------------------------------------------------------------------------------
SPORTSTRAC, INC.
AND
IAR SECURITIES CORP.
UNDERWRITER'S
WARRANT AGREEMENT
Dated as of , 1997
------------------------------------------------------------------------------
UNDERWRITER'S WARRANT AGREEMENT dated as of ____________, 1997 among
Sportstrac, Inc., a Delaware corporation (the "Company") and IAR Securities
Corp., a Delaware corporation (hereinafter referred to variously as the "Holder"
or the "Underwriter").
W I T N E S S E T H :
WHEREAS, the Company proposes to issue to the Underwriter warrants to
purchase up to an aggregate of 67,500 shares of common stock, par value $.01
per share, of the Company ("Common Stock"); and
WHEREAS, the Underwriter has agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof between
the Underwriter and the Company, to underwrite the Company's proposed public
offering of 675,000 shares of Common Stock, at a public offering price of $6.00
per share (the "Public Offering"); and
WHEREAS, the Underwriter's Warrants to be issued pursuant to this
Agreement will be issued on the Closing Date (as such term is defined in the
Underwriting Agreement) by the Company to the Underwriter in consideration for,
and as part of the compensation in connection with the Public Offering;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter to the Company of an aggregate of ten dollars ($10.00), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant. The Holder is hereby granted the right to purchase, at any
time from ____________, 1997 until; 5:30 p.m., New York time, on ____________,
2002 up to an aggregate 67,500 shares of Common Stock (subject to adjustment as
provided in Section 8 hereof) at a price of $9.90 (165% of the initial public
offering price), subject to the terms and conditions of this Agreement. Except
as set forth herein, the Common Stock issuable upon exercise of the
Underwriter's Warrants is in all respects identical to the shares of Common
Stock being purchased by the Underwriter for resale to the public pursuant to
the terms and provisions of the Underwriting Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall
be in the form set forth in Exhibit A, attached hereto and made a part hereof,
with such appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
3. Exercise of Warrant. The Warrants initially are exercisable at an
aggregate initial exercise price (subject to adjustment as provided in Section
8 hereof) as set forth in Section 6 hereof payable by certified or official
bank check in New York Clearing House funds, subject to adjustment as provided
in Section 8 hereof. Upon surrender at the Company's principal offices in
Colorado (presently located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇), of a Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with
2
payment of the Purchase Price (as hereinafter defined) for the shares of Common
Stock, the registered holder of a Warrant Certificate ("Holder" or "Holders")
shall be entitled to receive a certificate or certificates for the shares of
Common Stock so purchased. The purchase rights represented by each
Underwriter's Warrant Certificate are exercisable at the option of the Holder
thereof, in whole or in part (but not as to fractional shares of the Common
Stock). In the case of the purchase of less than all the shares purchasable
under any Warrant Certificate, the Company shall cancel the Warrant Certificate
upon the surrender thereof and shall execute and deliver a new Warrant
Certificate of like tenor for the balance of the securities purchasable
thereunder.
4. Issuance of Certificates. Upon the exercise of the Underwriter's
Warrants, the issuance of certificates for the Common Stock or other
securities, properties or rights underlying such Underwriter's Warrants, shall
be made forthwith (and in any event within three (3) business days thereafter)
without charge to the Holder thereof including, without limitation, any tax
which may be payable in respect of the issuance thereof, and such certificates
shall (subject to the provisions of Sections 5 and 7 hereof) be issued in the
name of, or in such names as may be directed by, the Holder thereof; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificates in a name other than that of the Underwriter and the Company
shall not be required to issue or deliver such certificates
3
unless or until the person or persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
The Underwriter's Warrant Certificates and the certificates
representing the Common Stock issuable upon exercise of the Underwriter's
Warrants shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its corporate
seal reproduced thereon, attested to by the manual or facsimile signature of
the then present Secretary or Assistant Secretary of the Company. Underwriter's
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
5. Restriction On Transfer of the Underwriter's Warrants. The Holder
of a Underwriter's Warrant Certificate, by its acceptance thereof, covenants
and agrees that the Underwriter's Warrants are being acquired as an investment
and not with a view to the distribution thereof; and that the Underwriter's
Warrants may not be sold, transferred, assigned, hypothecated or otherwise
disposed of, in whole or in part, for a period of one (1) year from the date of
the Public Offering, except to officers or partners of the Underwriter or
members of the selling group and/or their officers and partners.
