Exhibit 99.2
COMMON STOCK PURCHASE WARRANT
EVERLAST WORLDWIDE INC.
Dated: January 1, 2006
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS.
COMMON STOCK PURCHASE WARRANT
For the Purchase of 100,000 of Common Stock
of
EVERLAST WORLDWIDE INC.
(A Delaware Corporation)
1. WARRANT.
THIS CERTIFIES THAT Xxxxxxx Xxxxx, Inc. (the "Holder"), the registered
owner of this Warrant, is entitled, at any time and from time to time at or
before 5:00 p.m., prevailing Eastern Time, January 1, 2016, but not thereafter,
to subscribe for, purchase and receive, in whole or in part, up to One Hundred
Thousand (100,000) shares of common stock, $0.002 par value (the "Common Stock")
of Everlast Worldwide Inc., a Delaware corporation (the "Company"). If January
1, 2016 is a day on which banking institutions are authorized by law to close,
then this Warrant may be exercised on the next succeeding day that is not such a
day in accordance with the terms hereof. This Warrant shall be initially
exercisable on January 1, 2007. This Warrant is initially exercisable as to each
share of Common Stock purchasable hereunder at a price of $7.42 per share of
Common Stock (the "Exercise Price"). The term "Exercise Price" shall mean the
initial exercise price or such exercise price, as adjusted in the manner
provided herein, depending on the context. This Warrant is issued in accordance
with Letter of Intent dated November 10, 2005 between the Company and the Holder
(the "License Agreement").
2. EXERCISE.
In order to exercise this Warrant, the exercise form attached hereto as
Exhibit A (the "Exercise Notice") must be duly executed, completed and delivered
to the Company, together with this Warrant and payment of the Exercise Price for
the shares of the Common Stock being purchased. Such payment may be made, at the
option of the Holder, in cash, by certified or bank cashier's check, or by wire
transfer. If the rights represented hereby shall not be exercised at or before
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5:00 p.m., prevailing Eastern Time, on January 1, 2016, this Warrant shall
become and be void and without further force or effect and all rights
represented hereby shall cease and expire.
3. TRANSFER.
The securities purchased upon exercise of this Warrant shall not be
transferred unless and until (i) the Company has received an opinion of counsel
for the Holder that the securities may be transferred pursuant to an exemption
from registration under the Securities Act of 1933, as amended (the "Act"), the
availability of which is established to the reasonable satisfaction of the
Company, or (ii) a registration statement relating to such securities has been
filed by the Company and declared effective by the Securities and Exchange
Commission.
Each certificate for securities purchased upon exercise of this Warrant
shall bear a legend substantially as follows, unless such securities have been
registered under the Act:
"These securities represented by this certificate have not
been registered under the Securities Act of 1933 (the "Act").
The securities may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from
registration under the Act and applicable state securities
laws, supported by an opinion of counsel, reasonably
satisfactory to the company and its counsel, that such
registration is not required."
This warrant may not be assigned.
4. NEW WARRANTS TO BE ISSUED.
4.1 PARTIAL EXERCISE OR TRANSFER. Subject to the restrictions in
Section 3 hereof, this Warrant may be exercised or assigned in whole or in part.
In the event of the exercise or assignment hereof in part only, upon surrender
of this Warrant for cancellation, together with the duly executed exercise or
assignment form and funds sufficient to pay any required transfer tax, the
Company shall cause to be delivered to the Holder without charge a new warrant
or new warrants of like tenor with this Warrant in the name of the Holder
evidencing the right to purchase, in the aggregate, the remaining number of
underlying shares of Common Stock purchasable hereunder after giving effect to
any such partial exercise or assignment.
4.2 LOST CERTIFICATE. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of an indemnification in favor of the Company, reasonably satisfactory to
it, the Company shall execute and deliver a new warrant of like tenor and date.
