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No. of Shares: __________________
RIO GRANDE, INC.
[FORM OF COMMON STOCK PURCHASE WARRANT]
THIS WARRANT AND THE SHARES PURCHASABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES (REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL), OR AN OPINION OF THE COMPANY'S COUNSEL, STATING THAT
SUCH SALE, TRANSFER, OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
FOR VALUE RECEIVED, _______________________ (the "Holder") is entitled
to purchase from Rio Grande, Inc., a Delaware corporation, (the "Company"),
subject to the terms and conditions herein set forth, at any time before 5:00
p.m. San Antonio, Texas time on September 15, 2002, or the first business day
thereafter if such date is not a business day or such other date as may be
established in accordance with the terms of this Warrant (September 15, 2002 or
such other date being referred to herein as the "Expiration Date"), _________
of the shares of duly authorized, validly issued, fully paid and nonassessable
Common Stock of the Company, $____ par value (the "Warrant Stock"), subject to
adjustment of the number or kind of shares constituting Warrant Stock as
hereinafter provided. The Holder is entitled to purchase the Warrant Stock for
$.40 per share, subject to adjustment as hereinafter provided, (the "Exercise
Price") and is entitled also to exercise the other appurtenant rights, powers,
and privileges hereinafter set forth.
Article 1 Definitions.
For all purposes of this Warrant, unless the context otherwise
requires, the following terms have the following meanings:
1.1 "Affiliate" shall mean, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with the Person specified.
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1.2 "Anti-dilutive Incentive Options Shares" shall mean shares of
Common Stock issued upon proper exercise of options outstanding under [Company
Incentive Plans] on [reference date].
1.3 "Common Stock" means the Company's authorized common stock,
par value $.01 per share.
1.4 "Company" means Rio Grande, Inc., a corporation organized and
existing under the laws of the State of Delaware, and any successor
corporation.
1.5 "Exercise Price" means the exercise price for the Warrant
Stock established in accordance with Article 4.
1.6 "Existing Stock" shall have the meaning ascribed to that term
in Section 4.4 hereof.
1.7 "Expiration Date" means September 15, 2002, or the first
business day thereafter if such date is not a business day, or such other date
as may be established in accordance with the terms of this warrant.
1.8 "Fair Market Value" in reference to the Common Stock means, in
the event such stock is traded on a national securities exchange or in the over
the counter market as reported by the National Association of Securities
Dealers Automated Quotation System (stock being so traded or reported being
referred to herein as "Publicly Traded"), the average closing bid price of such
stock on the ten (10) trading days immediately preceding the date as of which
such value is to be determined, and in the event the Common Stock is not so
traded or reported, the value of such stock on an going-concern basis, as
determined by the Board of Directors of the Company or an appraiser mutually
acceptable to the Holder and the Company, the determination of such appraiser
to be final in the absence of fraud or bad faith. In the event the Common
Stock is not Publicly Traded, Fair Market Value in reference to a share of the
Common Stock shall mean the Fair Market Value of the equity of the Company
allocable to the issued Common Stock divided by the number of shares of Common
Stock that would have been outstanding had (i) this Warrant, (ii) all options
to purchase Common Stock, and (iii) all securities convertible into Common
Stock at a price per share no greater than Fair Market Value, been exercised or
converted on the date as of which value is to be determined (with appropriate
adjustment by appraisal to reflect the proceeds of the assumed exercise or
conversion of outstanding securities). As applicable to Warrants, Fair Market
Value shall mean the Fair Market Value of the Common Stock subject to such
Warrants minus the Exercise Price of such Warrants established in accordance
with Article 4.
1.9 "Holder" means [Initial Note Purchaser], and its successors or
assigns as Holder of this Warrant.
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1.10 "Note" or "Notes" shall mean the 11.5% Subordinated Notes
issued and sold by the Company in accordance with the terms of that certain
Note Purchase Agreement dated as of September 15, 1995.
1.11 "Person" means any natural person, sole proprietorship,
general partnership, limited partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, private or governmental
entity, or party.
1.12 "Publicly Traded" has the meaning ascribed in Section 1.7.
1.13 "Warrant" means this Warrant and any Warrants issued on or in
substitution for this Warrant including warrants issued in exchange for this
Warrant pursuant to Article 2 hereof.
1.14 "Warrant Stock" means the shares of Common Stock or other
securities acquired or to be acquired upon the exercise of the Warrant.
