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FORM OF
WARRANT AGREEMENT
By and Between
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
and
CRUTTENDEN ▇▇▇▇ INCORPORATED
ISG SOLID CAPITAL MARKETS, LLC
Dated as of ______________, 1999
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WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of ______________, 1999, by and between
▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation (the "Company"), and CRUTTENDEN ▇▇▇▇
INCORPORATED and ISG SOLID CAPITAL MARKETS, LLC (together, the "Underwriter").
The Company proposes to issue to the Underwriter warrants as hereinafter
described (the "Underwriter Warrants") to purchase up to an aggregate of 250,000
shares, subject to adjustment as provided in Section 8 hereof (such shares, as
adjusted, being hereinafter referred to as the "Shares") of the Company's common
stock, par value $.001 per share (the "Common Shares"), each Underwriter Warrant
entitling the holder thereof to purchase one Common Share. All capitalized terms
used herein and not otherwise defined herein shall have the same meanings as in
that certain underwriting agreement, of even date herewith, by and between the
Company and the Underwriter (the "Underwriting Agreement"). In this Agreement,
the singular includes the plural and the plural includes the singular.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth and for other good and valuable consideration, the parties
hereto agree as follows:
1. ISSUANCE OF WARRANTS; FORM OF WARRANT. The Company will issue, sell and
deliver the Underwriter Warrants to the Underwriter or its bona fide officers
for an aggregate price of $25.00. The form of the Underwriter Warrants and the
form of election to purchase Shares to be attached thereto shall be
substantially as set forth on EXHIBIT A attached hereto. The Underwriter
Warrants shall be executed on behalf of the Company by the manual or facsimile
signature of the present or any future Chief Executive Officer, President or any
Vice President of the Company, under its corporate seal, affixed or in
facsimile, and attested by the manual or facsimile signature of the present or
any future Secretary or Assistant Secretary of the Company.
2. REGISTRATION. The Underwriter Warrants shall be numbered and shall be
registered in an Underwriter Warrant register (the "Underwriter Warrant
Register"). The Company shall be entitled to treat the registered holder of any
Underwriter Warrant on the Underwriter Warrant Register (the "Holder") as the
owner in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Underwriter Warrant on the part
of any other person, and shall not be liable for any registration of transfer of
Underwriter Warrants which are registered or are to be registered in the name of
a fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith. The Underwriter Warrants shall be
registered initially in the name of "Cruttenden ▇▇▇▇ Incorporated" and "ISG
Solid Capital Markets, LLC" in such denominations as the Underwriter may request
in writing to the Company; PROVIDED, HOWEVER, that the Underwriter may designate
that all or a portion of the Underwriter Warrants be issued in varying amounts
directly to its bona fide officers, and not to the Underwriter. Such designation
will only be made by the Underwriter if it determines that such issuances would
not
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violate the interpretation of the Board of Governors of the National Association
of Securities Dealers, Inc. (the "NASD") relating to the review of corporate
financing arrangements.
3. TRANSFER OF WARRANTS. The Underwriter Warrants will not be sold,
transferred, assigned or hypothecated, in part or in whole the (other than by
will or pursuant to the laws of descent and distribution), except to officers of
the Underwriter and thereafter only upon delivery thereof duly endorsed by the
Holder or by his duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment or authority to transfer. In all cases
of transfer by an attorney, the original power of attorney, duly approved, or an
official copy thereof, duly certified, shall be deposited with the Company. In
case of transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited with the Company in its
discretion. Upon any registration of transfer, the Company shall deliver a new
Underwriter Warrant or Underwriter Warrants to the persons entitled thereto. The
Underwriter Warrants may be exchanged at the option of the Holder thereof for
another Underwriter Warrant, or other Underwriter Warrants, of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Common Shares upon surrender to the Company or its
duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Underwriter Warrants to be transferred on its books to any
person if such transfer would violate the Securities Act of 1933, as amended
(the "Act").
4. TERM OF WARRANTS, EXERCISE OF WARRANTS. Each Underwriter Warrant
entitles the registered owner thereof to purchase one Share at a purchase price
of $_____ per Share (the "Exercise Price") at any time from the first
anniversary of the effective date of the Registration Statement until 5:00 p.m.,
New York City time, on ________, 2004) (the "Warrant Expiration Date"). Prior to
the Warrant Expiration Date, the Company will not take any action which would
terminate the Underwriter Warrants. The Exercise Price and the Shares issuable
upon exercise of the Underwriter Warrants are subject to adjustment upon the
occurrence of certain events pursuant to the provisions of Section 8 of this
Agreement. Subject to the provisions of this Agreement, each Holder shall have
the right, which may be exercised as set forth in such Underwriter Warrants, to
purchase from the Company (and the Company shall issue and sell to such Holder)
the number of fully paid and nonassessable Common Shares specified in such
Underwriter Warrants, upon surrender to the Company, or its duly authorized
agent, of such Underwriter Warrants with the form of election to purchase
attached thereto duly completed and signed, with signatures guaranteed by a
member firm of a national securities exchange, a commercial bank or trust
company located in the United States or a member of the NASD and upon payment to
the Company of the Exercise Price, as adjusted in accordance with the provisions
of Section 8 of this Agreement, for the number of Shares in respect of which
such Underwriter Warrants are then exercised.
