WARRANT AGREEMENT
This WARRANT AGREEMENT is made and entered into as of August 28,
1997 by and between Wellsford Real Properties, Inc., a Maryland corporation
(together with its successors and permitted assigns, the "Company"), and
United States Trust Company of New York (together with its successors and
permitted assigns, the "Warrant Agent").
R E C I T A L S
WHEREAS, WHWEL Real Estate Limited Partnership, a Delaware limited
partnership ("Whitehall"), and Wellsford Commercial Properties Trust, a
Maryland real estate investment trust and a subsidiary of the Company
("WCPT"), have agreed to form, and contribute certain real property and other
assets to, Wellsford/Whitehall Properties, L.L.C., a Delaware limited
liability company ("Wellsford/Whitehall"), subject to the concurrent issuance
by the Company to Whitehall of five million (5,000,000) warrants to purchase
shares of the Company's Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is so willing to act, in connection with
the issuance, transfer or exercise of Warrants and other matters as provided
herein;
NOW, THEREFORE, in order to induce Whitehall to enter into
Wellsford/Whitehall and in consideration of the foregoing premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Warrant Agreement, as it may be amended
or modified from time to time.
"Articles of Incorporation" shall mean the Company's Articles of
Amendment and Restatement, as amended from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banks in New York are authorized or required to close.
"Cash Amount" shall mean, with respect to any Warrant, an amount of
cash equal to the product of (i) the Closing Price of the Common Stock as of
the date of exercise of such Warrant multiplied by (ii) the Shares Amount in
effect on such date.
"Close of Business" shall mean, for any day, 5:00 P.M., New York
City time, on such date.
"Closing Price" shall mean the last reported sale price regular way
on the day in question or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way of the
Common Stock, in each case on the American Stock Exchange ("AMEX"), or, if
the Common Stock is not listed or admitted to trading on the AMEX, on the
principal national securities exchange or quotation system on which the
Common Stock is listed or admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated, or a similarly
generally accepted reporting service, or, if not so available in such manner,
as furnished by any AMEX member firm selected from time to time by the board
of directors of the Company for the purpose. In the case of a closing price
of Common Stock on the AMEX, such price shall mean the closing price reported
in the AMEX composite transactions reporting system (as reported in the New
York City edition of The Wall Street Journal or, if not so reported, another
authoritative source).
"Common Stock" shall mean the common stock, par value $.01 per
share, of the Company and any other stock of the Company into which such
common stock may be converted or reclassified (other than stock of the
Company into which unissued Common Stock has been reclassified) or that may
be issued in respect of, in exchange for, or in substitution of, such common
stock by reason of any stock splits, stock dividends, distributions, mergers,
consolidations, recapitalizations or other like events. For purposes of
Section 6.1, the term "Common Stock" shall include the Class A common stock,
$.01 par value per share, of the Company.
"Company" shall have the meaning set forth in the Recitals of this
Agreement.
"Company Shares" shall have the meaning set forth in Section
7.1(g).
"current market price" shall have the meaning set forth in Section
6.1(a)(vii).
"Demand Registration" shall mean a registration of Eligible
Securities pursuant to Section 7.1 hereof.
"Eligible Common Stock" shall mean all shares of Underlying Common
Stock that are Eligible Securities.
"Eligible Securities" shall mean (x) all shares of Underlying
Common Stock and unless otherwise provided herein, any related Warrants and
(y) any other securities of the Company or any other entity issued or
issuable with respect to the Underlying Common Stock or Warrants by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise;
provided, however, that particular shares of Underlying Common Stock or
particular Warrants shall cease to be Eligible Securities when (i) such
shares or Warrants, as the case may be, shall have been disposed of in
accordance with an effective registration statement covering the sale of such
shares or Warrants; (ii) such shares or Warrants, as the case may be, have
been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act; or (iii) in the case of a Warrant only,
such Warrant has been transferred by the Initial Holder to another Person.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall have the meaning set forth in Section
3.1(b).
"Expiration Date" shall mean the fifth anniversary of the date of
this Agreement, provided that if such date is not a Business Day, the next
Business Day thereafter.
"Holders" shall mean, collectively, the holders from time to time
of Warrant Certificates and "Holder" shall mean any such holder. For
purposes of Articles 7 and 8 hereof, the term "Holder" shall mean the holder
of any Eligible Security.
"Initial Holder" shall mean Whitehall.
"Membership Unit" shall have the meaning set forth in the
Wellsford/Whitehall LLC Agreement.
"Partial Spin-Off" shall have the meaning set forth in
Section 6.1(a)(iv).
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in
Section 7.2(a).
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any of the Eligible Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Registration Demand" shall have the meaning set forth in Section
7.1(a).
"Registration Rights" shall mean the rights of Holders set forth in
Sections 7.1 and 7.2 to have Eligible Securities registered under the
Securities Act for sale under one or more effective Registration Statements.
"Registration Statement" shall mean any registration statement
filed by the Company under the Securities Act that covers any of the Eligible
Securities, including the Prospectus, any amendments and supplements to such
Registration Statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such registration statement.
"Representative" shall have the meaning set forth in Section
8.6(a), and "Representative(s)" shall mean one or more Representatives.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean the annual and quarterly reports and the
information, documents, and other reports that the Company is required to
file with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"selling holder" shall have the meaning set forth in Section 8.1.
"Shares Amount" shall mean, with respect to any Warrant, 0.826446
shares of Common Stock, subject to all adjustments made pursuant to Article 6
hereof on or prior to the date of exercise of such Warrant.
"Shelf Registration" shall have the meaning set forth in Section
7.1(c).
"Shelf Registration Statement" shall have the meaning set forth in
Section 7.1(c).
"Subsequent Warrant Holder" shall mean any Holder other than the
Initial Holder.
"Takedown" shall have the meaning set forth in Section 7.1(c)(ii).
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares
of Common Stock are not listed or admitted to trading on any national
securities exchange, any Business Day.
"Transfer Agent" shall have the meaning set forth in Section 11.1.
"Transfer Restriction Termination Date" shall mean the first
anniversary of the date of this Agreement.
"Underlying Common Stock" shall mean all shares of Common Stock
either issuable upon the exercise of the Warrants or previously issued upon
the prior exercise of the Warrants.
"underwriter" shall have the meaning set forth in Section 8.1.
"underwriting or agency agreement" shall have the meaning set forth
in Section 8.1.
"Warrants" shall mean the warrants issued by the Company on the
date hereof pursuant to this Agreement, and any additional warrants issued in
accordance with this Agreement.
"Warrant Certificates" shall mean the certificates substantially in
the form of Exhibit A evidencing the Warrants.
"Warrant Agent" shall have the meaning set forth in the Recitals to
this Agreement.
"WCPT" shall have the meaning set forth in the Recitals to this
Agreement.
"Wellsford/Whitehall" shall have the meaning set forth in the
Recitals to this Agreement.
"Wellsford/Whitehall LLC Agreement" shall mean the limited
liability company agreement of Wellsford/Whitehall dated as of August 28,
1997, as the same may be amended from time to time.
"Whitehall" shall have the meaning set forth in the Recitals to
this Agreement.
Certain terms used principally in Articles 4, 7 and 8 are defined
in those Sections.
ARTICLE 2
ORIGINAL ISSUE OF WARRANTS
Section 2.1 Form of Warrant Certificates. Warrant Certificates
shall be in registered form only, substantially in the form attached hereto
as Exhibit A and dated the date on which countersigned by the Warrant Agent.
Pending the preparation of definitive Warrant Certificates,
temporary Warrant Certificates may be issued, which may be printed,
lithographed, typewritten, mimeographed or otherwise produced, which will be
substantially of the tenor of the definitive Warrant Certificates in lieu of
which they are issued and which are not required to be countersigned by the
Warrant Agent.
If temporary Warrant Certificates are issued, the Company will
cause definitive Warrant Certificates to be prepared without unreasonable
delay. After the preparation of definitive Warrant Certificates, the
temporary Warrant Certificates shall be exchangeable for definitive Warrant
Certificates upon the surrender of the temporary Warrant Certificates to the
Warrant Agent, without charge to the Initial Holder. Until so exchanged the
temporary Warrant Certificates shall in all respects be entitled to the same
benefits under this Agreement as definitive Warrant Certificates.
Section 2.2 Execution and Delivery of Warrant Certificates.
(a) Simultaneously with the execution of this Agreement, Warrant
Certificates evidencing five million (5,000,000) Warrants, shall be executed
on behalf of the Company as provided in paragraph (b) below and delivered to
the Warrant Agent for countersignature and the Warrant Agent shall thereupon
countersign and deliver such Warrant Certificates to Whitehall. In addition,
the Warrant Agent is irrevocably authorized to countersign and deliver
Warrant Certificates as required by Sections 3.1(e), 5.1 and 5.2.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman, Chief Executive Officer or President, either
manually or by facsimile signature printed thereon. Warrant Certificates
shall be countersigned by the Warrant Agent, either manually or by facsimile
signature printed thereupon, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company whose signature shall have
been placed upon any Warrant Certificate shall cease to be such officer of
the Company before countersignature by the Warrant Agent and issue and
delivery thereof, such Warrant Certificates may, nevertheless, be
countersigned by the Warrant Agent and issued and delivered with the same
force and effect as though such person had not ceased to be such officer of
the Company.
ARTICLE 3
EXERCISE OF WARRANTS
Section 3.1 Exercise Procedures.
(a) Each Warrant shall be exercisable as provided in this Section
3 from time to time on any Business Day prior to the Close of Business on the
Expiration Date.
(b) When exercised in accordance with subparagraph (c) below, each
Warrant shall entitle the Holder to purchase, and the Company shall be
required to deliver, a number of shares of Common Stock equal to the Shares
Amount in effect on the day such Warrant is exercised in accordance with
Section 3.1(c), at an exercise price (the "Exercise Price") of, at the sole
election of the Holder, either (x) one Membership Unit or (y) $10.00 in cash;
provided, however, that the Company may, at its sole election, pay to the
Holder of each Warrant so exercised in respect of any one or more of such
Warrants cash in an amount equal to the Cash Amount in lieu of delivering the
shares of Common Stock. When multiple Warrants are exercised, the Exercise
Price may consist of cash, Membership Units or any combination thereof.
Notwithstanding the foregoing, the Holder may not elect to deliver Membership
Units as the Exercise Price upon the exercise of any Warrant before
August 28, 1999.
(c) In order to exercise a Warrant, the Holder must surrender the
Warrant Certificate evidencing such Warrant to the Warrant Agent, with the
form of election on the reverse of or attached to the Warrant Certificate
duly executed, together with any required payment or delivery, as the case
may be, of the Exercise Price, to the Warrant Agent at the principal office
of the Warrant Agent in New York, New York. In the event Holder elects to
tender Membership Units as provided in subparagraph (b) above, all such
Membership Units (and the corresponding Interest (as defined in
Wellsford/Whitehall LLC Agreement)) shall be assigned by the Warrant Agent to
the Company. In the event a Holder elects to pay the cash Exercise Price as
provided in subparagraph (b) above, such Holder shall transfer to the Warrant
Agent, together with the surrendered Warrant Certificate, the required
payment in full of the Exercise Price for each Warrant which is exercised.
Any such payment of the Exercise Price shall be by certified or official bank
check or wire transfer of same day funds, and such funds shall be deposited
by the Warrant Agent for the account of the Company, unless otherwise
instructed in writing by the Company.
(d) Upon surrender of a Warrant Certificate in conformity with the
foregoing, the Warrant Agent shall thereupon promptly notify the Company. In
the event the Company elects to deliver the Shares Amount as provided in
subparagraph (b) above, the Company shall transfer to the Holder of the
exercised Warrant share certificates representing the shares of Common Stock
to which such Holder is entitled and the Holder shall be deemed to own and
have all the rights associated with any shares of Common Stock to which it is
entitled pursuant to this Agreement upon the surrender of any Warrant
Certificate in accordance with this Section 3.1. If the Company elects to
deliver the Cash Amount as provided in subparagraph (b) above, the Company
shall deliver to the Holder of the exercised Warrant payment of the Cash
Amount in same day funds to the account specified on the form of election on
the reverse of or attached to the Warrant Certificate. The Holder
acknowledges that the Company does not currently intend to issue Common Stock
equal to 20% or more of its currently outstanding Common Stock upon the
exercise of any Warrants and, in the event of such an exercise that could
result in Common Stock being issued in excess of such limit, the Company will
instead deliver the Cash Amount.
(e) If fewer than all the Warrants represented by a Warrant
Certificate are exercised, such Warrant Certificate shall be surrendered by
the Warrant Agent to the Company with instructions for the issuance of a new
Warrant Certificate and the Company shall promptly execute such new Warrant
Certificate for the Warrants that were not exercised and deliver the same to
the Warrant Agent. The Warrant Agent shall promptly countersign the new
Warrant Certificate, register it and deliver it to the registered Holder
thereof.
ARTICLE 4
COMPLIANCE WITH THE SECURITIES ACT
Section 4.1 Transfers. The Initial Holder hereby acknowledges
that the Warrants and the shares of Common Stock which may be received by the
Initial Holder upon exercise of any Warrant are and will be subject to
certain restrictions on transfers under the Securities Act and the
regulations promulgated thereunder.
Section 4.2 Representations. The Initial Holder has been
afforded full and complete access to all information and other materials
relating to the Company and to the offer of the Warrants and has had the
opportunity to have answered any questions it had concerning the Company and
the offering of the Warrants.
The Initial Holder hereby represents that it is acquiring the
Warrants for its own account for investment and not with a view to the resale
or distribution of any interest therein.
ARTICLE 5
REGISTRATION OF TRANSFERS AND EXCHANGES
Section 5.1 Generally. The Warrant Certificates shall be issued
in registered form only. The Company shall cause to be kept at the office of
the Warrant Agent a register in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of the
transfers or exchanges of the Warrant Certificates as herein provided.
