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EXHIBIT 10.15
MANAGING UNDERWRITERS' WARRANT AGREEMENT
MANAGING UNDERWRITERS' WARRANT AGREEMENT, dated as of this ____ day of
December 1997, by and between Xxxxxx Industries, Inc. (the "Company"), Xxxxxx
Xxxxxxxxxx Xxxxx Inc. ("JMS") and Southwest Securities, Inc. ("Southwest") (JMS
and Southwest, collectively, the "Managing Underwriters").
W I T N E S S E T H
WHEREAS, the Company proposes to make a public offering (the
"Offering") of shares of Common Stock (as defined in Section 1) and common stock
purchase warrants (the "Warrants"), each Warrant exercisable to purchase one
share of Common Stock; and
WHEREAS, in relation to the Offering, the Company has filed a
Registration Statement on Form S-1 with the Securities and Exchange Commission
(the "SEC"); and
WHEREAS, in connection with the Offering, the Company desires to sell
and the Managing Underwriters desire to purchase Managing Underwriters' Warrants
(as defined in Section 1), each of which shall be represented by a certificate
(each such certificate, a "Managing Underwriters' Warrant Certificate"), which
the Managing Underwriters may exercise to purchase Underlying Shares (as defined
in Section 1) and Underlying Warrants (as defined in Section 1) pursuant to the
terms of this Agreement and such certificates;
WHEREAS, pursuant to this Agreement, each of the Managing Underwriters
shall receive initially the right to purchase 70,000 Underlying Shares and
70,000 Underlying Warrants;
NOW, THEREFORE, in consideration of $10 paid by the Managing
Underwriters to the Company and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and for the purpose of
defining the terms and provisions of the Managing Underwriters' Warrants and the
Managing Underwriters' Warrant Certificates and the respective rights and
obligations thereunder of the Company, the Managing Underwriters and the
Managing Underwriters' Warrant Holders (as defined in Section 1), the parties
hereto hereby agree as follows:
SECTION 1. Definitions. The following terms as used in this Agreement
shall have the meanings set forth below:
(a) "Business Day" means a day other than a Saturday, Sunday or
other day on which banks in the State of New York are authorized by law to
remain closed;
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(b) "Common Stock" shall mean the Company's common stock, par value
$.10 per share;
(c) "Company" shall have the meaning set forth in the introductory
paragraph;
(d) "Convertible Securities" shall have the meaning set forth in
Section 4(c);
(e) "Exempt Securities" shall have the meaning set forth in Section
4(o);
(f) "Exercise Date" shall mean the date on which the Company shall
have received both (i) the Managing Underwriters' Warrant Certificate
representing the Managing Underwriters' Warrant, with the exercise form
thereon duly executed by the Warrant Holder, or his attorney-in-fact duly
authorized in writing, and (ii) payment in cash, or by official bank or
certified check made payable to the Company, of an amount in lawful money
of the United States of America equal to the Underlying Share Purchase
Price and/or the Underlying Warrant Purchase Price, as the case may be,
plus transfer taxes, if any;
(g) "JMS" shall have the meaning set forth in the introductory
paragraph;
(h) "Managing Underwriters" shall have the meaning set forth in the
introductory paragraph;
(i) "Managing Underwriters' Warrant" shall mean the right to
purchase the Underlying Shares and the Underlying Warrants pursuant to this
Agreement, together with any divisions thereof;
(j) "Managing Underwriters' Warrant Certificate" shall have the
meaning set forth in the recitals hereto;
(k) "Managing Underwriters' Warrant Holder" means a person or
entity in whose name a Managing Underwriters' Warrant shall be registered
upon the books to be maintained by the Company for such purpose.
(l) "Nasdaq National Market" shall have the meaning set forth in
Section 4(f);
(m) "Notice Event" shall mean (i) any authorization by the Company
of the issuance to all holders of shares of Common Stock of rights, options
or warrants to subscribe for or purchase shares of Common Stock or of any
other subscription rights or
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warrants, or (ii) any authorization by the Company of the distribution
to all holders of shares of Common Stock of evidences of its
indebtedness or assets (other than cash dividends or distributions
payable out of consolidated earnings or earned surplus or dividends
payable in shares of Common Stock), (iii) any consolidation or merger
to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the conveyance or
transfer of the properties and assets of the Company substantially as
an entirety, or of any reclassification or change of Common Stock
issuable upon exercise of a Managing Underwriters' Warrant (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), or a tender offer or exchange offer for shares of Common
Stock, (iv) any voluntary or involuntary dissolution, liquidation or
winding up of the Company, or (v) any proposal by the Company to take
any other action that would require an adjustment of the Underlying
Share Purchase Price or the number of Underlying Shares pursuant to
Section 4;
(n) "Offering" shall have the meaning set forth in the
recitals hereto;
(o) "Option Issuance" shall have the meaning set forth in
Section 4(c);
(p) "Options" shall have the meaning set forth in Section
4(c);
(q) "Registrable Securities" means the Managing Underwriters'
Warrant and the Underlying Securities;
(r) "Registration Rights Agreement" means that certain
Registration Rights Agreement, dated as of the date hereof, by and
between the Company and the Managing Underwriters;
(s) "SEC" means the Securities and Exchange Commission;
(t) "SEC Reports" shall have the meaning set forth in Section
3(d) hereof;
(u) "Southwest" shall have the meaning set forth in the
introductory paragraph;
(v) "Stock Option Plans" shall have the meaning set forth in
Section 4(o);
(w) "Time of Determination" shall have the meaning set forth
in Section 4(f);
(x) "Transfer Agent" means American Stock Transfer & Trust
Company, as transfer agent;
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(y) "Underlying Securities" shall mean, collectively, the
Underlying Shares, the Underlying Warrants and the Underlying Warrant
Shares;
(z) "Underlying Share Expiration Date" means 5:00 p.m., New York
City time, on December ___, 2002 (or as may be extended pursuant to Section
3(c)), or if such expiration date is not a Business Day, at or before 5:00
p.m. New York City time on the next following Business Day;
(aa) "Underlying Share Purchase Price" shall mean the purchase
price to be paid upon the exercise of this Managing Underwriters' Warrant
with respect to the Underlying Shares in accordance with the terms hereof,
which price shall be $_____ per Underlying Share, subject to adjustment
from time to time pursuant to the provisions of Section 4;
(bb) "Underlying Shares" means the 140,000 shares of Common Stock
that are the subject of this Managing Underwriters' Warrant, subject to
adjustment from time to time as provided herein;
(cc) "Underlying Warrant Expiration Date" means 5:00 p.m. New York
City time on January ___, 2000 (or as may be extended pursuant to Section
3(c)), or if such expiration date is not a Business Day, at or before 5:00
p.m. New York City time on the next following Business Day provided that
such date shall not be later than the "Expiration Date" for the Warrants
under the Warrant Agreement;
(dd) "Underlying Warrant Purchase Price" shall mean the purchase
price to be paid upon the exercise of this Managing Underwriters' Warrant
with respect to the Underlying Warrants in accordance with the terms
hereof, which price shall be $_____ per Underlying Warrant;
(ee) "Underlying Warrants" means the 140,000 Warrants that are the
subject of this Managing Underwriters' Warrant, subject to adjustment from
time to time as provided in the Warrant Agreement and Section 5 hereof;
(ff) "Underlying Warrant Shares" means the shares of Common Stock
issuable upon exercise of the Underlying Warrants;
(gg) "Warrant Agent" shall mean American Stock Transfer & Trust
Company, as warrant agent;
(hh) "Warrant Agreement" shall mean that certain Warrant Agreement,
dated as of the date hereof, by and between the Company, certain selling
stockholders of the Company, and the Warrant Agent;
(ii) "Warrant Notice Event" shall mean (i) any authorization by the
Company of the issuance to all holders of Warrants of rights, options or
warrants to
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subscribe for or purchase shares of Common Stock, Warrants or of any
other subscription rights or warrants, (ii) any authorization by the
Company of the distribution to all holders of Warrants of evidences of
its indebtedness or assets (other than cash dividends or distributions
payable out of consolidated earnings or earned surplus or dividends
payable in shares of Common Stock), (iii) any reclassification or
change of Underlying Warrants issuable upon exercise of a Managing
Underwriters' Warrant, or a tender offer or exchange offer for
Warrants, or (iv) any proposal by the Company to take any other action
that would require an adjustment of the Underlying Warrant Purchase
Price or the number of Underlying Warrants pursuant to Section 5;
(jj) "Warrants" shall have the meaning set forth in the
recitals hereto.
