Exhibit 99.1
COMMON STOCK PURCHASE WARRANT
EVERLAST WORLDWIDE INC.
Dated: July 23, 2004
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 149,980 of Common Stock
of
EVERLAST WORLDWIDE INC.
(A Delaware Corporation)
1. WARRANT.
THIS CERTIFIES THAT Contender Partners LLC (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, July 23, 2014, but not
thereafter, to subscribe for, purchase and receive, in whole or in part, up to
One Hundred Forty-Nine Thousand Nine Hundred Eighty (149,980) shares of common
stock, $0.002 par value (the "Common Stock") of Everlast Worldwide Inc., a
Delaware corporation (the "Company"). If July 23, 2014 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 is initially exercisable as to each share of Common Stock
purchasable hereunder at a price of $2.75 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 was originally issued in accordance with
Section 6.0 of that certain Contender-Everlast Agreement dated July 23, 2004
among the Company, the Holder and Tournament of Contenders LLC (the
"Contender-Everlast 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, by wire transfer or in the manner specified in the next succeeding
paragraph. If the rights represented hereby shall not be exercised at or before
5:00 p.m., prevailing Eastern Time, on July 23, 2014, this Warrant shall become
and be void and without further force or effect and all rights represented
hereby shall cease and expire.
Notwithstanding any provisions herein to the contrary, if the Fair
Market Value (as hereinafter defined) of one share of Common Stock is greater
than the Exercise Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant for cash, the Holder may elect to receive shares
equal to the value (as determined below) of this Warrant (or the portion thereof
being exercised) by surrender of this Warrant at the principal office of the
Company together with the properly endorsed Exercise Notice in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:
X=(Y) x (A-B)
--------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised (at
the date of such calculation)
A = the Fair Market Value of one share of the Company's
Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
The acquisition of shares via the above formula is hereby referred to
as a "Cashless Exercise".
For purposes hereof, the "Fair Market Value" of a share of Common
Stock as of a particular date (the "Determination Date") shall mean the average
of the closing or last sale price reported for the last five business days
immediately preceding the Determination Date.
3. RETURNABLE SHARES.
3.1 Prior to the conclusion of the Season (as defined below), a number
of shares of Common Stock issuable or issued upon exercise of this Warrant shall
be "Returnable Shares." The number of Returnable Shares at any such time shall
be equal to the number of shares of Common Stock issuable and issued upon
exercise of this Warrant, multiplied by a fraction, the numerator of which is
the number of episodes of the Series (as defined below) scheduled to air in the
Season minus the number of episodes that have already aired in such Season, and
the denominator is the number of episodes scheduled to air in that Season. As
each subsequent episode of the Series is aired, the number of shares of Common
Stock issuable upon exercise of this Warrant or previously issued upon exercise
of this Warrant which are deemed to be "Returnable Shares" shall be adjusted
using the above formula. Notwithstanding the foregoing, upon the airing of ten
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episodes of the Series in the Season, none of the shares of Common Stock
issuable upon exercise of this Warrant or previously issued upon exercise of
this Warrant shall be "Returnable Shares".
3.2 The "Series" shall mean The Contender xxxxxxx xxxxxxxxxx series
being produced by Holder and Tournament of Contenders LLC. The "Season" shall
mean the first season of the Series.
3.3 In the event of an exercise of this Warrant at a time when a
portion of the shares issuable upon exercise of the Warrant constitute
"Returnable Shares," the Holder shall allocate the Returnable Shares among the
shares issued in connection with such exercise and the shares remaining under
this Warrant as it deems appropriate. In addition, for the avoidance of
confusion, in the case of Cashless Exercises, only Returnable Shares (or the
portion of the Warrant relating to Returnable Shares) may be used to satisfy the
exercise price for the acquisition of Returnable Shares, and only shares which
are not Returnable Shares (or the portion of the Warrant relating to shares
which are not Returnable Shares) may be used to satisfy the exercise price for
the acquisition of Returnable Shares.
3.4 In the event that the Holder holds Returnable Shares at the end of
the Season, and less than ten episodes of the Series have aired in the Season,
the Holder shall return to the Company any shares of Common Stock held by the
Holder which are Returnable Shares. At the same time, the Company shall refund
to the Holder all cash amounts paid by the Holder as exercise price with respect
to the Returnable Shares returned to the Company. If a Cashless Exercise has
previously occurred, then the amount of shares required to be returned by Holder
shall be adjusted to reflect the fact that the portion of the Warrant used to
satisfy the exercise price in the Cashless Exercise did not result in
outstanding shares. A hypothetical example of the application of the rule in the
preceding sentence follows:
Assume the total number of episodes scheduled to air in the Season is
12, and only 8 episodes actually air. Assume that this entire Warrant had been
exercised in a cashless exercise, and 115,977 shares were issued upon exercise.