Notwithstanding anything to the contrary contained herein, the Initial Holder
may not assign, sell or otherwise transfer Warrants at any time before the
Transfer Restriction Termination Date.
The Warrant Agent shall from time to time register the transfer or
exchange of any outstanding Warrant, in the records to be maintained by it
for that purpose, upon surrender of such Warrant. Upon any such registration
of transfer or exchange, a new Warrant Certificate shall be issued to the
transferee in the case of a transfer or to the Holder making the exchange,
and the surrendered Warrant Certificate shall be canceled by the Warrant
Agent. Canceled Warrant Certificates shall be disposed of by the Warrant
Agent in accordance with its customary procedures and the Warrant Agent shall
deliver a certificate of their destruction to the Company.
All Warrant Certificates issued upon any registration of transfer
or exchange shall be valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Warrant Certificates surrendered for such registration of transfer or
exchange.
Every Warrant Certificate surrendered for registration of transfer
or exchange shall (if so required by the Company or the Warrant Agent) be
duly endorsed, or be accompanied by a written instrument of transfer in form
contained in Exhibit B hereto or such other form satisfactory to the Company
and the Warrant Agent, duly executed by the Holder thereof or his attorney
duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates. The Company may require
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or
exchange of the Warrant Certificates.
Any Warrant Certificate when duly endorsed in blank shall be deemed
negotiable and when any Warrant Certificate shall have been so endorsed, the
Holder thereof may be treated by the Company, the Warrant Agent and all other
persons dealing therewith as the absolute owner thereof for any purpose and
as the Person entitled to either exercise the rights represented thereby or
to transfer the Warrants represented thereby on the register of the Company
maintained by the Warrant Agent, any notice to the contrary withstanding; but
until such transfer on such register, the Company and the Warrant Agent may
treat the registered Holder thereof as the owner for all purposes.
Section 5.2 Mutilated, Destroyed, Lost or Stolen Warrant
Certificates. If any mutilated Warrant Certificate is surrendered to the
Warrant Agent or the Company, or if the Warrant Agent receives evidence to
its satisfaction of the destruction, loss or theft of any Warrant
Certificate, and there is delivered to the Company and the Warrant Agent such
security or indemnity as may be reasonably required by them to save each of
them harmless, then, in the absence of notice to the Company or the Warrant
Agent that such Warrant Certificate has been acquired by a bona fide pur-
chaser, the Company shall execute and upon its written request the Warrant
Agent shall countersign and deliver, in exchange for any such mutilated
Warrant Certificate, or in lieu of any such destroyed, lost or stolen Warrant
Certificate, a new Warrant Certificate of like tenor and for a like aggregate
number of Warrants. Upon the issuance of any new Warrant Certificate under
this Section 5.2, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and other expenses (including the reasonable fees and expenses of the
Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to
this Section 5.2 in lieu of any destroyed, lost or stolen Warrant Certificate
shall constitute an original contractual obligation of the Company, whether
or not the destroyed, lost or stolen Warrant Certificate shall be at any time
enforceable as provided herein, and shall be entitled to the benefits of this
Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder. The provisions of this
Section 5.2 are exclusive and shall preclude (to the extent lawful) all other
rights or remedies with respect to the replacement of mutilated, destroyed,
lost or stolen Warrant Certificates.
ARTICLE 6
ADJUSTMENTS
Section 6.1 Adjustment upon Certain Transactions.
(a) The Shares Amount (and, by virtue thereof, the Cash Amount)
shall be subject to adjustment from time to time as follows:
a. In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall
pay or make a dividend or other distribution on any other class or
series of stock of the Company which dividend or distribution includes
Common Stock, the Shares Amount in effect at the opening of business on
the date following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be
increased by multiplying such Shares Amount by a fraction of which the
denominator shall be the number of shares of Common Stock outstanding at
the Close of Business on the date fixed for such determination and the
numerator shall be the sum of such number of shares plus the total
number of shares constituting such dividend or other distribution, such
increase to become effective immediately after the opening of business
on the day following the date fixed for such determination. For the
purposes of this subparagraph (i), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
2a In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall
otherwise issue to all holders of its Common Stock, rights or warrants
entitling the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share less than the current market price per
share (determined as provided in subparagraph (vii) of this
Section 6.1(a)) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, the Shares Amount in effect at the opening of business on the
day following the date fixed for such determination shall be increased
by multiplying the Shares Amount by a fraction of which the denominator
shall be the number of shares of Common Stock outstanding at the Close
of Business on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering price of the
total number of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price and the numerator
shall be the number of shares of Common Stock outstanding at the Close
of Business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, such
increase to become effective immediately after the opening of business
on the day following the date fixed for such determination. For the
purposes of this subparagraph (ii), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not issue any rights or warrants in
respect of shares of Common Stock held in the treasury of the Company.
In case any rights or warrants referred to in this subparagraph (ii) in
respect of which an adjustment shall have been made shall expire
unexercised within 60 days after the same shall have been distributed or
issued by the Company, the Shares Amount shall be readjusted at the time
of such expiration to the Shares Amount that would have been in effect
if no adjustment had been made on account of the distribution or
issuance of such expired rights or warrants.
c. In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Shares Amount in
effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately
increased, and conversely, in case outstanding shares of Common Stock
shall each be combined into a smaller number of shares of Common Stock,
the Shares Amount in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately decreased, such reduction or increase, as the case may
be, to become effective immediately after the opening of business on the
day following the day upon which such subdivision or combination becomes
effective. No reduction in the Shares Amount may occur except pursuant
to this subparagraph (iii).
d. Subject to the last two sentences of this subparagraph (iv),
in case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness, shares of any
class or series of stock, cash or assets (including securities, but
excluding any rights or warrants referred to in subparagraph (ii) of
this Section 6.1(a), any dividend or distribution paid exclusively in
cash and any dividend or distribution referred to in subparagraph (i) of
this Section 6.1(a)), the Shares Amount shall be increased so that the
same shall equal the number determined by multiplying the Shares Amount
in effect immediately prior to the effectiveness of the Shares Amount
increase contemplated by this subparagraph (iv) by a fraction of which
the denominator shall be the current market price per share (determined
as provided in subparagraph (vii) of this Section 6.1(a)) of the Common
Stock on the date fixed for the payment of such distribution (the
"Reference Date") less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors), on the
Reference Date, of the portion of the evidences of indebtedness, shares
of stock, cash and assets so distributed applicable to one share of
Common Stock and the numerator shall be such current market price per
share of the Common Stock, such increase to become effective immediately
prior to the opening of business on the day following the Reference
Date. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to the
actual or when issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in such market
over the same period used in computing the current market price per
share of Common Stock pursuant to subparagraph (vii) of this
Section 6.1(a). For purposes of this subparagraph (iv), any dividend or
distribution that includes shares of Common Stock or rights or warrants
to subscribe for or purchase shares of Common Stock shall be deemed
instead to be (1) a dividend or distribution of the evidences of
indebtedness, cash, assets or shares of stock other than such shares of
Common Stock or such rights or warrants (making any Shares Amount
increase required by this subparagraph (iv)) immediately followed by
(2) a dividend or distribution of such shares of Common Stock or such
rights or warrants (making any further Shares Amount increase required
by subparagraph (i) or (ii) of this Section 6.1(a), except (A) the
Reference Date of such dividend or distribution as defined in this
subparagraph (iv) shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution, "the date fixed for the determination of stockholders
entitled to receive such rights or warrants" and "the date fixed for
such determination" within the meaning of subparagraphs (i) and (ii) of
this Section 6.1(a) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the Close
of Business on the date fixed for such determination" within the meaning
of subparagraph (i) of this Section 6.1(a)). Notwithstanding anything
to the contrary contained in this Article 6, the Company may one time in
any twelve-month period pay a dividend or distribution on its Common
Stock exclusively in the form of securities of (or other ownership
interests in) any subsidiary of the Company (a "Partial Spin-Off")
without any adjustment to the Shares Amount on account thereof if the
fair market value (determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of
the Board of Directors) of the Partial Spin-Off distributed per share of
Common Stock outstanding on the date fixed for such determination does
not exceed 8% of the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a) of the Common
Stock on the Trading Day next preceding the date of declaration of such
dividend).
e. In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the
case of any quarterly cash dividend on the Common Stock, the portion
thereof that does not exceed the greater of (x) the per share amount of
the next preceding quarterly cash dividend on the Common Stock (as
adjusted to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this
Section 6.1(a)), and (y) the per share amount which, when multiplied by
four, and added to the fair market value (as determined in the last
sentence of (iv) above) of any Partial Spin-Off distributed per share of
Common Stock during the preceding twelve-month period, is equal to or
less than 8% of the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common
Stock on the Trading Day next preceding the date of declaration of such
dividend), the Shares Amount shall be increased so that the same shall
equal the number determined by multiplying the Shares Amount in effect
immediately prior to the effectiveness of the Shares Amount increase
contemplated by this subparagraph (v) by a fraction of which the
denominator shall be the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common
Stock on the date fixed for the payment of such distribution less the
amount of cash so distributed and not excluded as provided above
applicable to one share of Common Stock and the numerator shall be such
current market price per share of Common Stock, such increase to become
effective immediately prior to the opening of business on the day
following the date fixed for the payment of such distribution.
f. In case a tender or exchange offer made by the Company or by
any subsidiary of the Company for all or any portion of the Company's
Common Stock shall expire and such tender or exchange offer shall
involve the payment by the Company or such subsidiary of consideration
per share of Common Stock having a fair market value (as determined in
good faith by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) at
the last time (the "Expiration Time") tenders or exchanges may be made
pursuant to such tender or exchange offer (as it shall have been
amended) that exceeds the current market price per share (determined as
provided in subparagraph (vii) of this Section 6.1(a)) of the Common
Stock on the Trading Day next succeeding the Expiration Time, the Shares
Amount shall be increased so that the same shall equal the number
determined by multiplying the Shares Amount in effect immediately prior
to the effectiveness of the Shares Amount increase contemplated by this
subparagraph (vi) by a fraction of which the denominator shall be the
number of shares of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time multiplied by the current
market price per share (determined as provided in subparagraph (vii) of
this Section 6.1(a)) of the Common Stock on the Trading Day next
succeeding the Expiration Time and the numerator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares)
at the Expiration Time and the current market price per share
(determined as provided in subparagraph (vii) of this Section 6.1(a)) of
the Common Stock on the Trading Day next succeeding the Expiration Time,
such increase to become effective immediately prior to the opening of
business on the day following the Expiration Time.
g. For the purpose of any computation under subparagraph (ii),
(iv) and (v) of this Section 6.1(a), the "current market price" per
share of Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices for the five consecutive Trading
Days prior to and including the date in question; provided, however,
that (1) if the "ex" date (as hereinafter defined) for any event (other
than the issuance or distribution requiring such computation) that
requires an adjustment to the Shares Amount pursuant to subparagraph
(i), (ii), (iii), (iv), (v) or (vi) above ("Other Event") occurs after
the fifth Trading Day prior to the day in question and prior to the "ex"
date for the issuance or distribution requiring such computation (the
"Current Event"), the Closing Price for each Trading Day prior to the
"ex" date for such Other Event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Shares
Amount is so required to be adjusted as a result of such Other Event,
(2) if the "ex" date for any Other Event occurs after the "ex" date for
the Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other
Event shall be adjusted by multiplying such Closing Price by the
fraction by which the Shares Amount is so required to be adjusted as a
result of such Other Event, (3) if the "ex" date of any Other Event
occurs on the "ex" date for the Current Event, one of those events shall
be deemed for purposes of clauses (1) and (2) of this proviso to have an
"ex" date occurring prior to the "ex" date for the other event, and
(4) if the "ex" date for the Current Event is on or prior to the date in
question, after taking into account any adjustment required pursuant to
clause (2) of this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the amount of
any cash and the fair market value on the date in question (as
determined in good faith by the Board of Directors in a manner
consistent with any determination of such value for purposes of
paragraph (iv) or (v) of this Section 6.1(a), whose determination shall
be conclusive and described in a resolution of the Board of Directors)
of the portion of the rights, warrants, evidences of indebtedness,
shares of stock or assets being distributed applicable to one share of
Common Stock. For the purpose of any computation under
subparagraph (vi) of this Section 6.1(a), the current market price per
share of Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices for such date in question and the
next two succeeding Trading Days; provided, however, that if the "ex"
date for any event (other than the tender or exchange offer requiring
such computation) that requires an adjustment to the Shares Amount
pursuant to subparagraph (i), (ii), (iii), (iv), (v) or (vi) above
occurs after the Expiration Time for the tender or exchange offer
requiring such computation and on or prior to the second Trading Day
following the date in question, the Closing Price for each Trading Day
on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the fraction by which the Shares
Amount is so required to be adjusted as a result of such other event.
For purposes of this paragraph, the term "ex" date, (1) when used with
respect to any issuance or distribution, means the first date on which
the Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the
right to receive such issuance or distribution, (2) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such subdivision
or combination becomes effective, and (3) when used with respect to any
tender or exchange offer, means the first date on which the Common Stock
trades regular way on such exchange or in such market after the
Expiration Time of such offer.
h. The Company may make such increase in the Shares Amount, in
addition to those required by subparagraphs (i), (ii), (iii), (iv), (v)
and (vi) of this Section 6.1(a), as it considers to be advisable to
avoid or diminish an income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for
income tax purposes. The Company from time to time may increase the
Shares Amount by any amount for any period of time if the period is at
least twenty days, the increase is irrevocable during the period, and
the Board of Directors of the Company shall have made a determination
that such increase would be in the best interest of the Company, which
determination shall be conclusive. Whenever the Shares Amount is
increased pursuant to the preceding sentence, the Company shall mail to
Holders a notice of the increase at least fifteen days prior to the date
the increased Shares Amount takes effect, and such notice shall state
the increased Shares Amount and the period it will be in effect.
i. No adjustment in the Shares Amount shall be required unless
such adjustment would require an increase or decrease of at least 1% in
the Shares Amount; provided, however, that any adjustments which by
reason of this subparagraph (ix) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
j. Whenever the Shares Amount is adjusted as herein provided:
(i) the Company shall compute the adjusted Shares Amount
and shall prepare a certificate signed by the Chief Financial Officer of
the Company setting forth the adjusted Shares Amount and showing in
reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the Warrant Agent; and
(ii) a notice stating the Shares Amount have been
adjusted and setting forth the adjusted Shares Amount shall forthwith be
required, and as soon as practicable after it is required such notice
shall be mailed by the Company to all Holders.