4
6. Exercise Price.
ss.6.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 8 hereof, the initial exercise price of each of the shares
of Common Stock underlying the Underwriter's Warrants shall be $9.90 (165% of
the initial public offering price). The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Section 8 hereof.
ss.6.2 Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price,
depending upon the context.
7. Registration Rights.
ss.7.1 Registration Under the Securities Act of 1933. The
Underwriter's Warrants, the shares of Common Stock issuable upon exercise of
the Underwriter's Warrants have been registered pursuant to a registration
statement on form SB-2 (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Act").
ss.7.2 Piggyback Registration. If, at any time commencing after
_____________, 1997, through and including ________________, 2003
(84 months from the Effective Date), the Company proposes to register any of
its securities under the Act (other than in connection with a merger or
pursuant to Form S-8) it will give written notice by registered mail, at least
thirty (30) days prior to the filing of each such registration statement, to
the Underwriter and to all other Holders of the Underwriter's Warrants
5
and/or the Common Stock underlying same of its intention to do so. If any of
the Underwriter or other Holders of the Underwriter's Warrants and/or Common
Stock underlying same notify the Company within twenty (20) days after receipt
of any such notice of its or their desire to include any such securities in
such proposed registration statement, the Company shall afford each of the
Underwriter and such Holders of the Underwriter's Warrants and/or Common Stock
underlying same the opportunity to have any such Common Stock underlying same
registered under such registration statement.
Notwithstanding the provisions of this Section 7.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.2 (irrespective of whether a written request for inclusion of
any such securities shall have been made) to elect not to file any such
proposed registration statement, or to withdraw the same after the filing but
prior to the effective date thereof.
ss.7.3 Demand Registration.
(a) At any time commencing after ____________, 1998 (12 months from
the Effective Date) through and including ____________, 2002 (60 months from
the Effective Date), the Holders of the Underwriter's Warrants and/or Common
Stock underlying same representing a "Majority" (as hereinafter defined) of
such securities (assuming the exercise of all of the Underwriter's Warrants)
shall have the right (which right is in addition to the registration rights
under Section 7.2 hereof), exercisable by
6
written notice to the Company, to have the Company prepare and file with the
Commission, on one occasion, a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of both counsel for
the Company and counsel for the Underwriter and Holders, in order to comply
with the provisions of the Act, so as to permit a public offering and sale of
their respective Common Stock underlying same for nine (9) consecutive months
by such Holders and any other Holders of the Underwriter's Warrants and/or
Common Stock underlying same who notify the Company within ten (10) days after
receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by any Holder or Holders to all
other registered Holders of the Underwriter's Warrants and the Common Stock
underlying same within ten (10) days from the date of the receipt of any such
registration request.
(c) In addition to the registration rights under Section 7.2 and
subsection (a) of this Section 7.3, at any time commencing after ____________,
1998 (12 months from the Effective Date) through and including ____________,
2002 (60 months from the Effective Date), any Holder or Holders of a Majority
of Underwriter's Warrants and/or shares of Common Stock underlying same shall
have the right, exercisable by written request to the Company, to have the
Company prepare and file, on one occasion, with the Commission a registration
statement so as to permit a public offering and sale for nine (9) consecutive
months by any
7
such Holder or Holders, provided, however, that the provisions of Section
7.4(b) hereof shall not apply to any such registration request and registration
and all costs incident thereto shall be at the expense of the Holder or Holders
making such request.
(d) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the shares of Common
Stock underlying the Underwriter's Warrants within the time period specified in
Section 7.4(a) hereof pursuant to the written notice specified in Section
7.3(a) of a Majority of the Holders of the Underwriter's Warrants and/or shares
of Common Stock underlying same, the Company agrees that upon the written
notice of election of a Majority of the Holders of the Underwriter's Warrants
and/or Common Stock underlying same it shall repurchase (i) any and all Common
Stock underlying the Underwriter's Warrants at the higher of the Market Price
per share of Common Stock on (x) the date of the notice sent pursuant to
Section 7.3(a) or (y) the expiration of the period specified in Section 7.4(a).
