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SCOOP, INC.
and
SHAMUS GROUP, INC.
____________________
REPRESENTATIVE WARRANT AGREEMENT
Dated as of , 1997
____________________
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REPRESENTATIVE WARRANT AGREEMENT
THIS REPRESENTATIVE WARRANT AGREEMENT (the "Agreement"), dated as of
_______________ ___, 1997, is made and entered into by and between SCOOP, INC.,
a Delaware corporation (the "Company"), and SHAMUS GROUP, INC. (the
"Representative").
The Company agrees to issue and sell to the Representative and the
Representative agrees to purchase from the Company, for the price of $50, a
warrant, as hereinafter described (the "Warrant" and together with any warrants
subsequently issued hereunder, the "Warrants"), to purchase up to 130,000
shares, as may be adjusted from time to time as set forth herein, of the
Company's common stock, par value $0.001 per share (the "Common Stock"), in
connection with a public offering (the "Offering") by the Company of 1,300,000
shares of Common Stock pursuant to an underwriting agreement (the "Underwriting
Agreement"), dated as of _____________ __, 1997, by and between the Company and
the Representative, as representative of the several Underwriters named therein.
The shares of Common Stock purchasable upon exercise of the Warrants, as may be
adjusted from time to time as set forth herein, are hereinafter referred to as
the "Warrant Stock." The Warrant shall be issued pursuant to this Agreement on
the closing date of the Offering (the "Closing Date").
In consideration of the foregoing and for the purpose of defining the terms
and provisions of the Warrants, the Warrant Stock and the respective rights and
obligations thereunder, the Company and the Representative, for value received,
hereby agree as follows:
SECTION 1. TRANSFERABILITY AND FORM OF WARRANTS.
1.1 REGISTRATION. All Warrants shall be numbered and shall be
registered on the books of the Company when issued.
1.2 TRANSFER. The Warrants shall be transferable only on the books
of the Company maintained at its principal office, wherever its principal office
may then be located, upon delivery thereof duly endorsed by a Warrant holder (a
"Warrantholder") or by its duly authorized attorney or representative and with
the signatures properly guaranteed, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new certificate evidencing
each such Warrant to each person entitled thereto.
1.3 LIMITATIONS ON TRANSFER OF THE WARRANTS. Warrants shall not be
sold, transferred, assigned or hypothecated by the Representative until 6:30
a.m., Pacific time, on ____________ __, 1998 [ONE YEAR FOLLOWING THE EFFECTIVE
DATE]. The Warrants may be divided or combined, upon request to the Company by
a Warrantholder, into a certificate or certificates representing the right to
purchase the same aggregate number of Warrant Stock. Unless the context
indicates otherwise, the term "Warrantholder" shall include the Representative
and any transferee or transferees of the Warrants pursuant to this subsection
1.3 and as otherwise permitted by this Agreement, and the term "Warrants" shall
include any and all Warrants outstanding pursuant to this Agreement, including
those evidenced by a certificate or certificates issued upon division, exchange,
substitution or transfer pursuant to this Agreement.
1.4 FORM OF WARRANTS. The text of the Warrants and of the form of
election to purchase Warrant Stock shall be substantially as set forth in
Exhibit A attached hereto. The aggregate number of shares of Common Stock
issuable upon exercise of the Warrants is subject to adjustment upon the
occurrence of certain events, all as hereinafter provided. The Warrants
shall be executed on behalf of the Company by its Chief Executive Officer or
its President and attested to by its Chief Financial Officer
1
or its Secretary. A Warrant bearing the signature of an individual who was
at any time the proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office
prior to the delivery of such Warrant or did not hold such office on the date
of this Agreement or at any time thereafter.
The Warrants shall be dated as of the date of signature thereof
by the Company either upon initial issuance or upon division, exchange,
substitution or transfer.
1.5 LEGEND ON WARRANTS AND WARRANT STOCK. Each certificate
evidencing a Warrant (or Warrant Stock issued upon exercise of a Warrant)
initially issued upon exercise of a Warrant shall bear the following legend,
unless, at the time of exercise, such Warrant Stock is subject to a currently
effective Registration Statement under the Securities Act of 1933, as amended
(the "Act"):
"'THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, EXCHANGED, HYPOTHECATED OR
TRANSFERRED IN ANY MANNER EXCEPT IN COMPLIANCE WITH SECTION
11 OF THE REPRESENTATIVE WARRANT AGREEMENT PURSUANT TO WHICH
THEY WERE ISSUED."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to an effective registration statement under
the Act, of the securities represented thereby) shall also bear the above legend
unless, in the opinion of the Company's counsel, the securities represented
thereby need no longer be subject to such restrictions.
SECTION 2. EXCHANGE OF WARRANT CERTIFICATE. Any Warrant certificate
may be exchanged for another certificate or certificates entitling the
Warrantholder to purchase a like aggregate number of shares of Warrant Stock as
the certificate or certificates surrendered then entitled such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant certificate shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, the certificate evidencing the Warrant to be so exchanged.
Thereupon, the Company shall execute and deliver to the person entitled thereto
a new Warrant certificate or certificates as so requested.
SECTION 3. TERM OF WARRANTS; EXERCISE OF WARRANTS.
(a) Subject to the terms of this Agreement, the Warrantholder
shall have the right, at any time during the period commencing at 6:30 a.m.,
Pacific Time, on _________ ___, 1998 [ONE YEAR FOLLOWING EFFECTIVE DATE] and
ending at 5:00 p.m., Pacific Time, on _____________, 2002 [FIVE YEARS FOLLOWING
EFFECTIVE DATE] (the "Termination Date"), to purchase from the Company up to the
number of fully paid and nonassessable shares of Warrant Stock to which the
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrants to be exercised, together with the purchase
form on the reverse thereof duly completed and executed, and upon payment to the
Company of the Warrant Price (as defined in and determined in accordance with
the provisions of this Section 3 and Sections 7 and 8 hereof) for the number of
shares of Warrant Stock in respect of which such Warrants are then exercised,
but in no event for less than 100 shares of Warrant Stock (unless less than an
aggregate of 100 shares of Warrant Stock are then purchasable under all
outstanding Warrants held by such Warrantholder). This Warrant, when
exercisable, may be exercised from time to time in whole or in part.
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(b) Payment of the Warrant Price shall be made in cash, by
certified or official bank check in Los Angeles Clearing House funds (next day
funds), or any combination thereof.
(c) In addition to the method of payment set forth in Section
3(b) above and in lieu of any cash payment required thereunder, unless otherwise
prohibited by law, the Warrantholders shall have the right at any time, when
exercisable, and from time to time to exercise the Warrants in full or in part
(i) by receiving from the Company the number of shares of Warrant Stock equal to
the number of shares of Warrant Stock otherwise issuable upon such exercise less
the number of shares of Warrant Stock having an aggregate value on the date of
exercise equal to the Warrant Price multiplied by the number of shares of
Warrant Stock for which this Warrant is being exercised and/or (ii) by
delivering to the Company the number of shares of Common Stock having an
aggregate value on the date of exercise equal to the Warrant Price multiplied by
the number of shares of Warrant Stock for which this Warrant is being exercised.
