OFFSHORE WARRANT SUBSCRIPTION AGREEMENT
This Warrant Subscription Agreement (the "Agreement"),
dated as of July 17, 1997, is entered into by and between The Xxxxx
Corporation, a Delaware corporation (the "Issuer"), and First
Bermuda Securities Limited. (the "Purchaser").
The Issuer has offered to sell outside the United States
(as that term is defined in Regulation S ("Regulation S") under the
United States Securities Act of 1933, as amended (the "Act")) to
the Purchaser a warrant to purchase 37,037 shares of its common
stock ("Common Stock"), $1.00 par value, at a price of $6.75 per
share. Capitalized terms used herein and not defined herein shall
have the meanings given to them in Regulation S.
The parties hereto agree as follows:
1. Sale of Warrant. Upon the basis of the
representations and warranties, and subject to the terms and
conditions, set forth in this Agreement, the Issuer covenants and
agrees to sell to the Purchaser on the Closing Date (as hereinafter
defined), a warrant in the form of Exhibit A hereto (the "Warrant")
to purchase 37,037 shares of its Common Stock (such shares of
Common Stock and other securities issued and issuable upon any
exercise of the Warrant or a New Warrant (as defined below), the
"Warrant Shares"), at a price equal to $6.75 per share, in exchange
for services already rendered in full by the Purchaser in a
capital-raising transaction for the Issuer and upon the basis of
the representations and warranties, and subject to the terms and
conditions, set forth in this Agreement, the Purchaser covenants
and agrees to accept from the Issuer on the Closing Date the
Warrant as payment for said services.
2. Closing. The closing of the sale of the Warrant
pursuant to Section 1 hereof shall take place on or before July 17,
1997 (the "Closing Date"), at the offices of First Bermuda
Securities Limited, located at 00 Xxxxxx Xxxxxx, Xxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxx XX00. The Warrant shall be delivered by, or on
behalf of, the Issuer at the above-mentioned offices of First
Bermuda on the Closing Date. Delivery of the Warrant shall be in
accordance with the instructions of the Purchaser, and in such
names as the Purchaser shall instruct, subject to customary
settlement procedures.
3. Description of the Warrant
(a) Execution and Delivery. The Warrant shall be
executed by the Issuer and delivered to the Purchaser on the
Closing Date.
(b) Exercise. (i) The Issuer covenants that
procedures will be implemented ("Procedures") to ensure that the
Warrant and any new warrant issued pursuant to Section 2(a) or
Section 4 of the Warrant or otherwise (a "New Warrant") may not be
exercised within the United States and that no Warrant Share may be
delivered within the United States upon any such exercise, other
than in an offering that meets the definition of "offshore
transaction" pursuant to paragraph (i)(3) of Rule 902 of Regulation
S, unless registered under the Act or an exemption from such
registration is available. The Purchaser and any subsequent
transferee pursuant to the terms of this Agreement and the Warrant
or any New Warrant (the Purchaser and each such transferee, a
"Holder") covenant not to exercise the Warrant or any New Warrant
except in compliance with the Procedures and the terms of this
Agreement and the Warrant or such New Warrant.
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(ii) Each Holder agrees to deliver, prior to
any exercise of the Warrant or any New Warrant, a certificate in
the form of Schedule Two to Exhibit A hereto or a written opinion
of counsel that the Warrant, or New Warrant, as the case may be,
and the Warrant Shares delivered upon any exercise thereof have
been registered under the Act or are exempt from registration
thereunder.
(iii) The Issuer need not issue or deliver
Warrant Shares unless and until in the opinion of the Issuer's
counsel (such counsel's fees to be paid by the Issuer) all
applicable requirements of federal and state securities laws and
registration (or exemption from registration) of such shares under
the Act, and all applicable listing requirements of any national
securities exchange on which shares of the same class are then
listed, have been complied with.
(c) Transferability of Warrant. Each Holder will
not sell, assign, convey, pledge, hypothecate, grant security
interests in, encumber, give away or in any other manner dispose of
or transfer, whether voluntarily or by operation of law, any of the
Warrant, any New Warrant or the Warrant Shares to any person or
entity that, to the knowledge of such Holder, competes directly or
indirectly with the Issuer without the prior written consent of the
Issuer. Any attempted transfer of the Warrant, the Warrant Shares
or any New Warrant not in accordance with this Section 3(c) shall
be null and void, and the Issuer shall not in any way be required
to give effect to such transfer. No transfer of the Warrant or any
New Warrant shall be effective for any purpose hereunder unless and
until (i) written notice of such transfer and of the name and
address of the transferee has been received by the Issuer, (ii) the
transferee shall first agree in a writing deposited with the
Secretary of the Issuer to be bound by all the provisions of this
Agreement, and (iii) in the opinion of the Issuer's counsel (such
counsel's fees to be paid by the Issuer) all requirements of
applicable state securities laws and any requirement to register
such transfer under the Act have been complied with.
(d) Successors to the Issuer. This Agreement shall
be binding upon and inure to the benefit of any successor or
successors of the Issuer.
(e) Legends. The Warrant and each New Warrant
shall bear a legend stating:
This warrant and the shares of common stock of The Xxxxx
Corporation to be issued upon any exercise of the Warrant
have not been registered under the Securities Act of
1933, as amended (the "Act") and this warrant may not be
exercised by or on behalf of any U.S. person (as defined
in Regulation S under the Act) unless registered under
the Act or an exemption from such registration is
available.