Payment of such Exercise Price may be made at the Holder's election (i) by
certified or official bank check, (ii) in the event that the Holder holds Common
Shares of the Company and such Common Shares are listed on a domestic stock
exchange or quoted in the domestic over-the-counter market, by transferring to
the Company an amount of such Common Shares which, when multiplied by, the
current market price of the Common Shares at the time of
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exercise of such Underwriter Warrant, equals the aggregate amount of the
consideration payable upon such exercise, (iii) by surrendering to the Company
the right to receive a portion of the number of Shares with respect to which
such Underwriter Warrant is then being exercised equal to the product obtained
by multiplying such number of Shares by a fraction, the numerator of which is
the Exercise Price in effect on the date of such exercise and the denominator of
which is the current market price of the Common Shares in effect on such date,
or (iv) by a combination of the foregoing methods of payment selected by the
Holder. For purposes of this paragraph, the current market price of the Common
Shares shall be calculated either (a) on the date which the form of election to
purchase attached hereto is deemed to have been sent to the Company pursuant to
Section 12 hereof ("Notice Date") or (b) as the average of the last reported
sale price for each of the five trading days preceding the Notice Date,
whichever of (a) or (b) is greater. In any case where the consideration payable
upon such exercise is being paid in whole or in part pursuant to the provisions
of clause (ii) or clause (iii) of the preceding sentence, such exercise shall be
accompanied by written notice from the Holder specifying the manner of payment
thereof, and in the case of clause (ii), stating the amount of Common Shares of
the Company to be applied to such payment, and in the case of clause (iii),
containing a calculation showing the number of Shares with respect to which
rights are being surrendered thereunder and the net number of Shares to be
issued after giving effect to such surrender. No adjustment shall be made for
any dividends on any Shares issuable upon exercise of an Underwriter Warrant.
Upon each surrender of Underwriter Warrants and payment of the Exercise Price as
aforesaid, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Holder of such Underwriter Warrants
and in such name or names as such Holder may designate. a certificate or
certificates for the number of full Shares so purchased upon the exercise of
such Underwriter Warrants, together with cash, as provided in Section 9 of this
Agreement, in respect of any fractional Shares otherwise issuable upon such
surrender. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such Shares as of the date of the surrender of Underwriter
Warrants and payment of the Exercise Price as aforesaid; provided, however, that
if, at the date of surrender of such Underwriter Warrants and payment of such
Exercise Price, the transfer books for the Common Shares or other class of
securities issuable upon the exercise of such Underwriter Warrants shall be
closed, the certificates for the Shares shall be issuable as of the date on
which such books shall next be opened (whether before, on or after the Warrant
Expiration Date) and until such date the Company shall be under no duty to
deliver any certificate for such Shares; provided, further, however, that the
transfer books of record, unless otherwise required by law, shall not be closed
at any one time for a period longer than twenty (20) days. The rights of
purchase represented by the Underwriter Warrants shall be exercisable, at the
election of the Holders thereof, either in full or from time to time in part
and, in the event that any Underwriter Warrant is exercised in respect of less
than all of the Shares issuable upon such exercise at any time prior to the
Warrant Expiration Date, a new Underwriter Warrant or Underwriter Warrants will
be issued for the remaining number of Shares specified in the Underwriter
Warrant so surrendered.
5. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of Shares upon the exercise of Underwriter
Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay any
tax or taxes which may be payable in
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respect of any transfer involved in the issue or delivery of any certificates
for Shares in a name other than that of the Holder of Underwriter Warrants in
respect of which such Shares are issued.
6. MUTILATED OR MISSING WARRANTS. In case any of the Underwriter Warrants
shall be mutilated, lost, stolen or destroyed, the Company may, in its
discretion, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated Underwriter Warrant, or in lieu of and
substitution for the Underwriter Warrant lost, stolen or destroyed, a new
Underwriter Warrant of like tenor and representing an equivalent right or
interest, but only upon receipt of evidence reasonably satisfactory to the
Company of such mutilation, loss, theft or destruction of such Underwriter
Warrant and indemnity, unless mutilated, also reasonably satisfactory to the
Company. An applicant for such substitute Underwriter Warrants shall also comply
with such other reasonable regulations and pay such other reasonable charges as
the Company may prescribe.