For purposes hereof, the "value" of a share of Common Stock on a given date
shall equal to the Current Market Price on such date as defined in Section 9 of
this Agreement.
(d) Upon surrender of the Warrants and payment of the Warrant
Price as aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Warrantholder, and in
such name or names as the Warrantholder may designate, a certificate or
certificates for the number of full shares of Warrant Stock so purchased upon
such exercise of the Warrant, together with cash, as provided in Section 9
hereof, in respect of any fractional shares otherwise issuable upon such
surrender. Such certificate or certificates, to the extent permitted by law,
shall be deemed to have been issued and any person so designated to be named
therein shall be defined to have become a holder of record of such securities as
of the date of surrender of the Warrants and payment of the Warrant Price, as
aforesaid, notwithstanding that the certificate or certificates representing
such securities shall not actually have been delivered or that the stock
transfer books of the Company shall then be closed. The Warrants shall be
exercisable, at the election of the Warrantholder, either in full or from time
to time in part and, in the event that a Warrant is exercised in respect of less
than all of the shares of Warrant Stock specified therein at any time prior to
the Termination Date, a new Warrant evidencing the remaining shares of the
Warrant Stock purchasable by such Warrantholders hereunder shall be issued by
the Company to such Warrantholders.
SECTION 4. VALIDITY; PAYMENT OF TAXES. All securities delivered upon
exercise of a Warrant shall be duly and validly issued and non-assessable. The
Company shall pay all documentary stamp taxes, if any, attributable to the
initial issuance of the Warrants and the shares of Warrant Stock issuable upon
the exercise of the Warrants; provided, however, the Company shall not be
required to pay any tax which may be payable in respect of any secondary
transfer of the Warrants or the Warrant Stock.
SECTION 5. MUTILATED OR MISSING WARRANTS. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate
or certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of such Warrant and receipt by the Company of an
indemnity of lost warrant certificate reasonably satisfactory in form and
substance to the Company at the applicant's cost. Applicants for such
substitute Warrant certificate or certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
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SECTION 6. RESERVATION OF SHARES. The Company represents and warrants
to the Warrantholder that there has been reserved, and the Company shall at all
times keep reserved so long as the Warrants remain outstanding, out of its
authorized Common Stock, such number of shares of Common Stock as shall be
subject to purchase under the Warrants. Every transfer agent for the Common
Stock and other securities of the Company issuable upon the exercise of the
Warrants shall be irrevocably authorized and directed at all times to reserve
such number of authorized shares and other securities as shall be requisite for
such purpose. The Company shall keep a copy of this Agreement on file with
every transfer agent for the Common Stock and other securities of the Company
issuable upon the exercise of the Warrants. The Company shall supply every such
transfer agent with duly executed stock and other certificates, as appropriate,
for such purpose and shall provide or otherwise make available any cash which
may be payable in lieu of the issuance of fractional shares, as provided in
Section 9 hereof.
SECTION 7. WARRANT PRICE. The price per share at which shares of
Warrant Stock shall be purchasable upon the exercise of the Warrants shall be
$______ [120% OF IPO PRICE], subject to adjustment pursuant to Section 8 hereof
(as so adjusted from time to time, the "Warrant Price").
SECTION 8. ADJUSTMENTS OF NUMBER OF SHARES OF WARRANT STOCK AND WARRANT
PRICE. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
8.1 ADJUSTMENTS. The number of shares of Warrant Stock purchasable
upon the exercise of each Warrant and the Warrant Price shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its capital stock or other
securities, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding Common Stock into a smaller
number of shares or (iv) issue, by reclassification of its Common Stock, shares
of its capital stock or 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 of Warrant Stock
purchasable upon exercise of a Warrant immediately prior thereto shall be
adjusted so that the Warrantholder shall be entitled to receive the kind and
number of shares of Warrant Stock, shares of its capital stock and other
securities of the Company which such holder would have owned or would have been
entitled to receive immediately after the happening of any of the events
described above, had the Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any adjustment
made pursuant to this subsection 8.1(a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.
(b) In case the Company shall issue rights, options (other than
options or awards issued under, and pursuant to, the Company's 1996 Stock
Incentive Plan (the "Option Plan")), warrants or convertible securities to all
holders of its Common Stock, without any charge to such holders, containing the
right to subscribe for or purchase Common Stock, the number of shares of Warrant
Stock thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of shares of Warrant Stock theretofore
purchasable upon exercise of a Warrant by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of such rights, options, warrants or convertible securities plus
the number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such rights, options,
warrants or convertible securities. Such adjustment shall be made whenever such
rights, options, warrants or convertible securities are issued, and shall become
effective immediately upon issuance of such rights, options, warrants or
convertible securities.
4
(c) In case the Company shall distribute to all holders of its
Common Stock evidences of its indebtedness or assets (excluding cash dividends
or distributions out of current earnings made in the ordinary course of business
consistent with past practices), then in each case the number of shares of
Warrant Stock thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of shares of Warrant Stock theretofore
purchasable upon exercise of such Warrant by a fraction, of which the numerator
shall be the then Current Market Price (as defined below) on the date of such
distribution, and of which the denominator shall be such Current Market Price on
such date minus the then fair value (determined as provided in subsection 8(f)
below) of the portion of the assets or evidences of indebtedness so distributed
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective on the date of
distribution.
(d) No adjustment in the number of shares of Warrant Stock
purchasable pursuant to subsections 8.1(b) or (c) hereof shall be required
unless such adjustment would require an increase or decrease of at least one
percent in the aggregate number of shares of Warrant Stock then purchasable upon
the exercise of the Warrants or, if the Warrants are not then exercisable, the
number of shares of Warrant Stock purchasable upon the exercise of the Warrants
on the first date thereafter that the Warrants would become exercisable;
provided, however, that any adjustments which by reason of this subsection
8.1(d) are not required to be made immediately shall be carried forward and
taken into account in any subsequent adjustment.
(e) Whenever the number of shares of Warrant Stock purchasable
upon the exercise of a Warrant is adjusted as herein provided, the Warrant Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of shares of Warrant Stock purchasable upon the
exercise of such Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of shares of Warrant Stock purchasable
immediately thereafter.
