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JEREMY'S MICROBATCH ICE CREAM, INC.
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UNDERWRITER'S WARRANT AGREEMENT
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UNDERWRITER'S WARRANT AGREEMENT dated as of __________, 1999 between
JEREMY'S MICROBATCH ICE CREAM, INC., a Delaware corporation with its principal
address at __________________________________ (the "Company") and FIRST MONTAUK
SECURITIES CORP., with its principal address at ______________
___________________ , as Underwriter, a (hereinafter referred to variously as
the "Holder" or the "Underwriter").
W I T N E S S E T H :
WHEREAS, the Underwriter has agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof between the
Underwriter and the Company, to underwrite the Company's proposed public
offering (the "Public Offering") of 1,200,000 shares of common stock $_____ par
value (the "Common Stock") of the Company at a public offering price of $____
per share (the "Shares"); and
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WHEREAS, the Company proposes to issue to the Underwriter warrants
("Underwriter's Warrants") to purchase up to an aggregate of 120,000 fully paid
non-assessable shares (the "Warrant Shares") of the Company's Common Stock, at
an exercise price of $____ per share (125% of the public offering price of the
Shares); and
WHEREAS, the Underwriter's Warrants to be issued pursuant to this Agreement
will be issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Underwriter in consideration for, and as part
of the compensation in connection with the Public Offering;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter to the Company of an aggregate of One Hundred and Twenty ($120.00),
the agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
▇. ▇▇▇▇▇. The Holder is hereby granted the right to purchase, at any time
from __________, 2000 [one year
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after effective date] until 5:30 P.M., New York time, on _____________, 2003
[four years after effective date], up to an aggregate of 120,000 Shares at an
initial exercise price (subject to adjustment as provided in Section 8 hereof)
of $____ per Share (the "Exercise Price"), subject to the terms and conditions
of this Agreement. Except as set forth herein, the Shares issuable upon exercise
of the Underwriter's Warrants are in all respects identical to the shares of
Common Stock being purchased by the Underwriter for resale to the public
pursuant to the terms and provisions of the Underwriting Agreement.
2. Underwriter's Warrant Certificates. The Underwriter's warrant
certificates (the "Underwriter's Warrant Certificates") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth in Exhibit
A, attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions, and other variations as required or permitted by this
Agreement.
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3. Exercise of Underwriter's Warrants
Section 3.1 Exercise. The Underwriter's Warrants initially are exercisable
at an aggregate initial exercise price (subject to adjustment as provided in
Section 8 hereof) per share, as set forth in Section 6 hereof payable by
certified or official bank check in New York Clearing House funds, subject to
adjustment as provided in Section 8 hereof. Upon surrender at the Company's
principal offices currently located at _________________________________, of an
Underwriter's Warrant Certificate with the annexed Form of Election to Purchase
duly executed, together with payment of the Purchase Price (as hereinafter
defined) for the Shares purchased, the registered holder of an Underwriter's
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase rights
represented by each Underwriter's Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of Common Stock underlying the Underwriter's Warrants). In the case of
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the purchase of less than all the Shares purchasable under any Underwriter's
Warrant Certificate, the Company shall cancel the Underwriter's Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Underwriter's Warrant Certificate of like tenor for the balance of the Shares
purchasable thereunder.
Section 3.2 Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange the Warrants represented by such
Holder's Warrant certificate, in whole or in part (a "Warrant Exchange), into
the number of fully paid and non-assessable Shares determined in accordance with
this Section 3.2, by surrendering such Warrant certificate at the principal
office of the Company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange, or, if later, the
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date the Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new Warrant of like tenor evidencing the balance of the Shares
remaining subject to the Holder's Warrant certificate, shall be issued as of the
Exchange Date and delivered to the Holder within three (3) business days
following the Exchange Date. In connection with any Warrant Exchange, the
Holder's Warrant certificate shall represent the right to subscribe for and
acquire (i) the number of Shares (rounded to the next highest integer) equal to
(A) the number of Shares specified by the Holder in its Notice of Exchange (the
"Total Share Number") less (B) the number of Shares equal to the quotient
obtained by dividing (i) the product of the Total Share Number and the existing
Exercise Price (as hereinafter defined) per Share by (ii) the Market Price (as
defined in Section 3.3 hereof) of a share of Common Stock.