Any such new warrants executed and delivered as a result of such loss, theft,
mutilation or destruction shall constitute an additional contractual obligation
on the part of the Company.
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5. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
5.1 ADJUSTMENT FOR STOCK DIVIDENDS. In case the Company shall pay
a dividend or make any other distribution on any class of capital stock of the
Company in shares of Common Stock, the Exercise Price in effect at the close of
business on the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Exercise Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares of Common Stock constituting such dividend
or other distribution, such reduction to become effective immediately prior to
the opening of business on the date following the date fixed for such
determination. For the purposes of this Section 5.1, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company.
5.2 ADJUSTMENT FOR STOCK SUBDIVISIONS AND COMBINATIONS. In case
outstanding shares of Common Stock shall be subdivided into a greater number of
shares of Common Stock, the Exercise Price in effect at the close of business on
the day upon which such subdivision becomes effective shall be proportionately
reduced and, conversely, in case outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the Exercise Price in
effect at the opening of business on the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately prior to the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
5.3 ADJUSTMENT FOR DISTRIBUTION OF ASSETS. In case the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness or assets (including securities, but excluding any
rights or warrants referred to in Section 5.2, any dividend or distribution paid
in cash out of the earned surplus or capital surplus of the Company, and any
dividend or distribution referred to in Section 5.1), the Exercise Price shall
be adjusted so that the same shall equal the price determined by multiplying the
Exercise Price in effect immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the Market Price (as
defined below) per share of Common Stock on the date fixed for such
determination less the then Fair Market Value of the portion of the assets or
evidences of indebtedness so distributed (net of the Fair Market Value of any
consideration paid or exchanged with respect thereto) applicable to one share of
Common Stock and the denominator shall be such Market Price per share of Common
Stock, such adjustment to become effective immediately prior to the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution.
For purposes hereof "Market Price" shall mean the average of the daily
closing prices for the 20 consecutive business days immediately prior to the day
in question. The closing price for each day shall be (a) the last reported sales
price or, in the case no such reported sale takes place on such day, the average
of the reported closing bid and asked prices, in either case on the principal
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national securities exchange on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, on the National Association of Securities Dealers
Automated Quotation National Market System, (b) if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted on
such National Market System, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm reasonably selected from time to time by the Company for that purpose, or
(c) if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System and the average
price cannot be determined as contemplated by clause (b), the Fair Market Value.
For the purposes hereof, the term "business day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any day on which securities
are not traded on such exchange or in such market.
5.4 COMPUTATION OF ADJUSTED PURCHASE PRICE. Whenever the Exercise
Price is adjusted as provided in this Section 5:
(a) The Company shall compute the adjusted Exercise Price to the
nearest one-hundredth of a cent in accordance with this Section 5 and shall
prepare a certificate signed by the Chief Financial Officer or the Treasurer of
the Company setting forth the adjusted Exercise Price and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate shall
forthwith be filed with the books and records of the Company;
(b) A notice stating that the Exercise Price has been adjusted and
setting forth the adjusted Exercise Price shall, as soon as practicable after it
is required, be mailed to Holder; and
(c) At its option, Holder may confirm the adjustment noted on the
certificate by causing such adjustment to be computed by an independent
certified public accountant at the Holder's expense; provided, however, that if
the results of such computation reveal an error in the adjustment noted on the
certificate, then the Company shall pay the costs and expenses of such
computation.
5.5 MINIMUM ADJUSTMENT; LIMITATION. No adjustment in the Exercise
Price shall be required under this Section 5 unless such adjustment would
require an increase or decrease of at least one cent ($.01) in such price;
provided, however, that any adjustments that by reason of this Section 5.5 are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 5 shall be made to
the nearest one-hundredth of a cent or to the nearest one-hundredth of a share
as the case may be. Notwithstanding the foregoing provisions of this Section 5,
in no event shall the Exercise Price be reduced below the minimum amount for
which the Common Stock may lawfully be issued pursuant to applicable laws and
regulations; provided, however, that upon the occurrence of any event that
would, but for the foregoing limitation, give rise to an adjustment of the
Exercise Price pursuant to this Section 5, solely for purposes of determining
the number of warrants, the Exercise Price shall be given effect as if adjusted
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to the full extent provided for in this Section 5, without regard to the
limitation set forth in this sentence.