(f) To the extent not covered by subsections 8.1(b) or (c)
hereof, in case the Company shall sell or issue Common Stock or rights, options
(other than options or awards issued under and pursuant to the Option Plan),
warrants or convertible securities containing the right to subscribe for,
purchase or exchange into shares of Common Stock at a price per share
(determined, in the case of such rights, options, warrants or convertible
securities, by dividing (i) the total amount received or receivable by the
Company in consideration of the sale or issuance of such rights, options,
warrants or convertible securities, plus the total consideration payable to the
Company upon exercise, conversion or exchange thereof, by (ii) the total number
of shares covered by such rights, options, warrants or convertible securities)
lower than the then Current Market Price in effect immediately prior to such
sale or issuance, then the Warrant Price shall be reduced to a price (calculated
to the nearest cent) determined by dividing (I) an amount equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior to such
sale or issuance multiplied by the then existing Warrant Price, plus (B) the
consideration received or receivable by the Company upon such sale or issuance,
by (II) the total number of shares of Common Stock outstanding immediately after
such sale or issuance. The number of shares of Warrant Stock purchasable upon
the exercise of a Warrant shall thereafter be that number determined by
multiplying the number of shares of Warrant Stock purchasable upon exercise
immediately prior to such adjustment by a fraction, of which the numerator shall
be the Warrant Price in effect immediately prior to such adjustment and the
denominator shall be the Warrant Price as so adjusted. For the purposes of such
adjustments, the Common Stock which the holders of any such rights, options,
warrants or convertible securities shall be entitled to subscribe for, purchase
or exchange into shall be deemed issued and outstanding as of the date of such
sale or issuance and the consideration received by the Company therefor shall be
deemed to be the consideration received by the Company for such rights, options,
5
warrants or convertible securities, plus the consideration or premiums stated in
such rights, options, warrants or convertible securities to be payable for the
Common Stock covered thereby. In case the Company shall sell or issue Common
Stock or rights, options, warrants or convertible securities containing the
right to subscribe for, purchase or exchange into Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then, in determining the "price per share" of Common Stock and
the "consideration received by the Company" for purposes of the first sentence
of this subsection 8.1(f), the Board of Directors shall determine the fair value
of said property, and such determination, if based upon the Board of Directors,
good faith business judgment, shall be binding upon the Warrantholders. In
determining the "price per share" of Common Stock, any underwriting discounts or
commissions paid to brokers, dealers or other selling agents shall not be
deducted from the price received by the Company for sales of securities
registered under the Act or issued in a private placement. There shall be no
adjustment of the Warrant Price pursuant to this subsection 8.1(f) if the amount
of such adjustment would be less than $.05 per share of Common Stock; provided,
however, that any adjustment which by reason of this provision is not required
to be made immediately shall be carried forward and taken into account in any
subsequent adjustment.
This subsection 8.1(f) does not apply to:
(1) the exercise of the Warrants, or the conversion, exchange or
exercise of other securities convertible, exchangeable or exercisable for
Common Stock,
(2) Common Stock issued to the Company's employees under bona fide
employee benefit plans adopted by the Board of Directors and approved by
the holders of Common Stock when required by law, if such Common Stock
would otherwise be covered by this subsection 8.1(f) (but only to the
extent that the aggregate number of shares excluded hereby and issued after
the date of this Warrant Agreement shall not exceed 5% of the Common Stock
outstanding at the time of the adoption of each such plan, exclusive of
antidilution adjustments thereunder),
(3) Common Stock upon the exercise of rights or warrants issued to
the holders of Common Stock,
(4) Common Stock issued to shareholders of any person which merges
into the Company in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger,
(5) Common Stock issued in a bona fide public offering pursuant to a
firm commitment underwriting or
(6) Common Stock issued in a bona fide private placement through a
placement agent which is a member firm of the National Association of
Securities Dealers, Inc. (except to the extent that any discount from the
current market price attributable to restrictions on transferability of the
Common Stock, as determined in good faith by the Board of Directors and
described in a Board resolution, shall exceed 20%).
(g) For the purpose of this Section 8, the term "Common Stock"
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Agreement or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value. In the event that at any time, as a result of an adjustment made
pursuant to this Section 8, a Warrantholder shall become entitled to purchase
any securities of the Company other than Common
6
Stock, (i) if the Warrantholder's right to purchase is on any other basis
than that available to all holders of the Company's Common Stock, the Company
shall obtain an opinion of a reputable investment banking firm valuing such
other securities and (ii) thereafter the number of such other securities so
purchasable upon exercise of a Warrant and the Warrant Price of such
securities 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 this Section 8.
(h) Upon the expiration of any rights, options, warrants or
conversion privileges, if such shall not have been exercised, the number of
shares of Warrant Stock purchasable upon exercise of a Warrant and the Warrant
Price, to the extent a Warrant has not then been exercised, shall, upon such
expiration, be readjusted and shall thereafter be such number and such price as
they would have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) on the basis of (A) the fact
that the only shares of Common Stock issued in respect of such rights, options,
warrants or conversion privileges were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such rights, options, warrants or
conversion privileges, and (B) the fact that such shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise plus the consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants or
conversion privileges whether or not exercised; provided, however, that no such
readjustment shall have the effect of decreasing the numbers of shares of
Warrant Stock purchasable upon exercise of a Warrant or increasing the Warrant
Price by an amount in excess of the amount of the adjustment made in respect of
the issuance, sale or grant of such rights, options, warrants or conversion
privileges.
(i) Whenever the number of shares of Warrant Stock purchasable
upon the exercise of a Warrant or the Warrant Price is adjusted pursuant to this
Section 8, the Company shall cause to be promptly mailed to each Warrantholder
by first class mail, postage prepaid, notice of such adjustment or adjustments
and a certificate of the chief financial officer of the Company setting forth
the number of shares of Common Stock, capital stock and other securities
purchasable upon the exercise of such Warrantholder's Warrant and the applicable
Warrant Price after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made.
8.2 NO ADJUSTMENT FOR DIVIDENDS, OPTION PLAN OR REINVESTMENT PLAN.
Except as specifically provided in subsection 8.1, no adjustment in respect of
any cash dividends or distributions on the Company's Common Stock out of current
earnings made in the ordinary course of business consistent with past practices
shall be made during the term of the Warrants or upon the exercise of the
Warrants. No adjustment in respect to options or awards issued under, and
pursuant to, the Option Plan shall be made during the term of the Warrants or
upon the exercise of the Warrants. No adjustment shall be made for rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest.
8.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION OR
CONSOLIDATION. In case of any consolidation of the Company with or merger of
the Company into another corporation or other entity or in case of any sale,
lease, conveyance or other transfer to another corporation, person or other
entity of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, person or other entity, as the case may be, shall execute with the
Warrantholder, and the agreements governing such consolidation, merger, sale,
lease, conveyance or other transfer shall require such execution of, an
agreement that the Warrantholder shall have the right thereafter upon payment of
the Warrant Price in effect immediately prior to such event, upon exercise of
the Warrants, to receive the kind and amount of shares and other securities and
property which it would have owned or have been entitled to receive after the
happening of such consolidation,
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merger, sale, lease, conveyance or other transfer had the Warrants (and each
underlying security) been exercised immediately prior to such action. The
Company shall promptly mail to each Warrantholder by first class mail,
postage prepaid, notice of the execution of any such agreement. In the event
of a merger described in Section 368(a)(2)(E) of the Internal Revenue Code of
1986, in which the Company is the surviving corporation, the right to
purchase shares of Warrant Stock under the Warrants shall terminate on the
date of such merger and thereupon the Warrants shall become null and void,
but only if the controlling corporation shall agree to substitute for the
Warrants its warrant which entitles the holder thereof to purchase upon its
exercise the kind and amount of shares and other securities and property
which it would have owned or been entitled to receive had the Warrants been
exercised immediately prior to such merger. Any such agreements referred to
in this subsection 8.3 shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
Section 8 hereof, and shall provide for terms and provisions at least as
favorable to the Warrantholder as those contained in this Agreement. The
provisions of this subsection 8.3 shall similarly apply to successive
consolidations, mergers, sales, leases, conveyances or other transfers.