Section 3.3 Market Price. For the purpose of this Agreement, the phrase
"Market Price" at any date shall be deemed to be the (i) last reported sale
price
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on the last trading day or, in case no such reported sale takes place on such
day, the average last reported sale price for the last three (3) trading days,
in either case as officially reported by the principal securities exchange on
which the Common Stock is listed or admitted to trading, or, (ii) if the Common
Stock is not listed or admitted to trading on any national securities exchange
but is listed or quoted upon the Nasdaq National Market or SmallCap Market
(together referred to hereinafter as "NASDAQ"), the closing bid price on the
last trading day, or, in case no such reported bid takes place on such day, the
average closing bid price for the last three (3) trading days, as furnished by
NASDAQ or similar organization if NASDAQ is no longer reporting such
information, or (iii) if the Common Stock is not listed upon a principal
exchange or quoted on NASDAQ, but quotes for the Common Stock are available in
the OTC Bulletin Board or "pink sheets" the closing bid price on the last
trading day, or, in case no such bid takes place on such day, the average
closing bid price for the last three (3) trading days as furnished on the OTC
Bulletin
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Board or (iv) in the event the Common Stock is not traded upon a principal
exchange and not listed on NASDAQ and quotes are not available on the OTC
Bulletin Board, as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
4. Issuance of Certificates. Upon the exercise of the Underwriter's
Warrants, the issuance of certificates for the Shares or other securities,
properties or rights underlying such Underwriter's Warrants, shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder thereof including, without limitation, any tax which may be
payable in respect of the issuance thereof, and such certificates shall (subject
to the provisions of Sections 5 and 7 hereof) be issued in the name of, or in
such names as may be directed by, the Holder thereof; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the
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Underwriter and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The Underwriter's Warrant Certificates and the certificates representing
the Shares issuable upon exercise of the Underwriter's Warrants shall be
executed on behalf of the Company by the manual or facsimile signature of the
then Chairman or Vice Chairman of the Board of Directors or President or Vice
President of the Company under its corporate seal reproduced thereon, attested
to by the manual or facsimile signature of the then present Secretary or
Assistant Secretary of the Company. The Underwriter's Warrant Certificates shall
be dated the date of the execution by the Company upon initial issuance,
division, exchange, substitution or transfer. The certificates representing the
Shares issuable upon exercise of the Underwriter's Warrant shall be identical in
form to those issued in connection with the Public Offering.
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5. Restriction On Transfer of Underwriter's Warrants. The Holder of an
Underwriter's Warrant Certificate, by its acceptance thereof, covenants and
agrees that the Underwriter's Warrants are not being acquired with a view to the
distribution thereof; and that the Underwriter's Warrants may not be sold,
transferred, assigned, pledged or hypothecated, in whole or in part, for a
period of one (1) year from the date hereof, except members of the Selling Group
and bona fide officers or parties thereof (as defined in the Underwriting
Agreement).
6. Exercise Price
Section 6.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 8 hereof, the initial exercise price of each Underwriter's
Warrant shall be $____ per Share. The exercise price shall be adjusted from time
to time in accordance with the provisions of Section 8 hereof.
Section 6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise prices or the adjusted exercise price, depending upon the
context of the Underwriter's Warrants.
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7. Registration Rights.
Section 7.1 Registration Under the Securities Act of 1933. The
Underwriter's Warrants and the Shares issuable upon exercise of the
Underwriter's Warrants, have been registered (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Act").
