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EXHIBIT 4.2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
Warrant No._______ Warrant to Purchase 100,000 Shares of
Common Stock
WARRANT TO PURCHASE COMMON STOCK
of
UNICO, INC.
Void after December 1, 2006
This certifies that, for value received, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or
registered assigns ("Holder") is entitled, subject to the terms set forth below,
to purchase from Unico, Inc. (the "Company" or "Unico"), a New Mexico
corporation, shares of Common Stock of the Company, as constituted on the date
hereof (the "Warrant Issue Date"), upon surrender hereof, at the principal
office of the Company referred to below, with the subscription form attached
hereto duly executed, and simultaneous payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The number, character and Exercise Price of such
shares of Common Stock are subject to adjustment as provided below. The term
"Warrant" as used herein shall include this Warrant, and any warrants delivered
in substitution or exchange therefor as provided herein.
1. Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in
part, during the term commencing on the Warrant Issue Date and
ending at 5:00 p.m., Pacific standard time, on December 1,
2006, and shall be void thereafter.
2. Exercise Price. The Exercise Price at which this Warrant may
be exercised shall be $1.40 per share of Common Stock, as
adjusted from time to time pursuant to Section 11 hereof.
3. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, but
not for less than 5,000 shares at a time (or such
lesser number of shares which may then constitute the
maximum number purchasable; such number being subject
to adjustment as provided in Section 11 below), at
any time, or from time to time, during the term
hereof as described in Section 1 above, by the
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surrender of this Warrant and the Notice of Exercise
annexed hereto duly completed and executed on behalf
of the Holder, at the office of the Company (or such
other office or agency of the Company as it may
designate by notice in writing to the Holder at the
address of the Holder appearing on the books of the
Company), upon payment (i) in cash or by check
acceptable to the Company, (ii) by cancellation by
the Holder of indebtedness or other obligations of
the Company to the Holder, or (iii) by a combination
of (i) and (ii), of the purchase price of the shares
to be purchased.
(b) This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the
date of its surrender for exercise as provided
above, and the person entitled to receive the shares
of Common Stock issuable upon such exercise shall be
treated for all purposes as the holder of record of
such shares as of the close of business on such
date. As promptly as practicable on or after such
date and in any event within ten (10) days
thereafter, the Company at its expense shall issue
and deliver to the person or persons entitled to
receive the same a certificate or certificates for
the number of shares issuable upon such exercise. In
the event that this Warrant is exercised in part,
the Company at its expense will execute and deliver
a new Warrant of like tenor exercisable for the
number of shares for which this Warrant may then be
exercised.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the
exercise of this Warrant. In lieu of any fractional share to
which the Holder would otherwise be entitled, the Company
shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
5. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or
destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and substance to the Company or, in the
case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver,
in lieu of this Warrant, a new warrant of like tenor and
amount.
6. Rights of Stockholders. Subject to Sections 9 and 11 of this
Warrant, the Holder shall not be entitled to vote or receive
dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on
the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, 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, issuance of stock, reclassification of
stock, change of par
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value, or change of stock to no par value, consolidation,
merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised as
provided herein.
7. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register
(the "Warrant Register") containing the names and
addresses of the Holder or Holders. Any Holder of this
Warrant or any portion thereof may change his or her
address as shown on the Warrant Register by written
notice to the Company requesting such change. Any notice
or written communication required or permitted to be
given to the Holder may be delivered or given by mail to
such Holder as shown on the Warrant Register and at the
address shown on the Warrant Register. Until this
Warrant is transferred on the Warrant Register of the
Company, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to
the contrary.
(b) Warrant Agent. The Company may, by written notice to the
Holder, appoint an agent for the purpose of maintaining
the Warrant Register referred to in Section 7(a) above,
issuing the Common Stock or other securities then
issuable upon the exercise of this Warrant, exchanging
this Warrant, replacing this Warrant, Or any or all of
the foregoing. Thereafter, any such registration,
issuance, exchange, or replacement, as the case may be,
shall be made at the office of such agent.