7. RESERVATION OF SHARES, ETC. There have been reserved and the Company
shall at all times keep reserved, out of the authorized and unissued Common
Shares, a number of Common Shares sufficient to provide for the exercise of the
rights of purchase represented by the outstanding Underwriter Warrants.
Continental Stock Transfer & Trust Company, transfer agent for the Common Shares
(the "Transfer Agent"), and every subsequent transfer agent, if any, for the
Company's securities issuable upon the exercise of the Underwriter Warrants will
be irrevocably authorized and directed at all times until the Warrant Expiration
Date to reserve such number of authorized and unissued Common Shares as shall be
required for such purpose. The Company will keep a copy of this Agreement on
file with the Transfer Agent and with every subsequent transfer agent of the
Company's securities issuable upon the exercise of the Underwriter Warrants. The
Company will supply the Transfer Agent or any subsequent transfer agent with
duly executed certificates for such purpose and will itself provide or otherwise
make available any cash which may be distributable as provided in Section 9 of
this Agreement. All Underwriter Warrants surrendered in the exercise of the
rights thereby evidenced shall be canceled, and such canceled Underwriter
Warrants shall constitute sufficient evidence of the number of Shares that have
been issued upon the exercise of such Underwriter Warrants. No Common Shares
shall be subject to reservation in respect of unexercised Underwriter Warrants
subsequent to the Warrant Expiration Date.
8. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price
and the number and kind of securities issuable upon exercise of each Underwriter
Warrant shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
(a) In case the Company shall (i) declare a dividend on its Common
Shares in Common Shares or make a distribution of Common Shares, (ii)
subdivide its outstanding Common Shares, (iii) combine its outstanding
Common Shares into a smaller number of Common Shares or (iv) issue by
reclassification of the Common Shares other securities of the Company
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), the number of
Shares purchasable upon exercise of each Underwriter Warrant immediately
prior thereto shall be adjusted so that the Holder of each Underwriter
Warrant shall be entitled to receive the
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kind and number of Shares or other securities of the Company which he would
have owned or have been entitled to receive after the happening of any of
the events described above, had such Underwriter Warrant been exercised
immediately prior to the happening of such event or any record date with
respect thereto. An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the effective date of such event
retroactive to immediately after the record date, if any, for such event.
(b) In case the Company shall issue rights, options or warrants to all
holders of its Common Shares, without any charge to such holders, entitling
them (for a period expiring within 45 days after the record date mentioned
below in this paragraph (b)) to subscribe for or to purchase Common Shares
at a price per share that is lower at the record date mentioned below than
the then current market price per Common Share (as defined in paragraph (d)
below), the number of Shares thereafter purchasable upon exercise of each
Underwriter Warrant shall be determined by multiplying the number of Shares
theretofore purchasable upon exercise of each Underwriter Warrant by a
fraction, of which the numerator shall be the number of Common Shares
outstanding on such record date plus the number of additional Common Shares
offered for subscription or purchase, and of which the denominator shall be
the number of Common Shares outstanding on such record date plus the number
of shares which the aggregate offering price of the total number of Common
Shares so offered would purchase at the then current market price per
Common Share. Such adjustment shall be made whenever such rights, options
or warrants are issued, and shall become effective retroactively to
immediately after the record date for the determination of shareholders
entitled to receive such rights, options or warrants.
(c) In case the Company shall distribute to all holders of its Common
Shares stock other than Common Shares or evidences of its indebtedness or
assets (excluding cash dividends payable out of consolidated earnings or
retained earnings and dividends or distributions referred to in paragraph
(a) above) or rights, options or warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase Common Shares
(excluding those referred to in paragraph (b) above), then in each case the
number of Shares thereafter issuable upon the exercise of each Underwriter
Warrant shall be determined by multiplying the number of Shares theretofore
issuable upon the exercise of each Underwriter Warrant, by a fraction, of
which the numerator shall be the current market price per Common Share (as
defined in paragraph (d) below) on the record date mentioned below in this
paragraph (c), and of which the denominator shall be the current market
price per Common Share on such record date, less the then fair value (as
determined by the Board of Directors of the Company, whose determination
shall be conclusive) of the portion of the shares of capital stock other
than Common Shares or assets or evidences of indebtedness so distributed or
of such subscription rights, options or warrants, or of such convertible or
exchangeable securities applicable to one Common Share. Such adjustment
shall be made whenever any such distribution is made, and shall become
effective on the date of distribution retroactive to immediately after the
record date for the determination of shareholders entitled to receive such
distribution.