(b) No Fractional Shares. No fractional shares of Common Stock
shall be issued upon exercise of the Warrants. If more than one Warrant is
exercised by the same Holder at one time, the number of full shares issuable
upon such exercise shall be computed on the basis of the aggregate number of
Warrants so exercised. Instead of any fractional share of Common Stock that
would otherwise be issuable to a holder upon exercise of the Warrants, the
Company shall pay a cash adjustment in respect of such fractional share in an
amount equal to the same fraction of the Closing Price per share of Common
Stock as of the date of such exercise.
(c) Reclassification, Consolidation, Merger or Sale of Assets. In
the event that the Company shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common
Stock (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock and other than the reclassification of
unissued Common Stock into other stock of the Company), any consolidation of
the Company with, or merger of the Company into, any other Person, any merger
of another person into the Company (other than a merger which does not result
in a reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company), any sale or transfer of all or
substantially all of the assets of the Company or any compulsory share
exchange) pursuant to which the Common Stock is converted into the right to
receive other securities, cash or other property, then lawful provisions
shall be made as part of the terms of such transaction whereby the holder of
each Warrant then outstanding shall have the right thereafter to exercise
such Warrant only for (i) in the case of any such transaction other than a
Common Stock Fundamental Change and subject to funds being legally available
for such purpose under applicable law at the time of such exercise, the kind
and amount of securities, cash and other property receivable upon such
transaction by a holder of the number of shares of Common Stock of the
Company for which such Warrant could have been exercised immediately prior to
such transaction, and (ii) in the case of a Common Stock Fundamental Change,
common stock of the kind received by holders of Common Stock as a result of
such Common Stock Fundamental Change in an amount determined pursuant to the
provisions of Section 6.1(e). The Company or the Person formed by such
consolidation or resulting from such merger or which acquires such assets or
which acquires the Company's shares, as the case may be, shall execute an
agreement in form and substance reasonably acceptable to the Holders
evidencing such right. Such agreement shall provide for adjustments which,
for events subsequent to the effective date of such agreement, shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Article 6. The above provisions shall similarly apply to each and every
successive transaction of the foregoing type.
(d) Prior Notice of Certain Events. In case:
a. the Company shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash in an amount
not greater than its retained earnings other than any special or
nonrecurring or other extraordinary dividend or (2) declare or authorize
a redemption or repurchase of in excess of 10% of the then-outstanding
shares of Common Stock; or
b. the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any
share of stock of any class or series or of any other rights or
warrants; or
c. of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to
par value and other than the reclassification of unissued Common Stock
into other stock of the Company), or of any consolidation or merger to
which the Company is a party and for which approval of any shareholders
of the Company shall be required, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
d. of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Warrant Agent and shall
cause to be mailed to the Holders, at least 10 days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date
on which a record (if any) is to be taken for the purpose of such dividend,
distribution, redemption, repurchase, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no
failure to mail such notice or any defect therein or in the mailing thereof
shall affect the validity of the corporate action required to be specified in
such notice).
(e) Adjustments in Case of Fundamental Changes. Notwithstanding
any other provision in this Article 6 to the contrary, if any Fundamental
Change (as defined in Section 6.1(f)) occurs, then the Shares Amount in
effect will be adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock Fundamental
Change (as defined in Section 6(f)), each Warrant shall be exercisable solely
in exchange for common stock of the kind and amount received by holders of
Common Stock as a result of such Common Stock Fundamental Change as more
specifically provided below in this Section 6.1(e).
For purposes of calculating any adjustment to be made pursuant to
this Section 6.1(e) in the event of a Fundamental Change, immediately after
such Fundamental Change in the case of a Common Stock Fundamental Change, the
Shares Amount in effect immediately prior to such Common Stock Fundamental
Change, but after giving effect to any other prior adjustments effected
pursuant to this Section 6, shall thereupon be adjusted by multiplying such
Shares Amount by a fraction of which the denominator shall be the Purchaser
Stock price (as defined in Section 6.1(f)) and the numerator shall be the
Applicable Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% by value of the consideration received
by a holder of Common Stock is common stock of the successor, acquiror or
other third party (and cash, if any, is paid with respect to any fractional
interests in such common stock resulting from such Common Stock Fundamental
Change) and (B) all of the Common Stock shall have been exchanged for,
converted into or acquired for common stock (and cash with respect to
fractional interests) of the successor, acquiror or other third party, the
Shares Amount in effect immediately prior to such Common Stock Fundamental
Change shall thereupon be adjusted by multiplying such Shares Amount by the
number of shares of common stock of the successor, acquiror, or other third
party received by a shareholder for one share of Common Stock as a result of
such Common Stock Fundamental Change.
(f) Definitions. The following definitions shall apply to terms
used in this Article 6:
a. "Applicable Price" shall mean (1) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only
cash, the amount of cash received by a shareholder for one share of
Common Stock and (2) in the event of any other Non-Stock Fundamental
Change or any Common Stock Fundamental Change, the average of the daily
Closing Prices of the Common Stock for the ten consecutive Trading Days
prior to and including the record date for the determination of the
holders of Common Stock entitled to receive securities, cash or other
property in connection with such Non-Stock Fundamental Change or Common
Stock Fundamental Change, or, if there is no such record date, the date
upon which the holders of the Common Stock shall have the right to
receive such securities, cash or other property, in each case, as
adjusted in good faith by the Board of Directors of the Company to
appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of Section 6.1(a).
b. "Common Stock Fundamental Change" shall mean any Fundamental
Change in which more than 50% by value (as determined in good faith by
the Board of Directors of the Company) of the consideration received by
holders of Common Stock consists of common stock that for each of the
ten consecutive Trading Days referred to with respect to such
Fundamental Change in Section 6.1(f)(i) above has been admitted for
listing or admitted for listing subject to notice of issuance on a
national securities exchange or quoted on the NASDAQ National Market
System; provided, however, that a Fundamental Change shall not be a
Common Stock Fundamental Change unless either (1) the Company continues
to exist after the occurrence of such Fundamental Change and the
outstanding Warrants continue to exist as outstanding Warrants, or
(2) not later than the occurrence of such Fundamental Change, the
outstanding Warrants are converted into or exchanged for warrants of a
corporation succeeding to the business of the Company, which warrants
have terms identical to those of the Warrants.
c. "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to which all or
substantially all of the Common Stock shall be exchanged for, converted
into, acquired for or constitute solely the right to receive securities,
cash or other property (whether by means of an exchange offer, liquida-
tion, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided, however, in
the case of a plan involving more than one such transaction or event,
for purposes of adjustment of the Shares Amount, such Fundamental Change
shall be deemed to have occurred when substantially all of the Common
Stock of the Company shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive cash, securities,
property or other assets, but the adjustment shall be based upon the
highest weighted average of consideration per share which a holder of
Common Stock could have received in such transactions or events as a
result of which more than 50% of the Common Stock of the Company shall
have been exchanged for, converted into, or acquired for or constitute
solely the rights to receive cash, securities, property or other assets.
d. "Non-Stock Fundamental Change" shall mean any Fundamental
Change other than a Common Stock Fundamental Change.
e. "Purchaser Stock Price" shall mean, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Prices of the
common stock received in such Common Stock Fundamental Change for the
ten consecutive Trading Days prior to and including the record date for
the determination of the holders of Common Stock entitled to receive
such common stock, or, if there is no such record date, the date upon
which the holders of the Common Stock shall have the right to receive
such common stock, in each case, as adjusted in good faith by the Board
of Directors of the Company to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of
Section 6.1(a); provided, however, if no such Closing Prices of the
common stock for such Trading Days exist, then the Purchaser Stock price
shall be set at a price determined in good faith by the Board of
Directors of the Company.
(g) Certain Additional Rights. In case the Company shall, by
dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Section 6(a)(iv) or 6(a)(v) (including, without limitation,
dividends or distributions referred to in the last two sentences of
Section 6(a)(iv)), the holder of each Warrant, upon the exercise thereof
subsequent to the Close of Business on the date fixed for the determination
of shareholders entitled to receive such distribution and prior to the
effectiveness of the Shares Amount adjustment in respect of such distribu-
tion, shall also be entitled to receive for each share of Common Stock for
which such Warrant is exercised, the portion of the shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of stock, cash and assets
so distributed applicable to one share of Common Stock; provided, however,
that, at the election of the Company (whose election shall be evidenced by a
resolution of the Board of Directors) with respect to all holders so
exercising, the Company may, in lieu of distributing to such holder any
portion of such distribution not consisting of cash or securities of the
Company, pay such holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board
of Directors). If any exercise of a Warrant described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the holder of the Warrant so exercised is
entitled to receive in accordance with the immediately preceding sentence,
the Company may elect (such election to be evidenced by a resolution of the
Board of Directors) to distribute to such holder a due xxxx for the shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of stock,
cash or assets to which such holder is so entitled, provided that such due
xxxx (i) meets any applicable requirements of the principal national
securities exchange or other market on which the Common Stock is then traded
and (ii) requires payment or delivery of such shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of stock, cash or assets no later
than the date of payment or delivery thereof to holders of shares of Common
Stock receiving such distribution.
(h) Reservation of Shares, Etc. The Company shall at all times
reserve and keep available, free from preemptive rights out of its authorized
and unissued stock, solely for the purpose of allowing the exercise of the
Warrants, such number of shares of its Common Stock as shall from time to
time be sufficient to permit the Company to deliver the Shares Amount in the
event all of the Warrants from time to time outstanding were exercised. The
Company shall from time to time, in accordance with the laws of the State of
Maryland, increase the authorized number of shares of Common Stock if at any
time the number of shares of authorized and unissued Common Stock shall not
be sufficient to permit the Company to deliver the Shares Amount upon the
exercise of all of the then-outstanding Warrants (taking into account the
adjustments to the Shares Amount that are provided for herein).
If any shares of common stock required to be reserved for purposes
of the exercise of the Warrants hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be issued upon exercise, and an exemption under Section
3(a)(9) of the Securities Act or similar exemption is not available, the
Company will in good faith and as expeditiously as possible endeavor to cause
such shares to be duly registered or approved as the case may be. If the
Common Stock is quoted on the NASDAQ National Market System or listed on any
U.S. national securities exchange, the Company will, if permitted by the
rules of such exchange, list and keep listed on such exchange, upon official
notice of issuance, all shares of Common Stock issuable upon exercise of the
Warrants. The second sentence of this paragraph shall apply only when the
Warrants shall have become freely transferable pursuant to Rule 144(k) under
the Securities Act or if the shares of Common Stock issuable upon exercise of
the Warrants are exempt from the registration requirements of the Securities
Act by operation of an exemption referred to in the first sentence of this
paragraph.
(i) Dividend or Interest Reinvestment Plans or Other Plans.
Notwithstanding the foregoing provisions, the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan (a
"DRIP"), and the issuance of any shares of Common Stock or options or rights
to purchase such shares pursuant to any employee or director benefit plan or
program of the Company or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the date
hereof shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which
any of the adjustment provisions described above applies. There shall also
be no adjustment of the Shares Amount in case of the issuance of any stock
(or securities convertible into or exchangeable for stock) of the Company
except as specifically described in this Article 6. If any action would
require adjustment of the Shares Amount pursuant to more than one of the
provisions described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest absolute
value to holders of the Warrants.
ARTICLE 7
REGISTRATION RIGHTS
Section 7.1 Demand Registration.
(a) At any time after June 1, 1998, the Holders shall have the
right to request (each such request, a "Registration Demand") that the
Company file a registration statement under the Securities Act in respect of
all or any portion of such Holder's Eligible Securities; provided that if any
Holders shall request that a portion, but not all, of its Eligible Securities
be registered in accordance with this Section 7.1 (including a requested
Takedown pursuant to subsection (c)(ii) below), such portion shall include
not less than two hundred and fifty thousand (250,000) shares of Eligible
Common Stock (or such lesser number of such shares having a market valuation
of at least $5,000,000 as of the date the Registration Demand is made, based
on the Closing Price on such date). A Registration Demand shall specify the
number of shares of Eligible Common Stock (and, in the case of a Registration
Demand by the Initial Holder, the number of Warrants) that each such Holder
proposes to sell in the offering. If no Shelf Registration Statement shall
be effective as of the date of the Registration Demand, the demanding Holders
may elect to register such Eligible Securities in accordance with either
Section 7.1(c)(i) or Section 7.1(d). If a Shelf Registration Statement shall
be effective as of the date of the Registration Demand, then all demanding
Holders shall be deemed to have elected to register their Eligible Securities
pursuant to Section 7.1(c)(ii). The Holders may make in the aggregate two
(2) Registration Demands pursuant to Sections 7.1(c)(i) and 7.1(d) and four
(4) Registration Demands per year pursuant to an existing Shelf Registration
Statement pursuant to Section 7.1(c)(ii) for which the Company will pay and
bear all costs and expenses in accordance with Section 8.3 and thereafter the
Holders may make an unlimited number of Registration Demands for which such
requesting Holders shall pay and bear all costs and expenses.