If all shares had been acquired for cash, the number of Returnable Shares at the
end of the Season would be 4 divided by 12 times 149,980, or 49,993 shares.
However, since a Cashless Exercise occurred, the number is reduced. 22.67% of
the shares under the Warrant were paid as exercise price. Accordingly, of the
49,993 shares to be returned, 11,334 shares were previously effectively returned
to the Company in connection with the Cashless Exercise, and therefore only
38,659 shares would need to be returned at the end of the Season.
3.5 Returnable Shares shall have the same rights as any other shares
of Common Stock (including voting and rights to distributions), provided that
any property or securities received by the Holder from the Company with respect
to shares that are required to be returned to the Company hereunder shall also
be returned to the Company. Returnable Shares may be transferred by the Holder
(subject to the other restrictions herein), provided that the transferee shall
be subject to the return obligations set forth herein.
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3.6 Notwithstanding the above provisions, if the Series goes into a
fourth Season, this Warrant and any Returnable Shares shall be reinstated as
provided in the Contender Everlast Agreement.
4. 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:
"The 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."
This Warrant shall be assignable (in whole or in part) by the holder
thereof to any transferee or assignee who, after such assignment or transfer,
holds a warrant to purchase at least 10,000 shares of Common Stock (subject to
appropriate adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided: (i) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the portion of the Warrant which is being assigned;
and (ii) such transferee or assignee agrees in writing to be bound by and
subject to the terms and conditions of this Warrant.
Each certificate representing Returnable Shares shall also bear a legend
substantially as follows:
"The securities represented by this certificate may are
restricted and may be subject to a requirement that they be
returned to the Company, as more fully set forth in the
Common Stock Purchase Warrant dated July 23, 2004."
After any shares of Common Stock issued upon exercise of this Warrant cease to
be Returnable Shares, the Company shall, at the request of the Holder, issue a
replacement certificate to the Holder representing such shares that does not
contain the above legend.
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5. NEW WARRANTS TO BE ISSUED.
5.1 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.
5.2 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.
5.3 ADDITIONAL WARRANTS. The Company shall not be required to issue
any shares of Common Stock pursuant to this Warrant or pursuant to any other
warrant issued under the terms of the Contender-Everlast Agreement if such
issuance would result in the issuance of shares of Common Stock greater than the
number permitted to be issued without stockholder approval under the rules and
regulations of The Nasdaq Stock Market. In the event stockholder approval is
required, the Company covenants to prepare and file with the Securities and
Exchange Commission a proxy statement in accordance with Section 14 of the
Securities Exchange Act of 1934, as amended, soliciting from each stockholder of
the Company the affirmative vote at such stockholder meeting for approval of the
Company's issuance of all shares underlying this Warrant and other shares
issuable upon exercise of the warrants underlying the Contender-Everlast
Agreement, and the Company shall use its reasonable best efforts to solicit its
stockholders' approval of such issuance. In the event that the Company is unable
to issue shares of Common Stock pursuant to this Warrant or pursuant to any
other warrant that may be issued under the terms of the Contender-Everlast
Agreement as a result of the absence of stockholder approval, then the Company
shall pay to the Holder upon exercise an amount equal to the product of the
number of shares of Common Stock that the Company is unable to issue upon such
exercise multiplied by the difference between the Fair Market Value of shares of
Common Stock of the Company on such date and the Exercise Price. Such amount
shall be paid within sixty days of the date of such determination.
6. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
6.1 COMPUTATION OF ADJUSTED EXERCISE PRICE. Except as hereinafter
provided, in case the Company shall at any time after the date hereof issue or
sell any shares of Common Stock (other than the issuances or sales referred to
in Section 6.8 hereof), including shares held in the Company's treasury and
shares of Common Stock issued upon the exercise of any options (other than upon
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the exercises of options issued to directors, employees or consultants prior to
July 23, 2004) rights or warrants to subscribe for shares of Common Stock and
shares of Common Stock issued upon the direct or indirect conversion or exchange
of securities for shares of Common Stock, for a consideration per share less
than the Exercise Price in effect immediately prior to the issuance or sale of
such shares (the "New Exercise Price"), or without consideration, then forthwith
upon such issuance or sale, the Exercise Price shall (until another such
issuance or sale) be reduced to the New Exercise Price.