SECTION 2. Duration And Exercise
(a) Duration. Subject to the provisions of Section 4 hereof,
a Managing Underwriters' Warrant may be exercised from time to time,
upon the terms and subject to the conditions set forth herein, on or
after 9:00 a.m., New York City time, on the first anniversary hereof
and (a) before the Underlying Share Expiration Date to purchase the
Underlying Shares, and (b) before the Underlying Warrant Expiration
Date to purchase the Underlying Warrants. If a Managing Underwriters'
Warrant is not exercised before the Underlying Share Expiration Date to
purchase the Underlying Shares or the Underlying Warrant Expiration
Date to purchase the Underlying Warrants, the Managing Underwriters'
Warrant Holder shall no longer be entitled to purchase Underlying
Shares or Underlying Warrants and all rights hereunder to purchase such
Underlying Shares and such Underlying Warrants shall thereupon cease.
(b) Exercise.
(i) A Managing Underwriters' Warrant Holder may exercise a
Managing Underwriters' Warrant, in whole or in part, to purchase
Underlying Shares or Underlying Warrants, or both, in such amounts as
may be elected upon surrender of such Managing Underwriters' Warrant
Certificate with the subscription form thereon duly executed, to the
Company at its corporate office at 00 Xxxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx 00000, together with the full Underlying Share Purchase
Price for each Underlying Share to be purchased and the full Underlying
Warrant Purchase Price for each Underlying Warrant to be purchased, in
lawful money of the United States, or by certified check or bank draft
payable in United States Dollars to the order of the Company and upon
compliance with and subject to the conditions set forth herein.
(ii) Upon receipt of a Managing Underwriters' Warrant
Certificate with the subscription form thereon duly executed and
accompanied by payment of the Underlying Share Purchase Price for the
number of Underlying Shares and/or the Underlying Warrant Purchase
Price for the number of Underlying Warrants for which such Managing
Underwriters' Warrant is then being exercised, the Company, subject to
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Section 6(b), will cause to be issued and delivered promptly to the
Managing Underwriters' Warrant Holder certificates for such shares of
Common Stock or Warrants, respectively, in such denominations as are
requested by the Managing Underwriters' Warrant Holder.
(iii) In case a Managing Underwriters' Warrant Holder shall
exercise a Managing Underwriters' Warrant with respect to less than all
of the Underlying Shares and/or Underlying Warrants that may be
purchased pursuant to such Managing Underwriters' Warrant, the Company
will execute a new Managing Underwriters' Warrant Certificate, as
represented by a warrant certificate substantially in the form attached
hereto as Exhibit A, exercisable for the balance of the Underlying
Shares and/or Underlying Warrants that may be purchased upon exercise
of such Managing Underwriters' Warrant and deliver such new Managing
Underwriters' Warrant Certificate to the Managing Underwriters' Warrant
Holder. Managing Underwriters' Warrant Certificates shall be executed
on behalf of the Company by the Company's Chairman of the Board,
President or any Vice President and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary.
(iv) A Managing Underwriters' Warrant shall be deemed to have
been exercised immediately prior to the close of business on the
Exercise Date, and the person entitled to receive Underlying Shares
and/or Underlying Warrants and any Managing Underwriters' Warrant
Certificate representing the unexercised portion of such Managing
Underwriters' Warrant deliverable upon such exercise shall be treated
for all purposes as the holder of such Underlying Shares, Underlying
Warrants and unexercised Managing Underwriters' Warrant upon such
exercise as of the close of business on the Exercise Date.
(v) The Company covenants and agrees that it will pay when
due and payable any and all taxes that may be payable in respect of the
issue of this Managing Underwriters' Warrant or the issue of any
Underlying Securities. The Company shall not, however, be required to
pay any tax that may be payable in respect of any transfer of a
Managing Underwriters' Warrant or of any Underlying Security to a
person other than the Managing Underwriters' Warrant Holder at the time
of surrender, and until the payment of such tax, shall not be required
to issue such Underlying Security.
SECTION 3. Covenants
(a) Issuance and Sale of Underlying Shares and Underlying
Warrants. The Company covenants that it will at all times reserve and
keep available, free from preemptive rights, out of its authorized
Common Stock, solely for the purpose of issuance upon exercise of the
Managing Underwriters' Warrants, such number of shares of Common Stock
as shall equal the aggregate of the Underlying Shares and the
Underlying Warrant Shares. The Company covenants that all shares of
Common Stock that shall be issuable upon exercise of the Managing
Underwriters' Warrants shall, at the time of
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delivery, be duly and validly issued, fully paid, nonassessable and
free from all taxes, liens and charges with respect to the issue
thereof. The Company covenants that the Underlying Warrants that shall
be issuable upon exercise of the Managing Underwriters' Warrants shall
be validly issued and the legal, valid and binding obligations of the
Company.
The Transfer Agent for the Common Stock 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
Company will supply such Transfer Agent with duly executed certificates
for such purposes and will provide or otherwise make available any cash
which may be payable as provided in Section 6(b). The Company will
furnish such Transfer Agent and the Warrant Agent a copy of all notices
of adjustments and certificates related thereto, transmitted to each
Managing Underwriters' Warrant Holder pursuant to Section 4(p) hereof.
Before taking any action which would cause an adjustment
pursuant to Section 4 hereof that would reduce the Underlying Share
Purchase Price below the then par value (if any) of the shares of
Common Stock, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock at
the Underlying Share Purchase Price as so adjusted.