8.4 PAR VALUE OF SHARES OF COMMON STOCK. Before taking any action
which would cause an adjustment effectively reducing the portion of the Warrant
Price allocable to each share of Warrant Stock below the then par value per
share, if any, of the Warrant Stock issuable upon exercise of the Warrants, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Stock upon exercise of the Warrants.
8.5 INDEPENDENT PUBLIC ACCOUNTANTS. The Company may retain Deloitte
& Touche, LLP (or such other accounting firm qualified to practice in front of
the securities and Exchange Commission (the "Commission") as is reasonably
acceptable to the Representative) to make any computation required under this
Section 8, and a certificate signed by such firm shall be conclusive evidence of
the correctness of any computation made under this Section 8.
8.6 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the number of securities issuable upon exercise of Warrants,
Warrant certificates theretofore or thereafter issued may continue to express
the same number of securities as are stated in the similar Warrant certificates
initially issuable pursuant to this Agreement, provided that such expression
shall in no way affect the number of shares of Warrant Stock actually
purchasable upon the exercise of such Warrants.
SECTION 9. FRACTIONAL SHARES; CURRENT MARKET PRICE. The Company shall
not be required to issue fractional shares of Common Stock on the exercise of a
Warrant. If any fraction of a share of Common Stock would, except for the
provisions of this Section 9, be issuable upon the exercise of a Warrant (or
specified portion thereof), the Company shall in lieu thereof pay an amount in
cash equal to the then Current Market Price multiplied by such fraction. For
purposes of this Agreement, the term "Current Market Price" shall mean (i) if
the Common Stock is traded on the Nasdaq National Market ("NNM") or on a
national securities exchange, the per share closing price of the Common Stock in
the NNM or on the principal stock exchange on which it is listed, as the case
may be, on the date of exercise of the Warrant or, with respect to any
adjustment pursuant to Section 8.1 hereof, on the date immediately preceding the
announcement of the event causing such adjustment or (ii) if the Common Stock is
traded in the over-the-counter market and not in the NNM or on any national
securities exchange, the average of the per share closing bid prices of the
Common Stock on the thirty (30) consecutive trading days immediately preceding
the date in question, as reported by The Nasdaq SmallCap Market (or an
equivalent generally accepted reporting service if quotations are not reported
on The Nasdaq SmallCap Market). The closing price referred to in clause (i)
above shall be the last reported sale price or, in the case no such reported
sale takes place on such day, the average of the reported closing bid and asked
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prices, in either case in the NNM or on the principal stock exchange on which
the Common Stock is then listed. For purposes of clause (ii) above, if trading
in the Common Stock is not reported by The Nasdaq SmallCap Market, the bid price
referred to in said clause shall be the lowest bid price as reported in the
Nasdaq Electronic Bulletin Board or, if not reported thereon, as reported in the
"pink sheets" published by National Quotation Bureau, Incorporated, and, if such
Common Stock is not so reported, shall be the price of a share of Common Stock
determined by the Company's Board of Directors in good faith.
SECTION 10. NO RIGHTS AS STOCKHOLDER; NOTICES TO WARRANTHOLDER. Except
as expressly provided herein, nothing contained in this Agreement or in the
Warrants shall be construed as conferring upon the Warrantholder or its
transferees any rights as a shareholder of the Company, including the right to
vote, receive dividends, consent or receive notices as a shareholder in respect
of any meeting of shareholders for the election of directors of the Company or
any other matter. If, however, at any time prior to the expiration of the
Warrants and prior to their exercise, any one or more of the following events
shall occur:
(a) any action which would require an adjustment pursuant to
Section 8.1 or 8.3 hereof;
(b) an issuance by the Company of rights, options, warrants or
convertible securities to all or substantially all holders of its Common Stock,
without any charge to such holders, containing the right to subscribe for or
purchase Common Stock; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger or sale of its property,
assets and business as an entirety or substantially as an entirety) shall be
proposed;
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 13 hereof, at least 20 days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to any relevant dividend,
distribution or other rights or for the determination of stockholders entitled
to vote on such proposed dissolution, liquidation or winding up. Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be. Failure to mail or receive such notice or any defect therein shall
not affect the validity of any action taken with respect thereto.
SECTION 11. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS; OBLIGATIONS
IN REGISTRATION.
(a) The Warrantholder agrees that prior to making any
disposition of the Warrants or the Warrant Stock, other than to persons or
entities identified in the first sentence of Section 1.3, the Warrantholder
shall give written notice to the Company describing briefly the manner in which
any such proposed disposition is to be made; and no such disposition shall be
made unless the Warrantholder has notified, or currently with such disposition
notifies, the Company that in the opinion of counsel reasonably satisfactory to
the Company a registration statement, application or other notification, filing
or post-effective amendment or supplement thereto (hereinafter collectively a
"Registration Statement") under the Act or the state securities or "blue sky"
laws of any applicable jurisdiction is not required with respect to such
disposition and no such Registration Statement has been filed by the Company
with, and declared effective, if necessary, by, the Commission or state
securities commission or agency. The Warrantholder agrees that it shall use its
reasonable best efforts to obtain from any transferee who acquires any Warrants
in a private transaction with the Warrantholder an agreement by such transferee
that it agrees to be bound by any transfer restrictions set forth in this
subsection 11(a) then applicable to such transferees.
9
(b) The Company shall be obligated to the registered holders of
the Warrants and the Warrant Stock to maintain the currency and effectiveness of
the Registration Statement currently covering the Warrant and the Warrant Stock
(the "Current Registration Statement") or any replacement Registration Statement
continuously through 2003 [SIX YEARS FOLLOWING EFFECTIVE DATE], or upon the
transfer of all shares of the Warrant Stock. The Company shall not be deemed to
have used its reasonable best efforts to keep a Registration Statement effective
during the applicable period if it intentionally or voluntarily takes any action
that could reasonably be expected to result in such Warrantholders not being
able to sell such Warrant Stock, unless such action was (i) required by
applicable law or (ii) pursuant to Section 11(c).
(c) The Company may suspend the use of a prospectus included in
the Registration Statement for a period not to exceed 45 days in any three month
period or two periods not to exceed an aggregate of 75 days in any 12 month
period for valid business reasons including the acquisition or divestiture of
assets, public filings with the Commission, pending corporate developments and
similar events.
(d) All fees, disbursements and out-of-pocket expenses (other
than the Warrantholder's brokerage fees and commissions and legal fees of
counsel to the Warrantholder, if any) in connection with the filing of any
replacement Registration Statement or maintaining the currency and
effectiveness of the Current Registration Statement (or obtaining the opinion
of counsel with respect to sales under Rule 144) and in complying with
applicable federal securities and state securities and blue sky laws shall be
borne by the Company. The Company at its expense shall supply any
Warrantholder and any holder of Warrant Stock with copies of such
Registration Statement and the prospectus included therein and other related
documents and any opinions and no-action letters in such quantities as may be
reasonably requested by such Warrantholder or holder of Warrant Stock.
(e) The Company shall not be required by this Section 11 to
maintain the currency and effectiveness of the Current Registration Statement
if, in the opinion of counsel for the Warrantholders, which counsel shall be
reasonably satisfactory to the Company, or in the opinion of another counsel
experienced in securities law matters acceptable to counsel for such
Warrantholders and the Company, the proposed public offering or other transfer
as to which such Registration Statement is requested is exempt from applicable
federal securities and state securities and blue sky laws and would result in
all proposed sales being made under Rule 144 under the Act.
