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EXHIBIT 10.18
EXHIBIT C
THIS WARRANT AND THE SECURITIES PURCHASABLE UPON ITS EXERCISE HAVE BEEN AND WILL
BE, AS THE CASE MAY BE, ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF,
UNLESS SO REGISTERED OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED IS AVAILABLE FOR SUCH SALE, TRANSFER, OR
DISPOSITION.
WARRANT TO PURCHASE
COMMON STOCK OF
▇-▇▇▇▇▇▇▇.▇▇▇
FOR VALUE RECEIVED, subject to the terms and conditions herein set forth,
_____________________, or registered assigns ("Holder") is entitled to purchase
from ▇▇▇▇▇▇▇▇.▇▇▇, a Nevada corporation (the "Company"), at any time prior to
the Expiration Date (as defined below), at the Warrant Price (as defined below),
the number of fully paid and non-assessable shares of Common Stock of the
Company as set forth in Section 2 hereof (the "Common Stock Shares" or
"Shares"). This Warrant is issued pursuant to that certain Agreement and Plan of
Reorganization, dated as of August 6, 2001 (the "Reorganization Agreement"), by
and among the Company, CDS Acquisition Corporation and Chartwell Diversified
Services, Inc. Capitalized items not otherwise defined herein shall have the
respective meanings given to them in the Reorganization Agreement.
Definitions.
"Act" -- Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Company" -- ▇▇▇▇▇▇▇▇.▇▇▇, a Nevada corporation.
"Common Stock"-- Common Stock of the Company, par value $0.001 per
share.
"Common Stock Shares" or "Shares" -- The number of fully paid and
nonassessable shares of Common Stock of the Company issuable pursuant to
Section 2 of this Warrant.
"Conversion Right" -- Conversion Right has the meaning set forth in
Section 9 of this Warrant.
"Current Market Price" -- Current Market Price has the meaning set forth
in Section 3(a)(v) of this Warrant.
"Effectiveness Period" - Effectiveness Period has the meaning set forth
in Section 10(a) of this Warrant.
"Expiration Date" - August 6, 2006.
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"Fully Diluted Shares" -- The number of outstanding shares of Common
Stock of the Company, calculated on a fully diluted basis using the
treasury stock method as contemplated by the Accounting Principles Board
Opinion No. 15 (as referred to in Statement of Financial Accounting
Standards No. 128).
"Holder" -- Holder has the meaning set forth in the first recital of
this Warrant.
"Issue Date" - August 6, 2001.
"Liquidity Event" -- Liquidity Event means the sale of all or
substantially all the capital stock, or all or substantially all of the
assets, of the Company in a merger, business combination, or other form
of business transaction with or into a third party in which the
Company's stockholders do not own at least a majority of the outstanding
voting securities of the surviving corporation or business entity to
which such stock or assets are sold after such transaction (based solely
on such Company stockholders' holdings of the Company prior to the
transaction).
"Registrable Securities" - Registrable Securities has the meaning set
forth in Section 10(a) of this Warrant.
"SEC" -- the United States Securities and Exchange Commission, or
successor entity or agency.
"Selling Expenses" - Selling Expenses has the meaning set forth in
Section 10(a) of this Warrant.
"Vested" -- Vested has the meaning set forth in Section 8 of this
Warrant.
"Violation -- Violation has the meaning set forth in Section 10(d)(i)
of this Warrant
"Warrant" -- Warrant means this warrant issued to _____.
"Warrant Price" -- $4.00 per each share of Common Stock, subject to
adjustment as set forth in Section 3 hereof.
1. Price. The price for each Common Stock Share purchasable hereunder
shall be the Warrant Price.
2. Number of Shares. The number of Common Stock Shares issuable upon
exercise of this Warrant shall be ______, subject to adjustment as set forth in
Section 3 hereof.
3. Certain Adjustments to Warrant Price Applicable to Shares. The
Warrant Price and the number and kind of Shares shall be subject to adjustment
from time to time upon the happening of certain events as provided in this
Section 3.
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(a) Mechanical Adjustment.