(b) Registration Statement. A registration statement will be
required to be filed and declared effective by the SEC before the sale
or exercise of the Registrable Securities, unless such sale or exercise
is exempt from the registration requirements of the Securities Act of
1933, as amended. In addition, before the sale or exercise of the
Registrable Securities, the Registrable Securities must also be
registered or qualified for such sale or exercise or exempt from such
registration or qualification under the applicable state securities
laws. The Company covenants to execute, deliver and perform the
Registration Rights Agreement, pursuant to which the Company agrees to,
among other things, file and maintain the effectiveness of certain
registration statements and register or qualify the Registrable
Securities under state securities laws.
(c) Notices. The Company shall give notice not less than 90,
and not more than 120, days prior to each of the Underlying Share
Expiration Date and the Underlying Warrant Expiration Date to each
Managing Underwriters' Warrant Holder to the effect that the Managing
Underwriters' Warrants with respect to the Underlying Shares and with
respect to the Underlying Warrants, as the case may be, will terminate
and become void as of 5:00 p.m., New York City time, on each of the
Underlying Share Expiration Date and the Underlying Warrant Expiration
Date. If the Company fails to give such notice, the Managing
Underwriters' Warrants with respect to the Underlying Shares and with
respect to the Underlying Warrants, as the case may be, will not expire
until 90 days after the Company gives such notice, provided, however,
in no event will a
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Managing Underwriters' Warrant Holder be entitled to any
damages or other remedy for the Company's failure to give such notice
other than any such extension. In addition, notwithstanding anything to
the contrary in this Agreement, if the Company has not maintained an
effective registration statement under the Securities Act with respect
to the sale or issuance of the Registrable Securities during the 90
days immediately before each of the Underlying Share Expiration Date
and the Underlying Warrant Expiration Date (and maintained the
registration or qualification of such Registrable Securities under
applicable state securities laws during such periods), the Managing
Underwriters' Warrants with respect to the Underlying Shares and with
respect to the Underlying Warrants, as the case may be, shall not
expire until the Company maintains such effective registration
statement (and such registrations and qualifications) for 90
consecutive days beginning with the first day after 90 days before the
Underlying Share Expiration Date or Underlying Warrant Expiration Date,
as the case may be, that such registration statement (and such
registrations and qualifications) is effective. In the circumstances
described in this paragraph, the extended Underlying Share Expiration
Date and Underlying Warrant Expiration Date shall be considered the
Underlying Share Expiration Date and Underlying Warrant Expiration
Date, respectively, for purposes of this Agreement. Notwithstanding
anything to the contrary in this Agreement, the Company shall issue any
Underlying Shares, Underlying Warrants, or Underlying Warrant Shares to
the holder of the respective right to acquire such security upon the
exercise of such right and such holder's representation that such
holder is a "sophisticated investor" under the federal securities laws
if a registration statement is not effective with respect to such
issuance.
(d) SEC Reports. So long as the Managing Underwriters'
Warrants remain outstanding, the Company shall cause copies of all
quarterly and annual financial reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act ("SEC Reports") to be mailed to each Managing
Underwriters' Warrant Holder at his or her address appearing in the
register of the Managing Underwriters' Warrant Holders maintained by
the Company, in each case, within 15 days of filing with the SEC. If
the Company is not subject to the requirements of Section 13 or 15(d)
of the Exchange Act, the Company shall nevertheless continue to cause
SEC Reports, comparable to those which it would be required to file
pursuant to Section 13 or 15(d) of the Exchange Act if it were subject
to the requirements of either such section, to be so filed with the SEC
(but only if the SEC permits such filings) and mailed to each Managing
Underwriters' Warrant Holder, in each case, within the same time
periods as would have applied (including under the preceding sentence)
had the Company been subject to the requirements of Section 13 or 15(d)
of the Exchange Act.
(e) Restrictive Legend. Each Managing Underwriters' Warrant
Certificate shall bear the following restrictive legend until such time
as the transfer of such security is not restricted under the federal
securities laws:
"THE ISSUANCE OF THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THIS SECURITY
BEEN REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS
SECURITY MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF THE REGISTRATION
OF SUCH
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TRANSACTION UNDER THE SECURITIES ACT AND THE REGISTRATION OR
QUALIFICATION OF THIS SECURITY UNDER APPLICABLE STATE SECURITIES LAWS
UNLESS SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION AND THIS
SECURITY IS EXEMPT FROM SUCH REGISTRATION OR QUALIFICATION."
SECTION 4. Adjustment Of Underlying Share Purchase Price and
Number of Underlying Shares. The number of Underlying Shares purchasable upon
the exercise of this Managing Underwriters' Warrant and the Underlying Share
Purchase Price shall be subject to adjustment from time to time as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (i) pay a dividend or make a distribution on its Common Stock
in shares of its capital stock (whether shares of Common Stock or of
capital stock of any other class), (ii) subdivide its outstanding
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Common Stock any shares of capital
stock of the Company, the Underlying Share Purchase Price in effect and
the number of Underlying Shares issuable upon exercise of a Managing
Underwriters' Warrant immediately prior to such action shall be
adjusted so that the Managing Underwriters' Warrant Holder of such
Managing Underwriters' Warrant thereafter exercised shall be entitled
to receive the number of shares of capital stock of the Company at the
same aggregate Underlying Share Purchase Price that such Managing
Underwriters' Warrant Holder would have owned immediately following
such action had such Managing Underwriters' Warrant been exercised
immediately prior thereto. An adjustment made pursuant to this
paragraph shall become effective immediately after the record date in
the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to
this paragraph, the Managing Underwriters' Warrant Holder of the
Managing Underwriters' Warrant thereafter exercised shall become
entitled to receive shares of two or more classes of capital stock of
the Company, the Board of Directors of the Company (whose determination
shall be conclusive) shall determine the allocation of the adjusted
Underlying Share Purchase Price between or among shares of such classes
of capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of
any reclassification or change of outstanding shares of Common Stock
issuable upon exercise of the Managing Underwriters' Warrants (other
than as set forth in paragraph (a) above and 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), or in case of
any consolidation or merger of the Company with or into another
corporation or entity (other than a merger in which the Company is the
continuing corporation and which does not result in any
reclassification or change of the then outstanding shares of Common
Stock or other capital stock issuable upon exercise of the Managing
Underwriters' Warrants), or
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in the case of any sale or conveyance of all or substantially all of
the assets of the Company followed by a related distribution to holders
of shares of Common Stock of cash, securities or other property, then
as a condition of such reclassification, change, consolidation, merger,
or sale of assets, the Company or such a successor corporation or
entity, as the case may be, shall forthwith make lawful and adequate
provision whereby each Managing Underwriters' Warrant Holder of each
Managing Underwriters' Warrant then outstanding shall have the right
thereafter to receive on exercise of a Managing Underwriters' Warrant
the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, change, consolidation,
merger, or sale of assets, by a holder of the number of shares of
Common Stock issuable upon exercise of such Managing Underwriters'
Warrant immediately prior to such reclassification, change,
consolidation, merger, or sale of assets, and enter into a supplemental
warrant agreement so providing. Such provisions shall include provision
for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. If the
issuer of securities deliverable upon exercise of a Managing
Underwriters' Warrant under the supplemental warrant agreement is an
affiliate of the formed or surviving corporation or other entity, that
issuer shall join in the supplemental warrant agreement. The above
provisions of this paragraph (b) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to
successive consolidations or mergers.