Such repurchase shall be in immediately available funds and shall close within
two (2) days after the later of (i) the expiration of the period specified in
Section 7.4(a) or (ii) the delivery of the written notice of election specified
in this Section 7.3(d).
ss.7.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 7.2 or 7.3 hereof,
the Company covenants and agrees as follows:
8
(a) The Company shall use its best efforts to file a registration
statement within thirty (30) days of receipt of any demand therefor, shall use
its best efforts to have any registration statement declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell Common
Stock underlying the Underwriter's Warrants, such number of prospectuses as
shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s) counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, and blue sky fees and expenses.
The Holder(s) will pay all costs, fees and expenses in connection with any
registration statement filed pursuant to Section 7.3(c). If the Company shall
fail to comply with the provisions of Section 7.4(a), the Company shall, in
addition to any other equitable or other relief available to the Holder(s), be
liable for any or all incidental, special and consequential damages and damages
due to loss of profit sustained by the Holder(s) requesting registration of
their Warrant Shares.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Common Stock underlying the Underwriter's
Warrants included in a registration statement for offering and sale under the
securities or blue sky laws of such states as reasonably are requested by the
Holder(s), provided that
9
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Common Stock
underlying same to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect as the
provisions pursuant to which the Company has agreed to indemnify the
Underwriter contained in Section 7 of the Underwriting Agreement.
(e) The Holder(s) of the Common Stock underlying the Underwriter's
Warrants to be sold pursuant to a registration statement, and their successors
and assigns, shall severally, and not jointly, indemnify the Company, its
officers and directors and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against all loss, claim, damage or expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which they may become subject under the Act, the Exchange Act or
otherwise, arising from
10
information furnished by or on behalf of such Holders, or their successors or
assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 7 of the
Underwriting Agreement pursuant to which the Underwriter has agreed to
indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Underwriter's Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities other
than the Common Stock underlying the Underwriter's Warrants to be included in
any registration statement filed pursuant to Section 7.3 hereof, or permit any
other registration statement to be or remain effective during the effectiveness
of a registration statement filed pursuant to Section 7.3 hereof, without the
prior written consent of the Holders of the Underwriter's Warrants and Common
Stock underlying same representing a Majority of such securities.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold
11
comfort" letter dated the effective date of such registration statement (and,
if such registration includes an underwritten public offering, a letter dated
the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to underwriters in underwritten
public offerings of securities.
(i) The Company shall as soon as practicable after the effective date
of the registration statement, and in any event within 15 months thereafter,
have made "generally available to its security holders" (within the meaning of
Rule 158 under the Act) an earnings statement (which need not be audited)
complying with Section 11(a) of the Act and covering a period of at least 12
consecutive months beginning after the effective date of the registration
statement.
(j) The Company shall deliver promptly to each Holder participating in
the offering requesting the correspondence and memoranda described below, and
the managing underwriters, copies of all correspondence between the Commission
and the Company, its counsel or auditors and all memoranda relating to
discussions with
12
the Commission or its staff with respect to the registration statement and
permit each Holder and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and
at such reasonable times and as often as any such Holder shall reasonably
request.
(k) The Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Common Stock underlying same requested to be included in such
underwriting. Such agreement shall be satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms
as are customarily contained in agreements of that type used by the managing
underwriter.
The Holders shall be parties to any underwriting agreement relating to
an underwritten sale of their Common Stock underlying same and may, at their
option, require that any or all the representations, warranties and covenants
of the Company to or for the benefit of such underwriters shall also be made to
and for the benefit of such Holders. Such Holders shall not be required to
13
make any representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders, their intended methods
of distribution, and except for matters related to disclosures with respect to
such Holders, contained or required to be contained, in such registration
statement under the Act and the rules and regulations thereunder.
(1) For purposes of this Agreement, the term "Majority" in reference
to the Holders of Underwriter's Warrants, shall mean in excess of fifty percent
(50%) of the then outstanding Underwriter's Warrants assuming full exercise
thereof that (i) are not held by the Company, an affiliate, officer, creditor,
employee or agent thereof or any of their respective affiliates, members of
their families, persons acting as nominees or in conjunction therewith or (ii)
have not been resold to the public pursuant to Rule 144 under the Act or a
registration statement filed with the Commission under the Act.
