___________.
[The number of shares of Common Stock to be issued does not include all
shares of Common Stock purchasable as provided in the attached Warrant and,
accordingly, a certificate evidencing a new Warrant for _________ shares of
Common Stock is to be issued in the name of
_____________________________________, whose address is
________________________________________________________________________________
and whose (SS#)(FEIN#) is ___________.]
-
Signature___________________________
By__________________________________
Title_______________________________
Address_____________________________
-
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, ______________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) with respect to the number of shares of the Common
Stock covered thereby set forth below, unto:
Name(s) of Assignee(s) Address(es) No. of Shares
---------------------- ----------- -------------
Signature________________________
By ________________________
Title ________________________
Date ________________________
Witness ________________________