(c) Issuance of Options or Convertible Securities. In the
event the Company shall, at any time or from time to time after the
date hereof, issue, sell, distribute or otherwise grant in any manner
(including by assumption) any rights to subscribe for or to purchase,
or any warrants or options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock
(any such rights, warrants or options being herein called "Options" and
any such convertible or exchangeable stock or securities being herein
called "Convertible Securities"), whether or not such Options or the
rights to convert or exchange such Convertible Securities are
immediately exercisable, and the price per share at which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
aggregate amount, if any, received or receivable by the Company as
consideration for the issuance, sale, distribution or granting of such
Options or any such Convertible Security, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon
the exercise of all such Options or upon conversion or exchange of all
such Convertible Securities, plus, in the case of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all
such Convertible Securities, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of all such Options or upon
the conversion or exchange of all such Convertible Securities or upon
the conversion or exchange of all Convertible Securities issuable upon
the exercise of all such Options) shall be less than the current market
price per share of Common Stock on the record date that the Company
becomes obligated to make such issuance, sale, distribution or granting
of such Options or Convertible Securities (any such event being herein
called an "Option Issuance"), then,
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effective upon such Option Issuance, (I) the Underlying Share Purchase
Price shall be reduced to the price (calculated to the nearest 1/1,000
of one cent) determined by multiplying the Underlying Share Purchase
Price in effect immediately prior to such Option Issuance by a
fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such Option Issuance multiplied by the current
market price per share of Common Stock on the date of such Option
Issuance plus (ii) the consideration, if any, received by the Company
upon such Option Issuance, and the denominator of which shall be the
product of (A) the total number of shares of Common Stock outstanding
(exclusive of any treasury shares) immediately after such Option
Issuance multiplied by (B) the current market price per share of Common
Stock on the record date for such Option Issuance and (II) the number
of Underlying Shares purchasable upon the exercise of a Managing
Underwriters' Warrant shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately
prior to the record date for such Option Issuance by a fraction, the
numerator of which shall be the Underlying Share Purchase Price in
effect immediately prior to the adjustment required by clause (I) of
this sentence and the denominator of which shall be the Underlying
Share Purchase Price in effect immediately after such adjustment. For
purposes of the foregoing, the total maximum number of shares of Common
Stock issuable upon exercise of all such Options or upon conversion or
exchange of all such Convertible Securities or upon the conversion or
exchange of the total maximum amount of the Convertible Securities
issuable upon the exercise of all such Options shall be deemed to have
been issued as of the date of such Option Issuance and thereafter shall
be deemed to be outstanding and the Company shall be deemed to have
received as consideration therefor such price per share, determined as
provided above. Except as provided in paragraphs (j) and (k) below, no
additional adjustment of the Underlying Share Purchase Price shall be
made upon the actual exercise of such Options or upon conversion or
exchange of the Convertible Securities or upon the conversion or
exchange of the Convertible Securities issuable upon the exercise of
such Options.
(d) Dividends and Distributions. In the event the Company
shall, at any time or from time to time after the date hereof,
distribute to all the holders of Common Stock any dividend or other
distribution of cash, evidences of its indebtedness, other securities
or other properties or assets (in each case other than (i) dividends
payable in Common Stock, Options or Convertible Securities and (ii) any
cash dividend that, when added to all other cash dividends paid in the
one year prior to the declaration date of such dividend, does not
exceed 5% of the current market price per share of Common Stock on such
declaration date), or any options, warrants or other rights to
subscribe for or purchase any of the foregoing, then (A) the Underlying
Share Purchase Price shall be decreased to a price determined by
multiplying the Underlying Share Purchase Price then in effect by a
fraction, the numerator of which shall be the current market price per
share of Common Stock on the record date for such distribution less the
sum of (X) the cash portion, if any, of such distribution per share of
Common Stock outstanding (exclusive of any treasury shares) on the
record date for such distribution plus (Y) the then fair market value
(as determined in good faith by the Board of Directors of the Company)
per share
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of Common Stock outstanding (exclusive of any treasury shares) on the
record date for such distribution of that portion, if any, of such
distribution consisting of evidences of indebtedness, other securities,
properties, assets, options, warrants or subscription of purchase
rights, and the denominator of which shall be such current market price
per share of Common Stock and (B) the number of Underlying Shares
purchasable upon the exercise of a Managing Underwriters' Warrant shall
be increased to a number determined by multiplying the number of
Underlying Shares so purchasable immediately prior to the record date
for such distribution by a fraction, the numerator of which shall be
the Underlying Share Purchase Price in effect immediately prior to the
adjustment required by clause (A) of this sentence and the denominator
of which shall be the Underlying Share Purchase Price in effect
immediately after such adjustment. The adjustments required by this
paragraph (d) shall be made whenever any such distribution occurs
retroactive to the record date for the determination of stockholders
entitled to receive such distribution.
(e) Sale of Common Stock Below its Current Market Price. In
the event the Company shall, at any time or from time to time after the
date hereof, issue or sell any shares of Common Stock and the price per
share at which such shares were issued or sold shall be less than the
current market price per share of Common Stock on the date the Company
becomes obligated to make such issuance or sale, then, effective upon
such issuance or sale (i) the Underlying Share Purchase Price shall be
reduced to the price (calculated to the nearest 1/1,000 of one cent)
determined by multiplying the Underlying Share Purchase Price in effect
immediately prior to such issuance or sale by a fraction, the numerator
of which shall be the sum of (A) the number of shares of Common Stock
outstanding (exclusive of any treasury shares) immediately prior to
such issuance or sale multiplied by the current market price per share
of Common Stock on the date of such issuance or sale plus (B) the
consideration received by the Company upon such issuance or sale and
the denominator of which shall be the product of (X) the total number
of shares of Common Stock outstanding (exclusive of any treasury
shares) immediately after such issuance or sale multiplied by (Y) the
current market price per share of Common Stock on the date of such
issuance or sale and (ii) the number of Underlying Shares purchasable
upon the exercise of each Managing Underwriters' Warrant shall be
increased to a number determined by multiplying the number of
Underlying Shares so purchasable immediately prior to the date of such
issuance or sale by a fraction, the numerator of which shall be the
Underlying Share Purchase Price in effect immediately prior to the
adjustment required by clause (i) of this sentence and the denominator
of which shall be the Underlying Share Purchase Price in effect
immediately after such adjustment.