6.2 GENERAL RULES FOR COMPUTATION OF ADJUSTMENTS. For the purposes of
any computation to be made in accordance with Section 6.1, the following
provisions shall be applicable:
6.2.1 CASH COMPENSATION. In the case of the issuance or sale of
shares of Common Stock for a consideration part or all of which shall be cash,
the amount of the cash consideration therefor shall be deemed to be the amount
of cash received by the Company for such shares (or, if shares of Common Stock
are offered by the Company for subscription, the subscription price, or if
shares shall be sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price), before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or dealers or others performing
similar services, or any expenses incurred in connection therewith.
6.2.2 OTHER THAN CASH CONSIDERATION. In case of the issuance or
sale (otherwise than as a dividend or other distribution on any stock of the
Company) of shares of Common Stock for a consideration part or all of which
shall be other than cash, the amount of the consideration therefor other than
cash shall be deemed to be the value of such consideration as determined in good
faith by the Board of Directors of the Company, provided that in connection with
any such issuance to a current or former director, officer or owner of more than
5% of the Common Stock of the Company (or an affiliate thereof) (computed on a
"Fully Diluted Basis," which shall mean a computation assuming exercise,
conversion or exchange of all rights, options, warrants and convertible or
exchangeable securities), the Board's determination shall be based on a
valuation report by an independent appraiser reputation.
6.2.3 SHARE DIVIDENDS. Shares of Common Stock issuable by way of
dividend or other distribution on any stock of the Company shall be deemed to
have been issued immediately after the opening of business on the day following
the record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued without
consideration.
6.2.4 RECLASSIFICATION. The reclassification of securities of the
Company other than shares of Common Stock into securities including shares of
Common Stock shall be deemed to involve the issuance of such shares of Common
Stock for a consideration other than cash immediately prior to the close of
business on the date fixed for the determination of security holders entitled to
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receive such shares, and the value of the consideration allocable to such shares
of Common Stock shall be determined as provided in Section 6.2.2.
6.3 OPTIONS, RIGHTS, WARRANTS AND CONVERTIBLE AND EXCHANGEABLE
SECURITIES. In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share less than the Exercise Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, or without consideration, the Exercise Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, as the case may be, shall be
reduced to a price determined by making a computation in accordance with the
provisions of Section 6.1 hereof, provided that:
(i) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under such options, rights or warrants shall be deemed to
be issued and outstanding at the time such options, rights or warrants were
issued, and for a consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration, if any, received by the Company for the issuance of such
options, rights or warrants;
(ii) The aggregate maximum number of shares of Common Stock issuable
upon conversion or exchange of any convertible or exchangeable securities shall
be deemed to be issued and outstanding at the time of issuance of such
securities, and for a consideration equal to the consideration received by the
Company for the issuance of such securities, plus the minimum consideration, if
any, receivable by the Company upon the conversion or exchange thereof;
(iii) If any change shall occur in the exercise price per share
provided for in any of the options, rights or warrants referred to in clause (i)
of Section 6.3, or in the price per share at which the securities referred to in
clause (ii) of Section 6.3 are convertible or exchangeable, such options, rights
or warrants or conversion or exchange rights, as the case may be, shall be
deemed to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities; and
6.4 SUBDIVISION AND COMBINATION. If outstanding shares of the
Company's Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respective Common Stock, the Exercise
Price in effect immediately prior to such subdivision or at the record date of
such dividend shall, simultaneously with the effectiveness of such subdivision
or immediately after the record date of such dividend, be proportionally
reduced. If outstanding shares of Common Stock shall be combined into a smaller
number of shares, the Exercise Price in effect immediately prior to such
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combination shall, simultaneously with the effectiveness of such combination, be
proportionally increased.
6.5 ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 6, the number of
shares of Common Stock issuable upon the exercise of this Warrant shall be
adjusted to the nearest full number obtained by multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
6.6 RECAPITALIZATION. For the purpose of this Warrant, the term
"Common Stock" shall also mean any other class of stock resulting from
successive changes or reclassifications of Common Stock consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value.
6.7 MERGER OR CONSOLIDATION. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger that does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant providing that such Holder shall have the
right thereafter (until the stated expiration of such Warrant) to receive, upon
exercise of such Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger, by a
holder of the number of shares of Common Stock of the Company for which such
Warrants might have been exercised immediately prior to such consolidation,
merger, sale or transfer. Such supplemental warrants shall provide for
adjustments that shall be identical to the adjustments provided in Section 6.
This Section shall similarly apply to successive consolidations or mergers.