(f) [Intentionally Omitted].
(g) The Company agrees that until all the Warrants and Warrant
Stock have been sold under a Registration Statement or pursuant to Rule 144
under the Act, it shall keep current in filing all materials required to be
filed with the Commission in order to permit the holders of such securities to
sell the same under Rule 144.
(h) The Company shall:
(i) Prepare and promptly file with the Commission such
amendments and post-effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement continuously effective pursuant to
Section 11(b); cause the related prospectus to be supplemented, by any required
prospectus supplement, and as so supplemented, to be filed pursuant to Rule 424
under the Act; and comply with the provisions of the Act with respect to the
disposition of all Warrant Stock covered by such Registration Statement during
the applicable period in accordance with the intended methods of disposition as
set forth in such Registration Statement or supplement to such prospectus;
provided,
10
however, that before filing a replacement Registration Statement or
prospectus or any amendments or supplements thereto, the Company will furnish
to the Warrantholders, their counsel, and the underwriters, if any, to be
engaged in connection with the offering and sale by the Warrantholders (for
purposes of this subsection 11(h), the "Public Underwriter"), for their
review, copies of all such documents proposed to be filed, and the Company
will not file any such documents to which the Public Underwriter, if any,
shall reasonably objects;
(ii) As soon as the Company is advised or obtains knowledge
thereof, advise the Warrantholders and confirm the same in writing (A) when the
Registration Statement, as amended, becomes effective and when any post-
effective amendment to the Registration Statement becomes effective, (B) of the
issuance by the Commission or any State or other regulatory body of any stop
order or other order, or of the initiation or the threat or contemplation of any
proceeding, the outcome of which may result in the suspension of the
effectiveness of the Registration Statement or the issuance of any order
preventing or suspending the use of any preliminary prospectus or the
prospectus, or any amendment or supplement thereto, or the institution of any
proceedings for that purpose, (C) of the issuance by the Commission or any State
or other regulatory body of any proceedings for the suspension of the
qualification of any of the Warrant Stock for offering or sale in any
jurisdiction or of the initiation or the threat or contemplation of any
proceeding for that purpose, (D) of the receipt of any comments from the
Commission and (E) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the prospectus related
thereto or for additional information; if the commission or any State or other
regulatory body shall enter a stop order or other order suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of any preliminary prospectus or the prospectus, or any amendment or supplement
thereto, or suspend such qualification at any time, make every effort to obtain
promptly the lifting of such order or suspension;
(iii) If requested in writing by the Public Underwriter,
if any, or any Warrantholder (1) immediately incorporate in a prospectus
supplement or post-effective amendment such information as such Warrantholder
and the Public Underwriter, if any, agree should be included therein relating to
such sale and distribution of the Warrant stock, including, without limitation,
information with respect to the number of shares of Warrant Stock being sold to
such Public Underwriter, the purchase price being paid therefor by such Public
Underwriter and with respect to any other terms of the underwritten offering of
the Warrant Stock to be sold in such offering; (2) make all required filings of
such prospectus supplement or post-effective amendment as soon as notified of
the matters to be so incorporated in such prospectus supplement or post-
effective amendment; and (3) supplement or amend any Registration Statement if
reasonably requested in writing by the Warrantholders or any underwriter of
Warrant Stock;
(iv) Furnish to each of the Warrantholders and their
respective counsel, without charge and at such place as such Warrantholders may
designate, copies of each preliminary prospectus, the Registration Statement and
any pre-effective or post-effective amendments thereto, the Prospectus, and all
amendments and supplements thereto, including any prospectus prepared after the
effective date of the Registration Statement and any term sheet, in each case as
soon as available and in such quantities as each Warrantholder may reasonably
request;
(v) During the time when a prospectus is required to be
delivered under the Act, the Company shall comply with all requirements imposed
upon it by the Act and the Securities ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇, as amended (the
"Exchange Act"), as now and hereafter amended, and by the rules and regulations
of the Commission, as from time to time in force, so far as necessary to permit
the continuance of sales of or dealings in the Warrant Stock in accordance with
the provisions hereof and the prospectus, or any amendments or supplements
thereto; if at any time when a prospectus relating to the
11
Warrant Stock is required to be delivered under the Act, any event shall have
occurred as a result of which, in the opinion of the Company or counsel for
the Company or counsel for the Warrantholders, the prospectus, as then
amended or supplemented, would include an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances in which
they were made, not misleading, or if it is necessary at any time to amend or
supplement the prospectus to comply with the Act, notify the Public
Underwriter and suspend the use of the prospectus included in the
Registration Statement in accordance with Section 11(c) or prepare and file,
at the Company's expense, with the Commission an appropriate amendment or
supplement to the Registration Statement or an amendment or supplement to the
prospectus which will correct such statement or omission, or effect such
compliance, each such amendment or supplement to be reasonably satisfactory
to the Warrantholders and the counsel for the Warrantholders; and furnish to
the Warrantholders copies of such amendment or supplement as soon as
available and in such quantities as the Warrantholders may request;
(vi) Make generally available to its security holders, in
the manner specified in Rule 158(b) promulgated under the Act, and to the
Representative, an earnings statement which will comply with the provisions of
Section 11(a) of the Act and Rule 158(a) promulgated under the Act;
(vii) Deliver to each of the Warrantholders, their
respective counsel and the Public Underwriter, if any, without charge, as many
copies of the prospectus or prospectuses (including each preliminary prospectus)
and any amendment or supplement thereto as such persons may reasonably request;
the Company consents to the use of any such prospectus or any amendment or
supplement thereto by the Warrantholders and the Public Underwriter, if any, in
connection with the offering and sale of the Warrant Stock covered by such
prospectus or any amendment or supplement thereto;
(viii) Prior to any public offering of Warrant Stock, use
its best efforts, at or prior to the time the Registration Statement becomes
effective, to qualify the Warrant Stock for offering and sale under the
securities or "blue sky" laws of such jurisdictions as the Warrantholders may
reasonably designate to permit the continuance of sales and dealings therein for
as long as may be necessary to complete the distribution, and make such
applications, file such documents and furnish such information as may be
required for such purpose; provided, however, the Company shall not be required
to qualify as a foreign corporation or to execute a general consent to service
of process in any such jurisdiction; in each jurisdiction where such
qualification shall be effected, use its best efforts to file and make such
statements or reports at such times as are or may be required by the laws of
such jurisdiction to continue such qualification;
(ix) Cooperate with the Warrantholders and the Public
Underwriter, if any, to facilitate the timely preparation and delivery of
certificates representing Warrant Stock to be sold, which certificates shall not
bear any restrictive legends; and enable such Warrant Stock to be in such
denominations and registered in such names as the Public Underwriter, if any,
may request at least two (2) business days prior to any sale of Warrant Stock;
(x) Use its reasonable best efforts to cause the Warrant
Stock covered by the Registration Statement to be registered with or approved by
such other governmental bodies, agencies or authorities as may be necessary to
enable the Warrantholders or the Public Underwriter, if any, to consummate the
disposition of such Warrant Stock;
(xi) Make every reasonable effort to cause all Warrant Stock
covered by such Registration Statement to be (1) listed on each securities
exchange, if any, in which equity securities issued by the Company are then
listed or (2) authorized to be quoted on the NNM or Nasdaq SmallCap
12
Market or any exchange if the Company's Common Stock is then authorized to be
quoted on the NNM or Nasdaq SmallCap Market or any exchange;
(xii) Enter into such agreements (including, without
limitation, if applicable, an underwriting agreement, in form, scope and
substance as is customary in underwritten offerings) and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of such Warrant Stock and, in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration is an
underwritten registration, (1) make such representations and warranties to the