5.6 NO REDEMPTION OF WARRANT. This Warrant cannot be redeemed by
the Company without the prior written consent of the Holder.
5.7 ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrant, nor shall it be required to issue scrip or pay
cash in lieu of any fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the exercise thereof.
6. RESERVATION AND LISTING. The Company shall at all times reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon exercise of the Warrant, such number of shares of
Common Stock or other securities, properties or rights as shall be issuable upon
the exercise thereof. The Company covenants and agrees that, upon exercise of
the Warrant from time to time and payment of the Exercise Price therefor, all
shares of Common Stock and other securities issuable, properties and rights upon
such exercise shall be duly and validly issued, fully paid and nonassessable and
not subject to preemptive rights of any stockholder. As long as this Warrant
shall be outstanding, the Company shall use its best efforts to cause all shares
of Common Stock issuable upon exercise of the Warrant to be listed (subject to
official notice of issuance) on all securities exchanges and automated quotation
systems on which the Common Stock may then be listed and/or quoted.
7. PIGGYBACK REGISTRATION RIGHTS.
7.1 NOTICE AND REQUEST. If the Company at any time or from time to
time proposes to register any securities under the Securities Act of 1933, as
amended (the "Act") either for its own account or the account of any selling
security holders (other than pursuant to (i) a registration statement on Forms
S-4 or S-8 or any successor or similar forms, or (ii) a registration on any form
that does not permit secondary sales), it will give notice to the Holder of its
intention at least ten (10) days in advance of the filing of any registration
statement with respect thereto. Upon the written request of the Holder given
within five (5) business days after receipt of such notice, the Company, subject
to Section 7.2 below, will include in such registration, and in any underwriting
involved therein, all the shares of Common Stock issuable upon the exercise of
the Warrants (the "Registrable Securities") included in such request.
The Company shall cause the registration statement to become effective
and remain effective as provided herein. The Company shall use its reasonable
best efforts to cause the registration statement to be declared effective under
the Act as promptly as possible after the filing thereof. The Company shall use
its reasonable best efforts to keep the registration statement continuously
effective under the Act until the date which is the earlier date of when (i) all
Registrable Securities have been effectively registered under the Act and
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disposed of in accordance with the registration statement covering them, (ii)
all Registrable Securities are distributed to the public pursuant to Rule 144
(or any similar provision then in force) under the Act, or (iii) all Registrable
Securities are otherwise freely transferable without restriction under the Act.
7.2 UNDERWRITTEN OFFERING.
(a) In the case of an underwritten offering by the Company of
securities, the Holder will, with respect to Registrable Securities, enter into
an underwriting agreement with the same underwriters engaged by the Company with
respect to securities being offered by the Company and the Company shall cause
such underwriters to include in any such underwriting all of the Registrable
Securities that the Holder then desires to sell; provided, however, that such
underwriting agreement is in substantially the same form as the underwriting
agreement that the Company enters into in connection with the primary offering
it is making.
(b) If the managing underwriter with respect to such underwritten
offering requests in writing that the number of securities to be offered by
selling security holders be reduced because in the judgment of the managing
underwriter the offering would be materially and adversely affected, then such
securities shall be reduced by such amount as the managing underwriter may
determine so as to not materially and adversely affect the proposed offering,
provided that the securities held by any other holders (other than the Holder)
shall be proportionally reduced.