(b) Upon receipt of a Registration Demand (other than a Takedown),
the Company shall give written notice thereof to all of the other Holders at
least thirty (30) days prior to the initial filing of a Registration
Statement relating to such Registration Demand. Each of the other Holders
shall have the right, within twenty (20) days after the delivery of such
notice, to request that the Company include all or a portion of such Holder's
Eligible Securities in such Registration Statement. Upon receipt of a
Registration Demand that is a Takedown, a representative of the selling
holders shall give written notice thereof to all of the other Holders at
least three (3) Business Days prior to the initial filing of a prospectus
relating to such Registration Demand. Each of the other Holders shall have
the right, within one (1) Business Day after the delivery of such notice, to
request that the Company include all or a portion of such Holder's Eligible
Securities in such Registration Statement.
(c) a. As promptly as practicable and in no event later than sixty
(60) days after the Company receives a Registration Demand electing to
register Eligible Securities pursuant to this paragraph (c), the Company
shall file under the Securities Act a "shelf" registration statement (the
"Shelf Registration Statement") providing for the registration and the sale
on a continuous or delayed basis of all the Eligible Securities, pursuant to
Rule 415 under the Securities Act and/or any similar rule that may be adopted
by the SEC (the "Shelf Registration"). The Company agrees to use its
reasonable best efforts to cause such Shelf Registration Statement to become
or be declared effective as soon as practicable but no later than 75 calendar
days after the filing (the "75 Day Effective Date") and to keep such Shelf
Registration continuously effective for a period ending on the occurrence of
the earlier of: (x) the third anniversary of such Registration Demand and
(y) notification by all of the requesting Holders that such Holders have sold
all of the Eligible Securities owned by them. The Company further agrees to
supplement or make amendments to the Shelf Registration Statement and the
prospectus included therein (x) as may be necessary to effect and maintain
the effectiveness of such Shelf Registration Statement for the period set
forth in the previous sentence and (y) as may be required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration or by the Securities Act or rules and
regulations thereunder for shelf registration. The Company agrees to furnish
to the Holders of the securities registered thereby copies of any such
supplement or amendment (but excluding any periodic reports required to be
filed with the SEC under the Exchange Act of 1934) so that the Initial
Holder, or if the Initial Holder is no longer a Holder, the Holders, through
the Representative(s), have a reasonable opportunity to comment thereon prior
to its being used and/or filed with the SEC.
b. As promptly as practicable after the Company receives a
Registration Demand from a Holder or Holders pursuant to which a Holder is
deemed to have elected to register Eligible Securities pursuant to an
existing Shelf Registration Statement (a "Takedown"), the Company shall,
subject to the Takedown Blackout Period described below, file a Prospectus
with the SEC and otherwise comply with the Securities Act and all rules,
regulations and instructions thereunder applicable to such Takedown. In the
event that no Prospectus or other filing is required nor any other action
necessitating the Company's participation is required to effect a sale of
Eligible Securities pursuant to an effective Shelf Registration Statement
filed pursuant to Section 7.1(c)(i), each selling Holder agrees to provide
the Company with at least three (3) Business Days' notice of the proposed
sale (which may or may not include the amount of Eligible Securities to be
registered) pursuant to the effective Shelf Registration Statement; provided,
however, that the Company shall, subject to Section 7.3(g), have the right to
postpone any such sale whether before or after the filing of the applicable
Prospectus or Shelf Registration Statement for a reasonable period of time
not to exceed ninety (90) days (a "Takedown Blackout Period") if: (i) the
Company determines in its good faith judgment that it would, in connection
with such sale, be required to disclose in such Registration Statement (or
any prospectus supplement to be used in connection therewith) information not
otherwise then required by law to be publicly disclosed and (ii) either (x)
in the good faith judgment of the Board of Directors of the Company, such
disclosure would adversely affect any material corporate development or
business transaction contemplated by the Company or (y) the Company has a
bona fide purpose for preserving as confidential such information; provided
further that the Takedown Blackout Period shall earlier terminate upon the
completion or abandonment of the relevant corporate development or business
transaction or upon public disclosure by the Company or public disclosure by
the Company or public admission by the Company of such information specified
in (i) above.
(d) As promptly as practicable and in no event later than sixty
(60) days after the Company receives a Registration Demand electing to
register Eligible Securities pursuant to this Section 7.1(d), the Company
shall file with the SEC a Registration Statement, on any form that shall be
available and appropriate for the sale of the Eligible Securities in
accordance with the intended method of distribution thereof. The Company
shall include in such Registration Statement all of the Eligible Securities
of such requesting Holders that such Holders have requested to be included
therein pursuant to Sections 7.1(a) and 7.1(b); provided, however, that, if
the requested registration involves an underwritten offering, the Eligible
Securities to be registered may be reduced if the managing underwriter
delivers a notice (a "Cutback Notice") pursuant to Section 7.1(g). The Com-
pany shall use its reasonable best efforts to cause each such Registration
Statement to be declared effective (and to obtain acceleration of such
effectiveness) as soon as practicable but no later than 75 days after filing
such Registration Statement and to keep such Registration Statement continu-
ously effective and usable for resale of such Eligible Securities, for a
period of one hundred eighty (180) days from the date on which the SEC
declares such Registration Statement effective or such shorter period as is
necessary to complete the distribution of the securities registered
thereunder.
(e) The Initial Holder or, if the Initial Holder is not a selling
holder, the Representative(s) shall determine the method of distribution of
Eligible Securities pursuant to a Registration Demand.
(f) If a Registration Demand involves an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer such offering will be selected by the Initial Holder or, if the
Initial Holder is not a selling holder, the Representative(s); provided that
the Persons so selected shall be reasonably satisfactory to the Company.
(g) In the event that the proposed offering is an underwritten
offering and includes securities to be offered for the account of the Company
(the "Company Shares"), the provisions of this Section 7.1(g) shall be
applicable if the managing underwriter delivers a Cutback Notice stating
that, in its opinion, the aggregate number of shares of Eligible Common
Stock, plus the Company Shares proposed to be sold therein, exceeds the
maximum number of shares specified by the managing underwriter in such
Cutback Notice that may be distributed without adversely affecting the price,
timing or distribution of the Common Stock being distributed. If the
managing underwriter delivers such Cutback Notice, the number of shares of
Eligible Common Stock requested to be registered and Company Shares shall be
reduced in the following order until the number of shares to be offered has
been reduced to the maximum number of shares specified by the managing
underwriter in the Cutback Notice: first, the Company Shares and second, the
Eligible Common Stock in proportion to the respective number of shares of
Eligible Common Stock that each Holder has requested to be registered.
(h) The Company will pay all Registration Expenses (as set forth
in Section 8.3) in connection with a registration under this Section 7.1.
(i) No Registration Demand (other than a Takedown) may be made
until the expiration of six (6) months following the completion of the
distribution of the securities registered under any Registration Statement
that has been filed and has become effective pursuant to a prior Registration
Demand.
(j) A Registration Demand will not be deemed satisfied (and will
not count for purposes of the limitations in Section 7.1(a)) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 180 days (or such
shorter period which shall terminate when all Eligible Securities covered by
such registration statement have been sold), (ii) if, after it has become
effective, such registration is interfered with by any stop order, injunction
or other order or requirement of the SEC or other governmental agency or
court for any reason not attributable to the selling holders participating in
such registration and has not thereafter become effective, or (iii) if the
conditions to closing specified in the relevant underwriting or agency
agreement entered into in connection with such offering are not satisfied or
waived, other than by reason of a breach of such agreement by the selling
holders participating in such offering or wilful failure on the part of the
selling holders participating in such offering.
Section 7.2 Piggyback Registration Rights.
(a) If, at any time, the Company proposes to file a Registration
Statement with the SEC respecting an offering, whether primary, secondary or
combined, of any equity securities of the Company, the Company shall give
written notice to all Holders at least thirty (30) days prior to the initial
filing of the Registration Statement relating to each such offering. Such
notice shall specify, at a minimum, the number and the type of equity
securities so proposed to be registered, the proposed date of filing of such
registration statement, any proposed means of distribution of such
securities, any proposed managing underwriter or underwriters of such
securities and a good faith estimate by the Company of the proposed maximum
offering price thereof, as such price is proposed to appear on the facing
page of such registration statement. Each Holder shall have the right,
within twenty (20) days after delivery of such notice, to request in writing
that the Company include not less than 50,000 shares of Eligible Common Stock
(or such lesser amount as is then owned by such Holder) in such Registration
Statement (a "Piggyback Registration").
(b) In the event that the proposed offering is an underwritten
offering covering Company Shares, the provisions of this paragraph (b) shall
be applicable if the managing underwriter delivers a Cutback Notice stating
that, in its opinion, the aggregate number of shares of Eligible Common Stock
and the Company Shares that the Holders have requested to be registered,
exceeds the maximum number of shares specified by the managing underwriter in
such Cutback Notice that may be distributed without adversely affecting the
price, timing or distribution of the Common Stock being distributed. If the
managing underwriter delivers such Cutback Notice, the number of shares of
Eligible Common Stock and Company Shares requested to be included in such
offering shall be reduced in the following order until the number of shares
to be offered has been reduced to the maximum number of shares specified by
the managing underwriter in the Cutback Notice: first, the Eligible Common
Stock in proportion to the respective number of shares of Eligible Common
Stock that each Holder has requested to be registered and second, the Company
Shares.
(c) No Piggy-Back Registration effected under this Section 7.2
shall be deemed to have been effected pursuant to Section 7.1 hereof or shall
release the Company of its obligations to effect any Demand Registration upon
request as provided in Section 7.1.
(d) The Company will pay all Registration Expenses (as set forth
in Section 8.3) in connection with a registration under this Section 7.2.
(e) The provisions of this Section 7.2 shall not be applicable in
connection with a transaction in which a registration statement is filed by
the Company on Form S-4 or S-8 or any successor or similar form or a
registration statement is filed by the Company that registers securities
issued pursuant to a DRIP.
Section 7.3 Company's Ability to Postpone Registration Rights.
(a) The Company shall have the right to postpone the filing of any
Registration Statement relating to a Demand Registration for a reasonable
period of time not to exceed ninety (90) days (the "Blackout Period") if:
(i) the Company determines in its good faith judgment that it would be
required to disclose in such Registration Statement information not otherwise
then required by law to be publicly disclosed and (ii) either (x) in the good
faith judgment of the Board of Directors of the Company, such disclosure
would adversely affect any material corporate development or business
transaction contemplated by the Company or otherwise would be materially
harmful to the Company and its stockholders or (y) the Company has a bona
fide purpose for preserving as confidential such information or; provided,
however, that the Blackout Period shall earlier terminate upon the completion
or abandonment of the relevant corporate development or business transaction
or upon public disclosure by the Company or public admission by the Company
of such information specified in (i) above.
(b) If at any time after the Company notifies the Holders of its
intention to file a Registration Statement that would trigger Piggyback
Registration Rights, the Board of Directors of the Company in good faith
shall determine for any reason not to effect such registration or to postpone
such registration, the Company shall (i) in the case of a determination not
to effect such registration, be relieved of its obligation to register any
Eligible Securities of Holders requesting inclusion in such registration, and
(ii) in the case of a determination to postpone such registration, be
permitted to postpone registering the Eligible Securities of Holders
requesting inclusion in such registration.
(c) After the expiration of any Blackout Period and without
further request from any Holder, the Company shall effect the filing of the
relevant Demand Registration and shall use its reasonable best efforts to
cause any such Demand Registration to be declared effective as promptly as
practicable unless the requesting Holder or Holders shall have, prior to the
effective date of such Demand Registration withdrawn in writing its initial
request, in which case, such withdrawn request shall not constitute a
Registration Demand or reduce the number of Registration Demands available
under Section 7.1(a).
(d) Any request by a Holder for a Demand Registration which is
subsequently withdrawn prior to such Demand Registration becoming effective
shall not constitute a Registration Demand or reduce the number of
Registration Demands available under Section 7.1(a); provided, however, that
other than with respect to a withdrawal which is made as a result of or after
the expiration of any Blackout Period as specified in subsection (c) above,
the Holder or Holders, as appropriate, shall reimburse the Company for all
expenses relating to the preparation of such withdrawn Demand Registration.
(e) The Company shall as promptly as practicable notify the
Holders of any postponement pursuant to this Section 7.3 or
Section 7.1(c)(ii), specifying the reasons therefor.
(f) If the Company exercises its right to postpone the filing of
any Registration Statement pursuant to Section 7.3 or if the Company
exercises its right to postpone any Takedown pursuant to Section 7.1(c)(ii)
and the Company notifies any Holder of such postponement or if the Company
gives the notice described in Section 8.7(a), such Holder agrees to keep
confidential the exercise by the Company of its postponement right and any
information related thereto which is given to such Holder by the Company.
(g) Notwithstanding the provisions of this Section 7.3 or
Section 7.1(c)(ii), the aggregate number of days (whether or not consecutive)
during which the Company may delay the effectiveness of the Registration
Statement or prevent offerings, sales or distributions by the Holders
pursuant to this Section 7.3 or Section 7.1(c)(ii) shall in no event exceed
120 days during any 12-month period. In addition, no such delay shall exceed
such number of days that the Company determines in good faith to be
reasonably necessary.
Section 7.4 Holder Withdrawal Rights. The Company shall
withdraw from registration any Eligible Securities on request of a Holder.
The Company shall not be obligated to maintain the effectiveness of any
Registration Statement if, after any withdrawal of Eligible Securities by a
Holder, the number of Eligible Securities remaining subject to such
Registration Statement represents less than 5% of the shares of Eligible
Common Stock deemed outstanding, unless the Company is also registering
securities on such Registration Statement for its own account.