Warrantholders with respect to the business of the Company and its subsidiaries
and the Public Underwriter, if any, the Registration Statement, the prospectus,
the prospectus supplement (if any) and documents, if any, incorporated or deemed
to be incorporated by reference in the Registration Statement, in each case in
such form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested; (2) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Warrantholders), addressed to the Warrantholders with
respect to the matters referred to in the preceding clause in such form, scope
and substance as are customarily rendered to underwriters in underwritten
offerings and such other matters as may be reasonably requested by counsel to
the Warrantholders or the Public Underwriter, if any; (3) obtain "cold comfort"
letters and updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data is, or is required to
be, included in or incorporated by reference into the Registration Statement)
addressed to the Warrantholders and each of the Public Underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in connection with
underwritten offerings; (4) if an underwriting agreement is entered into, the
same shall set forth in full the indemnification and contribution provisions and
procedures of Section 12 hereof (or such other provisions and procedures as
shall be acceptable to the Warrantholders and to the Public Underwriter of such
underwritten offering) with respect to all parties to be indemnified pursuant to
said section; and (5) deliver such documents and certificates as may be
reasonably requested by the Warrantholders and the Public Underwriter, if any,
to evidence the continued validity of the representations and warranties made
pursuant to clause (1) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company; the above shall be done at each closing under such
underwriting or similar agreement or as and to the extent required thereunder;
(xiii) Make available for inspection by a representative
of the Warrantholders or any Public Underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant retained
by the Warrantholders or such Public Underwriter, all financial and other
records, pertinent corporate documents and properties and assets of the Company
and its subsidiaries and cause the officers, directors, agents and employees of
the Company and its subsidiaries to supply all information reasonably requested
by any such representative, Public Underwriter, attorney or accountant in
connection with any registration of Warrant Stock; provided, however, that any
records, information or documents that are designated by the Company in writing
at the time of delivery of such records, information or documents as
confidential shall be kept confidential by such persons unless (1) disclosure of
such records, information or documents is required by court or administrative
order or is necessary to respond to inquiries of governmental or regulatory
bodies, agencies or authorities, (2) disclosure of such records, information or
documents is, in the opinion of counsel to the Warrantholders or to any Public
Underwriter, required by law regulations or legal process, (3) such records,
information or documents are otherwise publicly available or (4) such records,
information or documents become available to such person from a source other
than the Company or its agents, accountants and attorneys and such source is not
bound by a confidentiality agreement;
13
(xiv) If the Company, in the exercise of its reasonable
judgment, objects to any change reasonably requested by the Warrantholders or
the Public Underwriter, if any, to any Registration Statement or prospectus or
any amendments or supplements thereto (including documents incorporated or
deemed to be incorporated therein by reference) as provided for in this
Subsection 11(h), the Company shall not be obligated to make any such change and
the Warrantholders may withdraw the Warrant and Warrant Stock from such
registration, in which event the Company shall pay all registration expenses
(including, without limitations, attorneys' fees and expenses) incurred by the
Warrantholders in connection with such Registration Statement or prospectus or
any amendment thereto or supplement thereof; provided, that if the Company
provides the Warrantholders with a written opinion of independent counsel (which
counsel may be the Company's regular outside counsel), upon which such
Warrantholders may rely, that the change so requested is not required in order
that the Registration Statement comply with all applicable securities laws
(including any rules and regulations promulgated thereunder), such
Warrantholders may withdraw the Warrants and the Warrant Stock from such
registration but the Company shall not be obligated to pay any registration
expenses incurred by the Warrantholders; and
(xv) Pay all reasonable costs and expenses incident to the
performance of or compliance with the Company's obligations under this
subsection 11(h) (collectively, "Registration Expenses") whether or not any
Registration Statement is filed or becomes effective, including, without
limitation, the fees and disbursements of the Company's auditors, legal counsel,
special legal counsel, legal counsel responsible for qualifying the Warrants and
the Warrant Stock under blue sky laws and with the NASD, all filing fees
(including, without limitation, the Commission, states, NASD, the Nasdaq Stock
Market or any exchange) and printing expenses, all expenses in connection with
the transfer and delivery of the Warrant Stock, and all expenses in connection
with the qualification of the Warrants and the Warrant Stock under applicable
blue sky laws and with the NASD; provided, however, that the Company shall not
bear the Public Underwriter's discount, commission or expenses with respect to,
or any transfer taxes imposed on, the Warrant Stock or the fees and expenses of
counsel to the Warrantholders; provided, further, however, that the Company
shall not be responsible in any way for any fees or expenses of counsel to the
Warrantholders or any underwriter of public offering by the Company, except, in
each case, as provided in Subsection 11(h)(xiv) above.
SECTION 12. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of the filing of any Registration statement
with respect to the Warrant Stock pursuant to Section 11 hereof, the Company
agrees to indemnify and hold harmless the Warrantholders, the underwriter(s) of
any public offering by the Company, and any Holder of Warrant Stock (for
purposes of this Section 12, "Holder" shall include the officers, directors,
partners, employees, agents and counsel of a Warrantholder or a holder of
Warrant Stock), and each person, if any, who controls a Holder ("controlling
person") within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all losses, claims, damages, expenses
(including, without limitation, reasonable attorneys' fees and expenses) or
liabilities and all actions, suits, proceedings, injuries, arbitrations,
investigations, litigation or governmental or other proceedings (in this Section
12, collectively, "actions") in respect thereof, whatsoever (including, without
limitation, any and all expenses whatsoever reasonably incurred in investigating
preparing or defending against any action, commenced or threatened, or any claim
whatsoever), as such are incurred, to which a Holder or such controlling person
may become subject under the Act, the Exchange Act or any other statute or at
common law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained (i) in any preliminary
prospectus, the Current Registration Statement, any replacement Registration
Statement or any prospectus (as from time to time amended and supplemented);
(ii) in any post-effective amendment or amendments or any new registration
statement and prospectus in which is included securities of the Company issued
or issuable upon exercise of the Warrants; or (iii) in any
14
application or other document or written communication (in this Section 12,
collectively, "application") executed by the Company or based upon written
information furnished by the Company in any jurisdiction in order to qualify
the Warrants or the Warrant Stock under the securities or blue sky laws
thereof or filed with the Commission, any state securities commission or
agency, the National Association of Securities Dealers, Inc. (the "NASD") or
the NNM, Nasdaq SmallCap Market or any other securities exchange; or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
light of the circumstances in which they were made), unless such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to a Holder by or on behalf of such
Holder expressly for use in any preliminary prospectus, the Registration
Statement or any prospectus, or any amendment thereof or supplement thereto,
or in any application, as the case may be. In addition to its other
obligations under this subsection 12(a), the Company agrees that, as an
interim measure during the pendency of any action arising out of or based
upon any untrue statement or omission, or alleged untrue statement or alleged
omission as described in this subsection 12(a), it shall reimburse the
Holders (and, to the extent applicable, each controlling person) on a monthly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such action notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Company's obligations to reimburse the Holders (and, to the extent
applicable, each controlling person) for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement is
so held to have been improper as to the Company, the Holders (and, to the
extent applicable, each controlling person) shall promptly return it to the
Company, together with interest compounded daily, based on the "reference
rate" announced from time to time by Bank of America NTSA (the "Prime Rate").