(c) Transferability and Nonnegotiability of Warrant. This
Warrant may not be transferred or assigned in whole or
in part without compliance with all applicable federal
and state securities laws by the transferor and the
transferee (including the delivery of investment
representation letters and legal opinions reasonably
satisfactory to the Company, if such are requested by
the Company). Subject to the Provisions of this Warrant
with respect to compliance with the Securities Act of
1933, as amended (the "Act"), title to this Warrant may
be transferred by endorsement (by the Holder executing
the Assignment Form annexed hereto) and delivery in the
same manner as a negotiable instrument transferable by
endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of
this Warrant for exchange, properly endorsed on the
Assignment Form and subject to the provisions of this
Warrant with respect to compliance with the Act and with
the limitations on assignments and transfers contained
in this Section 7, the Company at its expense shall
issue to or on the order of the Holder a new warrant or
warrants of like tenor, in the name of the Holder or as
tile Holder (on payment by the Holder of any applicable
transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.
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(e) Compliance with Securities Laws
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Common Stock to
be issued upon exercise hereof or conversion thereof are being
acquired solely for the Holder's own account and not as a
nominee for any other party, and for investment, and that the
Holder will not offer, sell or otherwise dispose of this Warrant
or any shares of Common Stock to be issued upon exercise hereof
or conversion thereof except under circumstances that will not
result in a violation of the Act or any state securities laws.
Upon exercise of this Warrant, the Holder shall, if requested by
the Company, confirm in writing, in a form satisfactory to the
Company, that the shares of Common Stock so purchased are being
acquired solely for the Holder's own account and not as a
nominee for any other party, for investment, and not with a view
toward distribution or resale.
(ii) This Warrant and all Shares of B Preferred Stock or Common
Stock issued upon exercise hereof or conversion thereof shall be
stamped or imprinted with a legend in substantially the
following form (in addition to any legend required by state
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
SUCH SECURITIES AND ANY SECURITIES ISSUED HEREUNDER OR
THEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND
APPLICABLE LAWS. COPIES OF THE AGREEMENT COVERING THE PURCHASE
OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY.
8. Reservation of Stock. The Company covenants that during the term
this Warrant is exercisable, the Company will reserve from its
authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the
exercise of this Warrant and, from time to time, will take all
steps necessary to amend its Certificate of Incorporation (the
"Certificate") to provide sufficient reserves of shares of its
Common Stock for issuance. The Company further covenants that
all shares that may be issued upon the exercise of rights
represented by this Warrant and payment of the Exercise Price,
all as set forth herein, will be free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously or otherwise
specified herein). The Company agrees that its issuance of this
Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Common Stock
upon the exercise of this Warrant.
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9. Notices. (a) Whenever the Exercise Price or number of shares
purchasable hereunder shall be adjusted pursuant to Section 11
hereof, the Company shall issue a certificate signed by its
Chief Financial Officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment,
the method by which such adjustment was calculated, and the
Exercise Price and number of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first-class mail, postage prepaid)
to the Holder of this Warrant.
(b) In case:
(i) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon
the exercise of this Warrant) for the purpose of entitling them
to receive any dividend or other distribution, or any right to
subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right, or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of
the assets of the Company to another corporation, or
(iii) of any voluntary dissolution, liquidation or winding-up of
the Company, then, and in each such case, the Company will mail
or cause to be mailed to the Holder or Holders a notice
specifying, as the case may be, (A) the date on which a record
is to be taken for the purpose of such dividend, distribution Or
right, and stating the amount and character of such dividend,
distribution or right, or (B) the date on which such
reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such stock or securities
at the time receivable upon the exercise of this Warrant) shall
be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 15 days prior
to the date therein specified.
(c) All such notices, advices and communications shall be deemed
to have been received (i) in the case of personal delivery, on
the date of such delivery and (ii) in the case of mailing, on
the third business day following the date of such mailing.
10. Amendments. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
11. Adjustments. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to
time as follows:
12.
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(a) Merger, Sale of Assets, etc. If at any time while this
Warrant, or any portion thereof, is outstanding and
unexpired there shall be (i) a reorganization (other
than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein),
(ii) a merger or consolidation of the Company with or
into another corporation in which the Company is not the
surviving entity, or a reverse triangular merger in
which the Company is the surviving entity but the shares
of the Company's capital stock outstanding immediately
prior to the merger are converted by virtue of the
merger into other property, whether in the form of
securities, cash, or otherwise, or (iii) a sale or
transfer of the Company's properties and assets as, or
substantially as, an entirety to any other person, then,
as a part of such reorganization, merger, consolidation,
sale or transfer, lawful provision shall be made so that
the holder of this Warrant shall thereafter be entitled
to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or
other securities or property of the successor
corporation resulting from such reorganization, merger,
consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would
have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant
had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this
Section 11. The foregoing Provisions of this Section
11(a) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other
corporation that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration
payable to the holder hereof for shares in connection
with any such transaction is in a form other than cash
or marketable securities, then the value of such
consideration shall be determined in good faith by the
Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the
rights and interests of the Holder after the
transaction, to the end that the provisions of this
Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of
this Warrant.