ARTICLE 8
REGISTRATION PROCEDURES
Section 8.1 Covenants of the Company Applicable to All
Registration Statements. This Section 8.1 applies to all Registration
Statements filed by the Company and referred to in Section 7.1 and 7.2. The
securities covered by each such Registration Statement are referred to as the
"Registered Securities". Each underwriter (including any qualified
independent underwriter), agent, selling broker, dealer manager or similar
securities industry professional participating in any offering of the
Registered Securities is referred to as an "underwriter" or "agent" and any
agreement entered into with an underwriter or agent is referred to as an
"underwriting or agency agreement". In connection with each such
registration, the Company covenants with each Holder participating in such
offering (each, a "selling holder") and each underwriter or agent
participating therein as follows:
(a) The Company will notify the selling holders and the managing
underwriter or agent, immediately, and confirm the notice in writing, (i)
when the Registration Statement or any pre-effective amendment, post-
effective amendment, prospectus or prospectus supplement is filed or when the
Registration Statement, or any post-effective amendment to the Registration
Statement, shall have become effective, (ii) of the receipt of any comments
from the SEC, (iii) of any request by the SEC or any state securities
authority for additional information or to amend the Registration Statement
or amend or supplement the Prospectus or any notification of an intention to
proceed for that purpose, (iv) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Registered Securities for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceedings for any of such purposes, (v) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of
the Registered Securities the representations and warranties of the Company
contemplated by Section 8.1(i) cease to be true and correct and (vi) of the
existence of any fact that results or may result in the Registration
Statement, the Prospectus or any document incorporated therein by reference
containing an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to make any
statement therein not misleading in light of the circumstances then existing.
(b) The Company will use its best efforts to prevent the issuance
of any stop order suspending the effectiveness of the Registration Statement
or of any order preventing or suspending the use of any preliminary
prospectus and, if any such order is issued, to obtain the lifting thereof at
the earliest possible moment.
(c) The Company will afford the Representative(s) and the managing
underwriters a reasonable opportunity, prior to its being filed with the SEC,
to comment on any Registration Statement, any amendment thereto, or any
amendment of or supplement to the Prospectus.
(d) The Company will furnish to each selling holder and to the
managing underwriter or agent, without charge, as many signed copies of the
Registration Statement (as originally filed) and of all amendments thereto,
whether filed before or after the Registration Statement becomes effective,
copies of all exhibits and documents filed therewith, including documents
incorporated by reference into the Prospectus, and signed copies of all
consents and certificates of experts, as such selling holder or the managing
underwriter or agent may reasonably request, and will furnish to the managing
underwriter, for each other underwriter participating in an underwritten
offering, one conformed copy of the Registration Statement as originally
filed and of each amendment thereto (including documents incorporated by
reference into the Prospectus but without exhibits).
(e) The Company will deliver to each selling holder and each
underwriter or agent participating in such offering, without charge, as many
copies of each preliminary prospectus as such selling holder or such
underwriter or agent may reasonably request, and the Company hereby consents
to the use of such copies for purposes permitted by the Securities Act. The
Company will deliver to each selling holder and each underwriter or agent
participating in such offering, without charge, from time to time during the
period when the Prospectus is required to be delivered under the Securities
Act, such number of copies of the Prospectus (as supplemented or amended) as
such selling holder or such underwriter or agent may reasonably request.
(f) The Company will comply with the Securities Act and the rules
and regulations of the SEC thereunder, the Exchange Act and the rules and
regulations of the SEC thereunder and any state securities laws or rules so
as to permit the completion of the distribution of the Registered Securities
in accordance with the intended method or methods of distribution
contemplated in the Prospectus. If at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales of the
Registered Securities any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the selling
holders, counsel for the underwriters or agents or counsel for the Company,
to amend the Registration Statement or amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in
the opinion of any such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with the
requirements of the Securities Act or the rules and regulations of the SEC
thereunder, the Company will promptly prepare and file with the SEC, subject
to Section 8.1(c), such amendment or supplement as may be necessary to
correct such untrue statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements and will promptly
furnish each selling holder and underwriter or agent with a reasonable number
of copies of such amendment or supplement.
(g) The Company will use its best efforts, in cooperation with the
selling holders or the underwriters or agents, as the case may be, to
register or qualify the Registered Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions as the
selling holders or the managing underwriter or agents, as the case may be,
may designate and to keep such registration or qualification in effect for so
long as such Registration Statement remains effective; provided, however,
that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which
it is not otherwise so subject. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the
Registered Securities have been qualified as above provided.
(h) The Company will effect the listing of the Registered
Securities covered by a Registration Statement on each national securities
exchange on which similar securities issued by the Company are then listed
and make all other necessary or appropriate filings with each such securities
exchange.
(i) The Company shall make such representations and warranties to
the selling holders and the underwriters or agents, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten public offerings.
(j) On the effective date of the Registration Statement or, in the
case of an underwritten offering, on the date of delivery of the
Registered Securities sold pursuant thereto, the Company shall cause to be
delivered to the selling holders and the underwriters or agents, if any,
opinions of counsel for the Company with respect to, among other things, the
due incorporation and good standing of the Company; the qualification of the
Company to transact business as a foreign corporation; the due authorization,
execution and delivery of this Agreement; the due authorization, execution,
authentication and issuance, and the validity and enforce ability, of the
Warrants and/or the Eligible Common Stock, as the case may be; the absence of
material legal or governmental proceedings involving the Company; the absence
of a material breach by the Company of, or a material default under,
agreements binding the Company; the absence of governmental approvals
required to be obtained in connection with the registration, offering and
sale of the Warrants and/or Eligible Common Stock, as the case may be; the
compliance as to form of the Registration Statement and any documents incor-
porated by reference therein with the requirements of the Securities Act; the
effectiveness of such Registration Statement under the Securities Act; and a
statement that, as of the date of the opinion and of the Registration
Statement or most recent post-effective amendment thereto, as the case may
be, nothing has come to the attention of such counsel which causes them to
believe that either the Registration Statement or the Prospectus included
therein, as then amended or supplemented, or the documents incorporated by
reference therein (in the case of such documents, in the light of the
circumstances existing at the time that such documents were filed with the
Commission under the Exchange Act), contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein not misleading (it being understood that such counsel need
express no opinion as to the financial statements and other financial data
included therein or omitted therefrom).
In the event that any broker-dealer registered under the Exchange
Act shall be an "affiliate" of, or shall have a "conflict of interest" with,
the Company (each such term as defined in Schedule E to the By-Laws of the
National Association of Securities Dealers ("NASD")), and such broker-dealer
shall underwrite any Eligible Securities or participate as a member of an
underwriting syndicate or selling group or otherwise "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the By-
Laws of the NASD) thereof, whether as a Holder or as an underwriter, a
placement or sales agent or a broker or dealer in respect of such Eligible
Securities or otherwise, the Company shall assist such broker-dealer, in
complying with the requirements of such Rules and By-Laws, including, without
limitation, by (1) if such Rules or By-Laws, including Schedule E thereto,
shall so require, engaging a "qualified independent underwriter" (as defined
in such Schedule) to participate in the preparation of the registration
statement relating to such Eligible Securities, to exercise usual standards
of due diligence in respect thereto and, if any portion of the offering
contemplated by the Registration Statement is an underwritten offering or is
made through a placement or sales agent, to recommend the maximum public
offering price of such Eligible Securities, (2) paying the fees and expenses
of any such qualified independent underwriter and indemnifying the qualified
independent underwriter to the extent of the indemnification of underwriters
provided in Section 8.4 hereof, and (3) providing to such broker-dealer such
information concerning the Company and its affiliates, officers, directors,
employees and security holders as may be required in order for such broker-
dealer to comply with the requirements of Schedule E to the NASD Bylaws and
Section 44 of the Rules of Fair Practice.
(k) Immediately prior to the effectiveness of the Registration
Statement or, in the case of an underwritten offering, at the time of
delivery of any Registered Securities sold pursuant thereto, the Company
shall cause to be delivered to the selling holders and the underwriters or
agents, if any, letters from the Company's independent public accountants
stating that such accountants are independent public accountants with respect
to the Company within the meaning of the Securities Act and the applicable
published rules and regulations of the SEC thereunder, and otherwise in
customary form and covering such financial and accounting matters as are
customarily covered by letters of the independent public accountants
delivered in connection with primary underwritten public offerings.
(l) If the managing underwriter or agent so requests, the
underwriting or agency agreement shall set forth in full the provisions
hereof relating to covenants, registration expenses, lock-up agreements,
indemnification and contribution contained in this Article 8, with such
changes therein as may be agreed to by the managing underwriter or agent, the
Company and the selling holders.
(m) The Company shall deliver such documents and certificates as
may be requested by any selling holder or the underwriters or agents, if any,
to evidence compliance with Section 8.1(i) and with any customary conditions
contained in the underwriting or agency agreement, if any.
(n) The Company will make available for inspection by
representatives of the selling holders and the underwriters or agents
participating in such offering, any attorney or accountant retained by such
selling holders or underwriters or agents and, with respect to any private
placement of Warrants or Underlying Common Stock, upon notice to the Company,
prospective purchasers, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter or agent, attorney or accountant in
connection with the preparation of the Registration Statement; provided,
however, that any records, information or documents that are designated by
the Company in writing as confidential shall be kept confidential by each
such person (by, among other things, if so requested by the Company, entering
into a confidentiality agreement in form and substance satisfactory to the
Company) unless such records, information or documents become part of the
public domain through no fault of such person or unless disclosure thereof is
required by court or administrative order or the SEC (including the federal
securities law). Without limitation of the foregoing, the Company will give
the selling holders, their underwriters or agents and their respective
counsel, accountants and other representatives and agents the opportunity to
participate in the preparation of any prospectus or offering circular
included therein or filed with the SEC, and, to review all information
reasonably requested by each of them as shall be necessary or appropriate, in
the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
(o) The Company will make generally available to its security
holders as soon as practicable, but not later than forty-five (45) days after
the close of the period covered thereby (or ninety (90) days if such period
is a fiscal year), an earnings statement of the Company (in form complying
with the provisions of Rule 158 under the rules and regulations of the SEC
under the Securities Act), covering a period of twelve (12) months beginning
after the effective date of the Registration Statement but not later than the
first day of the Company's fiscal quarter next following such effective date.
(p) The Company will enter into such customary agreements,
including a customary underwriting or agency agreement with the underwriters
or agents, if any, and take all other reasonable actions in connection with
the offering in order to expedite or facilitate the disposition of the
Registered Securities.
(q) The Company will provide a transfer agent and registrar for
all such Eligible Securities covered by such registration statement not later
than the effective date of such registration statement.
(r) The Company will provide a CUSIP number for all Eligible
Securities being offered, not later than the effective date of the
registration statement.
(s) The Company will take all such other commercially reasonable
actions as are necessary or advisable in order to expedite or facilitate the
disposition of such Eligible Securities.
(t) The Company shall cooperate with the selling holders and the
underwriters or agents participating in such offering to facilitate the
timely preparation and delivery of certificates representing such Registered
Shares to be sold, which certificates shall not bear any restrictive legends
except as required by law or the Articles of Incorporation or the Company's
By-laws; and, in the case of an underwritten offering, enable such Registered
Shares to be in such denominations and registered in such names as the
managing underwriter or underwriters may request in writing at least two
business days prior to any sale of the Registered Shares to the underwriters
or agents participating in such offering.
Section 8.2 Covenants of the Selling Holders.
(a) Each selling holder shall use its best efforts to furnish to
the Company such information regarding the distribution of such Registered
Securities as is customarily requested from selling holders in underwritten
public offerings to the extent necessary to permit the Company to comply with
the Securities Act; provided, that the Company will not include in any
Registration Statement, Prospectus or prospectus supplement information
concerning or relating to any Holder or selling holder to which such Holder
or selling holder shall reasonably object (unless the inclusion of such
information is required by applicable law or the regulation of any securities
exchange to which the Company may be subject), and the Company will not file
any Registration Statement, Prospectus or amendment or supplement thereto to
which such Holder or selling holder shall reasonably object; provided that,
if such Holder or selling holder objected to a registration statement to be
filed in connection with a Piggyback Registration, such Holder or selling
holder may withdraw any or all of its Eligible Securities from such
registration statement and the Company may file such registration statement.
(b) Each selling holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 8.1(a)(vi), such selling holder will forthwith discontinue the
disposition of its Registered Securities pursuant to the Registration
Statement until such selling holder's receipt of the copies of a supplemented
or amended Prospectus contemplated by Section 8.1(f), or until it is advised
in writing by the Company that the use of such Prospectus may be resumed. If
the Company shall give any such notice, the Company shall extend the period
of time during which the Company is required to keep the Registration
Statement effective and usable by the number of days during the period from
the date of receipt of such notice to the date when each selling holder of
Registered Securities covered by such Registration Statement either receives
the copies of a supplemented or amended Prospectus contemplated by Section
8.1(f) or is advised in writing by the Company that the use of such
Prospectus may be resumed.
(c) No selling holders, as such, shall be required to make any
representation or warranty as to the accuracy or completeness of the
Registration Statement or otherwise relating to the offering (except solely
as to written information furnished to the Company by such selling holder
expressly for use in the Registration Statement).
Section 8.3 Registration Expenses.
(a) The Company will pay and bear all costs and expenses incident
to the performance of its obligations under this Agreement with respect to
each registration pursuant to Section 7.1 or 7.2, including, without
limitation:
a. the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits), as originally
filed and as amended, any preliminary prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing
copies thereof to the selling holders or the underwriters or agents, as
the case may be;
b. the preparation, printing and distribution of any underwriting
or agency agreement, agreement among underwriters, selling agreements,
certificates representing the Registered Securities, any Blue Sky or
legal investment survey and other documents relating to the performance
of and compliance with this Agreement;
c. the fees and disbursements of the Company's counsel,
accountants and experts and the reasonable fees and disbursements of one
counsel retained by the selling holders pursuant to Section 8.3(b);
d. except as provided in Section 8.3(c), the fees and
disbursements of the underwriters or agents customarily paid by issuers
or sellers of securities and the reasonable fees and expenses of any
special experts retained in connection with the Registration Statement,
but excluding underwriting discounts and commissions and transfer taxes,
if any;
e. the qualification of the Registered Securities under
applicable securities laws in accordance with Section 8.1(g) and any
filing for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and fees and
disbursements of counsel for the selling holders and the underwriters or
agents, as the case may be, in connection therewith, in connection with
any Blue Sky or legal investment survey and in connection with any
reserve share program;
f. all fees and expenses incurred in connection with the listing,
if any, of any of the Registered Securities on any securities exchange
pursuant to Section 8.1(h); and
g. up to a 5% underwriting discount or commission payable to the
underwriters or agents in connection with the sale of the Registered
Securities.