(i) Stock Splits, Recapitalizations and Reorganizations. If at any
time prior to the exercise of this Warrant in full, the
Company shall (A) declare a dividend or make a distribution on
the Common Stock payable in shares of its capital stock
(whether shares of Common Stock or of capital stock of any
other class); (B) subdivide, reclassify or recapitalize its
outstanding Common Stock into a greater number of shares; (C)
combine, reclassify or recapitalize its outstanding Common
Stock into a smaller number of shares; or (D) issue any shares
of its capital stock by reclassification of its Common Stock
(including any such reclassification in connection with a
consolidation or a merger in which the Company is the
continuing corporation), the number of Shares issuable upon
exercise of the Warrant and/or the Warrant Price in effect at
the time of the record date of such dividend, distribution,
subdivision, combination, reclassification or recapitalization
shall be adjusted so that the Holder shall be entitled to
receive the aggregate number and kind of shares which, if this
Warrant had been exercised in full immediately prior to such
event, the Holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, distribution,
subdivision, combination, reclassification or
recapitalization. Any adjustment required by this Section
3(a)(i) shall be made successively immediately after the
record date, in the case of a dividend or distribution, or the
effective date, in the case of a subdivision, combination,
reclassification or recapitalization, to allow the purchase of
such aggregate number and kind of shares.
(ii) Special Dividends. If at any time prior to the exercise of
this Warrant in full, the Company shall fix a record date for
the issuance or making of a distribution to all holders of the
Common Stock (including any such distribution to be made in
connection with a consolidation or merger in which the Company
is to be the continuing corporation) of evidences of its
indebtedness, any other securities of the Company or any cash,
property or other assets (excluding a combination,
reclassification or recapitalization referred to in Section
3(a)(i), regular cash dividends or cash distributions paid out
of net profits legally available therefor and in the ordinary
course of business, and subscription rights, options or
warrants for Common Stock or Common Stock Equivalents
(excluding those referred to in Section 3(a)(iii)) (any such
nonexcluded event being herein called a "Special Dividend"),
the Warrant Price shall be decreased immediately after the
record date for such Special Dividend to a price determined by
multiplying the Warrant Price then in effect by a fraction,
the numerator of which shall be the then "current market
price" of the Common Stock (as defined in Section 3(a)(v)) on
such record date less the fair market value (as determined by
the Company's Board of Directors) of the evidences of
indebtedness, securities, cash, property, or other assets
issued or
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distributed in such Special Dividend applicable to one share
of Common Stock or of such subscription rights or warrants
applicable to one share of Common Stock and the denominator of
which shall be such then current market price per share of
Common Stock (as so determined). Any adjustment required by
this Section 3(a)(ii) shall be made successively whenever such
a record date is fixed and in the event that such distribution
is not so made, the Warrant Price shall again be adjusted to
be the Warrant Price that was in effect immediately prior to
such record date.
(iii) Subsidiary Stock Dividends. If at any time prior to the
exercise of this Warrant in full, the Company shall make a
distribution to all holders of the Common Stock of stock of a
subsidiary or securities convertible into or exercisable for
such stock, then in lieu of an adjustment in the Warrant Price
or the number of Shares purchasable upon the exercise of this
Warrant, each Holder, upon the exercise hereof at any time
after such distribution, shall be entitled to receive from the
Company, such subsidiary or both, as the Company shall
determine, the stock or other securities to which such Holder
would have been entitled if such Holder had exercised this
Warrant immediately prior thereto, all subject to further
adjustment as provided in this Section 3, and the Company
shall reserve, for the life of the Warrant, such securities of
such subsidiary or other corporation; provided, however, that
no adjustment in respect of dividends or interest on such
stock or other securities shall be made during the term of
this Warrant or upon its exercise.
(iv) Warrant Share Adjustment. Whenever the Warrant Price payable
upon exercise of each Warrant is adjusted pursuant to one or
more of paragraphs (i) and (ii) of this Section 3(a), the
Shares shall simultaneously be adjusted by multiplying the
number of Shares initially issuable upon exercise of each
Warrant by the Warrant Price in effect on the date thereof and
dividing the product so obtained by the Warrant Price, as
adjusted.
