EXHIBIT 4.2
WARRANT AGREEMENT
WARRANT AGREEMENT ("Agreement"), dated as of ___________ ___, 2000, by
and between XxxxxXxxx.xxx, Inc., a Texas corporation (the "Company"), and Xxxx
Capital Partners, Inc. and Pennsylvania Merchant Group (collectively, the
"Representatives").
WHEREAS, pursuant to an underwriting agreement between the Company
and the Representatives dated March __, 2000 (the "Underwriting Agreement"),
the Representatives have agreed to act as the representatives of the several
underwriters in connection with a proposed public offering by the Company
(the "Public Offering") of up to 4,025,000 shares (the "Public Shares") of
its common stock, no par value per share (the "Common Stock"), including
525,000 Public Shares covered by an over-allotment option; and
WHEREAS, pursuant to Section 6(l) of the Underwriting Agreement, the
Company has agreed to issue to the Representatives, for their own account, a
warrant (the "Warrant") to purchase up to 262,500 shares of Common Stock (or
up to 301,875 shares of Common Stock if the over-allotment option is
exercised), representing 7.5% of the Public Shares issued in the Public
Offering, subject to adjustment as provided herein (the "Warrant Shares"), at
a price per share equal to 165% of the Public Offering price; and
WHEREAS, the Public Shares and Warrant Shares are covered by a
registration statement (the "Registration Statement") prepared by the Company
and filed with the Securities and Exchange Commission, registration no.
333-94337.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and in the Underwriting Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. GRANT. On the Closing Date as defined in the Underwriting
Agreement, as an integral part of the consideration payable to the
Representatives for agreeing to act as the representatives of the several
underwriters under the Underwriting Agreement, the Company shall grant, issue
and deliver the said Warrant to the Representatives, severally and not
jointly. The Warrant shall be evidenced by one or more certificates (the
"Warrant Certificates") substantially in the form set forth in Exhibit A
attached hereto. The Warrant Certificates shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
Chairman of the Board, Chief Executive Officer, President or Vice President
of the Company, attested by the manual or facsimile signature of the
Secretary or an Assistant Secretary of the Company. Warrant Certificates
bearing the manual or facsimile signatures of individuals who were at any
time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrant Certificates or did
not hold such offices on the date of this Agreement. Warrant Certificates
shall be dated as of the date of execution thereof by the Company either upon
initial issuance or upon division, exchange, substitution or transfer.
2. REGISTRATION. The Warrant Certificates shall be consecutively
numbered and shall be registered on the warrant ownership and transfer records
(the "Warrant Register") of the Company as they are issued. The Company shall be
entitled to treat the registered holder (the
"Holder") of any Warrant Certificate on the Warrant Register as the owner in
fact for all purposes, shall not be bound to recognize any equitable or other
claim to or interest in such Warrant Certificate on the part of any other
person, and shall not be liable for any registration or transfer of Warrant
Certificates which are registered or are to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting
such registration or transfer, or with the knowledge of such facts that its
participation therein amounts to bad faith. One or more Warrant Certificates,
entitling the Holder or Holders thereof to purchase, in the aggregate, the
Warrant Shares shall be registered initially in the names of the
Representatives or in the names of such other Holders as are permitted
hereunder and under the Conduct Rules of the National Association of
Securities Dealers, Inc. ("NASD"), and in such denominations as, not less
than two days before the Closing Date, Xxxx Capital Partners, Inc., as one of
the Representatives, may request in writing to the Company.
3. EXCHANGE. Upon the surrender of a Warrant Certificate to the Company
and the written request of the Holder, the Company shall exchange the Warrant
Certificate for another certificate or certificates of like tenor entitling the
Holder thereof to purchase, in the aggregate, the number of Warrant Shares
stated in the Warrant Certificate being surrendered.
4. TRANSFER. The Warrant shall not be sold, transferred, assigned,
pledged or hypothecated by any person for a period of one year following the
effective date of the Registration Statement except (a) to any member of the
NASD participating in the Public Offering and their bona fide officers and
partners who agree in writing to be bound by the terms hereof or (b) as
otherwise permitted by Rule 2710(c)(7) of the Conduct Rules of the NASD; and the
Warrant Certificates shall bear an appropriate legend describing such
restriction and stating the time period for which the restriction is operative.
Subject to the restriction on transfer set forth in the preceding sentence, the
Warrant shall be transferable on the Warrant Register upon delivery of the
Warrant Certificate therefor duly endorsed by the Holder or by the Holder's duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall deliver a new Warrant Certificate to the person
entitled thereto.