Any such interim reimbursement payments which are not made to the applicable
Holder within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. In no case shall
any interest be in excess of that permitted by law.
The indemnity agreement in this subsection 12(a) shall be in
addition to any liability which the Company may have at common law or otherwise.
(b) Each Holder severally agrees to indemnify and hold
harmless the Company (for purposes of this Section 12, "Company" shall
include the officers, directors, partners, employees, agents and counsel of
the Company) and each other person, if any, who controls the Company
("controlling person") within the meaning of the Act, to the same extent as
the foregoing indemnity from the Company to the Holders, but only with
respect to statements or omissions, if any, made in any preliminary
prospectus, the Current Registration Statement, the Registration Statement or
any prospectus or any amendment thereof or supplement thereto or in any
application made in reliance upon, and in strict conformity with, written
information furnished to the Company with respect to such Holder by or on
behalf of such Holder expressly for use in any preliminary prospectus, the
Current Registration Statement, the Registration Statement or any prospectus
or any amendment thereof or supplement thereto or in any application,
provided that such written information or omissions only pertain to
disclosures in any preliminary prospectus, the Current Registration
Statement, the Registration Statement or any prospectus directly relating to
the transactions in connection with the offering contemplated hereby. In
addition to its other obligations under this subsection 12(b), each Holder
severally agrees that, as an interim measure during the pendency of any
action arising out of or based upon any untrue statement or omission, or
alleged untrue statement or alleged omission as described in this subsection
12(b), it shall reimburse the Company (and, to the extent applicable, each
controlling person) on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any action
with respect to such Holder notwithstanding the absence of a judicial
determination as to the propriety and enforceability of such Holder's
obligations to reimburse the Company (and, to the extent applicable,
15
each controlling person) for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement is so held
to have been improper as to such Holder, the Company (and, to the extent
applicable, each controlling person) shall promptly return it to such Holder,
together with interest compounded daily, based on the Prime Rate. Any such
interim reimbursement payments which are not made to the company within
thirty (30) days of a request for reimbursement shall bear interest at the
Prime Rate from the date of such request. In no case shall any interest be
in excess of that permitted by law. Notwithstanding the provisions of this
subsection 12(b), in connection with a registration that includes the
Warrants or Warrant Stock pursuant to subsection 11(b) hereof, no such Holder
shall be required to indemnify or hold harmless the Company or any
controlling person for any amounts in excess of the net proceeds (before
deducting expenses) applicable to the Warrants or Warrant Stock sold by such
Holder pursuant to the Registration Statement. Notwithstanding the
provisions of this subsection 12(b), in connection with a registration that
includes that Holder's Warrants or Warrant Stock pursuant to subsection
11(b), no such Holder shall be required to indemnify and hold harmless the
Company or any controlling person for any amounts in excess of that portion
of all expenses as to which indemnification is properly claimed under this
Agreement equal to such Holder's relevant proportion of all net proceeds
(before deduction of expenses) applicable to all securities sold pursuant to
the Current Registration Statement or the Registration Statement, as
applicable.
(c) Promptly after receipt by an indemnified party under this
Section 12 of notice of the commencement of any action, such indemnified party
shall notify each party against whom indemnification is to be sought in writing
of the commencement thereof (but the failure to so notify an indemnifying party
shall not relieve it from any liability which it may have under this Section 12
except to the extent that it has been materially prejudiced by such failure).
In case any such action is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties shall be entitled to participate therein, and to
the extent it or they may elect by written notice delivered to the indemnified
party or parties promptly after receiving the aforesaid notice from such
indemnified party or parties, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, an indemnified party shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party or parties in
connection with the defense of such action at the expense of the indemnifying
party or parties, (ii) the indemnifying party or parties shall not have employed
counsel reasonably satisfactory to such indemnified party to have charge of the
defense of such action within a reasonable time after notice of commencement of
the action or (iii) such indemnified party shall have reasonably concluded that
there may be one or more defenses available to it which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel (in addition to
appropriate local counsel) shall be borne by the indemnifying parties. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to appropriate local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. Anything in this Section 12 to
the contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent may not be unreasonably withheld.
(d) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes a claim for indemnification
pursuant to this Section 12, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the
16
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the
fact that the express provisions of this Section 12 provide for
indemnification in such case or (ii) contribution under the Act may be
required on the part of any indemnified party, then each indemnifying party
shall contribute to the amount paid as a result of such losses, claims,
damages, expenses or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified, on
the other hand, in connection with the statements or omissions that resulted
in such losses, claims, damages, expenses or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder, and the parties' relative intent,
knowledge, state of mind and access to information and opportunity to correct
or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to in the first sentence
of this subsection 12(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection 12(d), in a registration that includes a
Holder's Warrants or Warrant Stock pursuant to subsection 11(b) hereof, no
Holder shall be required to contribute any amount in excess of the net
proceeds (before deducting expenses) applicable to the shares of Warrants and
Warrant Stock sold by such Holder pursuant to such registration statement and
prospectus. Notwithstanding the provisions of this subsection 12(d), in a
registration that includes a Holder's Warrant Stock pursuant to subsection
11(b), no such Holder shall be required to contribute any amount in excess of
that portion of all expenses as to which contribution is properly claimed
under this Agreement equal to such Holder's relevant portion of all net
proceeds (before deducting expenses) applicable to all securities sold
pursuant to the Current Registration Statement or the Registration Statement,
as applicable. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act and the cases and promulgations
thereunder) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action against such party in respect to which a claim for contribution may be
made against another party or parties under this subsection 12(d), notify
such party or parties from whom contribution may be sought, but the omission
to so notify such party or parties shall not relieve the party or parties
from whom contribution may be sought from any obligation it or they may have
hereunder or otherwise than under this subsection 12(d) except to the extent
it has been materially prejudiced by such failure. The contribution
agreement set forth above shall be in addition to any liabilities which any
indemnifying party may have at common law or otherwise. Notwithstanding
anything to the contrary contained in this Agreement, no Holder shall be
required to contribute any amount in excess of the lesser of (i) that
proportion of the total of such losses, claims, damages or liabilities
indemnified or contributed against equal to the proportion of the total
securities sold pursuant to the Registration Statement or Current
Registration Statement, as the case may be, which is being sold by it, or
(ii) the proceeds received by it in any such offering. The Holders'
obligations in this Section 12(d) to contribute are several in proportion to
the number of Warrants or Warrant Shares registered on their behalf and not
joint.