In addition, this Warrant is subject to restrictions on
sale, assignment, conveyance, pledge, hypothecation,
grant of security interest, encumbrance, gift or any
other manner of disposition or transfer, whether
voluntarily or by operation of law, as set forth in an
Offshore Warrant Subscription Agreement, dated as of July
17, 1997, by and between First Bermuda Securities
Limited, and The Xxxxx Corporation, a copy of which is
available for inspection at the offices of The Xxxxx
Corporation.
Further, unless the Warrant Shares have been registered under the
Act, upon any exercise of any part of the Warrant or any New
Warrant, all certificates representing Warrant Shares shall bear on
the face thereof substantially the following legend:
The shares of common stock represented hereby have not
been registered under the Federal Securities Act of 1933,
as amended (the "Act") or the securities laws of any
state, and may be offered or sold only if registered
under the Act and all other applicable securities laws
or if The Xxxxx Corporation receives a satisfactory
opinion of counsel that an exemption from such
registration is available.
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4. Representations and Warranties of the Purchaser.
The Purchaser understands, and represents and warrants to, and
agrees with, the Issuer, that:
(a) The Purchaser understands that no federal or
state agency has passed on or made any recommendation or
endorsement of the Warrant.
(b) The Purchaser acknowledges that, in making the
decision to purchase the Warrant, it has relied solely upon
independent investigations made by it and not upon any
representations made by the Issuer with respect to the Issuer or
the Warrant.
(c) The Purchaser understands that the Warrant is
being offered and sold to it in reliance on specific exemptions or
non-application from the registration requirements of federal and
state securities laws and that the Issuer is relying upon the truth
and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth
herein in order to determine the applicability of such exemptions
and the suitability of the Purchaser to acquire the Warrant.
(d) The Purchaser is not a U.S. Person (as defined
in Regulation S) and is not an affiliate of the Issuer.
(e) No offer of the Warrant was made to the
Purchaser in the United States.
(f) At the time the buy order for the Warrant was
originated the Purchaser was located outside the United States.
(g) None of the Purchaser, its affiliates or any
person acting on behalf of the Purchaser or any such affiliate has
engaged, or will engage, in any Directed Selling Efforts with
respect to the Warrant, any New Warrant or the Warrant Shares; and
the Purchaser and its affiliates have complied, and will comply,
with the Offering Restrictions, and any other requirements, of
Regulation S.
(h) The Purchaser is aware that the Warrant, any
New Warrant and the Warrant Shares have not been and will not be
registered under the Act and may only be offered or sold pursuant
to registration under the Act or an available exemption therefrom,
and subject to the terms and conditions set forth herein.
(i) The Purchaser:
(i) will not, during the period commencing on
the Closing Date and ending on the day 40 days after the Closing
Date (the "Restricted Period"), offer or sell the Warrant, any New
Warrant or any Warrant Shares in the United States, to a U.S.
Person or for the account or benefit of a U.S. Person or other than
in accordance with Rule 903 or Rule 904 of Regulation S; and
(ii) will, after the expiration of the
Restricted Period, offer, sell, pledge or otherwise transfer the
Warrant, any New Warrant or any Warrant Shares only pursuant to
registration under the Act or an available exemption therefrom and,
in any case, in accordance with applicable state securities laws.
(j) If the Purchaser offers and sells the Warrant,
any New Warrant or any Warrant Shares during the Restricted Period,
then it will do so only in accordance with the provisions of
Regulation S or pursuant to registration under the Act.
(k) The transactions contemplated by this
Agreement:
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(i) have not been pre-arranged with a
purchaser located in the United States or is a U.S. Person; and
(ii) are not part of a plan or scheme to evade
the registration provisions of the Act.
(l) The Purchaser is purchasing the Warrant for its
own account for the purpose of investment and not (i) with a view
to, or for sale in connection with, any distribution thereof or of
any New Warrant or Warrant Shares or (ii) for the account or on
behalf of any U.S. Person.
(m) The Purchaser has consulted with the Issuer
with respect to the transactions pursuant to this Agreement, and no
objection has been raised by the Issuer.
(n) Neither the Purchaser nor any affiliate thereof
has entered, or will enter or has the intention of entering, into
any put option, short position or other similar instrument or
position with respect to the Warrant Shares or securities of the
same class as the Warrant Shares purchased in any transaction.
5. Representations and Warranties of the Issuer. The
Issuer represents and warrants to, and agrees with, the Purchaser
that:
(a) The Issuer has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of Delaware.
(b) This Agreement has been duly authorized,
executed and delivered by the Issuer and is a valid and binding
agreement enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and to general principles of
equity; and the Issuer has full corporate power and authority
necessary to enter into this Agreement and to perform its
obligations hereunder.
(c) No consent, approval, authorization or order of
any court, governmental agency or body or arbitrator having
jurisdiction over the Issuer or any of its affiliates is required
for execution of this Agreement, including, without limitation, the
issuance and sale of the Warrant or any exercise of the Warrant or
the issuance of shares upon any exercise of the Warrant, or the
performance of its obligations hereunder.
(d) Neither the sale of the Warrant or any exercise
of the Warrant, any New Warrant or the issuance of Warrant Shares
upon any exercise of the Warrant, pursuant to, nor the performance
of its obligations under, this Agreement by the Issuer will:
(i) violate, conflict with, result in a breach
of, or constitute a default (or an event which with the giving of
notice or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the articles of incorporation,
charter or by-laws of the Issuer or any of its affiliates, (B) any
decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Issuer or any of its affiliates of
any court, governmental agency or body, or arbitrator having
jurisdiction over the Issuer or any of its affiliates or over the
properties or assets of the Issuer or any of its affiliates, (C)
the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to
which the Issuer or any of its affiliates is a party, by which the
Issuer or any of its affiliates is bound, or to which any of the
properties of the Issuer or any of its affiliates is subject, or
(D) the terms of any "lock-up" or similar provision of any
underwriting or similar agreement to which the Issuer or any of its
affiliates is a party; or
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(ii) result in the creation or imposition of
any lien, charge or encumbrance upon the Warrant, any New Warrant
or any Warrant Shares or any of the assets of the Issuer or any of
its affiliates.