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(d) For the purpose of any computation under paragraphs (b) and (c) of
this Section 8, the current market price per Common Share at any date shall
be the average of the daily closing prices for fifteen (15) consecutive
trading days commencing twenty (20) trading days before the date of such
computation. The closing price for each day shall be the last reported sale
price regular way or, in case no such reported sale takes place on such
day, the average of the closing bid and asked prices regular way for such
day, in either case on the principal national securities exchange on which
the shares are listed or admitted to trading, or if they are not listed or
admitted to trading on any national securities exchange, but are traded in
the over-the-counter market, the closing sale price of the Common Shares
or, in case no sale is publicly reported, the average of the representative
closing bid and asked quotations for the Common Shares on the Nasdaq
SmallCap Market or any comparable system, or if the Common Shares are not
listed on the Nasdaq SmallCap Market or a comparable system, the closing
sale price of the Common Shares or, in case no sale is publicly reported,
the average of the closing bid and asked prices as furnished by two members
of the NASD selected from time to time by the Company for that purpose.
(e) No adjustment in the number of Shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in the number of Shares purchasable upon the
exercise of each Underwriter Warrant; provided, however, that any
adjustments which by reason of this paragraph (e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment, but not later than three years after the happening of the
specified event or events. All calculations shall be made to the nearest
one thousandth of a share. Anything in this Section 8 to the contrary
notwithstanding, the Company shall be entitled, but shall not be required,
to make such changes in the number of Shares purchasable upon the exercise
of each Underwriter Warrant, in addition to those required by this Section
8, as it in its discretion shall determine to be advisable in order that
any dividend or distribution in shares of Common Shares, subdivision,
reclassification or combination of Common Shares, issuance of rights,
warrants or options to purchase Common Shares, or distribution of shares of
capital stock other than Common Shares, evidences of indebtedness or assets
(other than distributions of cash out of consolidated earnings or retained
earnings) or convertible or exchangeable securities hereafter made by the
Company to the holders of its Common Shares, shall not result in any tax to
the holders of its Common Shares or securities convertible into Common
Shares.
(f) Whenever the number of Shares purchasable upon the exercise of
each Underwriter Warrant is adjusted, as herein provided, the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such adjustment by a fraction, of which the numerator
shall be the number of Shares purchasable upon the exercise of each
Underwriter Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Shares so purchasable immediately
thereafter.
(g) For the purpose of this Section 8, the term "Common Shares" shall
mean (i) the class of stock designated as the Common Shares of the Company
at the date of this
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Agreement or (ii) any other class of stock resulting from successive
changes or reclassifications of such shares consisting solely of changes in
par value, or from no par value to par value, or from par value to no par
value. In the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) above, the Holders shall become entitled to
purchase any shares of capital stock of the Company other than Common
Shares, thereafter the number of such other shares so purchasable upon
exercise of each Underwriter Warrant and the Exercise Price of such shares
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
Shares contained in paragraphs (a) through (f), inclusive, and paragraphs
(h) through (m), inclusive, of this Section 8, and the provisions of
Sections 4, 5, 7 and 10, with respect to the Shares, shall apply on like
terms to any such other shares.
(h) Upon the expiration of any rights, options, warrants or conversion
rights or exchange privileges, if any thereof shall not have been
exercised, the Exercise Price and the number of Common Shares purchasable
upon the exercise of each Underwriter War-rant shall, upon such expiration,
be readjusted and shall thereafter be such as it would have been had it
originally been adjusted (or had the original adjustment not been required,
as the case may be) as if (i) the only Common Shares so issued were the
Common Shares, if any, actually issued or sold upon the exercise of such
rights, options, warrants or conversion rights or exchange privileges and
(ii) such Common Shares, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the issuance,
sale or grant of all of such rights, options, warrants or conversion rights
or exchange privileges whether or not exercised; provided, however, that no
such readjustment shall have the effect of increasing the Exercise Price by
an amount in excess of the amount of the adjustment initially made in
respect to the issuance, sale or grant of such rights, options, warrants or
conversion rights or exchange privileges.
(i) The Company may, at its option, at any time during the term of the
Underwriter Warrants, reduce the then current Exercise Price to any amount
deemed appropriate by the Board of Directors of the Company.
(j) Whenever the number of Shares issuable upon the exercise of each
Underwriter Warrant or the Exercise Price of such Shares is adjusted, as
herein provided, the Company shall promptly mail by first class mail
postage prepaid to each Holder notice of such adjustment or adjustments.
The Company shall retain a firm of independent public accountants (who may
be the regular accountants employed by the Company) to make any computation
required by this Section 8 and shall cause such accountants to prepare a
certificate setting forth the number of Shares issuable upon the exercise
of each Underwriter Warrant and the Exercise 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 such adjustment
was made. Such certificate shall be conclusive on the correctness of such
adjustment and each Holder shall have the right to inspect such certificate
during reasonable business hours.