Section 7.2 Piggyback Registration. If, at any time commencing after
__________, 2000 (one (1) year from the Effective Date), through and including
__________, 2004 (five (5) years from the Effective Date), the Company proposes
to register any of its securities under the Act (other than in connection with a
merger or acquisition) it will give written notice by registered or certified
mail, at least thirty (30) days prior to the filing of each such registration
statement, to the Underwriter and to all other Holders of the Underwriter's
Warrants and Shares underlying the Underwriter's Warrants, of its intention to
do so. If any of the Underwriter or other Holders of the Underwriter's Warrants
and/or the Shares underlying the Underwriter's Warrants,
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notify the Company within twenty (20) days after receipt of any such notice of
its or their desire to include any such securities in such proposed registration
statement, the Company shall afford each of the Underwriter and such Holders of
the Underwriter's Warrants and/or Shares underlying the Underwriter's Warrants,
the opportunity to have any of such securities registered under such
registration statement; provided, however, that in the event the underwriters
advise the Company that in their opinion the number of securities requested to
be included in such registration pursuant to this Agreement and pursuant to any
other rights granted by the Company to holders of its securities exceeds the
number of securities that can be sold in the offering without adversely
affecting the offering price of the Company's securities, the Company may first
include in such registration all securities the Company proposes to sell
(without including the holders of other rights granted by the Company), and each
Holder shall accept a pro rata reduction in the number of shares to be included
in such registration statement.
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Notwithstanding the provisions of this Section 7.2, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 7.2 (irrespective of whether a written request for inclusion of any such
securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
Section 7.3 Demand Registration.
(a) At any time commencing after ____________, 2000 (one (1) year from the
Effective Date) through and including ____________, 2004 (five (5) years from
the Effective Date), the Holders of the Underwriter's Warrants and Shares
underlying the Underwriter's Warrants, representing a "Majority" of the shares
of Common Stock issuable upon the exercise of the Underwriter's Warrants
(assuming the exercise of all of the Underwriter's Warrants) shall have the
right (which right is in addition to the registration rights under Section 7.2
hereof), exercisable by written notice to the Company, to have the Company
prepare and file with the Commission,
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at on one occasion, a registration statement and such other documents, including
a prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Underwriter and Holders, in order to comply with the
provisions of the Act, so as to permit a public offering and sale of their
respective Warrant Shares for a period of time equal to the greater of (i) least
nine (9) consecutive months or (ii) the unexpired term of the Underwriter's
Warrants by such Holders and any other Holders of the Underwriter's Warrants and
the Shares who shall notify the Company within ten (10) days after receiving
notice from the Company of such request. Such registration and all costs
incident thereof shall be at the expense of the Company, as provided in Section
7.4(b).
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by any Holder or Holders to all
other registered Holders of the Underwriter's Warrants and Shares within ten
(10) days from the date of the receipt of any such registration request.
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(c) The Company and the Holders agree that the Holders of Underwriters
Warrants and Shares (the "Securities") will suffer damages if the Company fails
to fulfill its obligations under this Section 7.3 and that ascertaining the
extent of such damages with precision would not be feasible. Accordingly, the
Company agrees to pay liquidated damages in the form of interest with respect to
the Securities held by each Holder ("Liquidated Damages"), if:
(i) any Registration Statement required to be filed pursuant to this
Section 7.3 is not filed with the SEC on or prior to the date specified in
Section 7.4(a) for such filing in this Agreement;
(ii) any such Registration Statement has not been declared effective
by the SEC on or prior to the earliest possible time but in no event later
than 90 days after such filing (the "Effectiveness Target Date"); or
(iii) any Registration Statement required to be filed pursuant to this
Section 7.3 is filed and declared effective but shall thereafter cease to
be effective or fail to be
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usable for its intended purpose without being succeeded immediately by a
post effective amendment to such Registration Statement that cures such
failures and that is itself immediately declared effective;
(each such event in clauses (i) through (iii) above being referred to
herein as a "Registration Default"). The additional interest comprising
Liquidated Damages shall be an amount equal to (A) with respect to the
first 90-day period immediately following the occurrence of a Registration
Default, 10% of the number of Securities held by such Holder (pro-rated
weekly), plus (B) an additional 10% of the number of Securities held by
such Holder with respect to each 30-day period after the first 90 day
period, until all Registration Defaults have been cured, up to 100% of the
number of Securities held by such Holder. The Company shall notify the
Holders within one Business Day after each and every date on which a
Registration Default occurs. All accrued and unpaid Liquidated Damages
shall be paid immediately by the Company on the expiration of each 90-day
and 30-day period by mailing certificates for
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such securities to Holders of record of the Securities at such address as
is set forth on the stock record books of the Company. Each obligation to
pay Liquidated Damages shall be deemed to accrue beginning on the day of
the applicable Registration Default (other than as set forth above).