5. TERM AND EXERCISE.
5.1 Subject to all the terms and provisions of this Agreement,
each Warrant Certificate shall entitle the Holder, at any time from 10:00 a.m.,
Pacific time, on __________ ___, 2001 (the "Initial Exercise Date", being the
date one year after the effective date of the Registration Statement) until 6:00
p.m., Pacific time, on __________ ___, 2005 (the "Expiration Date", being the
date five years after the effective date of the Registration Statement), to
purchase from the Company the number of fully-paid Warrant Shares set forth
therein at a purchase price of $________, subject to adjustment (the "Warrant
Price").]
5.2 The Holder may exercise such right, in whole or part, by
surrender to the Company, or its duly authorized agent, of such Warrant
Certificate, with the form of election to purchase duly filled in and signed,
accompanied by payment to the Company of the Warrant Price, as adjusted in
accordance with the provisions of Section 11 of this Agreement, for the
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number of Warrant Shares in respect of which such right is then being exercised.
Payment of the Warrant Price shall be made in cash, by certified or official
bank check, by wire transfer, or a combination thereof. No adjustment shall be
made for any dividends on any Warrant Shares of stock issuable upon exercise of
the Warrant or any intent therein.
5.3 The Company shall thereupon issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
Holder, and in such name or names as such registered Holder may designate, a
certificate or certificates for the number of full Warrant Shares for which the
Warrant is then being exercised, together with cash, as provided in Section 12
of this Agreement in respect of any fraction of a share otherwise issuable upon
such surrender and, if the right to purchase Warrant Shares represented by a
Warrant Certificate shall not be exercised in full, a new Warrant Certificate
for the remaining number of whole Warrant Shares represented by the Warrant
Certificate surrendered.
5.4 If permitted by applicable law, such certificate or
certificates for the Warrant Shares shall be deemed to have been issued, and any
person so designated to be named therein shall be deemed to have become a holder
of record of such shares, as of the date of the surrender such Warrant
Certificate and payment of the Warrant Price as aforesaid.
6. [Reserved]
7. PAYMENT OF TAXES. The Company shall pay all documentary stamp taxes,
if any, attributable to the initial issuance of Warrant Shares.
8. MUTILATED OR MISSING WARRANTS. In case any Warrant Certificate shall
be mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant of like tenor and representing an equivalent
right or interest upon receipt of evidence reasonably satisfactory to the
Company of such mutilation, loss, theft or destruction of such Warrant
Certificate and, if requested, indemnity or bond also reasonably satisfactory to
the Company.
9. RESERVATION OF WARRANT SHARES. There have been reserved out of the
authorized and unissued shares of Common Stock a number of shares sufficient to
provide for the exercise of the rights of purchase represented by the Warrant,
and the transfer agent for the Common Stock (the "Transfer Agent") and every
subsequent Transfer Agent for any shares of the Company's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized and unissued shares as shall be required for
such purpose. The Company shall keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent Transfer Agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrant. The Company shall supply such Transfer Agent with
duly executed stock certificates for such purposes and shall itself provide or
otherwise make available any cash which may be issuable as provided in Section
12 of this Agreement. The Company shall furnish to such Transfer Agent a copy of
all notices of adjustments, and certificates related thereto, transmitted to
each Holder pursuant to Section 11.2 of this
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Agreement. All Warrant Certificates surrendered upon the exercise of the rights
thereby evidenced shall be cancelled.
10. STOCK EXCHANGE LISTINGS. The Company, at any time and from time to
time, at its sole cost and expense, shall take all action which may be necessary
or convenient so that the Warrant Shares, immediately upon their issuance, shall
be listed on the principal securities exchanges and markets within the United
States of America, if any, on which other shares of Common Stock are then
listed.
11. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of securities purchasable upon the exercise of the Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as hereinafter defined. For purposes of this Section
11, "Common Stock" means shares now or hereafter authorized of any class of
common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
11.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares
purchasable upon the exercise of each warrant and the Warrant Price shall be
subject to adjustment as follows:
(a) In case the Company shall (i) subdivide
its outstanding shares of Common Stock, (ii) combine its outstanding shares of
Common Stock or (iii) issue by reclassification of its shares of Common Stock
other securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of the
Warrant immediately prior thereto shall be adjusted so that each Holder shall be
entitled to receive the kind and number of Warrant Shares or other securities of
the Company which he would have owned or would have been entitled to receive
after the happening of any of the events described above had the Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for such event. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) In case the Company shall distribute to
all holders of its shares of Common Stock (including any such distribution made
in connection with a consolidation or merger in which the Company is the
surviving corporation) evidences of its indebtedness or assets (excluding cash
dividends or distributions payable out of consolidated earnings or earned
surplus and dividends or distribution referred to in paragraph (a) above or in
the paragraph immediately following this paragraph) or rights, options or
warrants, or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock, then in each case the number
of Warrant Shares thereafter purchasable upon the exercise of the rights
evidenced by the Warrant shall be determined by multiplying the number of
Warrant
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Shares theretofore purchasable by a fraction, the numerator of which shall be
the then current market price per share of Common Stock (as defined in paragraph
(c) below) on the date of such distribution, and the denominator of which shall
be the then current market price per share of Common Stock, less the then fair
value (as reasonably determined by the Board of Directors of the Company) of the
portion of the assets or evidences of indebtedness so distributed or of such
subscription rights, options or warrants, or of such convertible or exchangeable
securities applicable to one share of Common Stock. Such adjustment shall be
made whenever any such distribution is made and shall become effective on the
date of distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
In the event of a distribution by the Company to all holders of its
shares of Common Stock of shares of capital stock of a subsidiary or securities
convertible into or exercisable for such stock, then in lieu of an adjustment in
the number of Warrant Shares purchasable upon the exercise of the Warrant, each
Holder, upon the exercise of the rights evidenced by such Holder's Warrant
Certificate any time after such distribution, shall be entitled to receive from
the Company, such subsidiary or both, as the Company shall determine, the stock
or other securities to which such Holder would have been entitled if such Holder
had exercised the rights evidenced by such Warrant Certificate immediately prior
thereto, all subject to further adjustment as provided in this Section 11.1;
PROVIDED, HOWEVER, that no adjustment in respect of dividends or interest on
such stock or other securities shall be made during the term of the Warrant or
upon the exercise of the rights evidenced by a Warrant Certificate.
(c) For the purpose of any computation under
paragraph (b) of this Section, the current market price per share of Common
Stock at any date shall be the average of the daily Closing Prices for 20
consecutive trading days commencing 30 trading days before the date of such
computation. The selling price for each day (the "Closing Price") shall be the
last such reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices regular
way for such day, in each case on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if not
listed or admitted to trading, the average of the closing bid and asked prices
of the Common Stock in the over-the counter market as reported by the Nasdaq
National Market System, Nasdaq SmallCap System or OTC Bulletin Board or if not
approved for quotation on the Nasdaq National Market System, Nasdaq SmallCap
System or OTC Bulletin Board, the average of the closing bid and asked prices as
furnished by two members of the National Association of Securities Dealers, Inc.
selected from time to time by the Company for that purpose.
(d) No adjustment in the number of Warrant
Shares purchasable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the number of
Warrant Shares purchasable upon the exercise of the Warrant; PROVIDED, HOWEVER,
that any adjustments which by reason of this paragraph (d) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-thousandth of a
share.
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(e) Whenever the number of Warrant Shares
purchasable upon the exercise of the Warrant is adjusted, as herein provided,
the Warrant Price payable upon exercise of the Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
purchasable immediately thereafter.
(f) No adjustment in the number of Warrant
Shares purchasable upon the exercise of the Warrant need be made under paragraph
(b) if the Company issues or distributes to each Holder the rights, options,
warrants or convertible or exchangeable securities, or evidences of indebtedness
or assets referred to in those paragraphs which each Holder would have been
entitled to receive had rights evidenced by the Warrant Certificate of such
Holder been exercised prior to the happening of such event or the record date
with respect thereto. No adjustment need be made for a change in the par value
of the Warrant Shares.
(g) In the event that at any time, as a result
of an adjustment made pursuant to paragraph (a) above, the Holders shall become
entitled to purchase any securities of the Company other than shares of Common
Stock, thereafter the number of such other shares so purchasable upon exercise
of the Warrant and the Warrant Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
this Section 11, and the other provisions of this Agreement, with respect to the
Warrant and Warrant Shares, shall apply as nearly equivalent as practicable on
like terms to such other securities.
11.2 NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares purchasable upon the exercise of the Warrant or the Warrant Price of the
Warrant is adjusted, as herein provided, the Company shall promptly provide to
each Holder of the Warrant Certificates notice of such adjustment or adjustments
and a certificate of the Chief Financial Officer of the Company setting forth
the number of Warrant Shares purchasable upon the exercise of the Warrant and
the Warrant Price of such Warrant Shares after such adjustment, setting forth a
brief statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.
11.3 NO ADJUSTMENT FOR DIVIDENDS. No adjustments in respect of
any dividends shall be made during the term of a Warrant or upon any exercise of
the Warrant.