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(k) Except as provided in this Section 8, no adjustment in respect of
any dividends shall be made during the term of the Underwriter Warrants or
upon the exercise of the Underwriter Warrants.
(l) In case of any consolidation of the Company with or merger of, the
Company with or into another corporation or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation (or an affiliate of such successor or purchasing
corporation), as the case may be, agrees that each Holder shall have the
right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of each Underwriter Warrant
the kind and amount of shares and other securities and property (including
cash) which he would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale or conveyance had such
Underwriter Warrant been exercised immediately prior to such action. The
provisions of this paragraph (1) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(m) Notwithstanding any adjustment in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Underwriter Warrants
pursuant to this Agreement, certificates for Underwriter Warrants issued
prior or subsequent to such adjustment may continue to express the same
price and number and kind of Shares as are initially issuable pursuant to
this Agreement.
9. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractions of Shares on the exercise of Underwriter Warrants. If more than one
Underwriter Warrant shall be presented for exercise in full at the same time by
the same Holder, the number of Shares which shall be issuable upon the exercise
thereof shall be computed on the basis of the number of Shares issuable on
exercise of the Underwriter Warrants so presented. If any fraction of a Share
would, except for the provisions of this Section 9, be issuable on the exercise
of any Underwriter Warrant (or specified portions thereof), the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
current market price per Common Share (determined as provided in the second
sentence of Section 8(d) of this Agreement) on the date of exercise.
10. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. The Company covenants and agrees with
the Underwriter and any other or subsequent Holders of the Registrable
Securities (as defined in paragraph (e) of this Section 10) that, upon written
request of the then Holder(s) of at least a majority of the aggregate of the
Registrable Securities which were originally issued on the date hereof to the
Underwriter or its designees, made at any time within the period commencing one
year and ending five years after the Effective Date, the Company will file as
promptly as practicable and, in any event, within 45 days after receipt of such
written request, at its sole expense, no more than once, a post-effective
amendment (the "Amendment") to the Registration Statement, or a new Registration
Statement or a Regulation A Offering Statement (an "Offering Statement") under
the Act, registering or qualifying the Registrable Securities for sale. Within
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fifteen (15) days after receiving any such notice, the Company shall give notice
to the other Holders of the Registrable Securities advising that the Company is
proceeding with such Amendment, Registration Statement or Offering Statement and
offering to include therein the Registrable Securities of such Holders. The
Company shall not be obligated to any such other Holder unless such other Holder
shall accept such offer by notice in writing to the Company within ten (10) days
thereafter. No other securities of the Company shall be entitled to be included
in such Amendment, Registration Statement or Offering Statement. The Company
will use its best efforts, through its officers, directors, auditors and counsel
in all matters necessary or advisable, to file and cause to become effective
such Amendment, Registration Statement or Offering Statement as promptly as
practicable and for a period of two years thereafter to reflect in the
Amendment, Registration Statement or Offering Statement financial statements
which are prepared in accordance with Section 10(a)(3) of the Act and any facts
or events arising that, individually, or in the aggregate, represent a
fundamental and/or material change in the Amendment, Registration Statement or
Offering Statement to enable information set forth in Amendment, Registration
Statement or Offering Statement to enable any Holders of the Underwriter
Warrants to either sell such Underwriter Warrants or to exercise such
Underwriter Warrants and sell Shares, or to enable any holders of Shares to sell
such Shares, during said two-year period. The Holders may sell the Registrable
Securities pursuant to the Amendment, Registration Statement or the Offering
Statement without exercising the Underwriter Warrants. If any registration
pursuant to this paragraph (a) is an underwritten offering, the Holders of a
majority of the Registrable Securities to be included in such registration shall
be entitled to select the underwriter or managing underwriter (in the case of a
syndicated offering) of such offering.