(e) The Warrant (except for clauses iii and vi
below) and all Warrant Shares upon issuance:
(i) are, or will be, free and clear of any
security interests, liens, claims or other encumbrances;
(ii) have been, or will be, duly and validly
authorized and will be duly and validly issued;
(iii) shall be duly authorized, validly
issued, fully paid and nonassessable, and the Holder will have full
legal and equitable title thereto, free and clear of all liens,
encumbrances, claims and rights of others created by or through the
Issuer. The Issuer shall use its best efforts to list such Warrant
Shares prior to such delivery upon each securities exchange, if
any, upon which such class of security is listed at the time of
such delivery;
(iv) will not have been issued or sold in
violation of any preemptive or other similar rights of the holders
of any securities of the Issuer;
(v) will not subject the holders thereof to
personal liability by reason of being such holders; and
(vi) are quoted on, and will be, following the
completion of the Restricted Period (if sold in accordance with the
provisions of this Agreement), eligible for trading on, the
National Association of Securities Dealers Automated Quotations
system ("NASDAQ").
(f) The Issuer is a Reporting Issuer and has filed
all reports required to be filed by Section 13(a) or 15(d) of the
Securities and Exchange Act of 1934 (the "Exchange Act") during the
preceding 12 months and has been subject to such filing
requirements for the past 90 days.
(g) There is no pending or, to the best knowledge
of the Issuer, threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having
jurisdiction over the Issuer or any of its affiliates that would
materially affect the execution by the Issuer of, or the
performance by the Issuer of its obligations under, this Agreement
other than as set forth in the Exchange Act Reports, public
announcements made by the Company prior to the Closing Date and
information submitted to the Purchaser in the letter dated June 30,
1997.
(h) The Issuer, any person representing the Issuer,
and, to the best knowledge of the Issuer, any other person selling
or offering to sell the Warrant in connection with the transaction
contemplated by this Agreement, have not made, at any time through
and including the date hereof, any oral communication in connection
with the offer or sale of the Warrant which contained any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(i) The sale of the Warrant pursuant to this
Agreement will be made in accordance with the provisions and
requirements of Regulation S and any applicable state law.
(j) No offer to buy the Warrant was made to the
Issuer by any person in the United States.
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(k) None of the Issuer, any affiliate of the
Issuer, or any person acting on behalf of the Issuer or any such
affiliate has engaged, or will engage, in any Directed Selling
Efforts with respect to the Warrant, any New Warrant or the Warrant
Shares.
(l) The transactions contemplated by this
Agreement:
(i) have not been pre-arranged with a
purchaser who is in the United States or is a U.S. Person; and
(ii) are not part of a plan or scheme to evade
the registration provisions of the Act.
(m) The Issuer has not issued, and after the
Closing Date will not issue, any stop transfer order or other order
impeding the sale and delivery of the Warrant, any New Warrant or
any Warrant Shares except for a stop order restricting the sale of
the Warrant, any New Warrant or any such Warrant Shares into the
United States or to, or for the account or benefit of, U.S. Persons
during the Restricted Period, and a stop order restricting the sale
of the Warrant and any New Warrant pursuant to Section 3(c) hereof.
6. Covenants of the Issuer. The Issuer covenants and
agrees with the Purchaser to:
(a) continue to comply with all applicable
reporting requirements of the Exchange Act;
(b) refrain from publishing or disseminating any
material in connection with the offering of the Warrant, any New
Warrant or the Warrant Shares except as required by regulatory or
judicial order or request or as deemed by the Issuer to be
advisable in complying with SEC or Nasdaq reporting or listing
requirements.
(c) ensure that all Offering Restrictions
applicable to the sale of Warrant, any New Warrant and the Warrant
Shares pursuant to this Agreement are thoroughly complied with and
satisfied;
(d) refrain from engaging, and insure that none of
its affiliates will engage, in any Directed Selling Efforts with
respect to the Warrant, any New Warrant and the Warrant Shares; and
(e) notify the Purchaser promptly if at any time
during the period beginning on the date of this Agreement and
ending on the Closing Date (i) any event shall have occurred as a
result of which any oral communication made by the Issuer, any
person representing the Issuer, or, to the best knowledge of the
Issuer, by any other person in connection with the transactions
contemplated by this Agreement would include an untrue statement of
a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (ii)
there is any public disclosure of material information regarding
the Issuer or its financial condition or results of operation.
7. Conditions Precedent to the Purchaser's Obligations.
The obligations of the Purchaser hereunder are subject to the
performance by the Issuer of its obligations hereunder and to the
satisfaction of the following additional conditions precedent:
(a) The representations and warranties made by the
Issuer in this Agreement shall, unless waived by the Purchaser, be
true and correct as of the date hereof and at the Closing Date,
with the same force and effect as if they had been made on and as
of the Closing Date.
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8. Conditions Precedent to the Issuer's Obligations.
The obligations of the Issuer hereunder are subject to the
performance by the Purchaser of its obligations hereunder and to
the satisfaction of the following additional conditions precedent:
(a) The representations and warranties made by the
Purchaser in this Agreement shall, unless waived by the Issuer, be
true and correct as of the date hereof and at the Closing Date,
with the same force and effect as if they had been made on and as
of the Closing Date.