(b) Reclassification, etc. If the Company, at any time while
this Warrant, or any portion hereof, remains outstanding
and unexpired by reclassification of securities or
otherwise, shall change any of the securities as to
which purchase rights under this Warrant exist into the
same or a different number of securities of any other
class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of
securities as would have been issuable as the result of
such change with respect to the securities that were
subject to the purchase rights under this Warrant
immediately prior to such reclassification or other
change and the Exercise Price therefor shall be
appropriately adjusted, all subject to further
adjustment as provided in
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this Section 11.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant, or any portion
hereof, remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number
of securities of the same class, the Exercise Price for
such securities shall be proportionately decreased in
the case of a split or subdivision or proportionately
increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities
or Property. If while this Warrant, or any portion
hereof, remains outstanding and unexpired, the holders
of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or
after the record date fixed for the determination of
eligible stockholders, shall have become entitled to
receive, without payment therefor, other or additional
stock or other securities or property (other than cash)
of the Company by way of dividend, then and in each
case, this Warrant shall represent the right to acquire,
in addition to the number of shares of the security
receivable upon exercise of this Warrant, and without
payment of any additional consideration therefor, the
amount of such other or additional stock or other
securities or property (other than cash) of the Company
that such holder would hold on the date of such exercise
had it been the holder of record of the security
receivable upon exercise of this Warrant on the date
hereof and had thereafter, during the period from the
date hereof to and including the date of such exercise,
retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving
effect to all adjustments called for during such period
by the provisions of this Section 11.
(e) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment pursuant to this Section
11, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the
terms hereof and furnish to each Holder of this Warrant
a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company
shall, upon the written request, at any time, of any
such Holder, furnish or cause to be furnished to such
Holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the Exercise Price
at the time in effect; and (iii) the number of shares
and the amount, if any, of other property that at the
time would be received upon the exercise of the Warrant.
(f) No Impairment. The Company will not, by any voluntary
action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or
performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all
the provisions of this Section 11 and in the taking of
all such action as may be necessary Or
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appropriate in order to protect the rights of the Holder
of this Warrant against impairment.
12. Registration Rights. Upon exercise of this Warrant, the Holder
shall have and be entitled to exercise registration rights as
set forth in Exhibit "A" to this Warrant except that Holder
will not have Demand Registration Rights.
13. Miscellaneous.
(a) Governing Law and Modification. This Warranty shall
be deemed to be made under, and shall be governed by,
the laws of the State of California in all respects,
including matters of construction, validity, and
performance, and its terms and provisions may not be
waived, altered, modified, or amended except in
writing duly signed by an authorized officer of the
Company and by the Holder.
(b) Attorneys' Fees and Costs. In addition to the amounts
guaranteed under this agreement, the Company agrees
to pay legal interest from the date of this Warrant,
reasonable attorneys' fees and all other costs and
expenses incurred by the Holder in enforcing this
Warrant in any action or proceeding arising out of,
or relating to, this Warrant.
(c) Saturdays, Sundays and Holidays. If the expiration
date for this Warrant falls on a Saturday, Sunday or
a Holiday, then the exercise date will be on the
following business day.
IN WITNESS WHEREOF, UNICO, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: June 26, 1998
UNICO, INC. HOLDER
By: /s/ WING PO ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------- ------------------------------
Wing Po ▇▇▇▇▇, President ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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NOTICE OF EXERCISE
To: UNICO, INC.
By:
(1) The undersigned hereby: (A) elects to purchase shares of Common
Stock of UNICO, INC. pursuant to the provisions of Section 3(a) of the attached
Warrant, and tenders herewith payment of the purchase price for such shares in
full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock thereof are being acquired solely
for the account of the undersigned and not as a nominee for any other party, and
for investment, and that the undersigned will not offer, sell or otherwise
dispose of any such shares of Common Stock except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended, or any
applicable state securities laws.