11.4 PRESERVATION OF PURCHASE RIGHTS UPON MERGER,
CONSOLIDATION ETC. In case of any consolidation of the Company with, or merger
of the Company into, another corporation or in case of any sale, transfer or
lease to another corporation of all or substantially all the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with each Holder an agreement that each Holder shall have
the right thereafter upon payment of the Warrant Price in effect immediately
prior to such action to purchase upon exercise of the rights evidenced by each
Warrant Certificate the kind and amount of shares and other securities, cash and
property which he would have owned or would have been entitled to receive after
the happening of such consolidation, merger, sale, transfer or lease had
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such warrant been exercised immediately prior to such action; PROVIDED, HOWEVER,
that no adjustment in respect of dividends, interest or other income on or from
such shares or other securities, cash and property shall be made during the term
of the Warrant or upon the exercise of a Warrant. Such agreement shall provide
for adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 11. The provisions of this Section
11.4 shall similarly apply to successive consolidations, mergers, sales,
transfer or leases.
11.5 STATEMENTS ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Warrant Price or the number or kind of shares purchasable
upon any exercise of the Warrant, Warrant Certificates theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in the Warrant Certificates issued pursuant to this Agreement.
11.6 OPTIONAL CONVERSION.
(a) In addition to and without limiting the
rights of the Holders under this Agreement, the Holders shall have the right
(the "Conversion Right"), severally and not jointly, to convert the Warrant or
any portion thereof into shares of Common Stock as provided in this Section 11.6
at any time and from time to time on or after the Initial Exercise Date and
until the Expiration Date, subject to the restrictions set forth in paragraph
(c) below. Upon any exercise of the Conversion Right, the Company shall deliver
to the exercising Holder, without payment by the Holder of any exercise price or
any cash or other consideration, such number of shares of Common Stock equal to
the quotient obtained by dividing the Net Value (as hereinafter defined) of the
Converted Warrant Shares (as defined in paragraph (b) below) by the fair market
value (as defined in paragraph (d) below) of a single share of Common Stock,
determined in each case as of the close of business on the Conversion Date (as
hereinafter defined). The "Net Value" of the converted Warrant Shares shall be
determined by subtracting the aggregate purchase price of the Converted Warrant
Shares from the aggregate fair market value of the Converted Warrant Shares. No
fractional shares shall be issuable upon exercise of the Conversion Right, and
if the number of shares to be issued in accordance with the foregoing formula is
other than a whole number, the Company shall pay to the Holder an amount in cash
equal to the fair market value of the resulting fractional share.
(b) The Conversion Right may be exercised by any
Holder by the surrender of one or more Warrant Certificates held of record by
such Holder at the principal office of the Company together with a written
statement specifying that the Holder thereby intends to exercise the Conversion
Right and indicating the number of shares subject to the Warrant which are being
surrendered (referred to in paragraph (a) above as the Converted Warrant Shares)
in exercise of the Conversion Right. Such conversion shall be effective upon
receipt by the Company of the Warrant Certificates together with the aforesaid
written statement, or on such later date as is specified therein (the
"Conversion Date"), not later than the Expiration Date. Certificates for the
shares of Common Stock issuable upon exercise of the Conversion Right together
with a check in payment of any fractional share and, in the case of a partial
exercise, a new Warrant Certificate evidencing the remaining Warrant Shares
which the
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Holder might acquire upon further exercise, shall be issued as of, and
delivered to the Holder within seven days following, the Conversion Date.
(c) For purposes of this Section 11.6, the "fair
market value" of a share of Common Stock as of a particular date shall mean the
closing sale price per share reported on a consolidated basis for the Common
Stock on the principal stock exchange or market on which Stock is listed or
traded on the date as of which such value is being determined or, if there is no
sale on that date, then on the last previous day on which a sale was reported.
12. REGISTRATION UNDER THE SECURITIES ACT OF 1933. The
Representatives shall not sell, transfer, assign, pledge, hypothecate or
otherwise dispose of the Warrant or any interest therein, or the Warrant
Shares, except in a transaction (i) subject to an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), including
a post-effective amendment to the Registration Statement, or (ii) exempt from
registration under the Act. Unless the Warrant or Warrant Shares are so
registered, the Warrant Certificates and certificates for the Warrant Shares
shall bear a restrictive legend substantially as follow:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAW. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
13. REGISTRATION RIGHTS.
13.1 DEMAND REGISTRATION RIGHTS. The Company covenants and
agrees with the Representatives and any subsequent Holders of the Warrant
and/or Warrants Shares that, on one occasion, within 60 days after receipt of
a written request from the Representatives or from Holders of more than 40%
in interest of the aggregate of the Warrant and/or Warrant Shares (considered
for this purpose as one class) issued pursuant to this Agreement that the
Representatives or such Holders of the Warrant and/or Warrant Shares desire
and intend to transfer more than 25% in interest of the aggregate of the
Warrant Shares (the "Offered Warrant Shares") under such circumstances that a
public offering, within the meaning of the Act, would be involved, the
Company, on that one occasion, shall file a registration statement (and use
its reasonable best efforts to cause such registration statement to become
effective under the Act and to remain effective for not less than 90 days
thereafter with respect to the offering and sale or other disposition of the
Offered Warrant Shares; PROVIDED, HOWEVER, that any such disposition shall
occur on or after the Initial Exercise Date and on or before the Expiration
Date; PROVIDED FURTHER, that the Company shall have no obligation to comply
with the foregoing provisions of this Section 13.1 if, in the opinion of
counsel to the Company reasonably acceptable to the Holders from whom such
written requests have been received, registration under the Act is not
required for such disposition or that a post-effective amendment to an
existing registration statement would be legally sufficient for such transfer
(in which latter event the Company shall promptly file such post-effective
amendment and use its reasonable best efforts to cause such
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amendment to become effective under the Act). All expenses of registration and
disposition pursuant to this Section 13.1, exclusive of any underwriting
discounts and commissions, non-accountable expense allowances or costs and fees
of separate counsel to the Holders, shall be borne by the Company.