(b) The Purchaser will execute and deliver to the
Issuer, and retain in the records of the Purchaser, a certificate
in the form attached hereto as Exhibit B.
9. Fees and Expenses. Each of the Purchaser and the
Issuer agrees to pay its own expenses incident to the performance
of its obligations hereunder, including, but not limited to, the
fees, expenses and disbursements of such party's counsel.
10. Indemnification.
(a) In the event the Purchaser becomes involved in
any capacity in any action, proceeding or investigation in
connection with any matter referred to in or relating to this
Agreement (except as expressly provided for in paragraph (c) of
this Section 10), the Issuer will reimburse the Purchaser for its
reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith, as
such expenses are incurred, and will indemnify and hold the
Purchaser harmless from and against any losses, claims, damages or
liabilities to which it may become subject in connection with any
such action, proceeding, investigation or matter, unless such loss,
claim, damage or liability results primarily from the Purchaser's
gross negligence, recklessness or bad faith in performing the
services which are the subject of this Agreement.
(b) In the event that the Issuer becomes involved
in any capacity in any action, proceeding or investigation in
connection with any matter referred to in or relating to this
Agreement (except as expressly provided for in paragraph (c) of
this Section 10), the Purchaser will reimburse the Issuer for its
reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith, as
such expenses are incurred, and will indemnify and hold the Issuer
harmless from and against any losses, claims, damages or
liabilities to which it may become subject in connection with any
such action, proceeding, investigation or matter, unless such loss,
claim, damage or liability results primarily from the Issuer's
gross negligence, recklessness or bad faith in performing the
services which are the subject of this Agreement.
(c) Promptly after receipt by an indemnified party
under this Section 10 of notice of the commencement of any action,
such indemnified party shall notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify
the indemnifying party shall not relieve the indemnifying party
from any liability which it may have pursuant to this Section 10
unless, due to the failure to be so notified, the indemnifying
party is unable to contest the losses or claims indemnified
against, and such omission shall in no event relieve the
indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 10. In case
any such action shall be brought against any indemnified party and
it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein
and, to the extent that it may elect by written notice delivered to
such indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party,
(who shall not, except with the consent of the indemnified party,
which consent shall not be
7
unreasonably withheld, be counsel to the indemnifying party);
provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there
may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available
to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assert such legal
defenses and otherwise to participate in the defense of such action
on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section 10 for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall be liable for only the
reasonable expenses of counsel and shall not be liable for the
expenses of more than one separate counsel for each indemnified
party), (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party; provided further, however,
that, if clause (i) or (iii) is applicable, such liability shall be
only in respect of the counsel referred to in such clauses (i) or
(iii).
11. Survival of the Representations, Warranties, etc.
The respective agreements, representations, warranties, indemnities
and other statements made by or on behalf of the Issuer and the
Purchaser, respectively, pursuant to this Agreement, shall remain
in full force and effect for the term of the Warrant, regardless of
any investigation made by or on behalf of the other party to this
Agreement or any officer, director or employee of, or person
controlling or under common control with, such party and will
survive delivery of any payment for the Warrant.
12. Notices. All communications hereunder shall be in
writing, and, if sent to the Purchaser shall be sufficient in all
respects if delivered, sent by registered mail, or by telecopy and
confirmed to the Purchaser at:
First Bermuda Securities Limited
00 Xxxxxx Xxxxxx, Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx XX00
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or, if sent to the Issuer, shall be delivered, sent by registered
mail or by telecopy and confirmed to the Issuer at:
The Xxxxx Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
13. Miscellaneous.
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(a) This Agreement may be executed in one or more
counterparts and it is not necessary that signatures of all parties
appear on the same counterpart, but such counterparts together
shall constitute but one and the same agreement.
(b) This Agreement shall inure to the benefit of
and be binding upon the parties hereto, their respective successors
and, with respect to Section 10 hereof, the officers, directors and
controlling persons thereof and each person under common control
therewith, and no other person shall have any right or obligation
hereunder.
(c) This Agreement shall be governed by, and
construed in accordance with, the laws of the state of Delaware.
(d) The headings of the sections of this document
have been inserted for convenience of reference only and shall not
be deemed to be a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Agreement, all as of the day and year first
above written.
BY: THE XXXXX CORPORATION
Signature: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
BY: FIRST BERMUDA SECURITIES LIMITED
Signature: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx, CPA
Title: Chief Operating Officer
9
EXHIBIT A
THIS WARRANT AND THE SHARES OF COMMON STOCK OF
THE XXXXX CORPORATION TO BE ISSUED UPON ITS
EXERCISE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
AND THIS WARRANT MAY NOT BE EXERCISED BY OR ON
BEHALF OF ANY U.S. PERSON (AS DEFINED IN
REGULATION S UNDER THE ACT) UNLESS REGISTERED
UNDER THE ACT OR ON EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
IN ADDITION, THIS WARRANT IS SUBJECT TO
RESTRICTIONS ON SALE, ASSIGNMENT, CONVEYANCE,
PLEDGE, HYPOTHECATION, GRANT OF SECURITY
INTEREST, ENCUMBRANCE, GIFT OR ANY OTHER
MANNER OF DISPOSITION OR TRANSFER, WHETHER
VOLUNTARILY OR BY OPERATION OF LAW, AS SET
FORTH IN AN OFFSHORE WARRANT SUBSCRIPTION
AGREEMENT, DATED AS OF JULY 17, 1997, BY AND
BETWEEN FIRST BERMUDA SECURITIES, LTD., AND
THE XXXXX CORPORATION (THE "AGREEMENT"), A
COPY OF WHICH IS AVAILABLE FOR INSPECTION AT
THE OFFICES OF THE XXXXX CORPORATION.