(v) Current Market Price. For the purpose of any computation under
this Section 3(a), the "current market price" per share of
Common Stock at any date shall be deemed to be the average of
the daily closing prices for 20 consecutive trading days
commencing 30 trading days before such date. The closing price
for each day shall be the last sale price reported or, in case
no such reported sales take place on such day, the average of
the last reported bid and asked prices, in either case on the
principal national securities exchange on which the Common
Stock is admitted to trading or listed (including the Nasdaq
National Market or Nasdaq Market, or if not listed or admitted
to trading on such exchange, the representative closing bid
price as reported by Nasdaq, or other similar organization if
Nasdaq is no longer reporting such information, or if not so
available, the fair market price as determined by mutual
agreement of the Holder and the Company, and if the Holder and
the Company are unable to so agree, at the
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Company's sole expense, by an investment banker of national
reputation selected by the Company and acceptable to the
Holder in its sole discretion.
(vi) Minimum Adjustment. No adjustment in the Warrant Price under
this Section 3(a) shall be required unless such adjustment
would require an increase or decrease of at least five cents
($.05) in such price; provided, however, that any adjustments
which by reason of this paragraph (vi) are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section
3(a) shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. Notwithstanding
anything in this Section 3(a) to the contrary, the Warrant
Price shall not be reduced to less than the then existing par
value of the Common Stock as a result of any adjustment made
hereunder.
(vii) Subsequent Adjustment. In the event that at any time, as a
result of any adjustment made pursuant to Section 3(a), the
Holder thereafter shall become entitled to receive any shares
of the Company other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in
Section 3(a)(i) or this Section 3(a)(vii).
(b) Preservation of Purchase Rights in Certain Transactions. In case of
any reclassification, capital reorganization or other change of
outstanding shares of Common Stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change
in the par value of the Common Stock) or in case of any
consolidation or merger of the Company with or into another
corporation (other than merger with a subsidiary in which the
Company is the continuing corporation and that does not result in
any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon
exercise of this Warrant) or in the case of any sale, lease,
transfer or conveyance to another corporation of the property and
assets of the Company as an entirety or substantially as an
entirety, the Company shall provide 15 days prior written notice of
such transaction to the Holder. At the option of the Holder, the
Holder shall either (a) have the right to exercise this Warrant in
full or (b) have the opportunity to require, as a condition
precedent to such transaction, that the Company require such
successor or purchasing corporation, as the case may be, to execute
with the Holder, prior to the closing of such transaction, an
agreement granting the Holder the right thereafter, upon payment of
the Warrant Price in effect immediately prior to such action, to
receive upon exercise of this Warrant the kind and amount of shares
and other securities and property which he would have owned or have
been entitled to receive after the happening of such
reclassification, change, consolidation, merger, sale or conveyance
had this
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Warrant been exercised immediately prior to such action. In the
event that in connection with any such reclassification, capital
reorganization, change, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for, or
of, a security of the Company other than Common Stock, any such
issue shall be treated as an issue of Common Stock covered by the
provisions of Section 3. The provisions of this Section 3(b) shall
similarly apply to successive reclassifications, capital
reorganizations, consolidations, mergers, sales or conveyances.
(c) Notices of Adjustment. Whenever the number of Shares or the Warrant
Price is adjusted as herein provided, the Company shall prepare and
deliver forthwith to the Holder a certificate signed by its Chief
Executive Officer or President, and by any Vice President, Treasurer
or Secretary, setting forth the adjusted number of shares
purchasable upon the exercise of this Warrant and the Warrant Price
of such shares after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth
the computation by which adjustment was made.
(d) No Adjustment for Dividends. Except as provided in Section 3(a) of
this Agreement, no adjustment in respect of any cash dividends shall
be made during the term of this Warrant or upon the exercise of this
Warrant.
(e) Form of Warrant After Adjustments. The form of this Warrant need not
be changed because of any adjustments in the Warrant Price or the
number or kind of the Shares, and Warrants theretofore or thereafter
issued may continue to express the same price and number and kind of
shares as are stated in this Warrant, as initially issued.
(f) Treatment of Holder. Prior to due presentment for registration of
transfer of this Warrant, the Company may deem and treat the Holder
as the absolute owner of this Warrant (notwithstanding any notation
of ownership or other writing hereon) for all purposes and shall not
be affected by any notice to the contrary.
4. Expiration of Warrant. Subject to earlier termination in accordance
with Section 11 below, this Warrant shall expire and shall no longer be
exercisable after the Expiration Date or after a Liquidity Event; provided that
the Company shall have provided notice of the Liquidity Event required in
Section 6 below and given the Holder the opportunity to exercise this Warrant
prior thereto.