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease until the next Registration Default, if any.
Section 7.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 7.2 or 7.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration statement
within ninety (90) days of receipt of any demand therefor in accordance with
Section 7.3(a), shall use its best efforts to have any registration statement
declared effective by the Effectiveness Target Date, and shall furnish each
Holder desiring to sell the Shares underlying the Underwriter's Warrants such
number of prospectuses as shall reasonably be requested. Notwithstanding the
foregoing sentence, the
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Company shall be entitled to postpone the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to this Section
7.4(a) if the Company (i) is publicly committed to a self-tender or exchange
offer and the filing of a registration statement would cause a violation of
Regulation M under the Securities Exchange Act of 1934 as amended (the "Exchange
Act") or (ii) or if the Company is involved in negotiating or consummating an
acquisition or merger which would make such registration impracticable in which
case the filing of the registration statement may be delayed for a period of up
to 90 days. In the event of such postponement, the Company shall be required to
file the registration statement pursuant to this Section 7.4(a) upon the earlier
of (i) the consummation or termination, as applicable, of the event requiring
such postponement or (ii) 90 days after the receipt of the initial demand for
such registration. Additionally, notwithstanding anything to the contrary
contained herein, during any period that a registration statement filed pursuant
to Section 7.3 hereof is effective, the Company shall have the
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right to prohibit the sale of any shares thereunder upon notice to the Holder(s)
(A) if in the opinion of counsel for the Company, the Company would thereby be
required to disclose information not otherwise then required by law to be
publicly disclosed where it is significant to the operations or well being of
the Company that such information remain undisclosed, provided that the Company
shall use its best efforts to minimize the period of time in which it shall
prohibit the sale of any of such shares pursuant to this clause (A), (B) for
periods of up to 30 days if the Company reasonably believes that such sale might
reasonably be expected to have an adverse effect on any significant proposal or
plan of the Company to engage in an acquisition of assets or any merger,
consolidation, tender offer, financing, corporate reorganization or similar
transaction; (C) during the period starting with the date 10 days prior to the
Company's estimate of the date of filing of, and ending on a date 90 days after
the effective date of, a Company initiated registration in which the Holders are
entitled to and may in fact participate in accordance
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with Section 7.2 hereof, but in no event longer than 180 days; or (D) upon the
happening of any event, as a result of which the prospectus under the
registration statement includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing (in which case, the Company shall within a reasonable period provide
the Holder with revised or supplemental prospectuses and the Holders shall
promptly take action to cease making any offers of such shares until receipt and
distribution of such revised or supplemental prospectuses.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s) counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, and
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blue sky fees and expenses. The Holder(s) will pay all costs, fees and expenses
in connection with any registration statement filed pursuant to Section 7.3(c).
(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant underlying the Underwriter's Warrants
included in a registration statement for offering and sale under the securities
or blue sky laws of such states as reasonably are requested by the Holder(s),
provided that the Company shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Underwriter's Warrants
and Shares to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them
may become subject under the Act, the Exchange Act or otherwise, arising from
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such registration statement but only to the same extent and with the same effect
as the provisions pursuant to which the Company has agreed to indemnify the
Underwriter contained in Section 7 of the Underwriting Agreement.