WARRANT
to Purchase 37,037 Shares
of
Common Stock ($1.00 par value)
of
THE XXXXX CORPORATION
This certifies that, for value received, First Bermuda
Securities Limited and any subsequent transferee pursuant to the
terms of the Agreement and this Warrant (each, a "Holder") is
entitled to purchase, subject to the provisions of this Warrant,
from The Xxxxx Corporation, a Delaware corporation (the "Issuer"),
at any time or from time to time on or after the date hereof and on
or before July 17, 2000 (the "Expiration Date"), 37,037 fully paid
and nonassessable shares of common stock, $1.00 par value (the
"Common Stock"), of the Issuer at a price equal to $6.75 per share
(the "Exercise Price")(such shares of Common Stock and other
securities issued and issuable upon exercise of this Warrant, the
"Warrant Shares").
Section 1. Definitions. Except as otherwise specified herein,
terms defined herein shall have the meanings assigned to them in
the Agreement.
A-1
Section 2. Exercise of Warrant. (a) Subject to the
provisions hereof, this Warrant may be exercised, in whole or in
part, but not as to a fractional share, at any time or from time to
time on or after the date hereof and on or before the Expiration
Date, by presentation and surrender hereof to the Issuer at the
address which, in accordance with the provisions of Section 10
hereof, is then effective for notices to the Issuer, with the
Election to Purchase Form annexed hereto as Schedule One, duly
executed and accompanied by payment to the Issuer as further set
forth below in this Section 2, for the account of the Issuer, of
the Exercise Price for the number of Warrant Shares specified in
such form. If this Warrant should be exercised in part only, the
Issuer shall, upon surrender of this Warrant for the cancellation,
execute and deliver a new Warrant evidencing the rights of the
Holder hereof to purchase the balance of the Warrant Shares
purchasable hereunder. The Issuer shall maintain at its principal
place of business a register for the registration of this Warrant
and registration of transfer for this Warrant. The Exercise Price
for the number of Warrant Shares specified in the Election to
Purchase Form shall be payable in United States dollars by
certified or official bank check payable to the order of the Issuer
or by wire transfer of immediately available funds to an account by
the Issuer for that purpose.
(b) Prior to the delivery of any securities which the
Issuer shall be obligated to deliver upon exercise of this Warrant,
the Issuer shall use its best efforts to comply with all Federal
and state laws and regulations thereunder, including without
limitation, Regulation S under the Act, requiring the registration
of such securities with, or any approval of or consent to the
delivery thereof by, any governmental authority, provided, however,
that the Issuer shall have no obligation to register the Warrant
Shares beyond its obligation set forth in Section 9 below. The
Issuer need not issue or deliver such shares of Common Stock unless
and until in the opinion of the Issuer's counsel (such counsel's
fees to be paid by the Issuer) all applicable requirements of state
securities laws and registration of such shares under the Act, and
all applicable listing requirements of any national securities
exchange on which shares of the same class are then listed, have
been complied with.
(c) The Issuer covenants that procedures will be
implemented ("Procedures") to ensure that this Warrant may not be
exercised within the United States and that the Warrant Shares may
not be delivered within the United States upon such exercise, other
than in offerings that meet the definition of "offshore
transaction" pursuant to paragraph (i)(3) of Rule 902 of Regulation
S under the Act, unless registered under the Act or an exemption
from such registration is available. The Holder covenants not to
exercise this Warrant except in compliance with the Procedures and
the terms of the Agreement. The Purchaser or any other Holder of
this Warrant must deliver, prior to any exercise of this Warrant,
(i) a certificate in the form attached hereto as Schedule Two or
(ii) a written opinion of counsel that this Warrant and the
securities delivered upon any exercise thereof have been registered
under the Act or are exempt from registration thereunder.
(d) All Warrant Shares, when issued upon exercise of
this Warrant, shall be duly authorized, validly issued, fully paid
and nonassessable, and the Holder will have full legal and
equitable title thereto, free and clear of all liens, encumbrances,
claims and rights of others created by or through the Issuer. The
Issuer shall use its best efforts to list such Warrant Shares prior
to such delivery upon each securities exchange, if any, upon which
such class of security is listed at the time of such delivery.
(e) Unless the Warrant Shares have been registered under
the Act, upon any exercise of any part of this Warrant, all
certificates representing Warrant Shares shall bear on the face
thereof substantially the following legend:
The shares of common stock represented hereby have not been
registered under the Federal Securities Act of 1933, as
amended (the "Act") or the securities laws of any state,
and may be offered or sold only if registered under the Act
and all other applicable securities laws
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or The Xxxxx Corporation receives a satisfactory opinion of
counsel that an exemption from such registration is available.
(f) This Warrant may not be exercised to any extent by
anyone after the end of the Warrant term.