5. No Fractional Shares. This Warrant may not be exercised as to a
fractional share of Common Stock of the Company. The Company will make a cash
payment in lieu thereof.
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6. No Stockholder Right/Notices to Holders.
(a) This Warrant shall not entitle the Holder to any of the rights of
a stockholder of the Company, except as may be otherwise provided
in the Reorganization Agreement.
(b) The Company shall give notice to the Holder by registered mail if
at any time prior to the expiration or exercise in full of the
Warrants, any of the following events shall occur:
(i) The Company shall authorize the payment of any dividend
payable in any securities upon shares of Common Stock or
authorize the making of any distribution (other than a
cash dividend subject to the second parenthetical set
forth in Section 3(a)(ii)) to all holders of Common Stock.
(ii) The Company shall authorize the issuance to all holders of
Common Stock of any additional shares of Common Stock or
securities convertible into or exercisable for shares of
Common Stock ("Common Stock Equivalents") or of rights,
options or warrants to subscribe for or purchase Common
Stock or Common Stock Equivalents or of any other
subscription rights, options or warrants.
(iii) A dissolution, liquidation or winding up of the Company
shall be proposed.
(iv) A Liquidity Event or any capital reorganization or
reclassification of the Common Stock (other than a
subdivision or combination of the outstanding Common
Stock and other than a change in the par value of the
Common Stock) or any consolidation or merger of the
Company with or into another corporation (other than a
consolidation or merger in which the Company is the
continuing corporation and that does not result in any
reclassification or change of Common Stock outstanding)
or in the case of any sale or conveyance to another
corporation of the property of the Company as an
entirety or substantially as an entirety.
(c) Such giving of notice shall be initiated at least 15 days prior
to the date fixed as a record date or effective date or the
date of closing of the Company's stock transfer books for the
determination of the stockholders entitled to such dividend,
distribution or subscription rights, or for the determination
of the stockholders entitled to vote on such proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or
winding up. Such notice shall specify such record date or the
date of closing the stock transfer books, as the case may be.
Failure to provide such notice shall not affect the validity
of any action taken in connection with such dividend,
distribution or subscription rights, or proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or
winding up.
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7. Reservation of Shares. The Company covenants that during the period
this Warrant is exercisable it will reserve a sufficient number of its
authorized and unissued shares of Common Stock to provide for the issuance of
the number of shares of Common Stock upon the exercise of this Warrant. The
Company agrees that its issuance of this Warrant shall constitute full authority
to its officers to instruct the Company's transfer agent to issue the necessary
certificates for shares of Common Stock upon the exercise of this Warrant,
provided that a sufficient number of authorized and unissued share of Common
Stock then exist.
8. Vesting Schedule. This Warrant shall become vested and then
immediately exercisable without any further condition or event ("Vested") as
follows: twenty percent (20%) of the Shares shall become fully vested one
calendar year following the Issue Date, twenty percent (20%) of the Shares shall
become fully vested two calendar years following the Issue Date, twenty percent
(20%) of the Shares shall become fully vested three calendar years following the
Issue Date, twenty percent (20%) of the Shares shall become fully vested four
calendar years following the Issue Date, and twenty percent (20%) of the Shares
shall become fully vested five calendar years following the Issue Date, subject
to the occurrence of a Liquidity Event, in which case all of the Shares shall
become fully vested fifteen (15) days prior thereto. In the event of a Liquidity
Event, the Company shall give the Holder at least fifteen (15) days prior notice
of such event in accordance with Section 6(c) and shall give the Holder the
opportunity to exercise this Warrant prior thereto.