13.2 PIGGY-BACK REGISTRATION RIGHTS. The Company covenants
and agrees with the Representatives and any subsequent Holders of the Warrant
and/or Warrant Shares that, in the event the Company proposes to file a
registration statement under the Act with respect to any class of security
(other than in connection with an exchange offer, a non-cash offer or a
registration statement on Form X-0, Xxxx X-0 or other unsuitable registration
statement form) which becomes or which the Company believes will become
effective on or after the Initial Exercise Date and on or before the
Expiration Date, then the Company shall in each case give written notice of
such proposed filing to the Holders of the Warrant and/or Warrant Shares at
least 15 days before the proposed filing date and, by such notice, shall
offer to such Holders the opportunity to include in such registration
statement such as they may request in writing.
The Company shall permit, or shall cause the managing
underwriter of a proposed offering to permit, the Holders from whom such written
requests have been received to include such number of Warrant Shares (the
"Piggy-back Shares") in the proposed offering on the same terms and conditions
as applicable to securities of the Company included therein or as applicable to
securities of any person other than the Company and the Holders of Piggy-back
Shares if the securities of any such person are included therein; PROVIDED,
HOWEVER, that the Company shall not be required to honor any such request that
is received more than 15 days after the proper giving of the Company's notice or
after the Expiration Date. Notwithstanding the foregoing, if any such managing
underwriter shall advise the Company in writing that it believes that the
distribution of all or a portion of the Piggy-back Shares requested to be
included in the registration statement concurrently with the securities being
registered by the Company would materially adversely affect the distribution of
such securities by the Company for its own account, then the Holders of such
Piggy-back Shares shall delay their offering and sale of Piggyback Shares (or
the portion thereof so designated by such managing underwriter) for such period,
not to exceed 180 days, as the managing underwriter shall request, provided that
no such delay shall be required as to Piggy-back Shares if any securities of the
Company are included in such registration statement for the account of any
person other than the Company and the Holders of Piggy-back Shares. In the event
of such delay, the Company shall file such supplements, post-effective
amendments or separate registration statement, and shall use reasonable best
efforts to permit such Holders to make their proposed offering and sale for a
period of 90 days immediately following the end of such period of delay
("Piggy-back Termination Date"); PROVIDED, HOWEVER, that if at the Piggy-back
Termination Date the Piggy-back Shares are covered by a registration statement
which is, or required to remain, in effect beyond the Piggy-back Termination
Date, the Company shall maintain in effect the registration statement as it
relates to the Piggy-back Shares for so long as such registration statement
remains or is required to remain in effect for any of such other securities. All
expenses of registration and sale pursuant to this Section 13.2, exclusive of
any underwriting commissions or discounts, non-accountable expense allowances or
costs of separate counsel for the Holders, shall be borne by the Company.
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The Company shall be obligated pursuant to this Section 13.2
to include in the piggy-back offering Warrant Shares that have not yet been
purchased by a Holder so long as such Holder submits an undertaking to the
Company that such Holder intends to exercise the Warrant for at least the number
of Warrant Shares to be included in such piggy-back offering prior to the
consummation of such piggy-back offering.
If the Company decides not to proceed with the piggy-back
offering, the Company will have no obligation to proceed with the offering of
the Piggy-back Shares, unless the Holders from whom such written requests have
been received otherwise comply with the provisions of Section 13.1 hereof
(without regard to the 60 days' written request required thereby).
13.3 (a) The Company shall use its reasonable best efforts to
register or qualify the Offered Warrant Shares or Piggy-back Shares Warrant
Shares for offer or sale under the state securities or Blue Sky laws of such
states which the Holders of such Offered Warrant Shares or Piggy-back Shares
shall designate; PROVIDED, HOWEVER, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject or to register or get
a license as a broker or dealer in securities in any jurisdiction where it is
not so registered or licensed.