Section 3. Reservation of Shares; Preservation of Rights of
Investor. The Issuer hereby agrees that there shall be reserved
for issuance and/or delivery upon exercise of this Warrant, such
number of Warrant Shares as shall be required for issuance or
delivery upon exercise of this Warrant. The Warrant surrendered
upon exercise shall be cancelled by the Issuer. After the
Expiration Date, no shares of Common Stock shall be subject to
reservation in respect of this Warrant. The Issuer further agrees
(i) that it will not, by amendment of its Articles of Incorporation
or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to
avoid the observation or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by
the Issuer, (ii) promptly to take all action as may from time to
time be required in order to permit the Holder to exercise this
Warrant and the Issuer duly and effectively to issue shares of its
Common Stock or other securities as provided herein upon the
exercise hereof, and (iii) promptly to take all action required or
provided for herein to protect the rights of the Holder granted
hereunder against dilution other then issuances on conversion of
options, offerings or acquisitions. Without limiting the
generality of the foregoing, should the Warrant Shares at any time
consist in whole or in part of shares of capital stock having a par
value, the Issuer agrees that before taking any action which would
cause an adjustment of the Exercise Price so that the same would be
less than the then par value of such Warrant Shares, the Issuer
shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Issuer may validly and
legally issue fully paid and nonassessable shares of such Common
Stock at the Exercise Price as so adjusted. The Issuer further
agrees that it will not establish a par value for its Common Stock
while this Warrant is outstanding in an amount greater than the
Exercise Price.
Section 4. Exchange, Transfer, Assignment or Loss of Warrant.
The Holder will not sell, assign, convey, pledge, hypothecate,
grant security interests in, encumber, give away or in any other
manner dispose of or transfer, whether voluntarily or by operation
of law, any of this Warrant, the Warrant Shares or any new Warrant
to any person or entity that, to the knowledge of such Holder,
competes directly or indirectly with the Issuer without the prior
written consent of the Issuer. Any attempted transfer of this
Warrant, the Warrant Shares or any new Warrant not in accordance
with this Section shall be null and void, and the Issuer shall not
in any way be required to give effect to such transfer. No
transfer of this Warrant shall be effective for any purpose
hereunder until (i) written notice of such transfer and of the name
and address of the transferee has been received by the Issuer, (ii)
the transferee shall first agree in a writing deposited with the
Secretary of the Issuer to be bound by all the provisions of this
Agreement and (iii) in the opinion of the Issuer's counsel (such
counsel's fees to be paid by the Issuer), all requirements of
applicable state securities laws and any requirement to register
such transfer under the Act have been complied with. Upon
surrender of this Warrant to the Issuer by any transferee
authorized under the provisions of this Section 4, and subject to
the terms and conditions of the Securities Act, the Issuer shall,
without charge, execute and deliver a new Warrant registered in the
name of such transferee at the address specified by such
transferee, and this Warrant shall promptly be cancelled. The
Issuer may deem and treat the registered holder of any Warrant as
the absolute owner thereof for all purposes, and the Issuer shall
not be affected by any notice to the contrary. Any Warrant, if
presented by an authorized transferee, may be exercised by such
transferee without prior delivery of a new Warrant issued in the
name of the transferee.
Upon receipt by the Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Issuer
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will execute and deliver a new Warrant of like tenor and date. Any
such new Warrant executed and delivered shall constitute a separate
contractual obligation on the part of the Issuer, whether or not
the Warrant so lost, stolen, destroyed or mutilated shall be at any
time enforceable by anyone, provided, such indemnification
obligation may be used as an offset against this new Warrant.
Section 5. Rights of the Holder. Neither a Holder nor his
transferee by devise or the laws of descent and distribution or
otherwise shall be, or have any rights or privileges of, a
shareholder of the Issuer with respect to any Warrant Shares,
unless and until certificates representing such Warrant Shares
shall have been issued and delivered thereto.
Section 6. Adjustments in Exercise Price and Warrant Shares.
The Exercise Price and Warrant Shares shall be subject to
adjustment from time to time as provided in this Section 6.
(a) If the Issuer is recapitalized through the
subdivision or combination of its outstanding shares of Common
Stock into a larger or smaller number of shares, the number of
shares of Common Stock for which this Warrant may be exercised
shall be increased or reduced, as of the record date for such
recapitalization, in the same proportion as the increase or
decrease in the outstanding shares of Common Stock, and the
Exercise Price shall be adjusted so that the aggregate amount
payable for the purchase of all Warrant Shares issuable hereunder
immediately after the record date for such recapitalization shall
equal the aggregate amount so payable immediately before such
record date.
(b) If the Issuer declares a dividend on Common Stock,
or makes a distribution to holders of Common Stock, and such
dividend or distribution is payable or made in Common Stock or
securities convertible into or exchangeable for Common Stock, or
rights to purchase Common Stock or securities convertible into or
exchangeable for Common Stock, the number of shares of Common Stock
for which this Warrant may be exercised shall be increased, as of
the record date for determining which holders of Common Stock shall
be entitled to receive such dividend or distribution, in proportion
to the increase in the number of outstanding shares (and shares of
Common Stock issuable upon conversion of all such securities
convertible into Common Stock) of Common Stock as a result of such
dividend or distribution, and the Exercise Price shall be adjusted
so that the aggregate amount payable for the purchase of all the
Warrant Shares issuable hereunder immediately after the record date
for such dividend or distribution shall equal the aggregate amount
so payable immediately before such record date.
(c) If the Issuer declares a dividend on Common Stock
(other than a dividend covered by subsection (b) above) or
distributes to holders of its Common Stock, other than as part of
its dissolution or liquidation or the winding up or its affairs,
any shares of its stock, any evidence of indebtedness or any cash
or other of its assets (other than Common Stock or securities
convertible into or exchangeable for Common Stock), the Holder
shall receive notice of such event as set forth in Section 8 below.