(3) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
---------------------------
(Name)
Dated: __________________
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint ____________________ to make
such transfer on the books of UNICO, INC., maintained for the purpose, with full
power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the shares of stock to be issued
upon exercise hereof are being acquired for investment and that the Assignee
will not offer, sell or otherwise dispose of this Warrant or any shares of stock
to be issued upon exercise hereof except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Further, the Assignee has acknowledged that upon exercise of
this Warrant, the Assignee shall, if requested by the Company, confirm in
writing, in a form satisfactory to the Company, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated: ____________________
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
Registration Rights.
1.1. As used in this Section 1:
(A) The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement
in compliance with the federal Securities Act of 1933, as amended (the
"Act") and the declaration or ordering of the effectiveness of such
registration statement.
(B) The term "Registrable Securities" means shares of (i) Common
Stock of the Corporation issuable upon exercise of this Warrant (the
"Securities"), (ii) stock issued in lieu of the Securities in any
reorganization which have not been sold to the public and (iii) stock
issued in respect of the stock referred in (i) and (ii) as a result of a
stock split, stock distribution, recapitalization or combination, which
have not been sold to the public.
(C) The terms "Holder" or "Holders" mean any person or persons to
whom shares of Registrable Securities or this Warrant was originally
issued or qualifying transferees under Section 1.9 hereof who hold
Registrable Securities.
(D) The term "Initiating Holders" means any Holder or Holders of
this Warrant of the Registrable Securities represented by this Warrant.
1.2 Demand Registration.
1.2.1 In case the Corporation shall receive from the
initiating Holder(s) a written request that the Corporation effect any
registration with respect to all or a part of the Registrable Securities, the
Corporation will:
(A) promptly give written notice of the proposed registration to
any other Holders that may affect; and
(B) as soon as practicable, use its best efforts to effect all
such registrations (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualifications
under the applicable blue sky or other state securities laws and
appropriate compliance with exemptive regulations issued under the
Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders'
Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request given
within 30 days after receipt of such written notice from the Corporation;
provided that the Corporation shall not be obligated to take any action to
effect such registration pursuant to this Section 1.2:
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(1) at any time prior to 180 days following an Underwritten Public
Offering;
(2) in any particular jurisdiction in which the Corporation would be
required to execute a general consent to service of process in effecting
such registration;
(3) after the Corporation has effected one such registration pursuant
to this Section 1.2.1 and such registration has been declared or ordered
effective; or
(4) if the Corporation represents its intention to effect a
registration on its own behalf within 90 days of receipt of the written
request and employs a good faith effort to do so.
Subject to the foregoing paragraphs (1) through (4), the Corporation shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practical, but in any event within 90 days after
receipt of the request or requests of the Initiating Holders; provided, however,
that if the Corporation shall furnish to such Holders a certificate signed by
the President of the Corporation stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Corporation and its
stockholders for such registration statement to be filed at the date filing
would be required and it is therefore essential to defer the filing of such
registration statement, the Corporation shall have an additional period of not
more than 90 days after the expiration of the initial 90 day period within which
to file such registration statement.
1.2.2 If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Corporation as a part of their request made pursuant to Section 1.2.1
and the Corporation shall include such information in the written notice
referred to in Section 1.2.1. In such event, if so requested in writing by the
Corporation, the Initiating Holders shall negotiate with an underwriter selected
by the Corporation with regard to the underwriting of such requested
registration; provided, however, that if a majority in interest of the
Initiating Holders have not agreed with such underwriter as to the terms and
conditions of such underwriting within 20 days following commencement of such
negotiations, a majority in interest of the Initiating Holders may select an
underwriter of their choice with the consent of the Corporation, which consent
shall not be unreasonably withheld, but if consent of the Corporation cannot be
obtained, then a majority in interest of the Initiating Holders may elect to
withdraw their request. The right of any Holder to registration pursuant to this
Section 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. The
Corporation shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, the Initiating Holders
shall so advise all holders of Registrable Securities, and the number of shares
of Registrable Securities that may be included in the registration and
underwriting shall be limited to the number advised by the underwriters and
shall be limited to the number advised by the underwriters and shall be
allocated among all holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registerable Securities held by such Holders. If any
Holder of Registrable Securities disapproves of the terms of the underwriting,
he may elect to withdraw therefrom by written notice to the Corporation, the
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underwriter and the Initiating Holders. Any Registrable Securities which are
excluded from the underwriting by reason of the underwriter's marketing
limitation or withdrawn from such underwritings shall be withdrawn from such
registration.