9. Exercise of Warrant.
(a) This Warrant may be exercised by the Holder, subject to the
vesting schedule set forth in Section 8, on the earlier of (a) a
vote by a majority of the shareholders of the Common Stock of the
Company (other than the Holder) in favor of such exercise or (b)
upon the delisting by the American Stock Exchange of the Common
Stock of the Company. Such exercise may be in an amount that
corresponds to the amount of the Common Stock Shares which may be
purchased under the terms of this Warrant, by the surrender of
this Warrant at the principal office of the Company, together
with the Subscription Form attached hereto duly completed and
executed and accompanied by payment in full of the aggregate
Warrant Price for such amount of shares of Common Stock being
purchased upon such exercise; provided, however, that upon
request of the Holder, the Company shall promptly notify the
Holder of the aggregate Warrant Price for the shares of Common
Stock being purchased upon such exercise. Payment of the Warrant
Price may be made by cash, certified check, check made payable to
the Company (if approved by the Company), or wire transfer to an
account designated by the Company, as payment for all or part of
the purchase price for the shares of Common Stock being purchased
upon such exercise. The Warrant shall be deemed to have been
exercised immediately prior to the close of the effective date of
the purchase of the Shares and the Holder shall be treated for
all purposes as the holder of record of such Shares as of the
close of business on such effective date. As promptly as
practicable on or after such date, the Company shall instruct its
transfer agent to issue and deliver to the Holder a certificate
or certificates for the number of full Shares issuable upon such
exercise. The Company shall not be
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required to issue any fractional shares upon the exercise of the
Holder's purchase rights under this Warrant. In lieu of any
fractional shares, the Company shall pay cash equal to such
fraction multiplied by the per-share Warrant Price.
(b) Net Exercise. In addition to and without limiting the rights of
the Holder under the terms of this Warrant, if the Current
Market Price of one Share is greater than the Warrant Price
(at the date of calculation as set forth below), the Holder
may elect to convert this Warrant in whole or in part into
Shares (the "Conversion Right"), the aggregate value of which
Shares shall be equal to the value of this Warrant or the
portion thereof being converted. The Conversion Right may be
exercised by the Holder by surrender of this Warrant (with the
Subscription Form attached hereto) at the principal office of
the Company, in which event the Company shall issue to the
Holder a number of Shares computed using the following
formula:
X = Y(A-B)
------
A
Where:
X = The number of Shares to be issued to the Holder upon exercise
of the Conversion Right.
Y = The number of Shares issuable under this Warrant (or the
portion thereof being converted) as determined pursuant to
Section 2 hereof.
A = The Current Market Price of one share of Company's shares of
Common Stock.
B = The Warrant Price.
(c) Issuance of certificates for the Shares upon the exercise of
this Warrant shall be made without charge to the registered
holder hereof for any issue or other incidental expense, but
not including transfer taxes, with respect to the issuance of
such certificates, all of which expenses shall be paid by the
Company, and such certificates shall be issued in the name of
the registered holder of this Warrant or in such name or names
as may be directed by the registered holder of this Warrant;
provided, however, that in the event certificates for the
Shares are to be issued in a name other than the name of the
registered holder of this Warrant, this Warrant, when
surrendered for exercise, shall be accompanied by the Form of
Assignment attached hereto duly executed by the Holder hereof,
and provided further, that any such transfer shall comply with
Section 12 hereof.
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10. Registration Rights.
(a) Registration. The Company shall use its reasonable best
efforts to file with the SEC as soon as practicable after the
effective time of the Merger (as defined in the Reorganization
Agreement), but in no event later than the first business day
following the filing with the SEC of a post-merger current
report on Form 8-K by the Company, a registration statement
for an offering to be made on a continuous basis pursuant to
Rule 415 covering the resale of Common Stock Shares underlying
this Warrant (collectively the "Registrable Securities").
Company shall use its reasonable best efforts to cause such
registration statement to be declared effective pursuant to
the Securities Act as promptly as practicable following the
filing thereof. Company shall use its reasonable best efforts
to keep such registration statement continuously effective
under the Securities Act thereafter for the period ending one
year after the date such registration statement has been
declared effective (the "Effectiveness Period"). The
registration statement shall be on Form S-3 under the
Securities Act or such successor or other appropriate form
permitting registration of restricted securities for resale in
open market transactions (with or without the use of one or
more brokers). During the Effectiveness Period, the Company
shall use its reasonable best efforts to keep the registration
statement continuously effective by supplementing and amending
such registration statement as required by the rules,
regulations or instructions applicable to the registration
form used for such registration statement if required by the
Securities Act.