(d) In case of any consolidation of the Issuer with, or
merger of the Issuer into, any other corporation (other than a
consolidation or merger in which the Issuer is the continuing
corporation and in which no change occurs in its outstanding Common
Stock), or in case of any sale or transfer of all or substantially
all of the assets of the Issuer, or in the case of any statutory
exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third
corporation into the Issuer, except where the Issuer is the
surviving entity and no change occurs in its outstanding Common
Stock), the corporation formed by such consolidation or the
corporation resulting from such merger or the corporation which
shall have acquired such assets or securities of the Issuer, as the
case may be, shall execute and deliver to the Holder simultaneously
therewith a new Warrant, satisfactory in form and substance to the
Holder, together with such other documents as the Holder may
reasonably request, entitling the Holder thereof to receive upon
exercise of such Warrant the kind and amount of shares of
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stock and other securities and property receivable upon such
consolidation, merger, sale, transfer or exchange of securities, or
upon the dissolution following such sale or other transfer, by a
holder of the number of shares of Common Stock purchasable upon
exercise of this Warrant immediately prior to such consolidation,
merger, sale, transfer, or exchange, provided that if the kind or
amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is
not the same for each share of Common Stock in respect of which
rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this paragraph (d) the kind and
amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance for
each non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the non-electing shares.
Such new Warrant shall contain the same basic other terms and
conditions as this Warrant and shall provide for adjustments which,
for events subsequent to the effective date of such written
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 6. The above
provisions of this paragraph (d) shall similarly apply to
successive consolidations, mergers, exchanges, sales or other
transfers covered hereby.
(e) If the Issuer shall, at any time before the
expiration of this Warrant, dissolve, liquidate or wind up its
affairs, the Holder shall, upon exercise of this Warrant have the
right to receive, in lieu of the shares of Common Stock of the
Issuer that the Holder otherwise would have been entitled to
receive, the same kind and amount of assets as would have been
issued, distributed or paid to the Holder upon any such
dissolution, liquidation or winding up with respect to such shares
of Common Stock of the Issuer had the Holder been the holder of
record of such shares of Common Stock receivable upon exercise of
this Warrant on the date for determining those entitled to receive
any such distribution. If any such dissolution, liquidation or
winding up results in any cash distribution in excess of the
Exercise Price provided by this Warrant for the shares of Common
Stock receivable upon exercise of this Warrant, the Holder may, at
the Holder's option, exercise this Warrant without making payment
of the Exercise Price and, in such case, the Issuer shall, upon
distribution to the Holder, consider the Exercise Price to have
been paid in full and, in making settlement to the Holder, shall
obtain receipt of the Exercise Price by deducting an amount equal
to the Exercise Price for the shares of Common Stock receivable
upon exercise of this Warrant from the amount payable to the
Holder. For purposes of this paragraph, the sale of all or
substantially all of the assets of the Issuer and distribution of
the proceeds thereof to the Issuer's shareholders shall be deemed
a liquidation.
(f) If an event occurs which is similar in nature to the
events described in this Section 6, but is not expressly covered
hereby, the Board of Directors of the Issuer shall make or arrange
for an equitable adjustment to the number of Warrant Shares and the
Exercise Price.
(g) The term "Common Stock" shall mean the Common Stock,
$1.00 par value, of the Issuer as the same exists at the Closing
Date or as such stock may be constituted from time to time, except
that for the purpose of this Section 6, the term "Common Stock"
shall include any stock of any class of the Issuer which has no
preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the Issuer and which is not subject to redemption by
the Issuer.
(h) The Issuer shall retain a firm of independent public
accountants of recognized standing (who may be any such firm
regularly employed by the Issuer) to make any computation required
under this Section 6, and a certificate signed by such firm shall
be conclusive evidence of the correctness of any computation made
under this Section 6.
(i) Whenever the number of Warrant Shares or the
Exercise Price shall be adjusted as required by the provisions of
this Section 6, the Issuer forthwith shall file in the custody of
its secretary or
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an assistance secretary, at its principal office, and furnish to
each Holder hereof, a certificate prepared in accordance with
paragraph (h) above, showing the adjusted number of Warrant Shares
and the Exercise Price and setting forth in reasonable detail the
circumstances requiring the adjustment.
(j) Notwithstanding any other provision, this Warrant
shall be binding upon and inure to the benefit of any successor or
successors of the Issuer.
(k) No adjustment in the Exercise Price in accordance
with the provisions of this Section 6 need be made if such
adjustment would amount to a change in such Exercise Price of less
than $.01; provided, however, that the amount by which any
adjustment is not made by reason of the provisions of this
paragraph (k) shall be carried forward and taken into account at
the time of any subsequent adjustment in the Exercise Price.
(l) If an adjustment is made under this Section 6 and
the event to which the adjustment relates does not occur, then any
adjustments in accordance with this Section 6 shall be readjusted
to the Exercise Price and the number of Warrant Shares which would
be in effect had the earlier adjustment hot been made.
Section 7. Taxes on Issue or Transfer of Common Stock
and Warrant. The Issuer shall pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock or other securities on the
exercise of this Warrant. The Issuer shall not be required to pay
any tax which may be payable in respect of any transfer of this
Warrant or in respect of any transfers involved in the issue or
delivery of shares or the exercise of this Warrant in a name other
than that of the Holder and the person requesting such transfer,
issue or delivery shall be responsible for the payment of any such
tax (and the Issuer shall not be required to issue or deliver said
shares until such tax has been paid or provided for).