1.3 "Piggy-Back" Registration.
1.3.1 If at any time or from time to time, the Corporation
shall determine to register any of its securities, for its own account or the
account of any of its stockholders, including a registration relating solely to
employee and/or consultant stock option or purchase plans or a registration
relating solely to a business combination transaction, the Corporation will:
(A) promptly give to each Holder a written notice thereof (which
shall include a list of the jurisdictions in which the Corporation intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws): and
(B) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 30 days after receipt of such written notice from the
Corporation, by any Holder or Holders, except as set forth in Section
1.3.2.
1.3.2 If the registration of which the Corporation gives notice is
for a registered public offering involving an underwriting, the Corporation
shall so advise the Holders as part of the written notice given pursuant to
Section 1.3.1. In such event the right of any Holder to registration pursuant to
this Section 1.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting must enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Corporation. Notwithstanding any other provision of
this Section 1.3, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, and (i) if such
registration is the first Underwritten Public Offering, the underwriter may
limit the number of Registrable Securities to be included in the registration
and underwriting, or may exclude Registrable Securities entirely from such
registration and underwriting, or (ii) if such registration is other than the
first Underwritten Public Offering, the underwriter may limit to 25% of the
total amount of the registration the amount of Registrable Securities to be
included in the registration. However, this underwriters' "cutback" right after
the first Underwritten Public Offering shall be restricted so that all shares
held by Company employees, officers and directors which are not Registrable
Securities shall be excluded from the registration before any Registrable
Securities are so excluded. The Corporation shall so advise all Holders of
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all of
the Holders of Registrable Securities, in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities requested to be included in
such registration held by such Holder at the time of filing the registration
statement. In such event, except for securities sold by the Corporation, no
securities of the Corporation held by anyone other than a Holder of Registrable
Securities may be included in the registration and underwriting. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Corporation and
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the underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
1.4 The Corporation shall use its best efforts to qualify for
registration on Form S-3 or its successor form or may use Form S-8, where
applicable. After the Corporation has qualified for the use of Form S-3, Holders
of Registrable Securities shall have the right to request up to three
registrations on Form S-3 (such requests shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended
method of disposition of shares by such Holders), subject only to the following:
(A) The Corporation shall not be required to effect a registration
pursuant to this Section 1.4 within 180 days of the effective date of any
registration referred to in Sections 1.2 and 1.3.
(B) The Corporation shall not be required to effect a registration
pursuant to this Section 1.4 within one year of the effective date of the
last such registration pursuant to this Section 1.4.
The Corporation shall give written notice to any other Holders of
Registrable Securities that may be affected, of the receipt of a request for
registration pursuant to this Section 1.4 and shall provide a reasonable
opportunity for other Holders to participate in the registration, provided that
if the registration is for an underwritten offering, the terms of Section 1.3.2
shall apply to all participants in such offering. Subject to the foregoing, the
Corporation will use its best efforts to effect promptly the registration of all
shares of Registrable Securities on Form S-3 or, where applicable, Form S-8 to
the extent requested by the Holder or Holders thereof for purposes of
disposition.
1.5 All expenses incurred in connection with any registration
pursuant to this Section 1, including, without limitation, all registration,
filing and qualification fees, printing expenses, fees and disbursements of
counsel for the Corporation, and expenses of any special audits of the
Corporation's financial statements incidental to or required by such
registration, shall be borne by the Corporation except as follows:
(A) If the Corporation is not registering any shares for its own
account pursuant to any registration effected under Section 1.2.1, then
the selling Holders shall bear all expenses incurred in connection with
any special audits of the Corporation's financial statements incidental to
or required by such registration.
(B) The Corporation shall not be required to pay for expenses of any
registration proceeding began pursuant to Section 1.2, the request for
which has been subsequently withdrawn by the Initiating Holders, in which
latter case, such expenses shall be borne by the Holders requesting such
withdrawal.