(f) Current Market Price. For the purpose of any computation
of current market price under this Section 4 and Section 6(b), the
current market price per share of Common Stock at any date shall be (x)
for purposes of Section 6(b) and any Options granted to the Company's
directors and officers under the Stock Option Plans, the closing price
on the business day immediately prior to the exercise of a Managing
Underwriters' Warrant or the grant of any such Options and (y) in all
other cases, the
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average of the daily closing prices for the shorter of (i) the 20
consecutive trading days ending on the last full trading day on the
exchange or market described below prior to the Time of Determination
(as defined below) and (ii) the period commencing on the date next
succeeding the first public announcement of the issuance, sale,
distribution or granting in question through such last full trading day
prior to the Time of Determination. The term "Time of Determination" as
used herein shall be the time and date of the earlier to occur of (A)
the date as of which the current market price is to be computed and (B)
the last full trading day on such exchange or market before the
commencement of "ex-dividend" trading in the Common Stock relating to
the event giving rise to the adjustment. The closing price for any day
shall be the last reported sale 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 (1) on the
principal national securities exchange on which the shares of Common
Stock are listed or to which such shares are admitted to trading or (2)
if the Common Stock is not listed or admitted to trading on a national
securities exchange, in the over-the-counter market as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System ("Nasdaq National Market") or any comparable system or (3) if
the Common Stock is not listed on Nasdaq National Market or a
comparable system, as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time in
good faith by the Board of Directors of the Company for that purpose.
In the absence of all of the foregoing, or if for any reason the
current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph (f), the current market price
per share shall be the fair market value thereof as determined in good
faith by the Board of Directors of the Company.
(g) Change in the Number of Managing Underwriters' Warrants.
The Company may elect, upon any adjustment of the Underlying Share
Purchase Price hereunder, to adjust the number of Managing
Underwriters' Warrants with respect to the Underlying Shares
outstanding, in lieu of the adjustment in the number of shares of
Common Stock purchasable upon the exercise of a Managing Underwriters'
Warrant as hereinabove provided, so that each Managing Underwriters'
Warrant to purchase Underlying Shares outstanding after such adjustment
shall represent the right to purchase one share of Common Stock. Each
Managing Underwriters' Warrant to purchase Underlying Shares held of
record prior to such adjustment of the number of Managing Underwriters'
Warrants shall become that number of Managing Underwriters' Warrants
(calculated to the nearest tenth) determined by multiplying the number
one by a fraction, the numerator of which shall be the Underlying Share
Purchase Price in effect immediately prior to such adjustment and the
denominator of which shall be the Underlying Share Purchase Price in
effect immediately after such adjustment. Upon each adjustment of the
number of Managing Underwriters' Warrants pursuant to this Section 4,
the Company shall, as promptly as practicable, cause to be distributed
to each Managing Underwriters' Warrant Holder, on the date of such
adjustment, a Managing Underwriters' Warrant Certificate evidencing,
subject to Section 6(b) hereof, the number of additional Managing
Underwriters' Warrants to purchase Underlying Shares to which such
Managing Underwriters' Warrant Holder shall be entitled as a result of
such
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adjustment or, at the option of the Company, cause to be distributed to
such Managing Underwriters' Warrant Holder in substitution and
replacement for the Managing Underwriters' Warrant Certificate held by
such Managing Underwriters' Warrant Holder prior to the date of
adjustment (and upon surrender thereof, if required by the Company) new
Managing Underwriters' Warrant Certificates evidencing the number of
Managing Underwriters' Warrants to purchase Underlying Shares to which
such Managing Underwriters' Warrant Holder shall be entitled after such
adjustment.
(h) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed
for a consideration other than cash, the amount of the consideration
other than cash received by the Company in respect thereof shall be
deemed to be the then fair market value of such consideration (as
determined in good faith by the Board of Directors of the Company). If
any Options shall be issued in connection with the issuance and sale of
other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have
been issued without consideration. If the Company shall pay a dividend
or make any other distribution payable in Options or Convertible
Securities, then such Options or Convertible Securities shall be deemed
to have been issued or sold without consideration.
(i) Deferral of Certain Adjustments. No adjustment to the
Underlying Share Purchase Price (including the related adjustment to
the number of Underlying Shares) shall be required hereunder unless
such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one
percent of the Underlying Share Purchase Price; provided that any
adjustments which by reason of this paragraph (i) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. No adjustment need be made for a change in the
par value of the Common Stock. All calculations under this Section 4
shall be made to the nearest 1/1,000 of one cent or to the nearest
1/1000 of a share, as the case may be.
(j) Changes in Options and Convertible Securities. If the
exercise price provided for in any Options referred to in paragraph (c)
above, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
paragraph (c) above, or the rate at which any Convertible Securities
referred to in paragraph (c) above are convertible into or exchangeable
for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution upon an event
which results in a related adjustment pursuant to this Section 4), the
Underlying Share Purchase Price then in effect and the number of
Underlying Shares purchasable upon the exercise of a Managing
Underwriters' Warrant shall forthwith be readjusted (effective only
with respect to any exercise of the Managing Underwriters' Warrant
after such readjustment) to the Underlying Share Purchase Price and
number of Underlying Shares so purchasable that would then be in effect
had the adjustment made upon the issuance, sale, distribution or
granting of such Options or Convertible Securities been made based upon
such changed purchase price,
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additional consideration or conversion rate, as the case may be, but
only with respect to such Options and Convertible Securities as then
remain outstanding.
(k) Expiration of Options and Convertible Securities. If, at
any time after any adjustment to the number of Underlying Shares
purchasable upon the exercise of a Managing Underwriters' Warrant shall
have been made pursuant to paragraph (c) or (j) above or this paragraph
(k), any Options or Convertible Securities shall have expired
unexercised, the number of Underlying Shares so purchasable with
respect to any then outstanding Managing Underwriters' Warrants shall,
upon such expiration, be readjusted and shall thereafter be such as
they would have been had all of the Managing Underwriters' Warrants
outstanding at the time of the original adjustment been adjusted (or
had the original adjustment not been required, as the case may be) as
if (i) the only shares of Common Stock deemed to have been issued in
connection with such Options or Convertible Securities were the shares
of Common Stock, if any, actually issued or sold upon the exercise of
such Options or Convertible Securities and (ii) such shares of Common
Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the
issuance, sale, distribution or granting of all such Options or
Convertible Securities, whether or not exercised; provided that no such
readjustment shall have the effect of decreasing the number of such
Underlying Shares so purchasable by an amount (calculated by adjusting
such decrease to account for all other adjustments made pursuant to
this Section 4 following the date of the original adjustment referred
to above) in excess of the amount of the adjustment initially made in
respect of the issuance, sale, distribution or granting of such Options
or Convertible Securities.
(l) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Section 4, each Managing
Underwriters' Warrant Holder shall become entitled to receive any
securities of the Company other than Underlying Shares, thereafter the
number of such other securities so receivable upon exercise of a
Managing Underwriters' Warrant and the Underlying Share Purchase Price
applicable to such exercise 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 shares of Common Stock contained in
this Section 4.