(b) In connection with the filing of each Registration Statement,
the Company will reimburse the selling holders for the reasonable fees and
disbursements of one firm of legal counsel, which shall be chosen by the
Initial Holder, or if the Initial Holder is not then a selling holder, the
Representative(s) and shall be reasonably satisfactory to the Company.
(c) Each selling holder will pay and bear all costs and expenses
incident to the delivery of the Registered Securities to be sold by it,
including any stock transfer taxes payable upon the sale of such Registered
Securities to the purchaser thereof and, to the extent not paid pursuant to
Section 8.3(a)(vii) above, any underwriting discounts or commissions payable
to underwriters or agents in connection therewith.
Section 8.4 Indemnification and Contribution.
(a) In connection with each registration pursuant to Section 7.1
or 7.2, the Company shall and hereby does indemnify and hold harmless each
selling holder of Eligible Securities, each underwriter or agent
participating in such offering, each person, if any, who controls any selling
holder or any such underwriter or agent within the meaning of Section 15 of
the Securities Act, and each officer, director, employee, agent, stockholder,
member, partner or direct or indirect owner of any of the foregoing (all of
the foregoing being referred to collectively as "Seller Parties" and
individually as a "Seller Party"), as follows:
a. against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of or based upon an untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of an untrue statement of a material fact included in any
preliminary or summary prospectus or the Prospectus (or any amendment or
supplement thereto or any document incorporated therein by reference) or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
b. against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever arising out of or based upon any such untrue statement or
omission, or any such alleged untrue statement or alleged omission, if
such settlement is effected with the written consent of the Company,
which shall not be unreasonably withheld or delayed; and
c. against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by the Seller Parties),
reasonably incurred in investigating, preparing, defending against or
appealing any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that, with respect to any Seller Party, this indemnity
does not apply to any loss, liability, claim, damage or expense to the extent
arising out of an untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by such Seller Party, expressly for use in the
Registration Statement (or any amendment thereto), or any preliminary or
summary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) Each selling holder agrees severally, and not jointly or
jointly and severally, to indemnify and hold harmless the Company, its
directors, each of its officers who signed a Registration Statement, each
underwriter or agent participating in such offering and the other selling
holders, and each person, if any, who controls the Company, any such
underwriter or agent and any other selling holder within the meaning of
Section 15 of the Securities Act and each officer, director, employee, agent,
stockholder, member, partner or direct or indirect owner of any of the
foregoing, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 8.4(a), as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any amendment thereto),
or any preliminary or summary prospectus or the Prospectus (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such selling holder expressly for use
in the Registration Statement (or any amendment thereto), or any preliminary
or summary prospectus or the Prospectus (or any amendment or supplement
thereto); provided, however, that the liability of any selling holder under
this Section 8.4(b) shall be limited to the amount of net proceeds received
by such selling holder in the offering giving rise to such liability.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve the indemnifying party from any liability it may have
under this Agreement, except to the extent that the indemnifying party is
materially prejudiced thereby and shall not relieve the indemnifying party
from any liability it may have had to any indemnified party otherwise than
under this Section 8.4. In case any action or proceeding is brought against
the indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, unless in the reasonable judgment of the indemnified party a
conflict may exist between the indemnifying party and the indemnified party
in respect of such claim or proceeding, to assume the defense thereof,
jointly with any other indemnifying party so notified, with counsel
reasonably satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party that it so chooses, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
a. if the indemnifying party fails to take reasonable steps
necessary to defend diligently the claim within twenty (20) days after
receiving notice from the indemnified party that the indemnified party
believes it has failed to do so; or
b. if the indemnified party who is a defendant in any action or
proceeding which is also brought against the indemnifying party
reasonably shall have concluded that there may be one or more legal
defenses available to the indemnified party which are not available to
the indemnifying party; or
c. if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional
conduct, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified parties in each jurisdiction, except
to the extent any indemnified party or parties reasonably shall have
concluded that there may be legal defenses available to such party or
parties which are not available to the other indemnified parties or to
the extent representation of all indemnified parties by the same counsel
is otherwise inappropriate under applicable standards of professional
conduct) and the indemnifying party shall be liable for any reasonable
expenses therefor. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending
or threatened action or in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim and (B) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If for any reason the forgoing indemnity is unavailable, or is
insufficient to hold harmless, an indemnified party, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified
party as a result of any loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other
from such offering of securities. If, however, the allocation provided in
the immediately preceding sentence is not permitted by applicable law, or if
the indemnified party failed to give the notice required by subparagraph (c)
above and the indemnifying party is materially prejudiced thereby, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the indemnifying party
and the indemnified party as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this subparagraph (d) were to be determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the preceding sentences of
this subparagraph (d). The amount paid or payable in respect of any claim
shall be deemed to include any legal or other expenses incurred by such
indemnified party in connection with investigation or defending any such
claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act or the equivalent thereof under any
applicable law) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything in
this subparagraph (d) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this subparagraph (d) to contribute
any amount in excess of the net proceeds received by such indemnifying party
from the sale of securities in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate, less the amount of
any indemnification payment made pursuant to this subparagraph (d).
(e) Any indemnity and reimbursement agreements contained herein
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract. The
indemnity and contribution agreements contained in this Section 8.4 and the
representations and warranties of the Company referred to in Section 8.1(i)
shall remain operative and in full force and effect regardless of (i) any
termination of any underwriting or agency agreement, (ii) any investigation
made by or on behalf of the selling holders, the Company or any underwriter
or agent or controlling person or (iii) the consummation of the sale or
successive resales of the Registered Securities.
(f) The indemnification and contribution required herein shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
Section 8.5 Rule 144. The Company covenants that it will
continue to file on a timely basis the reports required to be filed by it
under the Securities Act and the rules and regulations of the SEC thereunder
and the Exchange Act and the rules and regulations of the SEC thereunder and
it will take such further action as any Holder of Eligible Securities may
reasonably request, all to the extent required from time to time to enable
such Holder to sell Eligible Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time.
Upon the request of any Holder of Eligible Securities, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
Section 8.6 Participation in Underwritten Offerings. No Holder
may participate in any underwritten offering hereunder unless:
(a) Such Holder (other than the Initial Holder) executes a power
of attorney appointing one or more (up to three (3)) attorneys (each, a
"Representative") designated by the selling holders proposing to sell a
majority of the Eligible Securities proposed to be sold by all selling
holders. Each such Representative shall be authorized, on customary
terms, to execute the underwriting agreement on behalf of each selling
holder and to otherwise act for the selling holders in connection with
the offering.
(b) Such Holder (other than the Initial Holder) directly through
its Representative, enters into an underwriting agreement with the
Company, the other selling holders, any selling stockholders and the
underwriters, which underwriting agreement shall comply with the
provisions of this Article 8.
(c) Such Holder executes all questionnaires and other documents
required by the underwriting agreement to be executed by such Holder.
Section 8.7 Lock-Up Agreements.
(a) Provided that the Company, within 10 Business Days after
receiving a Registration Demand, has not given notice to the Holder making
such Registration Demand to the effect that it is unable to provide a "lock-
up" as described in this Section 8.7(a) because it intends to issue
securities within the following 90 days, the Company agrees that it will not,
directly or indirectly, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, any share of Common Stock or securities
convertible into or exchangeable or exercisable for any share of Common
Stock, other than any (i) such sale or distribution of Common Stock upon
exercise of Warrants in the case of any registration pursuant to Section 7.l
and (ii) Excluded Securities (as defined below), for a period of ninety (90)
days (or such shorter period as the managing underwriter of such registration
shall determine) from the effective date of any Registration Statement
pertaining to such Eligible Common Stock."Excluded Securities" shall mean
(1) options or other securities issued to employees or directors of the
Company, (2) securities issued in exchange for interests in real property,
(3) shares issued in connection with the Company's DRIP, (4) securities
issued upon conversion of convertible securities issued by the Company and
(5) non-convertible preferred stock of the Company and non-convertible debt
securities of the Company.
(b) Each Holder of Eligible Common Stock whose Eligible Common
Stock is covered by a Registration Statement filed pursuant to Sections 7.1
or 7.2 agrees that it will not, directly or indirectly, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any shares of
Common Stock (other than the Eligible Common Stock covered by such Registra-
tion Statement) or any Warrants or other securities convertible into or
exchangeable or exercisable for Common Stock, for a period of ninety (90)
days (or such shorter period as the managing underwriter of such registration
shall determine) days from the effective date of the Registration Statement
pertaining to such Eligible Common Stock.
(c) The lock-up agreements set forth in Sections 8.7(a) and 8.7(b)
shall be subject to customary exceptions that may be contained in an
underwriting agreement if any such registration involves an underwritten
offering.
ARTICLE 9
WARRANT AGENT
Section 9.1 Nature of Duties and Responsibilities Assumed.
(a) The Company hereby appoints the Warrant Agent to act as agent
of the Company as set forth in this Agreement. The Warrant Agent hereby
accepts such appointment as agent of the Company and agrees to perform that
agency upon the terms and conditions herein set forth, by all of which the
Company and the Holders, by their acceptance thereof, shall be bound.
(b) The Warrant Agent shall not by countersigning the Warrant
Certificates or by any other act hereunder be deemed to make any
representations as to (i) the validity or authorization of the Warrants or
the Warrant Certificates (except as to its countersignature thereon), or of
any securities or other property delivered upon exercise or tender of any
Warrant, (ii) the accuracy of the computation of the Exercise Price or the
number or kind or amount of stock or other securities or other property
deliverable upon exercise of any Warrant, or (iii) the correctness of the
representations of the Company made in such certificates that the Warrant
Agent receives.
(c) The Warrant Agent shall not have any duty to calculate or
determine any adjustments with respect either to the Exercise Price, the kind
and amount of shares or other securities or any property receivable by
Holders upon the exercise or tender of Warrants, and the Warrant Agent shall
have no duty or responsibility in determining the accuracy or correctness of
such calculation. The Warrant Agent shall not (i) be liable for any recital
or statement of fact contained herein, or in the Warrant Certificates, or for
any action taken, suffered or omitted by it in good faith on the belief that
any Warrant Certificate, or any other documents or any signatures are genuine
or properly authorized, (ii) be responsible for any failure on the part of
the Company to comply with any of its covenants and obligations contained in
this Agreement or in the Warrant Certificates, or (iii) be liable for any act
or omission in connection with this Agreement except for its own negligence
or willful misconduct.
(d) The Warrant Agent is hereby authorized to accept instructions
with respect to the performance of its duties hereunder from the Chairman,
Chief Executive Officer or President of the Company and to apply to any such
officer for instructions (which instructions will be promptly given in
writing when requested) and the Warrant Agent shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
the instructions of any such officer, but in its discretion the Warrant Agent
may in lieu thereof accept other evidence of such or may require such further
or additional evidence as it may deem reasonable.
(e) The Warrant Agent may execute and exercise any of the rights
and powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys, agents or employees, provided reasonable care
has been exercised in the selection and in the continued employment of any
such attorney, agent or employee. The Warrant Agent shall not be under any
obligation or duty to institute, appear in or defend any action, suit or
legal proceeding in respect hereof, unless first indemnified to its
reasonable satisfaction, but this provision shall not affect the power of the
Warrant Agent to take such action as the Warrant Agent may consider proper,
whether with or without such indemnity. The Warrant Agent shall promptly
notify the Company in writing of any claim made or action, suit or proceeding
instituted against it arising out of or in connection with this Agreement.
(f) The Company will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Warrant
Agent in order to enable it to carry out or perform its duties under this
Agreement.
(g) The Warrant Agent shall act solely as agent of the Company
hereunder. The Warrant Agent shall not be liable except for the failure to
perform such duties as are specifically set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the
Warrant Agent, whose duties and obligations shall be determined solely by the
express provisions hereof.
Section 9.2 Right to Consult Counsel. The Warrant Agent may at
any time consult with competent legal counsel, and the Warrant Agent shall
incur no liability or responsibility to the Company and to the Holders for
any action taken, suffered or omitted by it in good faith in accordance with
the opinion or advice of such counsel.
Section 9.3 Compensation and Reimbursement. The Company agrees
to pay to the Warrant Agent from time to time compensation for all services
rendered by it hereunder as the Company and the Warrant Agent may agree from
time to time, and to reimburse the Warrant Agent for reasonable expenses and
disbursements incurred in connection with the execution and administration of
this Agreement (including the reasonable compensation and the expenses of its
counsel), and further agrees to indemnify the Warrant Agent for, and to hold
it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
Section 9.4 Warrant Agent May Hold Company Securities. The
Warrant Agent and any stockholder, director, officer or employee of the
Warrant Agent may buy, sell or deal in any of the securities of the Company
or its Affiliates or become pecuniarily interested in transactions in which
the Company or its Affiliates may be interested, or contract with or lend
money to the Company or its Affiliates or otherwise act as fully and freely
as though it were not the Warrant Agent under this Agreement. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
Section 9.5 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Warrant Agent and no
appointment of a successor warrant agent shall become effective until the
acceptance of appointment by the successor warrant agent as provided herein.