(c) The Company and the Holder agree, in connection with any
underwritten offering by the Company within two (2) years of the date hereof,
upon request of the underwriters managing any underwritten offering of the
Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those included in the registration) without the prior written
consent of such underwriters, as the case may be, for a period of time not to
exceed ninety (90) days from the effective date of such registration as the
Company or the underwriters may specify, but such restriction shall only apply
if (i) all directors and all executive officers of the Company agree to be bound
by such restrictions, and (ii) the Company shall release the Holder from any
such restriction to the extent the Company releases any other person or entity
from such a "lockup" restriction. The Holder agrees that the Company may
instruct its transfer agent to place stop-transfer notations in its records to
enforce the provisions of this Section 7.2.
7.3 INFORMATION. Upon making a request pursuant to this Section 7,
the Holder shall specify the number of shares of Registrable Securities to be
registered on its behalf and the intended method of disposition thereof. The
Company may require the Holder to furnish to the Company such information in
writing regarding itself and the distribution of Registrable Securities as the
Company may from time to time reasonably request in writing in order to comply
with the Act. The Holder agrees to supply the Company as promptly as practicable
with such information and to notify the Company as promptly as practicable of
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any inaccuracy or change in information they have previously furnished to the
Company.
7.4 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Warrant,
the Company will keep the Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. In
connection with any registration effected pursuant to this Warrant, the Company
will prepare and file such amendments and supplements to its registration
statement as may be necessary to comply with the provisions of the Act and any
applicable blue sky or other state securities laws with respect to the
disposition of all securities covered by such registration statement provided,
however, that the Company shall not be obligated to take any such action to
effect any such registration under this Agreement in any particular jurisdiction
in which the Company would be requested to execute a general consent to service
of process in effecting such registration, qualification or compliance unless
the Company is already subject to service in such jurisdiction and except as may
be required by the Act. At its expense, the Company will furnish such number of
prospectuses and other documents incident thereto as the Holder from time to
time may reasonably request.
The Company shall keep such Registration Statement effective
for a period of up to one-year after the Registration Statement is declared
effective or until the distribution contemplated in the Registration Statement
has been completed, whichever first occurs; provided, however, that such
one-year period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company.
7.5 EXPENSES OF REGISTRATION. All reasonable fees and expenses
incident to the Company's performance of or compliance with this Warrant shall
be borne by the Company whether or not any Registration Statement becomes
effective including, without limitation: (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the National Association of Securities Dealers, Inc.,
and (B) with respect to compliance with securities or blue sky laws); (ii) fees
and disbursements of counsel for the Company; (iii) fees and disbursements of
all independent certified public accountants for the Company (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance); (iv) Act liability insurance if
the Company so desires such insurance; and (v) fees and expenses of all other
persons retained by the Company. The Company shall not pay any other fees or
expenses incurred by the Holder including, without limitation, accounting
expenses of the Holder and commissions or discounts attributable to the Holder's
sale of Registrable Securities.
8. CERTAIN NOTICE REQUIREMENTS.
8.1 HOLDER'S RIGHT TO RECEIVE NOTICE. Nothing herein shall be
construed as conferring upon the Holder the right to vote or consent or to
receive notice as a stockholder for the election of directors or any other
matter, or as having any rights whatsoever as a stockholder of the Company. If,
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however, at any time prior to the expiration of the Warrant and its exercise,
any of the events described in Section 8.2 shall be proposed, then, in each such
event, the Company shall give written notice of such event at least fifteen (15)
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, conversion or exchange of securities or subscription
rights, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of the
closing of the transfer books, as the case may be.
8.2 EVENTS REQUIRING NOTICE. The Company shall be required to give
the notice described in this Section 8 upon one or more of the following events:
(i) if the Company shall take a record of the holders of its shares of Common
Stock for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable
otherwise than out of retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company, or (ii)
the Company shall offer to all the holders of its Common Stock any additional
shares of capital stock of the Company or securities convertible into or
exchangeable for shares of capital stock of the Company, or any option, right or
warrant to subscribe therefore, or (iii) a dissolution, liquidation or winding
up of the Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business shall be
proposed.