Section 8. Notice of Adjustment. So long as this
Warrant shall be outstanding, (a) if the Issuer shall propose to
pay any dividends or make any distribution upon the Common Stock,
or (b) if the Issuer shall offer generally to the holders of Common
Stock the right to subscribe to or purchase any shares of any class
of Common Stock or securities convertible into Common Stock or any
other similar rights, or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the
surviving entity, recapitalization of the capital stock of the
Issuer, consolidation or merger of the Issuer with or into another
corporation, sale, lease or other transfer of all or substantially
all of the property and assets of the Issuer, or voluntary or
involuntary dissolution, liquidation or winding up of the Issuer,
or (d) if the Issuer shall give to its stockholders any notice,
report or other communication respecting any significant or special
action or event, then in such event, the Issuer shall give to the
Holder, at least thirty days prior to the relevant date described
below (or such shorter period as is reasonably possible if thirty
days is not reasonably possible), a notice containing a description
of the proposed action or event and stating the date or expected
date on which a record of the Issuer's stockholders is to be taken
for any of the foregoing purposes, and the date or expected date on
which any such dividend, distribution, subscription,
reclassification, reorganization, consolidation, combination,
merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected
date, if any is to be fixed, as of which the holders of Common
Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
event.
Section 9. Registration Rights. (a) Right to
Piggyback. Whenever the Company proposes to register any of its
shares of Common Stock under the Securities Act of 1933, as amended
(the "Securities Act") and the registration form to be used is not
a Form S-8 or Form S-4 and otherwise may be
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used for the registration of any Warrant Shares (a "Piggyback
Registration"), the Company will give prompt written notice to all
holders of the Warrant Shares for which the registration form may
be used of its intention to effect such a registration and will
include in such registration all Warrant Shares (in accordance with
the priorities set forth in Subsections 9(b) and 9(c) below) with
respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after the receipt of the
Company's notice or such shorter time as the Company may deem
necessary or advisable due to the anticipated filing date of such
registration. Inclusion of Warrant Shares in any secondary
registration on behalf of holders of the Company's securities will
be subject to any rights of approval and other rights which such
holders may have and conditions which such holders may impose.
(b) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of
the Company and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such
registration (i) first, the securities that the Company proposes to
sell and (ii) second, the Warrant Shares requested to be included
in such registration and other securities requested to be included
in such registration pro rata among the holders of the Warrant
Shares and the other securities on the basis of the number of
securities so requested to be included therein.
(c) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of
holders of the Company's securities and the managing underwriters
advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds
the number which can be sold in such offering, the Company will
include in such registration (i) first, the securities requested to
be included therein by the holders requesting such registration and
such other securities as may have the right to be included on a
priority with such securities, pro rata based on the number of such
securities requested to be included in such registration and (ii)
second, the Warrant Shares and other securities requested to be
included in such registration, pro rata based on the number of
Warrant Shares and other securities so requested to be included
therein.
(d) Selection of Underwriters. If any Piggyback
Registration is an underwritten offering, the selection of
investment banker(s) and manager(s) for the offering will be in the
sole discretion of the Company.
Section 10. Notices. All communications hereunder shall
be in writing, and, if sent to the Holder shall be sufficient in
all respects if delivered, sent by registered mail, or by telecopy
and confirmed to the Holder at:
First Bermuda Securities Limited
00 Xxxxxx Xxxxxx, Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx XX00
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or it to any other Holder, addressed to such Holder at such address
as it shall have specified to the Issuer in writing, or, if sent to
the Issuer, shall be delivered, sent by registered mail or by
telecopy and confirmed to the Issuer at:
The Xxxxx Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
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Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 11. Governing Law. This Warrant shall be
governed by, and interpreted in accordance with, the laws of the
State of Delaware.
Dated: July 17, 1997
THE XXXXX CORPORATION
BY: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
ATTEST:
/s/ Xxxxx X. Xxxxxx, Secretary
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Schedule One
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise
this Warrant and to purchase ____________ shares of The Xxxxx
Corporation Common Stock issuable upon the exercise of this
Warrant, and requests that certificates for such shares shall be
issued in the name of:
(Name)
(Address)
(United States Social Security or other taxpayer
identifying number, if applicable)
and, if different from above, be delivered to:
(Name)
(Address)
and, if the number of Warrant Shares so purchased are not all of
the Warrant Shares issuable upon exercise of this Warrant, that a
Warrant to purchase the balance of such Warrant Shares be
registered in the name of, and delivered to, the undersigned at the
address stated below.
Date: , 19__
Name of Registered Owner:
Address:
Signature:
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Schedule Two
[Warrant Agent]
Dear Sir/Madam
In connection with the warrant of The Xxxxx Corporation issued
to First Bermuda Securities Limited, on July 17, 1997, and attached
hereto, the undersigned certifies, represents and warrants as
follows:
1. I/We hereby exercise the warrants identified above.
[Give details of how payment is being made, in accordance
with terms of warrants.]
2. I/We hereby certify that I am/we are not a U.S. person
(as that term is defined in Regulation S under the
Securities Act); nor am I/we acting for or on behalf of
a U.S. person.
3. At the time of exercise of the warrants I am/we are and
any person for whom we are acting is located outside the
United States.
4. Please deliver the common stock of The Xxxxx Corporation
as follows:
______________
______________
______________
[specify address outside the United States]
Very truly yours,
[WARRANTHOLDER]
By:________________
Name:
Title:
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EXHIBIT B
The Xxxxx Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
U. S. A.
Attention: Xx. Xxxxx Xxxxxxx
Dear Sirs:
In connection with the Warrant of The Xxxxx Corporation,
issued to First Bermuda Securities Limited, on July 17, 1997, and
attached hereto, the undersigned performed the functions of
managing underwriter in connection with the offering of such
warrants and certifies, represents and warrants as follows:
We hereby certify that the distribution of the warrants
identified above was completed on July 17, 1997.
Very truly yours,
FIRST BERMUDA SECURITIES LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx, CPA
Title: Chief Operating Officer
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