(m) Common Stock. As used in this Section 4, the term "Common
Stock" shall mean and include the Common Stock authorized on the date
of the original issue of the shares of Common Stock and Warrants in
connection with the Offering and shall also include any capital stock
of any class of the Company thereafter authorized that is not limited
to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends and in the distribution of assets
upon the voluntary liquidation, dissolution or winding up of the
Company; provided, however, that the Underlying Shares shall include
only shares of such class designated in the Company's Certificate of
Incorporation as Common Stock on the date of the original issue of the
shares of Common Stock and Warrants in connection with the Offering or
(i) in the case of any reclassification, change, consolidation, merger,
or sale of assets of the character referred to in Section 4(b) hereof,
the stock, securities or property provided for in such section or (ii)
in the case of any reclassification or change in the number of
Underlying Shares as a
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result of a subdivision or combination or consisting of a change in par
value, or from par value to no par value, or from no par value to par
value, such Underlying Shares as so reclassified or changed.
(n) Determination of Gross Sales Price. In case of the sale
for cash of any shares of Common Stock, Options, or Convertible
Securities, the consideration received by the Company therefor shall be
deemed to be the gross sales price therefor without deducting therefrom
any expense paid or incurred by the Company or any underwriting
discounts or commissions or concessions paid or allowed by the Company
in connection therewith.
(o) Events Resulting in no Adjustments. No adjustment to the
Underlying Share Purchase Price or to the number of Underlying Shares,
however, will be made upon (i) the sale of any shares of Common Stock
or Warrants in the Offering (including the exercise of the
over-allotment option granted to the underwriters), (ii) the exercise
of any stock options issued under the Company's 1997 Stock Option Plan,
1996 Stock Option Plan, 1992 Non-Qualified Stock Option Plan or 1988
Non-Qualified Stock Option Plan (the "Stock Option Plans") to officers,
directors and employees of the Company under the terms of such plans as
they exist on the date hereof, (iii) the exercise of any warrants by
officers and directors of the Company that are outstanding as of the
date hereof, (iv) the sale of any shares of Common Stock or Warrants
pursuant to the exercise of any Managing Underwriters' Warrant, or (v)
the sale of any shares of Common Stock upon the exercise of any
Warrants (collectively, the "Exempt Securities").
(p) Notice of Change in Underlying Share Purchase Price. Upon
any adjustment of the Underlying Share Purchase Price pursuant to
Section 4, the Company shall promptly thereafter (i) cause to be
prepared a certificate of the President and Chief Financial Officer of
the Company setting forth the Underlying Share Purchase Price after
such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and
setting forth the number of Underlying Shares (or portion thereof)
issuable after such adjustment in the Underlying Share Purchase Price,
upon exercise of a Managing Underwriters' Warrant and payment of the
adjusted Underlying Share Purchase Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein
absent manifest error, provided that if a Managing Underwriters'
Warrant Holder reasonably requests, the Company shall engage a firm of
independent public accountants of recognized standing selected by the
Board of Directors of the Company (who may be the regular auditors of
the Company) to prepare and file such certificate in lieu of the
certificate of the President and Chief Financial Officer, in which case
such certificate shall be conclusive evidence of the matters set forth
therein, absent manifest error, and (ii) send to each of the Managing
Underwriters' Warrant Holders at the address appearing on the registry
books maintained by the Company written notice of such adjustments by
first-class mail, postage prepaid.
(q) Notice of Certain Events. With respect to any Notice
Event, the Company shall cause to be given to each Managing
Underwriters' Warrant Holder at such
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Managing Underwriters' Warrant Holder's address appearing on the
registry books maintained by the Company, at least 20 days prior to the
applicable record date hereinafter specified, or promptly in the case
of events for which there is no record date, by first class mail,
postage prepaid, a written notice stating (i) the date as of which the
holders of record of shares of Common Stock entitled to receive any
such rights, options, warrants or distribution is to be determined,
(ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of
record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice
required by this Section 4(q) or any defect therein shall not affect
the legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, or
liquidation or winding up, or the vote upon any action, provided that
each Managing Underwriters' Warrant Holder shall retain any right to
damages from the Company with respect to such failure.
SECTION 5. Change in Number of the Underlying Warrants and the
Underlying Warrant Purchase Price.
(a) Adjustment. Under the Warrant Agreement, the Company may
elect, upon any adjustment of the exercise price of the Warrants, to
adjust the number of Warrants outstanding in lieu of adjusting the
number of shares of Common Stock purchasable upon the exercise of each
Warrant, so that each Warrant outstanding after such adjustment shall
represent the right to purchase one share of Common Stock. In such a
case (i) the Underlying Warrant Purchase Price shall become that price
(calculated to the nearest 1/1,000 of one cent) determined by
multiplying the Underlying Warrant Purchase Price in effect immediately
prior to such adjustment by a fraction, the numerator of which shall be
the exercise price of the Warrants in effect immediately prior to such
adjustment and the denominator of which shall be the exercise price of
the Warrants in effect immediately after such adjustment and (ii) each
Underlying Warrant under this Managing Underwriters' Warrant that has
not been purchased pursuant to the exercise of such Managing
Underwriters' Warrant prior to such adjustment of the number of
Warrants shall become that number of Underlying Warrants (calculated to
the nearest tenth) determined by multiplying the number one by a
fraction, the numerator of which shall be the exercise price of the
Warrants in effect immediately prior to such adjustment and the
denominator of which shall be the exercise price of the Warrants in
effect immediately after such adjustment. Upon each adjustment of such
Underlying Warrants pursuant to this Section 5, the Company shall, as
promptly as practicable, cause to be distributed to each Managing
Underwriters' Warrant Holder, on the date of such adjustment, Managing
Underwriters' Warrant Certificates evidencing, subject to Section 6(b)
hereof, the number of additional Underlying Warrants to which such
Managing
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Underwriters' Warrant Holder shall be entitled as a result of such
adjustment or, at the option of the Company, cause to be distributed to
such Managing Underwriters' Warrant Holder in substitution and
replacement for the Managing Underwriters' Warrant Certificates held by
such Managing Underwriters' Warrant Holder prior to the date of
adjustment (and upon surrender thereof, if required by the Company) new
Managing Underwriters' Warrant Certificates evidencing the number of
Underlying Warrants to which such Managing Underwriters' Warrant Holder
shall be entitled after such adjustment.
(b) Warrant Notice Event. With respect to any Warrant Notice
Event, the Company shall cause to be given to each Managing
Underwriters' Warrant Holder at such Managing Underwriters' Warrant
Holder's address appearing on the registry books maintained by the
Company, at least 20 days prior to the applicable record date
hereinafter specified, or promptly in the case of events for which
there is no record date, by first class mail, postage prepaid, a
written notice stating (i) the date as of which the holders of record
of the Warrants entitled to receive any such rights, options, warrants
or distribution is to be determined, (ii) the initial expiration date
set forth in any tender offer or exchange offer for Warrants, or (iii)
the date on which any such reclassification or change is expected to
become effective or consummated, and the date as of which it is
expected that holders of record of Warrants shall be entitled to
exchange such shares for securities or other property, if any,
deliverable upon such reclassification or change. The failure to give
the notice required by this Section 5(b) or any defect therein shall
not affect the legality or validity of any distribution, right, option,
warrant, or reclassification, or the vote upon any action, provided
that each Managing Underwriters' Warrant Holder shall retain any rights
to damages from the Company with respect to such failure.