The Warrant Agent may resign its duties and be discharged from all further
duties and liability hereunder (except liability arising as a result of the
Warrant Agent's own negligence or willful misconduct) after giving written
notice to the Company.
(b) The Company may remove the Warrant Agent upon written notice,
and the Warrant Agent shall thereupon in like manner be discharged from all
further duties and liabilities hereunder, except as aforesaid. The Warrant
Agent shall, at the Company's expense, cause to be mailed (by first-class
mail, postage prepaid) to the Holders at their last address as shown on the
register of the Company maintained by the Warrant Agent a copy of said notice
of resignation or notice of removal, as the case may be.
(c) Upon such resignation or removal, the Company shall appoint in
writing a new warrant agent. If the Company shall fail to make such
appointment within a period of twenty (20) days after it has been notified in
writing of such resignation by the resigning Warrant Agent or after such
removal, then the Holders may apply to any court of competent jurisdiction
for the appointment of a new warrant agent. Any new warrant agent, whether
appointed by the Company or by such a court, shall be a corporation doing
business under the laws of the United States or any state thereof, in good
standing and having a combined capital and surplus of not less than
$50,000,000. The combined capital and surplus of any such new warrant agent
shall be deemed to be the combined capital and surplus as set forth in the
most recent annual report of its condition published by such warrant agent
prior to its appointment, provided that such reports are published at least
annually pursuant to law or to the requirements of a Federal or state
supervising or examining authority.
(d) After acceptance in writing of such appointment by the new
warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant
Agent, without any further assurance, conveyance, act or deed; but if for any
reason it shall be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of
the Company and shall be legally and validly executed and delivered by the
resigning or removed Warrant Agent. Not later than the effective date of any
such appointment, the Company shall give notice thereof to the resigning or
removed Warrant Agent. Failure to give any notice provided for in this
Section, however, or any defect therein, shall not affect the legality or
validity of the resignation of the Warrant Agent or the appointment of a new
warrant agent, as the case may be.
(e) Any corporation into which the Warrant Agent or any new
warrant agent may be merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, shall be a successor Warrant Agent under this Agreement without any
further act, provided that such corporation would be eligible for appointment
as successor to the Warrant Agent under the provisions of Section 9.5(c).
Any such successor Warrant Agent shall promptly cause notice of its
succession as Warrant Agent to be mailed (by first-class mail, postage
prepaid) to the Holders at their last address as shown on the register of the
Company maintained by the Warrant Agent.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Section 10.1 Representations and Warranties. The Company hereby
represents and warrants that, as of the date of this Agreement:
(a) Authorization. It has the corporate power and authority to
enter into this Agreement and to perform its obligations under, and
consummate the transactions contemplated by, this Agreement and has by proper
action duly authorized the execution and delivery of this Agreement.
(b) No Conflicts or Consents. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated
herein, nor the performance of and compliance with the terms and provisions
hereof will: (i) violate or conflict with any provision of its Articles of
Incorporation or By-laws; (ii) violate any law, regulation (including without
limitation Regulation G, T, U or X), order, writ, judgment, injunction,
decree or permit applicable to it; (iii) violate or materially conflict with
any contractual provisions of, or cause an event of default under, any
indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound; or (iv) result in or require the creation of any
lien, security interest or other charge or encumbrance (other than those
contemplated in or in connection with this Agreement) upon or with respect to
its properties.
(c) Consents. No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental
authority or other Person is required in connection with the execution,
delivery or performance of this Agreement or the Warrants.
(d) Enforceable Obligations. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
(e) Capitalization. As of the date hereof, the Company's
authorized stock consists of (i) 197,650,000 shares of Common Stock of which
16,572,043 have been issued and are outstanding, (ii) 350,000 shares of Class
A Common Stock, $.01 par value per share, of which 339,806 have been issued
and are outstanding, (iii) 2,000,000 shares of Series A 8% Convertible
Redeemable Preferred Stock, .$.01 par value per share, of which no shares
have been issued and are outstanding. As of the date hereof, no shares of
Common Stock are held in treasury, 1,326,235 shares of Common Stock have been
reserved for issuance under the Company's Rollover Stock Option Plan of which
options to acquire all 1,326,235 shares of Common Stock have been granted and
1,750,000 shares of Common Stock have been reserved for issuance under the
Company's 1997 Management Incentive Plan of which options to acquire 547,375
shares of Common Stock have been granted. The Company also grants shares of
Common Stock to directors in consideration of their service as directors.
ARTICLE 11
COVENANTS
Section 11.1 Reservation of Common Stock for Issuance on Exercise
of Warrants. The Company covenants that it will at all times reserve and
keep available, free from pre-emptive rights, out of its authorized but
unissued shares of Common Stock, solely for the purpose of issue upon
exercise of Warrants, as herein provided, such number of shares of Common
Stock as shall then be issuable upon the exercise of all Warrants issuable
hereunder. The transfer agent for the Common Stock (the "Transfer Agent")
will be irrevocably authorized and directed at all times to reserve such
number of authorized shares as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent.
The Warrant Agent is hereby irrevocably authorized to requisition from time
to time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company covenants that all shares of Common Stock which
shall be so issuable shall, upon payment therefor as set forth in this
Agreement and such issue, be duly and validly issued and fully paid and non-
assessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof.
Section 11.2 Notice of Dividends. At any time when and if the
Company declares any dividend on its Common Stock, it shall give notice to
the Holders of all the then outstanding Warrants of any such declaration not
less than ten (10) days prior to the related record date for payment of the
dividend so declared.
Section 11.3 Reports. For so long as any Warrants remain
outstanding and not expired by their terms, the Company shall furnish to the
Holders the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act. In addition, the Company shall file with the
Warrant Agent within 15 days after it files them with the Commission copies
of its SEC Reports. In the event the Company shall cease to be required to
file SEC Reports pursuant to the Exchange Act, the Company shall nevertheless
mail such SEC Reports to Holders upon their request. The Company shall
furnish copies of its SEC Reports to Holders promptly after the Company files
the same with the Warrant Agent. The Company shall make all such information
available to investors, securities analysts and broker-dealers who request it
in writing.
ARTICLE 12
WARRANT HOLDERS
Section 12.1 Warrant Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Warrant Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise or conversion of the Warrants represented thereby, nor shall
anything contained herein or in any Warrant Certificate be construed to
confer upon the holder of any Warrant Certificate, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
specifically provided herein), or to receive dividends or subscriptions
rights, or otherwise, until the Warrant or Warrants evidenced by such Warrant
Certificate shall have been exercised and the Company shall have elected to
deliver Common Stock (and not cash) upon such exercise.
Section 12.2 Right of Action. All rights of action in respect of
this Agreement are vested in the Holders of the Warrants, and any Holder of
any Warrant, without consent of the Warrant Agent or any other Holder, may on
such Holder's own behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's right to
exercise or exchange such Holder's Warrants in the manner provided in this
Agreement.
ARTICLE 13
MISCELLANEOUS
Section 13.1 Money and Other Property Deposited with the Warrant
Agent. Any moneys, securities or other property which at any time shall be
deposited by the Company or by Holders with the Warrant Agent pursuant to
this Agreement shall be and are hereby assigned, transferred and set over to
the Warrant Agent in trust for the purpose for which such moneys, securities
or other property shall have been deposited; but such moneys, securities or
other property need not be segregated from other funds, securities or other
property except to the extent required by law. The Warrant Agent shall
distribute any money deposited with it for payment and distribution to the
Company or to Holders by a wire transfer in the appropriate amount to an
account designated by each such Person. Any money deposited with the Warrant
Agent for payment and distribution to the Company or the Holders that remains
unclaimed for two years after the date the money was deposited with the
Warrant Agent shall be returned to the Company or the relevant Holder(s) upon
its or their request therefor.
Section 13.2 Payment of Taxes. The Company shall pay all
transfer, stamp and other similar taxes that may be imposed in respect of the
issuance or delivery of Warrants, or in respect of the issuance or delivery
by the Company of any securities upon exercise of Warrants with respect
thereto. The Company shall not be required, however, to pay any tax or other
charge imposed in connection with any transfer involved in the issue of any
certificate for shares of Common Stock or other securities underlying the
Warrants or payment of cash to any Person other than the Holder of a Warrant
Certificate surrendered upon the exercise or purchase of a Warrant, and in
case of such transfer or payment, the Warrant Agent and the Company shall not
be required to issue any stock certificate or pay any cash until such tax or
charge has been paid or it has been established to the Warrant Agent's and
the Company's satisfaction that no such tax or other charge is due.
Section 13.3 Notices. (a) Any notice, demand or delivery
authorized by this Agreement shall be in writing and shall be sufficiently
given or made when delivered or on the third Business Day following the date
sent by first-class mail, postage prepaid, addressed (i) to any Holder at
such Holder's address shown on the register of the Company maintained by the
Warrant Agent, (ii) to the Company or the Warrant Agent as follows:
If to the Company: Wellsford Real Properties, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
If to the Warrant Agent: United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
or (iii) such other address as shall have been furnished to the party giving
or making such notice, demand or delivery.
(b) The Company hereby irrevocably authorizes the Warrant Agent,
in the name and at the expense of the Company, to mail to the Holders any
such notice upon receipt thereof from the Company.
Section 13.4 APPLICABLE LAW. THIS AGREEMENT, EACH WARRANT
CERTIFICATE AND EACH WARRANT ISSUED HEREUNDER AND ALL RIGHTS ARISING
HEREUNDER SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 13.5 Persons Benefitting. This Agreement shall be
binding upon and inure to the benefit of any Holders (each of whom is an
intended third party beneficiary), the Company and the Warrant Agent, and
their respective successors, assigns, beneficiaries, executors and
administrators. Nothing in this Agreement is intended or shall be construed
to confer upon any Person, other than the Company, the Warrant Agent and the
Holders (and such successors, assigns, beneficiaries, executors and
administrators), any right, remedy or claim under or by reason of this
Agreement or any part hereof.
Section 13.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
Section 13.7 Supplements and Amendments. The Company and the
Warrant Agent may from time to time, without the consent of the Holders, by
supplemental agreement or otherwise, make any changes or corrections in this
Agreement in order to (a) cure any ambiguity or to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, (b) add to the covenants and agreements of the Company for
the benefit of the Holders, or surrender any rights or power reserved to or
conferred upon the Company in this Agreement, (c) modify the restrictions on,
and procedures for, resale and other transfers of the Warrants to the extent
required or permitted by any change in applicable law or regulation (or the
interpretation thereof) of the United States of America or in practices
relating to the resale or transfer of restricted securities generally or (d)
evidence the succession of another Person to the Company or the Warrant Agent
and the assumption by such successor of this Agreement as provided herein;
provided, that, in each case, such changes or corrections shall in any
respect not adversely affect the interests of the Holders. The Warrant Agent
shall send a copy of any such supplemental agreement or amendment to each of
the Holders by first-class mail at the Company's expense. The Warrant Agent
shall join with the Company in the execution and delivery of any such
supplemental agreements and amendments unless it affects the Warrant Agent's
own rights, duties or immunities hereunder, in which case the Warrant Agent
may, but shall not be required to, join in such execution and delivery. Any
amendment or supplement to this Agreement that has an adverse effect on the
rights of Holders as set forth in this Agreement shall require the written
consent of registered Holders of two-thirds (2/3) of the then outstanding
Warrants. Notwithstanding the foregoing, the consent of each Holder of a
Warrant affected shall be required for any amendment pursuant to which the
Shares Amount would be decreased.
Section 13.8 Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience and shall not control
or affect the meaning or construction of any of the provisions hereof.
Section 13.9 Remedies. In the event of a breach by the Company
or by a holder of Eligible Securities, of any of their obligations under this
Agreement, each holder of Eligible Securities or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company and each holder of Eligible
Securities agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
_______________________________
Name: Xxxxxx Xxxxxxxxx
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, Warrant Agent
By: /s/ Xxxxxxx Xxxxxx
_______________________________
Name: Xxxxxxx Xxxxxx
Title: Assistant Vice President
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
WARRANTS TO PURCHASE COMMON STOCK
OF WELLSFORD REAL PROPERTIES, INC.
No._______ Certificate for ______ Warrants
This certifies that [HOLDER] , or registered assigns, is
the registered holder of the number of Warrants set forth above. Each
Warrant entitles the holder thereof (a "Holder"), subject to the provisions
contained herein and in the Warrant Agreement referred to below, to purchase,
from Wellsford Real Properties, Inc., a Maryland corporation (the "Company"),
the number of shares of the Company's common stock, par value $.01 per share
(the "Common Stock"), as provided in the Warrant Agreement, at an exercise
price and subject to all of the terms and conditions set forth in the Warrant
Agreement. At the sole election of the Company, upon the exercise of any
Warrant, the Company may pay to the Holder a certain amount of cash, as
provided in the Warrant Agreement, in lieu of delivering the shares of Common
Stock.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of August 28, 1997 (the "Warrant Agreement"),
between the Company and United States Trust Company of New York, as warrant
agent (the "Warrant Agent", which term includes any successor Warrant Agent
under the Warrant Agreement), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. The
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the Warrant Agreement for a full
statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Warrant Agent and
the Holders of the Warrants.
This Warrant Certificate shall terminate and be void as of the
Close of Business on August 28, 2002.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable from time to
time on any Business Day beginning on August 28, 1997, and ending on the
Expiration Date.
The Exercise Price and the number of shares of Common Stock
issuable upon the exercise of each Warrant are subject to adjustment as
provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the
exercise of Warrants shall, upon payment therefor as set forth in the Warrant
Agreement and such issue, be duly and validly issued and fully paid and non-
assessable.