8. Adjustments to Exercise Price and Number of Securities.
ss.8.1 Intentionally Omitted.
ss.8.2 Intentionally Omitted.
ss.8.3 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision
or increased in the case of combination.
ss.8.4 Adjustment in Number of Securities. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 8,
14
the number of shares of Common Stock underlying the Underwriter's Warrants
shall be adjusted to the nearest full amount by multiplying a number equal to
the Exercise Price in effect immediately prior to such adjustment by the number
of shares of Common Stock underlying same issuable upon exercise of the
Underwriter's Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
ss.8.5 Definition of Common Stock. For the purpose of this Agreement,
the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Certificate of Incorporation of the Company as amended as of the
date hereof, or (ii) any other class of stock resulting from successive changes
or reclassifications of such 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. In
the event that the Company shall after the date hereof issue a class of Common
Stock with greater or superior voting rights than the shares of Common Stock
outstanding as of the date hereof, the Holder, at its option, may receive upon
exercise of any Warrant either shares of Common Stock or a like number of such
securities with greater or superior voting rights.
ss.8.6 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 which 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
each Holder a
15
supplemental warrant agreement providing that each Holder shall have the right
thereafter (until the 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 Warrant might
have been exercised immediately prior to such consolidation or merger. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
ss.8.7 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Underwriter's Warrants
or the shares of Common Stock issuable upon the exercise of (i) the
Underwriter's Warrants, (ii) the options and warrants outstanding on
the date hereof and described in the prospectus relating to the Public
Offering or (iii) up to an aggregate of 480,000 shares issuable upon
the exercise of options granted under the Company's 1995 Stock Plan;
or
(b) If the amount of such adjustment shall be less than two
cents ($.02) per share, 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,
16
together with any adjustment so carried forward, shall amount
to at least two cents ($.02) per share.
ss.8.9 Dividends and Other Distributions. In the event that the
Company shall at any time prior to the exercise of all Underwriter's Warrants
declare a dividend (other than a dividend consisting solely of shares of Common
Stock) or otherwise distribute to its stockholders any 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 Holders of the unexercised Underwriter's Warrants 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 Underwriter's Warrants, the same property, assets, rights, evidences of
indebtedness, securities or any other thing of value that they would have been
entitled to receive at the time of such dividend or distribution as if the
Underwriter's Warrants had been exercised immediately prior to the record date
for 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 subsection 8.9.
ss.8.10 Reserved.
9. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal
executive office of the Company, for a new Warrant Certificate of
17
like tenor and date representing in the aggregate the right to purchase the
same number of shares of Common Stock underlying same in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Underwriter's
Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. 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 Underwriter's Warrants underlying same, nor shall it
be required to issue scrip or pay cash in lieu of 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.
11. Reservation and Listing of Securities. 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 the exercise of the Underwriter's
Warrants, 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
18
agrees that, upon exercise of the Underwriter's Warrants and payment of the
exercise prices therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. As
long as the Underwriter's Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Underwriter's Warrants to be listed (subject to official notice of
issuance) on all securities exchanges on which the Common Stock issued to the
public in connection herewith may then be listed and/or quoted on NASDAQ.
12. Notices to Warrant Holders. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders 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 Underwriter's Warrants and their exercise, any
of the following events shall occur:
(a) 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 current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
19
(b) 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
(c) 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 as an
entirety shall be proposed; then, in any one or more of such events
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, convertible or exchangeable
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 closing the transfer
books, as the case may be. Failure to give such notice or any defect
therein shall not affect the validity of any action taken in
connection with the declaration or payment of any such dividend, or
the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Notices.
20
All notices requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Underwriter's
Warrants, to the address of such Holder as shown on the books
of the Company; or
(b) If to the Company, to the address set forth in
Section 3 hereof or to such other address as the Company may
designate by notice to the Holders.
14. Supplements and Amendments. The Company and the
Underwriter may from time to time supplement or amend this Agreement without
the approval of any holders of Warrant Certificates (other than the
Underwriter) in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Underwriter may deem
necessary or desirable and which the Company and the Underwriter deem shall not
adversely affect the interests of the Holders of Warrant Certificates.
15. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the
Company, the Holders and their respective successors and assigns
hereunder.