Article 2 Exercise of Warrant
2.1 Partial Exercise. This Warrant may be exercised in whole or
in part. In the event of a partial exercise, the Company shall execute and
deliver to the Holder (or to such other Person as shall be designated in the
Subscription Notice) a new Warrant covering the unexercised portion of the
Warrant Stock.
2.2 Procedure. To exercise this Warrant, the Holder shall deliver
to the Company at its principal office:
(a) a written notice, in substantially the form of the
Subscription Notice appearing at the end of this Warrant, of the Holder's
election to exercise this Warrant;
(b) a check payable to the Company in the amount of the
Exercise Price; and
(c) this Warrant.
The Company shall as promptly as practicable, an in any event within
twenty (20) days after receipt of such notice, execute and deliver or cause to
be executed and delivered one or more certificates representing the aggregate
number of shares of Warrant Stock to which the Holder is entitled and, if this
Warrant is exercised in part, a new Warrant as set forth in Section 2.1.
2.3 Name and Effective Date. The stock certificate(s) so
delivered shall be issued in the name of the Holder or such other name as shall
be designated in the notice specified in Section 2.2. Such certificate(s)
shall be deemed to have been issued and such Holder or any other Person so
designated to be named therein shall be deemed for all purposes to have
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become a Holder of record of such shares as of the date the Company actually
receives the notice specified in Section 2.2.
2.4 Expenses. The Company shall pay all expenses, taxes, and other
charges payable in connection with the preparation, issue, and delivery of such
stock certificate(s), except that, in case such stock certificate(s) shall be
registered in a name or names other than the name of the Holder of this
Warrant, stock transfer taxes that are payable upon the issuance of such stock
certificate(s) shall be paid by the Holder hereof.
2.5 Legal Requirements. The Warrant Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid, and
nonassessable.
2.6 No Fractional Shares. The Company shall not issue a stock
certificate representing any fraction of a share upon partial exercise by a
Holder of such ▇▇▇▇▇▇'s rights hereunder.
2.7 Registration. The Company will keep at is principal office a
register in the Company that will provide for the registration and transfer of
the Warrant.
Article 3 Transfer
3.1 Permitted Transfers. This Warrant shall be freely
transferable, in whole or in part to any Affiliate of the Holder, subject to
the limitations specified in Section 3.2 herein. This Warrant shall not be
transferable to any other Person except in connection with the transfer or
assignment, in whole or in part, of the Note or Notes registered in the name of
the Holder, and subject to the limitations specified in Section 3.2 herein.
3.2. Securities Laws. Neither this Warrant nor the Warrant Stock
shall be transferable unless:
(a) either a registration statement under the Securities Act of
1933 (the "1933 Act") is in effect covering the Warrant or the Warrant Stock,
as the case may be, or the Company has received an opinion from Company counsel
to the effect that such registration is not required, or the Holder has
furnished to the Company an opinion of ▇▇▇▇▇▇'s counsel, which counsel shall be
reasonably satisfactory to the Company, to the effect that such registration is
not required; and
(b) the transfer complies with any applicable state securities
laws.
In the event ▇▇▇▇▇▇ seeks an opinion as to transfer without
registration from ▇▇▇▇▇▇'s counsel, the Company shall provide such factual
information to ▇▇▇▇▇▇'s counsel as ▇▇▇▇▇▇'s counsel may reasonably request for
the purpose of rendering such opinion and such counsel may rely on the accuracy
and
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completeness of such information in rendering such opinion. Upon issuance at a
time when the Stock of the Company is not publicly traded, the Warrant Stock
will bear a legend describing the restrictions on transfer set forth in this
Section 3.2.
3.3 Procedure. (a) The holder of this Warrant, or of any warrant
substituted therefor pursuant to the provisions of this Section 3.3, may,
subject to the limitations set forth in Section 3.1, in person or by duly
authorized attorney, surrender the same for exchange at such principal office
of the Company and, within a reasonable time thereafter and without expense
(other than transfer taxes, if any) receive in exchange therefor one or more
duly executed warrants each evidencing the right to receive one share of Common
Stock of the Company or such other number of shares as may be designated by the
holder at the time of surrender.
The Company and any agent of the Company may treat the person in whose
name a warrant is registered as the owner of the warrant for all purposes
hereunder and neither the Company nor such agent shall be affected by notice to
the contrary. The Company covenants and agrees to take and cause to be taken
all action necessary to effect such registrations, transfers and exchanges.