(b) PIGGYBACK REGISTRATION RIGHTS. The Company covenants and agrees
with the Underwriter and any other Holders or subsequent Holders of the
Registrable Securities that if, at any time within the period commencing one
year and ending five years after the Effective Date, it proposes to file a
Registration Statement or Offering Statement with respect to any class of
security (other than in connection with an offering to the Company's employees)
under the Act in a primary registration on behalf of the Company and/or in a
secondary registration on behalf of holders of such securities and the
registration form or Offering Statement to be used may be used for registration
of the Registrable Securities, the Company will give prompt written notice
(which. in the case of a Registration Statement or notification pursuant to the
exercise of demand registration rights other than those provided in Section
10(a) of this Agreement, shall be within ten (10) business days after the
Company's receipt of notice of such exercise, in any event, shall be at least 45
days prior to such filing) to, the Holders of Registrable Securities (regardless
of whether some of the Holders shall have theretofore availed themselves of the
right provided in Section 10(a) of this Agreement) at the addresses appearing on
the records of the Company of its intention to file a Registration Statement or
Offering Statement and will offer to include in such registration statement or
Offering Statement to the maximum extent possible, and limited, in the case of a
Regulation A offering, to the amount of the available exemption, subject to
sub-paragraphs (i) and (ii) of this paragraph (b), such number of Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within ten (10) days after the giving of notice by the
Company. All registrations requested pursuant to this Section 10(b) are referred
to herein as "Piggyback Registrations," All Piggyback Registrations pursuant to
this Section 10(b) will be made solely at the Company's expense. This paragraph
is not applicable to
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a Registration Statement filed by the Company with the Commission on Forms S-4
or S-8 or any successor forms.
(i) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration
includes an underwritten primary registration on behalf of the Company and
the underwriter(s) for the offering being registered by the Company shall
determine in good faith and advise the Company in writing that in its/their
opinion the number of Registrable Securities requested to be included in
such registration exceeds the number that can be sold in such offering
without materially adversely affecting the distribution of such securities
by the Company, the Company will include in such registration (A) first,
the securities that the Company proposes to sell and (B) second, the
Registrable Securities requested to be included in such registration,
apportioned pro rata among the Holders of Registrable Securities and (C)
third, securities of the holders of other securities requesting
registration.
(ii) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
consists only of an underwritten secondary registration on behalf of
holders of securities of the Company (other than pursuant to Section
10(a)), and the underwriter(s) for the offering being registered by the
Company advise the Company in writing that in its/their opinion the number
of Registrable Securities requested to be included in such registration
exceeds the number which can be sold in such offering without materially
adversely affecting the distribution of such securities by the Company, the
Company will include in such registration (A) first, the securities
requested to be included therein by the holders requesting such
registration and the Registrable Securities requested to be included in
such registration above, pro rata, among all such holders on the basis of
the number of shares requested to be included by each such holder and (B)
second, other securities requested to be included in such registration.
Notwithstanding the foregoing if any such underwriter shall determine in
good faith and advise the Company in writing that the distribution of the of the
Registrable Securities requested to be included in the registration concurrently
with the securities being registered by the Company would materially adversely
affect the distribution of such securities by the Company, then the Holders of
such Registrable Securities shall delay their offering and We for such period
ending on the earliest of (1) 90 days following the effective date of the
Company's registration statement, (2) the day upon which the underwriting
syndicate, if any, for such offering shall have been disbanded or, (3) such date
as the Company, managing underwriter and Holders of Registrable Securities shall
otherwise agree. In the event of such delay, the Company shall file such
supplements, post-effective amendments and take any such other steps as may be
necessary to permit such Holders to Take their proposed offering and sale for a
period of 120 days immediately following the end of such period of delay. If any
party disapproves of the terms of any, such underwriting, it may elect to
withdraw therefrom by written notice to the Company, the underwriter, and
Underwriter. Notwithstanding the foregoing, the Company shall not be required to
file a registration statement to include Shares pursuant to this Section 10(b)
if an opinion of independent counsel, reasonably satisfactory to counsel for the
Company and counsel
11
for Underwriter, that the Shares proposed to be disposed of may be transferred
pursuant to the provisions of Rule 144 under the Act, shall have been delivered
to counsel for the Company.
(c) OTHER REGISTRATION RIGHTS. In addition to the rights above
provided, the Company will cooperate with the then Holders of the
Registrable Securities in preparing and signing any Registration Statement
or Offering Statement, in addition to the Registration Statements and
Offering Statements discussed above, required in order to sell or transfer
the Registrable Securities and will supply all information required
therefor, but such additional Registration Statement or Offering Statement
shall be at the then Holders' cost, and expense; provided, however, that if
the Company elects to register or qualify additional Common Shares, the
cost and expense of such Registration Statement or Offering Statement will
be pro rated between the Company and the Holders of the Registrable
Securities according to the aggregate sales price of the securities being
issued, Notwithstanding the foregoing, the Company will not be required to
file a Registration Statement or Offering, Statement at a time when the
audited financial statements required to be included therein are not
available, which time shall be limited to the period commencing 45 days
after the end of a fiscal year and ending 90 days after the end of such
fiscal year.