21
16. Termination. This Agreement shall terminate at the close
of business on ____________, 2003. Notwithstanding the foregoing,
the indemnification provisions of Section 7 shall survive such
termination until the close of business on ____________, 2006.
17. Governing Law: Submission to Jurisdiction. This Agreement
and each Warrant Certificate issued hereunder shall be deemed to be
a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of such
State without giving effect to the rules of said State governing
the conflicts of laws.
The Company, the Underwriter and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement 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 irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Underwriter and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the Underwriter
and the Holders (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 3 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company,
22
the Underwriter and the Holders agree that the prevailing party(ies) in any
such action or proceeding shall be entitled to recover from the other
party(ies) all of its/their reasonable legal costs and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
18. Entire Agreement: Modification. This Agreement (including
the Underwriting Agreement to the extent portions thereof are
referred to herein) contains the entire understanding between the
parties hereto with respect to the subject matter hereof and may
not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is
sought.
19. Severability. If any provision of this Agreement shall be
held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision of this
Agreement.
20. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not
intended, nor should they be construed as, a part of this Agreement
and shall be given no substantive effect.
21. Benefits or this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Underwriter and any other registered Holder(s) of the Warrant Certificates or
Common Stock underlying same any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the
23
Company and the Underwriter and any other Holder(s) of the Warrant Certificates
or Warrant Shares.
22. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] Sportstrac, Inc.
By _________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
Attest:
______________________
Secretary
IAR SECURITIES CORP.
By _________________________
Name:
Title:
24
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE UNDERWRITER'S WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE UNDERWRITER'S WARRANTS REPRESENTED
BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT
AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME FEBRUARY 9, 2002
No. W-001 67,500 Underwriter's Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that IAR Securities Corp., or
registered assigns, is the registered holder of 67,500 Underwriter's Warrants
to purchase initially, at any time from ____________, 1998 [one year from the
effective date of the Registration Statement] until 5:30 p.m. New York time on
____________, 2002 ("Expiration Date"), up to 67,500 fully-paid and
non-assessable share of common stock, par value $.01 per share ("Common Stock")
of Sportstrac, Inc., a Delaware corporation (the "Company"), at the initial
exercise prices, subject to adjustment in certain events (the "Exercise
Prices"), of $9.90, upon surrender of this Warrant Certificate and payment of
the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Underwriter's warrant agreement dated as
of _______________, 1997 between the Company and IAR Securities, Inc. (the
"Underwriter's Warrant Agreement"). Payment of the Exercise Prices shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company.
1
No Underwriter's Warrant may be exercised after 5:30 p.m., New York
time, on the Expiration Date, at which time all Underwriter's Warrants
evidenced hereby, unless exercised prior thereto, hereby shall thereafter be
void.
The Underwriter's Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of shares of Common Stock pursuant to the
Underwriter's Warrant Agreement, which agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the
Underwriter's Warrants.
The Underwriter's Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Underwriter's
Warrants; provided, however, that the failure of the Company to issue such new
Warrant Certificates shall not in any way change, alter or otherwise impair,
the rights of the holder as set forth in the Underwriter's Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Underwriter's Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Underwriter's Warrant Agreement, without any charge except
for any tax or other governmental charge imposed in connection with such
transfer.
Upon the exercise of less than all of the Underwriter's Warrants
evidenced by this Certificate, the Company shall forthwith issue to the holder
hereof a new Warrant Certificate representing such numbered unexercised
Underwriter's Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
2
All terms used in this Warrant Certificate which are defined in the
Underwriter's Warrant Agreement shall have the meanings assigned to them in the
Underwriter's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of _____________, 1997
Sportstrac, Inc.
[SEAL] By _____________________________
Name:
Title: President
Attest:
__________________________
Secretary
3
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of
Common Stock underlying the Underwriter's Warrants, and herewith tenders in
payment for such securities a certified or official bank check payable in New
York Clearing House Funds to the order of Sportstrac, Inc. in the amount of
$______________, all in accordance with the terms hereof. The undersigned
requests that a certificates for such securities be registered in the name of
IAR Securities Corp. whose address is ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and that such Certificate be delivered to IAR Securities, Inc. whose address is
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Dated:
Signature _____________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
_______________________________
Insert Social Security or Other
Identifying Number of Holder)