(b) The Holder may transfer this Warrant on the books of the
Company by surrendering to the Company:
(i) this Warrant;
(ii) a written assignment of this Warrant, in substantially the
form of the Assignment appearing at the end of this Warrant, naming the
assignee duly executed by the Holder; and
(iii) funds sufficient to pay any stock transfer taxes payable upon
the making of such transfer.
The Company shall thereupon execute and deliver a new Warrant in the
name of the assignee specified in such instrument of assignment, and if this
Warrant is transferred in part, the Company shall also execute and deliver in
the name of the Holder a new Warrant covering the untransferred portion of the
Warrant. Upon issuance of the new Warrant or Warrants, the Warrant surrendered
for transfer shall be canceled by the Company.
3.4 Expenses. The Company shall pay all expenses, taxes (other
than transfer taxes), and other charges payable in connection with the
preparation issue, and delivery of any new Warrant under this Article 3.
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Article 4 Exercise Price and Adjustments
4.1 Exercise Price. The initial Warrant Price for the Warrant
Stock shall be $.40 per share.
4.2 Stock Splits, Stock Dividends and Reverse Stock Splits. If at
any time the Company shall subdivide (by reclassification, by the issuance of a
Common Stock dividend on Common Stock, or otherwise) its outstanding shares of
Common Stock into a greater number, the number of shares of Common Stock that
may be purchased hereunder shall be increased proportionately and the Exercise
Price per share of Common Stock shall be decreased proportionately as of the
effective date of such action. The effective date of a stock dividend shall be
the date on which the dividend is declared. Issuance of a Common Stock
dividend shall be treated as a subdivision of the whole number of shares of
Common Stock outstanding immediately before the record date for such dividend
into a number of shares equal to such whole number of shares so outstanding
plus the number of shares issued as a stock dividend. If at any time the
Company shall combine (by reclassification or otherwise) its outstanding number
of shares of Common Stock into a lesser number, the number of shares of Common
Stock that may be purchased hereunder shall be reduced proportionately and the
Exercise Price per share of Common Stock shall be increased proportionately as
of the effective date of such action.
4.3 Dividends Other than in Common Stock or Cash; Other
Distributions. If at any time while this Warrant is outstanding the Company
shall declare or make for the benefit of all holders of its Common Stock any
dividend or distribution upon its Common Stock other than ordinary cash
dividends, or distributions to which Section 4.2 or 4.4 apply (whether payable
in stock of any class or classes other than its Common Stock or payable in
evidences of indebtedness or assets or in rights, options, or warrants or
convertible or exchangeable securities), then in each such case the number of
shares of Common Stock that may be purchased hereunder shall be determined by
multiplying the number of shares of Common Stock theretofore comprising the
Warrant Stock by a fraction, the numerator of which shall be the Fair Market
Value per share of the Common Stock determined in accordance with Section 1.6
as of the record date for such dividend or distribution and the denominator of
which shall be the Fair Market Value per share, as so determined, less the fair
value as of such date, as reasonably determined by the Board of Directors of
the Company, of the portion of such dividend or distribution applicable to one
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of distribution
retroactive to the record date for the determination of shareholders entitled
to receive the distribution. In the event the Company determines that the
adjustment provided for above is unduly difficult or expensive to effect
because of difficulties of valuation, the Company may, at its option and as an
alternative to the adjustment, distribute and place in escrow for the Holder
that portion of
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such dividend or distribution which the Holder would have received had it
exercised this Warrant before the declaration of the dividend or the making of
the distribution. Upon exercise of this Warrant, the Holder shall receive its
portion of the dividend, distribution, or rights.
4.4 Issuance on Common Stock of Options, Warrants or Rights. If
at any time while this Warrant is outstanding the Company shall grant to all
holders of its Common Stock any rights, options, or warrants (referred to in
this Section 4.4 as "Rights") entitling them to purchase shares of Common Stock
at a price per share that is lower at the record date for such issuance than
the Fair Market Value of the Common Stock on such date determined in accordance
with Section 1.6, the number of Shares of Common Stock that may be purchased
hereunder shall be determined by multiplying the number of Shares of Common
Stock theretofore comprising the Warrant Stock by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding or subject
to issuance at prices at or below the Fair Market Value of the Common Stock on
such record date (the "Existing Stock") plus the number of shares subject to
issuance pursuant to the Rights and of which the denominator shall be the
number of shares of Existing Stock plus the number of shares which the
aggregate offering price of the total number of shares of Common Stock so
offered would purchase at the then current Fair Market Value per share of
Common Stock. Such adjustment shall be made whenever such rights, options, or
warrants or issued and shall become effective retroactively immediately after
the record date for the determination of shareholders entitled to receive such
rights, options or warrants. In the event the Company determines that the
adjustment provided for above in this Section is unduly difficult or expensive
to effect because of difficulties of valuation, the Company may, at its option
and as an alternative to the adjustment, grant and convey to the Holder of the
Rights which the Holder would have received had it exercised this Warrant
before issuance of the Rights.