SECTION 6. Other Provisions Relating to Rights of a Managing
Underwriters' Warrant Holder.
(a) Managing Underwriters' Warrant Holders not Stockholders.
The Managing Underwriters' Warrant Holders, as such, shall not be
entitled to vote or receive dividends or be deemed holders of Common
Stock or Warrants for any purpose, nor shall anything contained in this
Agreement be construed to confer upon the Managing Underwriters'
Warrant Holders, as such, any of the rights of a stockholder or holder
of a Warrant of the Company or any right to vote, give or withhold
consent to any action by the Company (whether upon any
recapitalization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of
meetings or other action affecting stockholders or Warrant holders
(except for notices provided for in this Agreement), receive dividends
or subscription rights, or otherwise until the Managing Underwriters'
Warrant shall have been exercised to purchase the Underlying Shares or
the Underlying Warrants, at which time the person or persons in whose
name or names the certificate or certificates for the shares of Common
Stock or Warrants are registered shall be deemed the holder or holders
of record of such shares of Common Stock or Warrants for all purposes.
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(b) Fractional Shares or Warrants. Anything contained herein
to the contrary notwithstanding, the Company shall not be required to
issue any fractional shares of Common Stock or Underlying Warrants in
connection with the exercise of a Managing Underwriters' Warrant. In
any case where a Managing Underwriters' Warrant Holder would, except
for the provisions of this Section 6(b), be entitled under the terms of
this Agreement to receive a fraction of a share of Common Stock or an
Underlying Warrant upon the exercise of this Managing Underwriters'
Warrant, the Company shall, upon the exercise of the Managing
Underwriters' Warrant and receipt of the Underlying Share Purchase
Price or the Underlying Warrant Purchase Price, as the case may be,
issue the largest number of whole shares of Common Stock or Underlying
Warrants, as the case may be, purchasable upon exercise of this
Managing Underwriters' Warrant. The Managing Underwriters' Warrant
Holder expressly waives his or her right to receive a certificate of
any fraction of a share of Common Stock or an Underlying Warrant upon
the exercise hereof. However, with respect to any fraction of a share
of Common Stock or Underlying Warrant called for upon any exercise
hereof, the Company shall pay to the Managing Underwriters' Warrant
Holder an amount in cash equal to such fraction multiplied by the
current market price per share of Common Stock or Underlying Warrant,
as the case may be, determined pursuant to Section 4(f) hereof
(substituting "Warrant" for "share of Common Stock" in the case of
Underlying Warrants).
(c) Absolute Owner. Prior to due presentment for registration
of transfer of any Managing Underwriters' Warrant Certificate, the
Company may deem and treat each Managing Underwriters' Warrant Holder
as the absolute owner of its Managing Underwriters' Warrant for the
purpose of any exercise thereof and for all other purposes and the
Company shall not be affected by any notice to the contrary.
SECTION 7. Division, Split-Up, Combination, Exchange and Transfer of
Warrants
(a) Request. A Managing Underwriters' Warrant may be divided,
split up, combined or exchanged for another Managing Underwriters'
Warrant of like tenor to purchase a like aggregate number of Underlying
Shares and Underlying Warrants. If a Managing Underwriters' Warrant
Holder desires to divide, split up, combine or exchange a Managing
Underwriters' Warrant, he or she shall make such request in writing
delivered to the Company at its office in Lancaster, Pennsylvania and
shall surrender such Managing Underwriters' Warrant Certificates to be
so divided, split up, combined or exchanged at said office. Upon any
such surrender for a division, split-up, combination or exchange, the
Company shall execute and deliver to the person entitled thereto a new
Managing Underwriters' Warrant Certificate as so requested. The Company
may require such Managing Underwriters' Warrant Holder to pay a sum
sufficient to cover any tax or governmental charge that may be imposed
in connection with any division, split-up, combination or exchange of
Managing Underwriters' Warrants.
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(b) Initial Issuance to JMS and Southwest. The Company
initially shall issue the right to purchase 70,000 Underlying Shares
and 70,000 Underlying Warrants to each of JMS and Southwest, as
represented by a Managing Underwriters' Warrant Certificate issued to
each of JMS and Southwest in the form attached hereto as Exhibit A, or
to such officers of JMS and/or Southwest as such Managing Underwriters
may direct.
(c) Assignment; Replacement of Managing Underwriters' Warrant
Certificate. The Managing Underwriters' Warrants may not be sold,
transferred, assigned, or hypothecated by each Managing Underwriter, in
whole or in part, for a period of one year from the effective date of
the Offering except to the officers of such Managing Underwriter.
Thereafter, the Managing Underwriters' Warrants may be sold,
transferred, assigned or hypothecated, in whole or in part, subject to
federal and state securities laws. Any division or assignment permitted
of a Managing Underwriters' Warrant shall be made by surrender of the
respective Managing Underwriters' Warrant Certificate to the Company at
its principal office with the Form of Assignment attached hereto duly
executed and with funds sufficient to pay any transfer tax. In such
event, the Company shall, without charge, execute and deliver a new
Managing Underwriters' Warrant Certificate in the name of the assignee
named in such instrument of assignment and the surrendered Managing
Underwriters' Warrant Certificate shall promptly be canceled. Upon
receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of a Managing Underwriters' Warrant
Certificate and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and (in the case of
mutilation) upon surrender and cancellation of such Managing
Underwriters' Warrant Certificate, the Company will execute and deliver
a new Managing Underwriters' Warrant Certificate of like tenor and date
and any such lost, stolen or destroyed Managing Underwriters' Warrant
Certificate shall thereupon become void. Any such new Managing
Underwriters' Warrant Certificate executed and delivered shall
constitute an additional contractual obligation on the part of the
Company, whether or not the Managing Underwriters' Warrant Certificate
so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
SECTION 8. Other Matters.
(a) Taxes and Charges. The Company will from time to time
promptly pay, subject to the provisions of paragraph (v) of Section
2(b), all taxes and charges that may be imposed upon the Company in
respect of the issuance or delivery, but not the transfer, of the
Managing Underwriters' Warrants or the Underlying Securities.
(b) Notices. Notice or demand pursuant to this Agreement to be
given or made by the any Managing Underwriters' Warrant Holder to or on
the Company shall be sufficiently given or made if delivered or sent by
registered or certified mail, postage prepaid, return receipt
requested, and addressed, until another address is designated in
writing by the Company, or by facsimile transmission, as follows:
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Xxxxxx Industries, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to:
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Notices to the Managing Underwriters' Warrant Holders provided
for in this Agreement shall be deemed given or made by the Company if
delivered or sent by mail, certified or registered, return receipt
requested, postage prepaid, or overnight courier or facsimile
transmission addressed to each Managing Underwriters' Warrant Holder at
his or her last known address or facsimile number as shall appear on
the registry books of the Company and at the following addresses for
JMS and Southwest:
(i) if to JMS:
Xxxxxx Xxxxxxxxxx Xxxxx Inc.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(ii) if to Southwest:
Southwest Securities, Inc.