(e) The Holder(s) of the Underwriter's Warrants and Shares underlying the
Underwriter's Warrants to be sold pursuant to a registration statement, and
their successors and assigns, shall severally, and not jointly, indemnify the
Company, its officers and directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage or expense or liability (including
all expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which they may become subject under the Act,
the Exchange Act or otherwise, arising from information furnished by or on
behalf of such Holders, or their successors or assigns, for specific inclusion
in such registration statement to the same extent and with
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the same effect as the provisions contained in Section 7 of the Underwriting
Agreement pursuant to which the Underwriter has agreed to indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as requiring the
Holder(s) to exercise their Underwriter's Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities other than
the Shares underlying the Underwriter's Warrants to be included in any
registration statement filed pursuant to Section 7.3 hereof, or permit any other
registration statement (other than in connection with a merger or acquisition)
to become effective within 120 days of a registration statement filed pursuant
to Section 7.3 hereof, without the prior written consent of the Holders of the
Underwriter's Warrants or Shares underlying the Underwriter's Warrants
representing a majority of the shares of Common Stock issuable upon the exercise
of such Underwriter's Warrants.
(h) If the Shares underlying the Shares underlying the Underwriter's
warrants are to be sold in an underwritten public offering, the Company shall
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use its best efforts to furnish to each Holder participating in the offering and
to each such underwriter, a signed counterpart, addressed to such underwriter,
of (i) an opinion of counsel to the Company dated the date of the closing under
the underwriting agreement, and (ii) a "cold comfort" letter dated the date of
the closing under the underwriting agreement signed by the independent public
accountants who have issued a report on the Company's financial statements
included in such registration statement, in each case covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(i) The Company shall as soon as practicable after the effective date of
the registration statement, and in any event within 15 months thereafter, have
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made "generally available to its security holders" (within the meaning of Rule
158 under the Act) an earnings statement (which need not be audited) complying
with Section 11(a) of the Act and covering a period of at least 12 consecutive
months beginning after the effective date of the registration statement.
(j) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence and memoranda described below, and the
managing underwriters, copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the registration statement and
permit each Holder and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such
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investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder shall reasonably request.
(k) The Company shall enter into an underwriting agreement with the
managing underwriter(s) selected for such underwriting, if any, by Holders
holding a Majority of the Underwriter's Warrants and Shares underlying the
Underwriter's Warrants requested to be included in such underwriting. Such
underwriting agreement shall be satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily contained in agreements of that type used by the managing
underwriter(s).
The Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Underwriter's Warrants and the Shares underlying the
Underwriter's Warrants and may, at their option, require that any or all the
representations, warranties
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and covenants of the Company to or for the benefit of such underwriter(s) shall
also be made to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriter(s) except as they may relate to such Holders, their
intended methods of distribution, and except for matters related to disclosures
with respect to such Holders, contained or required to be contained, in such
registration statement under the Act and the rules and regulations thereunder.
(l) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Underwriter's Warrants and Shares, shall mean in excess of fifty
percent (50%) of the then outstanding Shares, assuming the full exercise of all
Underwriter's Warrants that (i) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their families, persons acting as nominees or in
conjunction therewith or (ii) have
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not been resold to the public pursuant to Rule 144 under the Act or a
registration statement filed with the Commission under the Act.
8. Adjustments to Exercise Price and Number of Securities.
Section 8.1 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price of the Underwriter's Warrants shall forthwith be proportionately decreased
in the case of subdivision or increased in the case of combination.
Section 8.2 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price of the Underwriter's Warrants, pursuant to the provisions of this
Section 8, the number of shares issuable upon the exercise of the Underwriter's
Warrants, shall be adjusted to the nearest full amount by multiplying a number
equal to the exercise price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of the Underwriter's
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Prices.
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Section 8.3 Definition of Common Stock. For the purpose of this Agreement,
the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Articles of Incorporation of the Company as amended as of the date
hereof, or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock, consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. In
the event that the Company shall after the date hereof issue common securities
with greater or superior voting rights than the shares of Common Stock
outstanding as of the date hereof, the Holder, at its option, may receive upon
exercise of any Underwriter's Warrant, either shares of Common Stock or a like
number of such securities with greater or superior voting rights.