(b) (i) In the event of any post-effective
amendment or other registration with respect to any Offered Warrant Shares or
Piggy-back Shares pursuant to Section 13.1 or 13.2 above, the Company will
indemnify and hold harmless any Holder whose Offered Warrant Shares or
Piggy-back Shares are being so registered, and each person, if any, who controls
such Holder within the meaning of the Act, against any losses, claims, damages
or liabilities, joint or several, to which such Holder or such controlling
person may be subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in any such registration
statement, or final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each such Holder and
each such controlling person for any legal or other expenses reasonably incurred
by such Holder or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company will not be liable in such case to the extent that any such
loss, claim, damage or liability arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any such registration statement, or final prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished by such Holder expressly for use in the preparation thereof. The
Company will not be liable to a claimant to the extent of any misstatement
corrected or remedied in any amended prospectus if the Company timely delivers a
copy of such amended prospectus to such indemnified person and such indemnified
person does not timely furnish such amended prospectus to such claimant. The
Company shall not be
10
required to indemnify any Holder or controlling person for any payment made to
any claimant in settlement of any suit or claim unless such payment is approved
by the Company.
(ii) Each Holder of Offered Warrant
Shares or Piggy-back Shares who participates in a registration pursuant to
Section 13.1 or 13.2 shall indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed any such registration statement,
and each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities to which the Company, or any
such director, officer or controlling person may become subject under the Act,
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of, or are based upon, any untrue or alleged
untrue statement or any material fact contained in any such registration
statement, or final prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any such registration statement, or final prospectus, or
any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished by such Holder expressly for use in the
preparation thereof; and will reimburse any legal or other expenses reasonably
incurred by the Company, or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the indemnity agreement contained
in this subparagraph (ii) shall not apply to amounts paid to any claimant in
settlement of any suit or claim unless such payment is first approved by such
Holder.
(iii) In order to provide for just and
equitable contribution in any action in which a claim for indemnification is
made pursuant to this subsection b(iii) of Section 13.3 but is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this subsection (b) of Section 13.3 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that each Holder whose
Offered Warrant Shares or Piggy-back Shares are being registered is responsible
pro rata for the portion represented by the public offering price received by
such Holder from the sale of such Holder's Offered Warrant Shares or Piggy-back
Shares, and the Company is responsible for the remaining portion; PROVIDED,
HOWEVER, that (i) no Holder shall be required to contribute any amount in excess
of the public offering price received by such Holder from the sale of such
Holder's Warrant Shares and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. This subsection (b)(iii) shall not be operative as to any
Holder of Offered Warrant Shares or Piggy-back Shares to the extent that the
Company has received indemnity under this subsection (b) of Section 13.3.
13.4 Each of the Holders shall comply with all reasonable
requests made by the Company or its counsel with respect to the registration of
such Offered Warrant Shares or Piggy-
11
back Shares, including, without limitation, providing access to all relevant
books and records, completing, executing and delivering all questionnaires,
powers of attorney and other usual and customary documents necessary or
appropriate with respect to the offering of such Offered Warrant Shares or
Piggy-back Shares. In the case of a registration which is underwritten, each of
the Holders shall sell such Offered Warrant Shares or Piggy-back Shares on the
basis provided in the applicable underwriting arrangement including the making
of reasonable representations or warranties to the Company or the underwriters,
or to undertake any indemnification obligations to the Company or the
underwriters with respect thereto.
14. NO RIGHTS AS STOCKHOLDER; NOTICES TO HOLDERS. Nothing contained in
this Agreement or in any of the Warrant Certificates shall be construed as
conferring upon the Holders or their transferee(s) the right to vote or to
receive dividends or to consent to or receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter or any rights whatsoever as stockholders of the Company. If,
however, at any time prior to the expiration of the Warrants and prior to their
exercise, any of the following events occur:
(a) the Company shall declare any dividend
payable in any securities upon its shares of Common Stock or make any
distribution (other than a cash dividend) to the holders of its shares of Common
Stock; or
(b) the Company shall offer to the holders of
its shares of Common Stock any additional shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock or any right to
subscribe to or purchase any thereof; or
(c) a dissolution, liquidation or winding up of
the Company (other than in connection with a consolidation, merger, sale,
transfer or lease of all or substantially all of its property, assets and
business as an entirety) shall be proposed, then in any one or more of said
events the Company shall (i) give notice in writing of such event to the
Holders, as provided in Section 15 hereof and (ii) if there are more than 100
Holders, cause notice of such event to be published once in The Wall Street
Journal (national edition), such giving of notice and publication to be
completed at least 20 days prior to the date fixed as a record date or the date
of closing the transfer books for the determination of the stockholders entitled
to such dividend, distribution or subscription rights, or for the determination
of stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to publish, mail or receive such
notice or any defect therein or in the publication or mailing thereof shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or such proposed dissolution, liquidation
or winding up.