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: C. Xxxxxxx Xxxxxx, Xx.
Phone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(c) Governing Law. The validity, interpretation and
performance of this Agreement shall be governed by the laws of the
State of New York without giving effect to the conflicts of laws
principles thereof.
(d) Exclusive Benefit. Nothing in this Agreement expressed or
nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or give to, any person
or corporation other than the Company, JMS, Southwest, and the Managing
Underwriters' Warrant Holders any right, remedy or claim hereunder, and
all covenants, conditions, stipulations, promises and agreements
contained in this Agreement shall be for the sole and exclusive benefit
of such persons and their successors, survivors and permitted assigns
hereunder. This Agreement is for the benefit of and is enforceable by
any subsequent Managing Underwriters' Warrant Holder.
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(e) Headings. The article headings herein are for convenience
only and are not part of this Agreement and shall not affect the
interpretation hereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
XXXXXX INDUSTRIES, INC.
By:______________________________________
Xxxxx Xxxx
President
XXXXXX XXXXXXXXXX XXXXX INC.
By:______________________________________
Xxxxxxx X. Xxxxxxx
Senior Vice President
SOUTHWEST SECURITIES, INC.
By:______________________________________
C. Xxxxxxx Xxxxxx, Xx.
Senior Vice President
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EXHIBIT A
THE ISSUANCE OF THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, NOR HAS THIS SECURITY BEEN REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES LAWS. THIS SECURITY MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF THE
REGISTRATION OF SUCH TRANSACTION UNDER THE SECURITIES ACT AND THE REGISTRATION
OR QUALIFICATION OF THIS SECURITY UNDER APPLICABLE STATE SECURITIES LAWS UNLESS
SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION AND THIS SECURITY IS EXEMPT
FROM SUCH REGISTRATION OR QUALIFICATION.
No.__________
MANAGING UNDERWRITERS' WARRANT CERTIFICATE
XXXXXX INDUSTRIES, INC.
This warrant certificate certifies that __________________________, or
its registered assigns, is the registered holder of a Managing Underwriters'
Warrant representing the right to purchase ________ shares (the "Underlying
Shares") of common stock, par value $.10 per share (the "Common Stock") of
Xxxxxx Industries, Inc. (the "Company") and ________ Common Stock Purchase
Warrants of the Company (the "Underlying Warrants") issuable under the Warrant
Agreement (as defined in the Managing Underwriters' Warrant Agreement) in
accordance with the terms of the Managing Underwriters' Warrant Agreement. This
Managing Underwriters' Warrant with respect to the Underlying Shares expires on
December ______, 2002 (the "Underlying Share Expiration Date") and with respect
to the Underlying Warrants expires on January _______, 2000 (the "Underlying
Warrant Expiration Date"), or on such expiration dates as may be extended
pursuant to the terms of the Managing Underwriters' Warrant Agreement.
This Managing Underwriters' Warrant entitles the registered holder,
upon exercise from time to time from 9:00 a.m. New York City time on or after
December _____, 1998 until 5:00 p.m. New York City time on the Underlying Share
Expiration Date (with respect to the Underlying Shares) and the Underlying
Warrant Expiration Date (with respect to the Underlying Warrants), to purchase
Underlying Shares at $_____ per Underlying Share (the "Underlying Share Purchase
Price") and Underlying Warrants at $________ per Underlying Warrant (the
"Underlying Warrant Purchase Price") in lawful money of the United States of
America upon surrender of this certificate and payment of the Underlying Share
Purchase Price and/or the Underlying Warrant Purchase Price in accordance with
the terms of the Managing Underwriters'
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Warrant Agreement. The Underlying Share Purchase Price, the number of Underlying
Shares issuable upon exercise of this Managing Underwriters' Warrant, the
Underlying Warrant Purchase Price, and the number of Underlying Warrants
issuable upon exercise of this Managing Underwriters' Warrant are subject to
adjustment upon the occurrence of certain events set forth in the Managing
Underwriters' Warrant Agreement.
This Managing Underwriters' Warrant with respect to the Underlying Shares
may not be exercised after 5:00 p.m. on the Underlying Share Expiration Date and
with respect to the Underlying Warrants may not be exercised after 5:00 p.m. on
the Underlying Warrant Expiration Date, and to the extent not exercised by such
time such Managing Underwriters' Warrant shall become void.
This warrant certificate shall be governed by and construed in accordance
with the internal laws of the State of New York.
IN WITNESS WHEREOF, Xxxxxx Industries, Inc. has caused this warrant
certificate to be signed by its President and its Secretary.
Dated:___________
XXXXXX INDUSTRIES, INC.
__________________________________
President
__________________________________
Secretary
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FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto _______________________, whose address is ______________________ and whose
social security or other identifying number is _______________, the right to
purchase __________ Underlying Shares and _________ Underlying Warrants
evidenced by the within Managing Underwriters' Warrant, and hereby irrevocably
constitutes and appoints the Secretary of the Company as his, her or its
attorney-in-fact to transfer the same on the books of Xxxxxx Industries, Inc.
with full power of substitution and re-substitution. If said number of
Underlying Shares and/or Underlying Warrants is less than all of the Underlying
Shares and/or Underlying Warrants purchasable hereunder, the undersigned
requests that a new warrant certificate representing the right to purchase the
balance of such Underlying Shares and/or Underlying Warrants be registered in
the name of _______________, whose address is ________________________ and whose
social security or other identifying number is ___________________, and that
such warrant certificate be delivered to _________________, whose address is
_________________.
Dated:______________________ ______________________________________
Signature
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SUBSCRIPTION FORM
The undersigned hereby irrevocably elects to exercise the right,
represented by this warrant certificate, to purchase ______________ Underlying
Shares and/or _______________ Underlying Warrants and tenders payment herewith
in the amount of $________. The undersigned requests that a certificate for such
Underlying Shares and/or Underlying Warrants be registered in the name of
_______________, whose address is ______________ and whose social security or
other identifying number is _____________________, and that such Underlying
Shares and/or Underlying Warrants be delivered to _________________, whose
address is ____________________. If said number of Underlying Shares and/or
Underlying Warrants is less than all of the Underlying Shares and/or Underlying
Warrants purchasable hereunder, the undersigned requests that a new warrant
certificate representing the right to purchase the balance of such Underlying
Shares and/or Underlying Warrants be registered in the name of
__________________, whose address is ____________________ and whose social
security or other identifying number is ____________________, and that such
warrant certificate be delivered to ______________________, whose address is
_____________________.
Date:_______________ ______________________________________
Signature
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