(C) The Corporation shall not be required to pay fees of legal
counsel of a Holder except for a single counsel whose fees are reasonable
and customary acting on behalf of all selling Holders, or underwriters
fees, discounts or commissions relating to Registrable Securities.
1.6 In the case of each registration effected by the Corporation
pursuant to this Section 1, the Corporation will keep each Holder participating
therein advised in writing as
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to the initiation of each registration and as to the completion thereof. At
its expense the Corporation will:
(A) keep such registration pursuant to Section 1.2, 1.3 or 1.4
effective for a period of 180 days or until the Holder or Holders have
completed the distribution described in the registration statement
relating thereto, whichever first occurs; and
(B) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
1.7 Indemnification
1.7.1 To the extent permitted by law, the Corporation will
indemnify each Holder of Registrable Securities, each of its officers, directors
and partners, and each person controlling such Holder, with respect to which
such registration has been effected pursuant to this Section 1, and each
underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Corporation of any rule or regulation promulgated under the Securities Act or
any state securities law applicable to the Corporation in connection with any
such registration, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, provided that the indemnity contained in this Section 1.7 shall not
apply to amounts paid in settlement of any such claim, loss, damage, liability
or action if such settlement is effected without the consent of the Corporation
(which consent will not be reasonably withheld) and provided further that the
Corporation will not be liable in any such case to the extent that any such
claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the
Corporation by such Holder specifically for use therein.
1.7.2 Each holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration is being effected, indemnify the Corporation, each of its directors
and officers, each legal counsel and independent accountant of the Corporation,
each underwriter, if any, of the Corporation's securities covered by such a
registration statement, each person who controls the Corporation within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors and partners and each person controlling such Holder, against all
claims, losses, expenses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Corporation, such Holders, such directors, officers, partners, persons or
underwriters for any reasonable investigating, defending, or settling any such
claim, loss, damage, liability or action, in each case to the extent, but only
to
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the extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Corporation by such Holder specifically for
use therein; and provided further that the indemnity contained in the paragraph
shall not apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent of the
Holder (which consent will not be unreasonably withheld).
1.7.3 Each party entitled to indemnification under this Section 1.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation
1.8 The Holder or Holders of Registrable Securities included in any
registration shall promptly furnish to the Corporation such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Corporation may request in writing and as shall be required in
connection with any registration referred to herein.
1.9 The rights to cause the Corporation to register Registrable
Securities of a Holder, granted to a Holder by the Corporation under Sections
1.2, 1.3, and 1.4 may be assigned by a Holder to a transferee or assignee of
shares of the Registrable Securities not sold to the public, provided that the
Corporation is given written notice by the Holder at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned.
1.10 The Corporation may not grant to subsequent investors rights of
registration without the prior consent of the Holders of a majority (as measured
by the number of shares held) of the Registrable Securities.
1.11 Notwithstanding anything else in this Section 1, (i) if the
Corporation shall have obtained from the SEC a "no-action" letter in which the
SEC has indicated that it will take no action if, without registration under the
Securities Act, any Holder disposes of Registrable Securities covered by any
request for registration made under Section 1.2, 1.3 or 1.4 in the manner in
which such Holder proposes to dispose of the Registrable Securities included in
such request or (ii) if in the opinion of counsel for the Corporation no
registration under the Securities Act is required in connection with such
disposition, then in either such case the Registrable Securities included in
such request shall not be eligible for registration
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under this Agreement.
1.12 Each Holder of Registrable Securities shall, if requested by
the Corporation and an underwriter of a registration, not sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the
Corporation held by such Holder during the 180-day period following the
effective date of a registration statement of the Corporation filed under the
Act, provided that:
(A) all officers and directors and affiliates of the Corporation
enter into similar agreements.
Such agreement shall be in writing in the form satisfactory to the
Corporation and such underwriter. The Corporation may impose stop transfer
instructions with respect to the shares (or securities) subject to the
foregoing restriction until the end of said 180-day period.
1.13 The registration rights granted pursuant to this Section 1
shall terminate as to each Holder at such time as all Registrable Securities of
the Holder can, in the opinion of counsel to the Corporation be sold within a
given three-month period pursuant to Rule 144 or other applicable exemption.
1.14 No Holder shall have any right to take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy that may arise with respect to the interpretation or implementation
of this Section 1.
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