15. NOTICES. Any notice permitted or required to be give or made
hereunder shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed as follows:
If to the Representatives to:
Xxxx Capital Partners, Inc.
12
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Syndicate Department
If to the Company, to:
XxxxxXxxx.xxx, Inc.
0000 X. Xxxxxxx Xxxx., Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
and, if to any Holder, to such Holder at the address of such Holder as shown on
the Warrant Register.
16. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without giving effect to
principles of conflicts of laws.
17. SUPPLEMENTS AND AMENDMENTS. The Company and the Representatives
may from time to time supplement or amend this Agreement in order to cure any
ambiguity or to correct or supplement any provision contained herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Representatives may deem necessary or desirable and
which shall not be inconsistent with the provisions of the Warrant and which
shall not adversely affect the interests of the Holders. This Agreement may
also be supplemented or amended from time to time by a writing executed by or
on behalf of the Company and all of the Holders.
18. SUCCESSOR. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Holders shall bind and inure to the
benefit of their respective successors and assigns hereunder. Assignments by the
Holders of their rights hereunder shall be made in accordance with Section 4
hereof.
19. MERGER OR CONSOLIDATION OF THE COMPANY. So long as the Warrant
remains outstanding, the Company will not merge or consolidate with or into, or
sell, transfer or lease all or substantially all of its property to, any other
corporation unless the successor or purchasing corporation, as the case may be
(if not the Company), shall expressly assume, by supplemental agreement executed
and delivered to the Holders, the due and punctual performance and observance of
each and every covenant and condition of this Agreement to be performed and
observed by the Company.
20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement, but
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holders.
13
21. CAPTIONS. The captions of the sections and subsections of this
Agreement have been reserved for convenience only and shall have no substantive
effect.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which when so executed shall be deemed to be an original;
but such counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
XXXXXXXXX.XXX, INC.
Attest:
______________________ By:_________________________________
_______________, Secretary Xxxxxx X. Xxxxxxx, President
XXXX CAPITAL PARTNERS, INC.
Attest:
______________________ By:_________________________________
_______________, Secretary Xxxxxx Xxxxxxx, Managing Director
PENNSYLVANIA MERCHANT GROUP
Attest:
______________________ By:_________________________________
_______________, Secretary
14
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT (IF AVAILABLE) OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND, IN ANY EVENT, IN COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS.
THIS CERTIFICATE IS SUBJECT IN ITS ENTIRETY TO THE TERMS OF A
WARRANT AGREEMENT DATED _________ ___, 2000 BETWEEN XXXXXXXXX.XXX, INC. (THE
"COMPANY") AND XXXX CAPITAL PARTNERS, INC. AND PENNSYLVANIA MERCHANT GROUP
(THE "REPRESENTATIVES"), THE ORIGINAL HOLDERS OF THE WARRANT EVIDENCED
HEREBY. IN ACCORDANCE WITH THE WARRANT AGREEMENT, THE WARRANT WILL BE
RESTRICTED FROM SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR HYPOTHECATION FOR A
PERIOD OF ONE YEAR AFTER MARCH ___, 2000, THE EFFECTIVE DATE OF THE COMPANY'S
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, COMMISSION FILE NO.
333-94337, EXCEPT TO ANY MEMBER PARTICIPATING IN THE OFFERING OF THE PUBLIC
SHARES COVERED BY THE REGISTRATION STATEMENT AND THEIR BONA FIDE OFFICERS AND
PARTNERS WHO AGREE IN WRITING TO BE BOUND BY THE TERMS HEREOF. ANY SUCCESSOR
OR PERMITTED ASSIGNEE OF SUCH HOLDER WILL BE REQUIRED TO AGREE IN WRITING TO
TAKE SUBJECT TO SUCH AGREEMENT. A COPY OF THE WARRANT AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST. CERTIFICATES FOR ANY SHARES ACQUIRED UPON EXERCISE HEREOF WILL BEAR
A COMPARABLE LEGEND.
No. _____
_________ ___, 2000
Warrant to Purchase _____ Shares of Common Stock
VOID AFTER 6:00 P.M., LOS ANGELES TIME
ON _________ ___, 2005
XXXXXXXXX.XXX, INC.
WARRANT CERTIFICATE
(REGISTRATION RIGHTS INCLUDED)
This certifies that ______________, or registered assigns (the
"HOLDER"), is the holder of a warrant (the "WARRANT") to purchase up to _______
shares of the common stock, par value $.01 per share (the "WARRANT SHARES"), of
XxxxxXxxx.xxx, Inc., a Texas corporation (the "COMPANY"), at any time and from
time to time, commencing at 9:00 a.m., Los Angeles time, on ________ ___, 2001
(the "INITIAL EXERCISE DATE") and ending at 6:00 p.m., Los Angeles time, on
________ ___, 2005 or, if _______ ___, 2000 is not a business day in the City of
Los Angeles, then on the next succeeding business day (the "EXPIRATION DATE").