6.8 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment of
the Exercise Price shall be made:
(i) Upon the issuance or sale of the shares of Common Stock issuable
upon the exercise of this Warrant; or
(ii) If the amount of said adjustment shall be less than one cent
($.01) per share of Common Stock, provided, however, that in such case, any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least one cent ($.01) per share of Common Stock.
6.9 NO REDEMPTION OF WARRANT. This Warrant cannot be redeemed by the
Company without the prior written consent of the Holder.
6.10 DIVIDENDS AND OTHER DISTRIBUTIONS. In the event that the Company
shall at any time prior to the exercise in full of this Warrant declare a
dividend (other than a dividend consisting solely of shares of Common Stock) or
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otherwise distribute to its stockholders any cash, assets, property, rights,
evidences of indebtedness, securities (other than shares of Common Stock),
whether issued by the Company or by another, or any other thing of value, the
Holder of this Warrant shall thereafter be entitled, in addition to the shares
of Common Stock or other securities and property receivable upon the exercise
thereof, to receive, upon the exercise of such Warrant, the same cash, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that it would have been entitled to receive at the time of such dividend
or distribution as if the Warrant had been exercised immediately prior to such
dividend or distribution. At the time of any such dividend or distribution, the
Company shall make appropriate reserves to ensure the timely performance of the
provisions of this Section 6.10.
6.11 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.
7. 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.
8. PIGGYBACK REGISTRATION RIGHTS.
8.1 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 8.2 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.
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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
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,
and the holders thereof have delivered an opinion of their legal counsel to such
effect in form and substance reasonably satisfactory to the Company.
8.2 UNDERWRITTEN OFFERING.
(i) 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.
(ii) 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.
(iii) 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 shareholders who own more than five percent of the Company's Common
Stock on a Fully Diluted Basis, all directors and all 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 8.2.
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8.3 INFORMATION. Upon making a request pursuant to this Section 8, 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 agree to supply the Company as promptly as practicable
with such information and to notify the Company as promptly as practicable of
any inaccuracy or change in information they have previously furnished to the
Company.
8.4 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.
8.5 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. In addition, the Company shall pay the
reasonable fees and expenses of one (1) counsel to the Holder in connection with
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such registration, not to exceed $5,000 in the aggregate for any such
registration. 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.
9. CERTAIN NOTICE REQUIREMENTS.
9.1 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,
however, at any time prior to the expiration of the Warrant and its exercise,
any of the events described in Section 9.2 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.
9.2 EVENTS REQUIRING NOTICE. The Company shall be required to give the
notice described in this Section 9 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
therefor, 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.
9.3 NOTICE OF CHANGE IN EXERCISE PRICE. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send notice to the Holder of such event and change (the "Price Notice").
The Price Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company's Chief Executive Officer and Chief Financial Officer.
9.4 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:
(i) If to the Holder, to:
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Contender Partners LLC
c/o Xxxxx Xxxxxxx
PMB 208
0000 Xxxxx Xxxxxx Xxxx.
Xxxxxxx Xxxxx, XX 00000
(ii) if to the Company, to:
Everlast Worldwide Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X Xxxxxxxx
Title : President
Either of the Holder or the Company may change the foregoing address by notice
given pursuant to this Section 9.4.
10. MISCELLANEOUS.
10.1 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.
10.2 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.
10.3 ENTIRE AGREEMENT. This Warrant (together with the other
agreements and documents being delivered pursuant to or in connection with this
Warrant) constitute the entire agreement of the parties hereto with respect to
the subject matter hereof, and supersede all prior agreements and understandings
of the parties, oral and written, with respect to the subject matter hereof.
10.4 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.
10.5 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
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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 therefor.
10.6 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
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 23rd day of July, 2004.
EVERLAST WORLDWIDE INC.
By: /s/ Xxxxxx X Xxxxxxxx
------------------------------
Name: XXXXXX X XXXXXXXX
Title: Chief Executive Officer
Acknowledged:
CONTENDER PARTNERS LLP
By: /s/ Xxxx Xxxxxxx
------------------------
Name: Xxxx Xxxxxxx
Title: Managing Partner
By: /s/ Xxxxx Xxxxxxx
------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Partner
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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.]
/ / to make payment of $________________ (at the rate of $_______ per
share) as provided in the second paragraph of Section 2 of the
Warrant.
/ / the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 2,
to exercise this Warrant with respect to the maximum number of
shares of Common Stock purchasable pursuant to the cashless
exercise procedure set forth in Section 2.
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
------------------------------------------------------------------------
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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.