(d) ACTION TO BE TAKEN BY THE COMPANY. In connection with the
registration of Registrable Securities in accordance with paragraphs (a),
(b) or (c) of this Section 10, the Company agrees to:
(i) Bear the expenses of any registration or qualification under
paragraphs (a) or (b) of this Section 10, including, but not limited
to, legal accounting, and printing fees; provided, however, that in no
event shall the Company be obligated to pay (A) any fees and
disbursements of special counsel for Holders of Registrable
Securities, or (B) any underwriters' discount or commission in respect
of such Registrable Securities, or (C) upon the exercise of and demand
registration right provided for in paragraph (a) of this Section 10,
the cost of and liability or similar insurance required by an
underwriter, to the extent that such costs are attributable solely to
the offering of such Registrable Securities, payment of which shall,
in each case, be the sole responsibility of the Holders of the
Registrable Securities;
(ii) Use its best efforts to register or qualify the Registrable
Securities for offer or sale under state securities or Blue Sky laws
of such jurisdictions as Underwriter shall reasonably request arid to
do any and all other acts and things which may be necessary or
advisable to enable the holders to consummate the proposed sale,
transfer or other disposition of such securities in any jurisdiction;
and
(iii) Enter into a cross-indemnity agreement, in customary form,
with each underwriter, if any, and each holder of securities included
in such Amendment, Registration Statement or Offering Statement,
12
(e) For purposes of this Section 10, (i) the term "Holder" shall
include holders of Shares, and (ii) the term "Registrable Securities" shall mean
the Underwriter Warrants and the Shares, issued upon exercise of the Underwriter
Warrants.
11. NOTICES TO HOLDERS.
(a) Nothing contained in this Agreement or in any of the Underwriter
Warrants shall be construed as conferring upon the Holders thereof the right to
vote or to receive dividends or to consent or to receive notice as shareholders
in respect of the meetings of shareholders or the election of directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company; provided, however, that in the event that a meeting of shareholders
shall be called to consider and take act ion on a proposal for the voluntary
dissolution of the Company, other than in connection with a consolidation,
▇▇▇▇▇▇ or sale of all, or substantially all, or its property, assets, business
and good will as an entirety. then and in that event the Company shall cause a
notice thereof to be sent by first-class mail, postage prepaid, at least twenty
(20) days prior to the date filed as a record date or the date of closing, the
transfer books in relation to such meeting, to each registered Holder of
Underwriter Warrants at such Holder's address appearing in the Underwriter
Warrant Register; but failure to mail or to receive such notice or any defect
therein or in the mailing thereof shall not affect the validity of any action
taken in connection with such voluntary dissolution. If such notice shall have
been so given and if such a voluntary dissolution shall be authorized at such
meeting or any adjournment thereof, then from and after the date on which such
voluntary dissolution shall have been duly authorized by the shareholders, the
purchase rights represented by the Underwriter Warrants and all other rights
with respect thereto shall cease and terminate.
(b) In the event the Company intends to make any distribution on its
Common Shares (or other securities which may be issuable in lieu thereof upon
the exercise of Underwriter Warrants), including, without limitation, any such
distribution to be made in connection with a consolidation or merger in which
the Company is the continuing corporation, or to issue subscription rights or
warrants to holders of its Common Shares, the Company shall cause a notice of
its intention to make such distribution to be sent by first-class mail, postage
prepaid, at least twenty (20) days prior to the date fixed as a record date or
the date of closing the transfer books in relation to such distribution, to each
registered Holder of Underwriter Warrants at such Holder's address appearing, on
the Underwriter Warrant Register, but failure to mail or to receive such notice
or any defect therein or in the mailing thereof shall not affect the validity of
any action taken in correction with such distribution.
12. NOTICES. Any notice pursuant to this Agreement to be given or made by
the Holder of any Underwriter Warrant and/or the holder of any Share to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed as follows or to such other address as the Company
may designate by notice given in accordance with this Section 12, to the Holders
of Underwriter Warrants and/or the holders of Shares:
13
▇▇▇▇▇▇▇▇▇.▇▇▇, inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇ ▇. ▇▇▇▇▇, President
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Notices or demands authorized by this Agreement to be given or made by the
Company to or on the Holder of any Underwriter Warrant and/or the holder of any
Share shall be sufficiently given or made (except as otherwise provided in this
Agreement) if sent by first-class mail, postage prepaid, addressed to such
Holder or such holder of Shares at the address of such Holder or such holder of
Shares as shown on the Underwriter Warrant Register or the books of the Company,
as the case may be.
13. GOVERNING LAW. THIS AGREEMENT AND EACH UNDERWRITER WARRANT ISSUED
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF
LAWS. The Company hereby agrees to accept service of process by notice given to
it pursuant to the provisions of Section 12.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same agreement.