Until the Expiration Date, the Warrant may be exercised, in whole or in
part, at any time and from time to time, by presentation and surrender of this
Warrant Certificate, with the Election to Purchase form annexed hereto duly
executed and accompanied by payment of the exercise price (the "EXERCISE
PRICE"), at the principal office of the Company at 0000 X. Xxxxxxx Xxxxxxx,
Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000, or such other place at the Company may
hereafter specify by notice. The Exercise Price for each Common Share acquired
upon exercise of the Warrant evidenced hereby is $_____, payable in cash, by
certified or cashier's check, or by immediately available funds. The number of
Warrant Shares for which the Warrant is exercisable and the Exercise Price are
both subject to adjustment, as provided in that certain warrant agreement (the
"Warrant Agreement") dated ________ ___, 2000, between the Company and the
Representatives.
Upon the exercise of the Warrant in part only, the Company will return
to the Holder a new warrant certificate, in form identical to this Warrant
Certificate, specifying the remaining number of Warrant Shares for which the
Warrant evidenced by this Warrant Certificate is then exercisable. Unless fully
exercised prior to the Expiration Date as provided herein, the Warrant evidenced
by this Certificate will expire.
The Holder of the Warrant evidenced by this Certificate is entitled to
certain registration rights with respect to the Warrant Shares purchasable upon
exercise thereof. Such registration rights are set forth in full in the Warrant
Agreement.
No holder of this Warrant Certificate shall be deemed to be the holder
of Warrant Shares or any other securities of the Company that may at any time be
issuable on the exercise of the Warrant for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this 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 (whether upon any reorganization, issuance of shares,
reclassification or conversion of shares, change of par value, or exchange of
shares, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise, until the
Warrant evidenced by this Warrant Certificate shall have been exercised and the
Warrant Shares purchasable upon the exercise thereof shall have become issuable.
This Warrant Certificate may not be transferred or otherwise disposed
of without the prior consent of the Company. The registration rights described
herein may not be transferred separately from the Warrants or underlying Warrant
Shares.
2
IN WITNESS WHEREOF, XxxxxXxxx.xxx, Inc. has caused this Certificate to
be executed and delivered on its behalf on ________ ___, 2000.
XXXXXXXXX.XXX, INC.
Attest:
___________________________ By: _______________________________
, Secretary Xxxxxx X. Xxxxxxx, President
(SEAL)
3
ELECTION TO PURCHASE
To: XXXXXXXXX.XXX, INC.
On this _____ day of _________, ______, the undersigned Holder of the
Warrant evidenced by this Certificate hereby irrevocably elects to exercise the
Warrant and to purchase thereby _____________ Warrant Shares, and requests that
certificates for such Warrant Shares be issued and registered in the name of
-------------------------------------------------------------------------------
(Name)
-------------------------------------------------------------------------------
(Address)
-------------------------------------------------------------------------------
(Social Security or Other Tax Identification Number)
-------------------------------------------------------------------------------
(Telephone and Fax Numbers; email Address)
-------------------------------------------------------------------------------
(Relationship to the Undersigned)
and be delivered to
-------------------------------------------------------------------------------
(Name)
-------------------------------------------------------------------------------
(Address)
and, if said number of Warrant Shares shall not be all the Warrant Shares for
which the Warrant evidenced hereby may be exercised, a new Warrant Certificate
for the balance of such Warrant Shares be delivered to the undersigned at the
record address of the undersigned on file with the Company.
Name of Warrant Holder: _____________________________________________________
(Please Print)
Signature: __________________________________________________________________
ASSIGNMENT
FOR VALUE RECEIVED, on this _____ day of _________, ______, the
undersigned Holder hereby sells, transfers and assigns to
_________________________________________, whose address is
_______________________________________________________________, whose telephone
and fax numbers, and email address, are ______________________________
________________________________________, and whose social security or other tax
identification number is __________________, the right represented by the within
Certificate to purchase _________ Warrant Shares of XxxxxXxxx.xxx, Inc. to which
the within Certificate relates, and appoints the Secretary of the Company
attorney-in-fact to transfer such right on the books of the Company with full
power of substitution in the premises, and, if said number of Warrant Shares
shall not be all the Warrant Shares for which the Warrant evidenced hereby may
be exercised, a new Warrant Certificate for the balance of such Warrant Shares
be delivered to the undersigned at the record address of the undersigned on file
with the Company.
Name of Warrant Holder: _____________________________________________________
(Please Print)
Signature: __________________________________________________________________