(b) Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or
compliance pursuant to Section 10 shall be borne by the
Company. All Selling Expenses (as defined below) incurred in
connection with any registrations hereunder shall be borne by
the Holder whose securities are so registered pro rata on the
basis of the number of shares so registered. For purposes of
this Warrant "Registration Expenses" shall include all
registration and filing fees, printing expenses, fees and
disbursement of counsel for the Company, reasonable fees and
expenses of one (1) legal counsel for the Holder up to
$30,000, Blue Sky fees and expenses and the expense of any
special audits incident to or required by any such
registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by
the Company). For the purpose of this Warrant "Selling
Expenses" shall mean all underwriting discounts and selling
commissions and the fees and expenses of one legal counsel for
the Holder in excess of $30,000 for each sale.
(c) Additional Obligations of the Company. The Company shall, as
expeditiously as reasonably possible:
(i) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act,
and such other documents as they may reasonably request to
facilitate the disposition of Registrable Securities owned
by them.
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(ii) Use reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of such a
registration statement, or the lifting of any suspension
of the qualification of any of the securities covered by
such registration statement for sale in any jurisdiction,
at the earliest possible date, but such efforts need not
include litigation.
(iii) Use reasonable best efforts to register and qualify the
securities covered by such registration statement under
such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required
in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to
service of process in any such states or jurisdictions
unless the Company is already subject to service in such
jurisdiction and except as may be required by the
Securities Act.
(iv) Notify each Holder covered by such registration statement
at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the
happening of any event as a result of which the
prospectus included in such registration statement, as
then in effect, includes an untrue statement of a
material fact or omits to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances
then existing. The Company will use its best efforts to
amend or supplement such prospectus to cause such
prospectus not to include any untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances
then existing.
(v) Furnish on the date that such Registrable Securities are
delivered to the underwriters for sale, if such
securities are being sold through underwriters, or, if
such securities are not being sold through underwriters,
on the date that the registration statement with respect
to such Registrable Securities becomes effective, (i) an
opinion, dated as of such date, of the counsel
representing the Company for the purposes of such
registration, in form and substance as is customarily
given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, or to
the Holders requesting registration of Registrable
Securities if no underwriter is involved, and (ii) a
letter dated as of such date, from the independent
certified public accountants of the Company, in form and
substance as is customarily given by independent
certified public accountants to underwriters in an
underwritten public offering addressed to the
underwriters, if any.
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(d) Indemnification.
(i) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, members and
directors of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following
statements, omissions or violations (collectively a
"Violation") by the Company: (i) any untrue statement or
alleged untrue statement of a material fact contained in the
registration statement contemplated in Section 10(a),
including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection
with the offering covered by such registration statement; and
the Company will pay as incurred to each such Holder, partner,
officer, member, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this Section 10(d)(i)
shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be
liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for
use in connection with such registration by such Holder,
partner, member, officer, director, underwriter or controlling
person of such Holder.
(ii) To the extent permitted by law, each Holder, severally but not
jointly, will, if Registrable Securities held by such Holder
are included in the securities as to which such registration
qualifications or compliance is being effected, indemnify and
hold harmless the Company, each of its directors, its officers
and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other
Holder selling securities under such registration statement or
any of such other Holder's partners, members, directors or
officers or any person who
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controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any
such director, officer, member, controlling person,
underwriter or other such Holder, or partner, member,
director, officer or controlling person of such other Holder
may become subject under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information
furnished by such Holder under an instrument duly executed by
such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will
pay as incurred any legal or other expenses reasonably
incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner,
member, officer, director or controlling person of such other
Holder in connection with investigating or defending any such
loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section
10(d)(ii) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld;
(iii) Promptly after receipt by an indemnified party under this
Section 10(d) of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 10(d) deliver to the
indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party
(together with all other indemnified parties which may be
represented without conflict by one counsel) would be
inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented
by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 10(d), but the omission
so to deliver written notice to the
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indemnifying party will not relieve it of any liability that
it may have to any indemnified party otherwise than under this
Section 10(d).
(iv) If the indemnification provided for in this Section 10(d) is
held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any losses, claims,
damages or liabilities referred to herein, the indemnifying
party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the
indemnified party on the other hand in connection with the
Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by a court of
law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission;
provided that in no event shall any contribution by an Holder
hereunder exceed the net proceeds from the offering received
by such Holder.