Section 8.4 Merger or Consolidation. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or
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change of the outstanding Common Stock), the corporation formed by such
consolidation or merger shall execute and deliver to the Holder a supplemental
warrant agreement providing that the Holder shall have the right thereafter
(until the expiration of such warrant) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
Section 8.5 No Adjustment of Exercises Price in Certain Cases. No
adjustment of the Exercise Price of the Underwriter's Warrants shall be made:
(a) Upon the issuance or sale of the Underwriter's Warrants or Shares
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issuable upon the exercise of the Underwriter's Warrants or the exercise of
options and warrants outstanding on the date hereof and described in the
prospectus relating to the Public Offering; or
(b) If the amount of such adjustment shall be less than two cents ($.02)
per share of Common Stock, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to at least
two cents ($.02) per share of Common Stock.
9. Exchange and Replacement of Underwriter's Warrant Certificates. Each
Underwriter's Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal executive office of
the Company, for a new Underwriter's Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of Shares as
provided in the original Underwriter's
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Warrants in such denominations as shall be designated by the Holder thereof at
the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Underwriter's Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Underwriter's Warrants, if mutilated, the Company will make and deliver a
new Underwriter's Warrant Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Underwriter's Warrants, nor shall it be required to issue scrip
or pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be
33
eliminated by rounding any fraction up to the nearest whole number of shares of
Common Stock or other securities, properties or rights.
11. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Underwriter's Warrants,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Underwriter's Warrants and payment of the Exercise
Price therefor, all shares of Common Stock and other securities issuable upon
such exercise shall be duly and validly issued, fully paid, non-assessable and
not subject to the preemptive rights of any stockholder. As long as the
Underwriter's Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of the
Underwriter's Warrants to be listed (subject to official notice of issuance) on
all securities exchanges on which the Common
34
Stock issued to the public in connection herewith may then be listed and/or
quoted on the Nasdaq Stock Market (National Stock Market or SmallCap Market).
12. Notices to Underwriter's Warrant Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the right to vote or
to consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Underwriter's Warrants and their exercise, any of
the following events shall occur:
(a) the Company shall take a record of the holders of its shares of Common
Stock for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable
otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
35
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of its property assets and business as an entirety shall be proposed; then, in
any one or more of such events the Company shall give written notice to the
Holders of such event at least fifteen (15) days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein
36
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend, or the issuance of any convertible
or exchangeable securities, or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
13. Notices
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Underwriter's Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or to
such other address as the Company may designate by notice to the Holders.
14. Supplements and Amendments. The Company and the Underwriter may from
time to time supplement or amend this Agreement without the approval of any
37
holders of Underwriter's Warrant Certificates (other than the Underwriter) in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Underwriter may deem necessary or desirable and which
the Company and the Underwriter deem shall not adversely affect the interests of
the Holders of Underwriter's Warrant Certificates.
15. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close of business on
___________, 2004. Notwithstanding the foregoing, the indemnification provisions
of Section 7 shall survive such termination until the close of business on
___________, 2006.
17. Governing Law: Submission to Jurisdiction. This Agreement and each
Underwriter's Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of New Jersey and for all purposes
38
shall be construed in accordance with the laws of such State without giving
effect to the rules of said State governing the conflicts of laws.
The Company, the Underwriter and the Holders hereby agree that any action,
proceeding or claim against it arising out of, or relating in any way to, this
Agreement shall be brought and enforced in the courts of the State of New Jersey
or of the United States of America for the ___________, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclusive. The Company, the
Underwriter and the Holders hereby irrevocably waive any objection to such
exclusive jurisdiction or inconvenient forum. Any such process or summons to be
served upon any of the Company, the Underwriter and the Holders (at the option
of the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
13 hereof. Such mailing shall be deemed personal service and
39
shall be legal and binding upon the party so served in any action, proceeding or
claim. The Company, the Underwriter and the Holders agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
18. Entire Agreement: Modification. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and, except as provided in Section 14 hereof, may not be
modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
19. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
40
20. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Underwriter and any other registered Holder(s) of the Underwriter's Warrant
Certificates or Shares underlying the Underwriter's Warrants any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and the Underwriter and any
other Holder(s) of the Underwriter's Warrant Certificates or Shares.
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] JEREMY'S MICROBATCH ICE CREAM, INC.
By
--------------------------------
Name:
Title:
Attest:
---------------------
Secretary
FIRST MONTAUK SECURITIES CORP.