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
(Corporate Seal)
Attest: ▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:
---------------------------------- ------------------------------------
Secretary ▇▇ ▇. ▇▇▇▇▇
President
Attest: CRUTTENDEN ▇▇▇▇ INCORPORATED
By:
---------------------------------- ------------------------------------
Name:
Title:
Attest: ISG SOLID CAPITAL MARKETS, LLC
By:
---------------------------------- ------------------------------------
Name:
Title:
15
EXHIBIT A
No.___________ __________ Warrants
VOID AFTER 5:00 P.M. NEW YORK CITY TIME
ON ________________, 2004
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
Warrant Certificate
THIS CERTIFIES THAT for value received __________________ or registered
assigns, is the owner of the number of warrants set forth above, each of which
entities the owner thereof to purchase at any time from ____________, 2000,
until 5:00 p.m., New York City time on _____________, 2004 (the "Warrant
Expiration Date"), one fully paid and nonassessable Common Share, without par
value (the "Common Shares"), of ▇▇▇▇▇▇▇▇▇.▇▇▇, inc., a Delaware corporation (the
"Company"), at the purchase price of $_____ per share (the "Exercise Price")
upon presentation and surrender of this Warrant Certificate with the Form of
Election to Purchase duly executed, The number of Warrants evidenced by this
Warrant Certificate (and the number of shares which may be purchased upon
exercise thereto set forth above, and the Exercise Price per share set forth
above, are the number and Exercise Price as of the date of original issuance of
the Warrants, based on the Common Shares of the Company as constituted at such
date. As provided in the Warrant Agreement referred to below, the Exercise Price
and the number or kind of shares which may be purchased upon the exercise of the
Warrants evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of an agreement, dated as of
_____________, 1999 (the "Warrant Agreement"), between the Company and
Cruttenden ▇▇▇▇ Incorporated and ISG Solid Capital Markets, LLC, which Warrant
Agreement is hereby incorporated herein by reference and made a part hereof and
to which Warrant Agreement reference is hereby made for a full description of
the rights, limitations of rights, duties and immunities hereunder of the
Company and the holders of the Warrant Certificates. Copies of the Warrant
Agreement are on file at the principal office of the Company.
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender at the principal office of the Company, may be exchanged for another
Warrant Certificate or Warrant Certificates of like tenor and date evidencing
Warrants entitling the holder to purchase a like aggregate number of Common
Shares as the Warrants evidenced by the Warrant Certificate or Warrant
Certificates surrendered entitled such holder to purchase. If this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to
receive upon surrender hereof
16
another Warrant Certificate or Warrant Certificates for the number of whole
Warrants not exercised.
No fractional Common Shares will be issued upon the exercise of any Warrant
or Warrants evidenced hereby, but in lieu thereof a cash payment will be made,
as provided in the Warrant Agreement.
No holder of this Warrant Certificate shall be entitled to vote or receive
dividends or be deemed the holder of Common Shares, any other securities of the
Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained in the Warrant Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance, or otherwise) or,
except as provided in the Warrant Agreement, to receive notice of meetings, or
to receive dividends or subscription rights or otherwise, until the Warrant or
Warrants evidenced by this Warrant Certificate shall have been exercised and the
shares shall have become deliverable as provided in the Warrant Agreement.
If this Warrant shall be surrendered for exercise within any period during
which the transfer books for the Company's Common Shares or other class of stock
purchasable upon the exercise of this Warrant are closed for any purpose, the
Company shall not be required to make delivery of certificates for shares
purchasable upon such exercise until the date of the reopening of said transfer
books.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇▇.▇▇▇, inc. has caused the signature (or
facsimile signature) of its President and its Secretary to be printed hereon and
its corporate seal (or facsimile) to be printed hereon.
Dated: _________________, 1999
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:
------------------------------------
▇▇ ▇. ▇▇▇▇▇
President
(Corporate Seal)
Attest:
----------------------------------
Secretary
17
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate.)
TO:
-------------------------------
The undersigned hereby irrevocably elects to exercise Warrants represented
by this Warrant Certificate to purchase the Common Shares issuable upon the
exercise of such Warrants and requests that certificates for such shares be
issued in the name of: (Please insert social security or other identifying
number)
---------------------------------------
---------------------------------------
---------------------------------------
(Please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security number or other identifying number
---------------------------------------
---------------------------------------
---------------------------------------
(Please print name and address)
Dated:
----------------------------
-------------------------------------
Signature
(signature must conform in all
respects to name of holder as
specified on the face of this Warrant
Certificate)
Signature Guaranteed:
----------------------------------
18
FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificates.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and
transfers unto ______________________________________ this Warrant Certificate,
together with all right, title and interest herein, and does hereby irrevocably
constitute and appoint ________________, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated:
-----------------------
Signature:
-----------------------------
Signature Guaranteed:
-----------------------------
NOTICE
The signature of the foregoing Assignment must correspond to the name as
written upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
19