(v) The obligations of the Company and Holders under this Section
10(d) shall survive completion of any offering of Registrable
Securities in a registration statement and the termination of
this agreement. No indemnifying party, in the defense of any
such claim or litigation, shall, except with the consent of
each indemnified party, consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(e) Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC
which may permit the sale of the Registrable Securities to the
public without registration, the Company agrees to use reasonable
best efforts to:
(i) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar
or analogous rule promulgated under the Securities Act, at
all times after the effective date of the first
registration filed by the Company for an offering of its
securities to the general public;
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(ii) File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Exchange
Act; and
(iii) So long as an Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written
statement by the Company as to its compliance with the
reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act (at any time after it has
become subject to such reporting requirements); a copy of
the most recent annual or quarterly report of the Company;
and such other reports and documents as an Holder may
reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such
securities without registration.
11. Automatic Termination. This Warrant and the rights hereunder shall
be automatically be terminated upon (a) the dissolution or liquidation of the
Company, or (b) in the event that Holder, in its capacity as a shareholder of
Series A Convertible Preferred Stock of the Company, causes a redemption of any
or all of its shares of such stock under Section 6 of the Certificate of and
Designation of Series and Determination of Rights and Preferences for Series A
Convertible Preferred Stock of ▇-▇▇▇▇▇▇▇.▇▇▇, filed with the Nevada Secretary of
State on August __, 2001 (the "Certificate of Designations"); provided, however,
that if Holder causes a partial redemption of such shares, this Warrant and the
rights hereunder shall be automatically cancelled on a pro rata basis equivalent
to the percentage of the total number of Series A Preferred Stock redeemed by
the Holder.
12. Transfer or Assignment of Warrant. This Warrant, and any rights
hereunder, may not be assigned or transferred, except the heirs or assigns of
Holder or as provided pursuant to the Reorganization Agreement or operation of
law or by reason of reorganization. Any purported transfer or assignment made
other than in accordance with this Section 12 shall be null and void and of no
force and effect.
13. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new warrant identical in tenor and date in lieu of this
Warrant.
14. General. This Warrant shall be governed by and interpreted in
accordance with the laws of the State of Delaware. The headings in this Warrant
are for purposes of convenience and reference only and shall not be deemed to
constitute a part hereof. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally but rather only by an
instrument in writing signed by the Company and the Holder. All notices and
other communications from the Company to the Holder shall be by courier or
mailed first-class registered or certified mail, postage pre-paid, to the last
address furnished to the Company in writing by the Holder. This Warrant shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
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15. Amendment and Waiver. Any provisions of this Warrant (including,
without limitation, termination of exercisability) may be amended or waived, and
any and all such amendments or waivers shall be binding upon the Holder, only if
approved in writing by the Company and the Holder.
[SIGNATURE PAGE FOLLOWS]
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EXHIBIT C
This Warrant is issued this ____ day of ________, 2001 to _____.
▇▇▇▇▇▇▇▇.▇▇▇
By:___________________________________
Name: ____________________________
Title: __________________________
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SUBSCRIPTION FORM
The undersigned registered owner of the Warrant which accompanies this
Subscription Form hereby irrevocably exercises such Warrant for, and purchases,
______ shares of ▇▇▇▇▇▇▇▇.▇▇▇ ("Company") Common Stock, purchasable upon the
exercise of such Warrant, and herewith makes payment therefor, all at the price
and on the terms and conditions specified in such Warrant. The undersigned
elects to make such payment in ______ cash. In making such election, the
undersigned warrants that all of the terms of the Reorganization Agreement,
pursuant to which the Warrant was issued, shall apply in full upon exercise of
the Warrant.
Dated: _______________
_______________________________
(Signature of Registered Owner)
_______________________________
(Name)
_______________________________
(Street Address)
_______________________________
(City, State, Zip Code)
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FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
_______________________________
_______________________________
_______________________________
(Name and address of assignee must be printed or typewritten)
___________ shares of ▇▇▇▇▇▇▇▇.▇▇▇ Common Stock purchasable under the within
Warrant, hereby irrevocably constituting and appointing __________ to transfer
said Warrant on the books of the Company, with full power of substitution in the
premises.
Dated: ___________
By:_________________________________________
(Signature of Registered Owner)