By
--------------------------------
Name:
Title:
42
EXHIBIT A
[FORM OF UNDERWRITER'S WARRANT CERTIFICATE]
THE UNDERWRITER'S WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE UNDERWRITER'S WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE UNDERWRITER'S WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, _____________, 2004
No. UW-1 120,000 Underwriter's Warrants
UNDERWRITER'S WARRANT CERTIFICATE
This Underwriter's Warrant Certificate certifies that _____________________
______________________, or registered assigns, is the registered holder of
120,000 Underwriter's Warrants to purchase initially, at any time from
________________, 2000 [one year from the effective date of the offering] until
5:30 p.m. New York time on _____________, 2004 [five years from the effective
date of the offering] ("Expiration Date"), up to 120,000 fully-paid and
non-assessable shares of Common Stock, par value $.001 per share (the
"Warrants") of JEREMY'S MICROBATCH ICE CREAM, INC., a Delaware corporation (the
"Company"), at an initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), of $____ per Share upon surrender of this
Underwriter's Warrant Certificate and payment of the Exercise Price at an office
or agency of the Company, but subject to the conditions set forth herein and in
the warrant agreement dated as of _____________, 1999 between the Company and
FIRST MONTAUK SECURITIES CORP. (the "Underwriter's Warrant Agreement"). Payment
of the Exercise Price shall be made by certified or official bank check in New
York Clearing House funds payable to the order of the Company or otherwise in
accordance with the terms of the Underwriter's Warrant Agreement. In accordance
with Section 3.2 of the Underwriter's Warrant Agreement, payment of the exercise
price may also be made by the delivery of Shares of Common Stock of the Company.
No Underwriter's Warrant may be exercised after 5:30 p.m., New York time,
on the Expiration Date, at which time all Underwriter's Warrants evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Underwriter's Warrants evidenced by this Underwriter's Warrant
Certificate are part of a duly authorized issue of warrants pursuant to the
Underwriter's Warrant Agreement, which Underwriter's Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Underwriter's Warrants.
The Underwriter's Warrant Agreement provides that upon the occurrence
of certain events the exercise price and/or number of the Company's securities
2
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Underwriter's
Warrant Certificate evidencing the adjustment in the exercise price and the
number and/or type of securities issuable upon the exercise of the Underwriter's
Warrants; provided, however, that the failure of the Company to issue such new
Underwriter's Warrant Certificates shall not in any way change, alter or
otherwise impair, the rights of the holder as set forth in the Underwriter's
Warrant Agreement.
Upon due presentment for registration of transfer of this Underwriter's
Warrant Certificate at an office or agency of the Company, a new Underwriter's
Warrant Certificate or Underwriter's Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Underwriter's Warrants shall be
issued to the transferee(s) in exchange for this Underwriter's Warrant
Certificate, subject to the limitations provided herein and in the Underwriter's
Warrant Agreement, without any charge except for any tax or other governmental
charge imposed in connection with such transfer.
Upon the exercise of less than all of the Underwriter's Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Underwriter's Warrant Certificate representing such number of unexercised
Underwriter's Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Underwriter's Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
3
All terms used in this Underwriter's Warrant Certificate which are defined
in the Underwriter's Warrant Agreement shall have the meanings assigned to them
in the Underwriter's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Underwriter's Warrant
Certificate to be duly executed under its corporate seal.
Dated as of ______________, 1999
JEREMY'S MICROBATCH ICE CREAM, INC.
[SEAL] By
-------------------------------
Name:
Title:
Attest:
------------------
Secretary
4
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Underwriter's Warrant Certificate, to purchase _____ shares
of Common Stock and herewith tenders in payment for such securities a certified
or official bank check payable in New York Clearing House Funds to the order of
_______________________________ in the amount of $_______, all in accordance
with the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of ________________ whose address is
___________________ and that such Certificate be delivered to ________________
whose address is _________________.
Dated:
Signature
---------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Underwriter's Warrant Certificate.)
-------------------------------
Insert Social Security or Other
Identifying Number of Holder)