8.3 TRANSMITTAL OF NOTICES. All notices, requests, consents and
other communications under this Warrant shall be in writing and shall be deemed
to have been duly given or made when hand delivered, or when delivered by
responsible overnight courier:
(a) If to the Holder, to:
Xxxxxxx Xxxxx, Inc.
000 Xxxxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Attention: Xxxxxx Xxxxxx
Title: Chairman and Chief Executive Officer
(b) if to the Company, to:
Everlast Worldwide Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Title: Chairman and Chief Executive Officer
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Either of the Holder or the Company may change the foregoing address by notice
given pursuant to this Section 8.3.
9. MISCELLANEOUS.
9.1 AMENDMENTS. The Company and the holder of a majority of the
Warrants may from time to time supplement or amend this Warrant in order to cure
any ambiguity, to correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions herein. All modifications
or amendments to this Warrant shall require the written consent of the party
against whom enforcement of the modification or amendment is sought.
9.2 HEADINGS. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this Warrant.
9.3 ENTIRE AGREEMENT. This Warrant (together with the other
agreements and documents being delivered pursuant to or in connection with this
Warrant) constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
9.4 BINDING EFFECT. This Warrant shall inure solely to the benefit
of and shall be binding upon, the Holder and the Company and their permitted
assignees, respective successors, legal representatives and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Warrant or any
provisions herein contained.
9.5 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Warrant shall
be governed by and construed and enforced in accordance with the laws of the
State of New York, without giving effect to conflict of laws principles. Any
action, proceeding or claim against the Company or the Holder arising out of, or
relating in any way to this Warrant shall be brought and enforced in the courts
of the State of New York or of the United States of America for the Southern
District of New York, and the Company and the Holder irrevocably submit to such
jurisdiction, which jurisdiction shall be exclusive. The parties hereto waive
any objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. The prevailing party in any such action shall be entitled to
recover from the other party all of its reasonable attorneys' fees and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefore.
9.6 WAIVER, ETC. The failure of the Company or the Holder to at
any time enforce any of the provisions of this Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Warrant or any provision hereof or the right of the Company or
any Holder to thereafter enforce each and every provision of this Warrant. No
waiver of any breach, noncompliance or nonfulfillment of any of the provisions
of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
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waiver is sought; and no waiver of any such breach, noncompliance or
nonfulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, noncompliance or nonfulfillment.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the 1st day of January, 2006.
EVERLAST WORLDWIDE INC.
By: ______________________________
Name: XXXX XXXXXXXX
Title: Chief Executive Officer
Acknowledged:
XXXXXXX XXXXX, INC.
By: ____________________________________
Name: XXXXXX XXXXXX
Title: Chairman and Chief Executive Officer
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Exhibit A - Exercise Notice (form to be used to exercise Warrants):
Everlast Worldwide Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx Xxxx, Xxx Xxxx 00000
Date: ________________, 20__
The Undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase __________ shares of Common Stock of Everlast Worldwide
Inc.
The Undersigned further elects
to make payment of $________________ (at
the rate of $_______ per share) (in cash)
(by certified or bank cashier's check
tendered herewith) (by wire transfer to the
account of the Company previously
designated by the Company).
[Note: Cross out inapplicable choices.]
Please issue the shares as to which this Warrant is exercised in
accordance with the instructions given below.
____________________________________
Signature
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name ________________________________________________________________________
(Print in block Letters)
Address ________________________________________________________________________
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever.
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Form to be used to assign Warrant:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the
within Warrant):
FOR VALUE RECEIVED, ________________________________ does hereby sell,
assign and transfer unto __________________________ the right to purchase shares
of Common Stock of Everlast Worldwide Inc. (the "Company") evidenced by the
within Warrant and does hereby authorize the Company to transfer such right on
the books of the Company.
Dated:__________________, 20__
____________________________________
Signature
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever.