(e) The indemnity and contribution agreements contained in this
Section 12 shall remain operative and in full force and effect, regardless of
(i) any investigation made by or on behalf of any Holder or any person
controlling any Holder, the Company, its directors or officers or any
underwriter or any person controlling such underwriter, (ii) acceptance of any
Warrants or Warrant Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Holder or any person
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controlling any Holder, or to the Company, its directors or officers, or any
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
12.
(f) In any proceeding relating to the Registration Statement,
the Current Registration Statement or any prospectus or any amendment or
supplement thereto, each party against whom contribution may be sought under
this Section 12 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process issuing from
such court may be served upon him or it by any other contributing party and
consents to the service of such process and agrees that any other contributing
party may join him or it as an additional defendant in any such proceeding in
which such other contributing party is a party.
SECTION 13. NOTICES. All notices and communications hereunder, except
as herein otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed, delivered by hand or transmitted by
any standard form of telecommunication. Notices to the Warrantholders or a
holder of Warrant Stock shall be directed to Shamus Group, Inc., ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇▇, with a copy to Jeffer,
Mangels, ▇▇▇▇▇▇ & Marmaro LLP, 2121 Avenue of the Stars, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. Notices to the
Company shall be directed to the Company at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
SECTION 14. PARTIES. This Agreement shall inure solely to the benefit
of and shall be binding upon, the Representative, the Company and the
Warrantholders and the holders of Warrant Stock and the controlling persons,
officers, directors and others referred to in Section 12 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained.
SECTION 15. MERGER OR CONSOLIDATION OF THE COMPANY. The Company shall
not merge or consolidate with or into any other corporation or sell all or
substantially all of its property to another corporation, unless the provisions
of Section 8.3 hereof are complied with.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements
contained in the Underwriting Agreement, any schedule, exhibit, certificate or
other instrument delivered by or on behalf of the parties hereto, or in
connection with the transactions contemplated by this Agreement, shall be deemed
to be representations and warranties hereunder. Notwithstanding any
investigations made by or on behalf of the parties to this Agreement, all
representations, warranties and agreements made by the parties to this Agreement
or pursuant hereto shall survive the termination of this Agreement and the
issuance, sale and delivery of the Warrant and the Warrant Stock.
SECTION 17. CONSTRUCTION. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without giving effect to conflict of laws principles thereof.
SECTION 18. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which taken together shall be deemed to be one and the same instrument.
SECTION 19. ENTIRE AGREEMENT, AMENDMENTS. This Agreement and the
Underwriting Agreement constitute the entire agreement of the parties hereto
concerning the subject matter hereof and
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supersede all prior written or oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may
not be amended, modified or altered except in a writing signed by the
Representative and the Company.
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
SCOOP, INC., a Delaware corporation
By:
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▇▇▇▇ ▇▇▇▇▇▇▇▇
President
SHAMUS GROUP, INC.
By:
-----------------------------------
Name:
Title:
20
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER EXCEPT IN
COMPLIANCE WITH SECTION 1.3 AND 11(a) OF THE REPRESENTATIVE WARRANT
AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED.
WARRANT CERTIFICATE NO. 1
WARRANT TO PURCHASE 130,000
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.
PACIFIC TIME, ON _____________ ___, 2002
SCOOP, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
This certifies that, for value received, SHAMUS GROUP, INC., the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from SCOOP, INC. (the "Company"), at any time during the period
commencing at 6:30 a.m., Pacific time, on _______________, 1998
[ONE YEAR FOLLOWING EFFECTIVE DATE], and before 5:00 p.m., Pacific time,
on_________________ ___, 2002 [FIVE YEARS FOLLOWING EFFECTIVE DATE], at the
purchase price per share of Common Stock of $_______ (the "Warrant Price")
[120% OF IPO PRICE], 130,000 shares of Common Stock of the Company (the
"Warrant Stock "). The number of shares of Common Stock of the Company
purchasable upon exercise of each Warrant evidenced hereby shall be subject
to adjustment from time to time as set forth in the Representative Warrant
Agreement, dated as of ___________________, 1997, by and between the Company
and the Representative (the "Representative Warrant Agreement").
The Warrants evidenced hereby represent the right to purchase an
aggregate of up to 130,000 shares of Warrant Stock (subject to adjustment as
provided in the Representative Warrant Agreement) and are issued under and in
accordance with the Representative Warrant Agreement, and are subject to the
terms and provisions contained in the Representative Warrant Agreement, to
all of which the Warrantholder by acceptance hereof consents.
The Warrants evidenced hereby may be exercised in whole or in part
by presentation of this Warrant Certificate with the Purchase Form attached
hereto duly executed (with a signature guarantee as provided hereon) and
simultaneous payment of the Warrant Price at the principal office of the
Company. Payment of such price shall be made at the option of the
Warrantholder in any manner allowed in the Representative Warrant Agreement.
Upon any partial exercise of the Warrants evidenced hereby, there
shall be signed and issued to the Warrantholder a new Warrant Certificate in
respect of the shares of Warrant Stock as to which the Warrants evidenced
hereby shall not have been exercised. These Warrants may be exchanged at the
office of the Company by surrender of this Warrant Certificate properly
endorsed for one or more new Warrants of the same aggregate number of shares
of Warrant Stock as evidenced by the Warrant or Warrants exchanged. No
fractional securities shall be issued upon the exercise of rights to purchase
hereunder, but the Company shall pay the cash value of any fraction upon the
exercise of one or more Warrants. These Warrants are transferable at the
office of the Company in the manner and subject to the limitations set forth
in the Warrant Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a shareholder of the Company.
SCOOP, INC., a Delaware corporation
By:
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
President
Dated: , 1997
ATTEST: [Seal]
---------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Secretary
2
SCOOP, INC.
PURCHASE FORM
SCOOP, INC. (the "Company")
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, _____ shares of common stock of the Company (the "Warrant Stock")
provided for therein, and requests that certificates for the Warrant Stock be
issued in the name of:
-----------------------------------------------------------------------
(Please print or Type Name, Address and Social Security Number)
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and, if said number of shares of Warrant Stock shall not be all the Warrant
Stock purchasable hereunder, that a new Warrant Certificate for the balance of
the Warrant Stock purchasable under the within Warrant Certificate be registered
in the name of the undersigned Warrantholder or his Assignee as below indicated
and delivered to the address stated below.
Dated:
Name of Warrantholder
or Assignee:
------------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------------
------------------------------------------------------------
Signature:
------------------------------------------------------------
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
Signature Guaranteed:
---------------------------------------------------------
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange of the National Association of Securities Dealers, Inc.)
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers the right to purchase _____________________shares of Warrant Stock
represented by the within Warrant Certificate unto, and requests that a
certificate for such Warrant be issued in the name of:
-----------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
-----------------------------------------------------
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hereby irrevocably constituting and appointing _______________________________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises and, if said number of warrant Stock shall not
bear all of the Warrant Stock purchasable under the within Warrant Certificate,
that a new Warrant Certificate for the balance of the Warrant Stock purchasable
under the within Warrant Certificate be registered in the name of the
undersigned Warrantholder and delivered to such Warrantholder's address as then
set forth on the Company's books.
Dated:
--------------------------------
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
Signature Guaranteed:
----------------------------------------------------------
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)