In order to exercise a Warrant, the registered holder hereof must
surrender this Warrant Certificate at the corporate trust office of the
Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly
executed by the Holder hereof, with signature guaranteed as therein
specified, together with any required payment in full of the Exercise Price
then in effect for the share(s) of Underlying Common Stock as to which the
Warrant(s) represented by this Warrant Certificate are submitted for
exercise, all subject to the terms and conditions hereof and of the Warrant
Agreement. Any such payment of the cash Exercise Price shall be by certified
or official bank check drawn on a New York City bank payable to the order of
the Company.
The Company shall pay all transfer, stamp and other similar taxes
that may be imposed in respect of the issuance or delivery of the Warrants or
in respect of the issuance or delivery by the Company of any securities upon
exercise of the Warrants. The Company shall not be required, however, to pay
any tax or other charge imposed in connection with any transfer involved in
the issuance of any certificate for shares of Common Stock or other
securities underlying the Warrants or payment of cash to any Person other
than the Holder of a Warrant Certificate surrendered upon the exercise or
purchase of a Warrant, and in case of such transfer or payment, the Warrant
Agent and the Company shall not be required to issue any stock certificate or
pay any cash until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or other charge is
due.
Subject to the Warrant Agreement, this Warrant Certificate and all
rights hereunder are transferable by the registered holder hereof, in whole
or in part, on the register of the Company, upon surrender of this Warrant
Certificate for registration of transfer at the office of the Warrant Agent
maintained for such purpose in The City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed by, the Holder hereof or his
attorney duly authorized in writing, with signature guaranteed as specified
in the attached Form of Assignment. Upon any partial transfer, the Company
will issue and deliver to such holder a new Warrant Certificate or
Certificates with respect to any portion not so transferred.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Each taker and holder of this Warrant Certificate, by taking or
holding the same, consents and agrees that this Warrant Certificate when duly
endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the holder hereof may be treated by
the Company, the Warrant Agent and all other persons dealing with this
Warrant Certificate as the absolute owner hereof for any purpose and as the
person entitled to exercise the rights represented hereby, or to the transfer
hereof on the register of the Company maintained by the Warrant Agent, any
notice to the contrary notwithstanding, but until such transfer on such
register, the Company and the Warrant Agent may treat the registered Holder
hereof as the owner for all purposes.
This Warrant Certificate and the Warrant Agreement are subject to
amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate that are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
Copies of the Warrant Agreement are on file at the office of the
Company and may be obtained by writing to the Company at the following
address: 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
This Warrant Certificate shall not be valid for any purpose until
it shall have been countersigned by the Warrant Agent.
Dated: __________
WELLSFORD REAL PROPERTIES, INC.
By: _________________________
Name:
Title:
Countersigned:
UNITED STATES TRUST COMPANY
OF NEW YORK, Warrant Agent
By: _________________________
Name:
Title:
FORM OF REVERSE OF WARRANT CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Wellsford Real Properties, Inc.
The undersigned irrevocably exercises __________of the Warrants
for, at your election, either (i) the Shares Amount or (ii) the Cash Amount
and herewith makes payments of $_____________ and/or delivers __________
membership units of Wellsford\Whitehall Properties, L.L.C. (such cash payment
being by certified or official bank check drawn on a New York City bank
payable to the order of Wellsford Real Properties, Inc.), all at the Exercise
Price and on the terms and conditions specified in the within Warrant
Certificate and the Warrant Agreement therein referred to, surrenders this
Warrant Certificate and all right, title and interest therein to Wellsford
Real Properties, Inc. and directs that any shares of Common Stock deliverable
upon the exercise of such Warrants be registered in the name and delivered at
the address specified below or any Cash Amount be wired to the account
specified below.
Date: ________________
________________________________________(1)
(Signature of Owner)
________________________________________
(Xxxxxx Xxxxxxx)
________________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
_______________________________________]
Securities and/or check to be issued to:
_______________________
(1) The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Wire transfer instructions:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants
constituting a part of the Warrants evidenced by the within Warrant
Certificate not being assigned hereby) all of the rights of the undersigned
under the within Warrant Certificate, with respect to the number of Warrants
set forth below:
Social
Security or
other
Identifying
Names of Number of Number of
Assignees Address Assignee(s) Warrants
--------- ------- ----------- --------
and does hereby irrevocably constitute and appoint ________________ the
undersigned's attorney to make such transfer on the books of _______________
maintained for that purpose, with full power of substitution in the premises.
Date: _______________
______________________________________(1)
(Signature of Owner)
______________________________________
(Xxxxxx Xxxxxxx)
______________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
______________________________________
___________________
(1) The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2 ORIGINAL ISSUE OF WARRANTS
Section 2.1. Form of Warrant Certificates. . . . . . . . . . . . . . . . .5
Section 2.2. Execution and Delivery of Warrant Certificates. . . . . . . .6
ARTICLE 3 EXERCISE OF WARRANTS
Section 3.1. Exercise Procedures . . . . . . . . . . . . . . . . . . . . .6
ARTICLE 4 COMPLIANCE WITH THE SECURITIES ACT
Section 4.1. Transfers . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 4.2. Representations . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE 5 REGISTRATION OF TRANSFERS AND EXCHANGES
Section 5.1. Generally . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 5.2. Mutilated, Destroyed, Lost or Stolen Warrant Certificates . .8
ARTICLE 6 ADJUSTMENTS
Section 6.1. Adjustment upon Certain Transactions. . . . . . . . . . . . .9
ARTICLE 7 REGISTRATION RIGHTS
Section 7.1. Demand Registration . . . . . . . . . . . . . . . . . . . . 19
Section 7.2. Piggyback Registration Rights . . . . . . . . . . . . . . . 22
Section 7.3. Company's Ability to Postpone Registration Rights . . . . . 23
Section 7.4. Holder Withdrawal Rights. . . . . . . . . . . . . . . . . . 24
ARTICLE 8 REGISTRATION PROCEDURES
Section 8.1. Covenants of the Company Applicable to All
Registration Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.2. Covenants of the Selling Holders. . . . . . . . . . . . . . 29
Section 8.3. Registration Expenses . . . . . . . . . . . . . . . . . . . 30
Section 8.4. Indemnification and Contribution. . . . . . . . . . . . . . 31
Section 8.5. Rule 144. . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.6. Participation in Underwritten Offerings . . . . . . . . . . 34
Section 8.7. Lock-Up Agreements. . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 9 WARRANT AGENT
Section 9.1. Nature of Duties and Responsibilities Assumed . . . . . . . 35
Section 9.2. Right to Consult Counsel. . . . . . . . . . . . . . . . . . 37
Section 9.3. Compensation and Reimbursement. . . . . . . . . . . . . . . 37
Section 9.4. Warrant Agent May Hold Company Securities . . . . . . . . . 37
Section 9.5. Resignation and Removal; Appointment of Successor . . . . . 37
ARTICLE 10 REPRESENTATIONS AND WARRANTIES
Section 10.1. Representations and Warranties. . . . . . . . . . . . . . . 38
ARTICLE 11 COVENANTS
Section 11.1. Reservation of Common Stock for Issuance on
Exercise of Warrants.. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.2. Notice of Dividends . . . . . . . . . . . . . . . . . . . . 40
Section 11.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 12 WARRANT HOLDERS
Section 12.1. Warrant Certificate Holder Not Deemed a
Shareholder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 12.2. Right of Action . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 13 MISCELLANEOUS
Section 13.1. Money and Other Property Deposited with the
Warrant Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 13.2. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . 41
Section 13.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 13.4. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . 42
Section 13.5. Persons Benefitting . . . . . . . . . . . . . . . . . . . . 42
Section 13.6. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 42
Section 13.7. Supplements and Amendments. . . . . . . . . . . . . . . . . 42
Section 13.8. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 13.9. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 43
WARRANTS TO PURCHASE COMMON STOCK
OF WELLSFORD REAL PROPERTIES, INC.
No. 1 Certificate for 5,000,000 Warrants
This certifies that WHWEL REAL ESTATE LIMITED PARTNERSHIP, or
registered assigns, is the registered holder of the number of Warrants set
forth above. Each Warrant entitles the holder thereof (a "Holder"), subject
to the provisions contained herein and in the Warrant Agreement referred to
below, to purchase, from Wellsford Real Properties, Inc., a Maryland
corporation (the "Company"), the number of shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), as provided in the
Warrant Agreement, at an exercise price and subject to all of the terms and
conditions set forth in the Warrant Agreement. At the sole election of the
Company, upon the exercise of any Warrant, the Company may pay to the Holder
a certain amount of cash, as provided in the Warrant Agreements, in lieu of
delivering the shares of Common Stock.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of August 28, 1997 (the "Warrant Agreement"),
between the Company and United States Trust Company of New York, as warrant
agent (the "Warrant Agent", which term includes any successor Warrant Agent
under the Warrant Agreement"), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. The
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the Warrant Agreement for a full
statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Warrant Agent and
the Holders of the Warrants.
This Warrant Certificate shall terminate and be void as of the
Close of Business on August 28, 2002.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable from time to
time on any Business Day beginning on August 28, 1997, and ending on the
Expiration Date.
The Exercise Price and the number of shares of Common Stock
issuable upon the exercise of each Warrant are subject to adjustment as
provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the
exercise of Warrants shall, upon payment therefor as set forth in the Warrant
Agreement and such issue, be duly and validly issued and fully paid and non-
assessable.
In order to exercise a Warrant, the registered holder hereof must
surrender this Warrant Certificate at the corporate trust office of the
Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly
executed by the Holder hereof, with signature guaranteed as therein
specified, together with any required payment in full of the Exercise Price
then in effect for the share(s) of Underlying Common Stock as to which the
Warrant(s) represented by this Warrant Certificate are submitted for
exercise, all subject to the terms and conditions hereof and of the Warrant
Agreement. Any such payment of the cash Exercise Price shall be by certified
or official bank check drawn on a New York City Bank payable to the order of
the Company.
The Company shall pay all transfer, stamp and other similar taxes
that may be imposed in respect of the issuance or delivery of the Warrants or
in respect of the issuance or delivery by the Company of any securities upon
exercise of the Warrants. The Company shall not be required, however, to pay
any tax or other charge imposed in connection with any transfer involved in
the issuance of any certificate for shares of Common Stock to other
securities underlying the Warrants or payment of cash of any Person other
than the Holder or a Warrant Certificate surrendered upon the exercise of
purchase of a Warrant, and in case of such transfer or payment, the Warrant
Agent and the Company shall not be required to issue any stock certificate or
pay any cash until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or other charge is
due.
Subject to the Warrant Agreement, this Warrant Certificate and all
rights hereunder are transferable by the registered holder hereof, in whole
or in part, on the register of the Company, upon surrender of this Warrant
Certificate for registration of transfer at the office of the Warrant Agent
maintained for such purpose in The City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed by, the Holder hereof or his
attorney duly authorized in writing, with signature guaranteed as specified
in the attached Form of Assignment. Upon any partial transfer, the Company
will issue and deliver to such holder a new Warrant Certificate or
Certificates with respect to any portion not so transferred.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Each taker and holder of this Warrant Certificate, by taking or
holding the same, consents and agrees that this Warrant Certificate when duly
endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the Holder hereof may be treated by
the Company, the Warrant Agent and all other persons dealing with this
Warrant Certificate as the absolute owner hereof for any purpose and as the
person entitled to exercise the rights represented hereby, or to the transfer
hereof on the register of the Company maintained by the Warrant Agent, any
notice to the contrary notwithstanding, but until such transfer on such
register, the Company and the Warrant Agent may treat the registered Holder
hereof as the owner for all purposes.
This Warrant Certificate and the Warrant Agreement are subject to
amendment as provided in the Warrant Agreement.
All terms used in this Warrant Certificate that are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
Copies of the Warrant Agreement are on file at the office of the
Company and may be obtained by writing to the Company at the following
address: 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
This Warrant Certificate shall not be valid for any purpose until
it shall have been countersigned by the Warrant Agent.
Dated: August 28, 1997
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
___________________________
Name: Xxxxxx Xxxxxxxxx
Title: President
Countersigned:
UNITED STATES TRUST COMPANY OF NEW YORK, Warrant Agent
By: /s/ Xxxxxxx Xxxxxx
______________________________
Name: Xxxxxxx Xxxxxx
Title: Assistant Vice President
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Wellsford Real Properties, Inc.
The undersigned irrevocably exercises ____________ of the Warrants
for, at your election, either (i) the Shares Amount of (ii) the Cash Amount
and herewith makes payments of $________ and/or delivers _____ membership
units of Wellsford/Whitehall Properties, L.L.C. (such cash payment being by
certified or official bank check drawn on a New York City bank payable to the
order of Wellsford Real Properties, Inc.), all at the Exercise Price and on
the terms and conditions specified in the within Warrant Certificate and the
Warrant Agreement therein referred to, surrenders this Warrant Certificate
and all right, title and interest therein to Wellsford Real Properties, Inc.
and directs that any shares of Common Stock deliverable upon the exercise of
such Warrants be registered in the name and delivered at the address
specified below or any Cash Amount be wired to the account specified below.
Date:
_______________________________*
(Signature of Owner)
_______________________________
(Xxxxxx Xxxxxxx)
________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
_______________________________]
Securities and/or check to be issued to:
* The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Wire transfer instructions:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants
constituting a part of the Warrants evidenced by the within Warrant
Certificate not being assigned hereby) all of the rights of the undersigned
under the within Warrant Certificate, with respect to the number of Warrants
set forth below:
Social Security or
other Identifying
Names of Number of
Assignees Address Assignee(s) Number of Warrants
--------- ------- ----------- ------------------
and does hereby irrevocably constitute and appoint the undersigned's attorney
to make such transfer on the books of maintained for that purpose with full
power of substitution in the premises.
Date:
________________________________ *(Signature
of Owner)
________________________________
(Xxxxxx Xxxxxxx)
________________________________
(City) (State) (Zip Code)
[Signature Guaranteed by:
_______________________________]
______________________
* The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Warrant Agent.