On the expiration or termination of any of the Rights, the number of
shares of Common Stock then purchasable upon the exercise of each Warrant and
the exercise price then in effect shall be subject to readjustment and the
number of shares of Common Stock subject to the Warrants shall forthwith be
decreased and the exercise price under the Warrants shall forthwith be
increased to that which would have been in effect at the time of such
expiration or termination had such Right, to the extent outstanding immediately
prior to such expiration or termination, never had been issued.
4.5 Exercise of Management Options. If at any time while this
Warrant is outstanding any Anti-dilutive Option Shares are properly issued,
then in each case the number of shares of Common Stock purchasable hereunder
shall be increased by the product of each Warrant complete with the number
equal to (a) [percentage of equity issued in all Warrants multiplied by (b)
[percentage of all
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Warrants represented by this Warrant] multiplied by the number of Anti-dilutive
Incentive Option Shares so issued.
4.6 Anti-dilution Adjustment in Exercise Price.
(a) In case the Company shall at any time after the date
of this Warrant issue for consideration any shares of Common Stock or any
securities or other rights convertible into Common Stock or any other equity
security entitled to participate with the Common Stock in the earnings or
assets of the Company (but not any equity security entitled to a fixed
preference in such earnings or assets rather than a participation therein)
(such other securities or rights herein called "Common Stock Equivalents") for
a price per share less than the Exercise Price in effect immediately preceding
the issuance of such additional Common Stock or Common Stock Equivalents, the
Exercise Price in effect immediately prior to the issuance of such additional
shares of Common Stock Equivalents shall forthwith be reduced to a price
determined by:
(i) An amount equal to the sum of
(x) the total number of shares of Common Stock
deemed to be outstanding immediately prior to such
issuance multiplied by the Exercise Price in effect
immediately prior to such issuance,
(y) the total number of additional shares of
Common Stock so sold multiplied by the price per
share, if any, for which such shares are sold, and
(z) the aggregate amount paid for the Common
Stock Equivalents so sold plus the aggregate amount
subsequently required to be paid under the terms of
such Common Stock Equivalents to acquire additional
shares of Common Stock.
(ii) The total number of shares of Common Stock deemed to
be outstanding immediately after the issuance of such additional shares of
Common Stock or Common Stock Equivalents.
(b) For purposes of clauses (i) and (ii) of Subsection
4.6(a), the total number of shares of Common Stock deemed to be outstanding
shall include that number of shares of Common Stock actually outstanding plus
that number of shares of Common Stock then issuable under this Warrant plus
that number of shares of Common Stock then issuable pursuant to terms of the
Common Stock Equivalents at a price per share, computed pursuant to Subsection
4.6(d), that is less than the Exercise Price.
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(c) For purposes of this Section 4.6, the price per share
for which additional shares of Common Stock and Common Stock Equivalents are
issued or sold shall, to the extent such price consists of cash, be computed on
the basis of the amount of cash received by the Company (and in the case of
Common Stock Equivalents, such amount plus the amount of cash required to be
paid to acquire additional shares of Common Stock), after deduction of any
expenses payable by the Company and any underwriting or similar commissions,
compensations or concessions paid or allowed by the Company in connection with
such issue or sale. To the extent that the consideration for such additional
shares and Common Stock Equivalents is property or services other than cash,
the amount thereof shall be the value received by or required to be paid to the
Company as fixed in good faith by the Board of Directors of the Company
(d) The Exercise Price shall never be increased pursuant
to this Section 4.6 except as provide in this Subsection 4.6(d). Upon the
expiration unexercised of the entitlement to receive shares of Common Stock
under any Common Stock Equivalents the issuance of which resulted in a an
adjustment to the Exercise Price under this Section 4.6, then the Exercise
Price shall thereupon be increased by the amount that the issuance or sale of
such Common Stock Equivalent caused the Exercise Price to be decreased (subject
to any applicable adjustment thereunder) and thereafter adjustments will be
made to the Exercise Price in accordance with this Section 4.6.
4.7 Reorganization and Reclassification. In case of any capital
reorganization or any reclassification of the capital stock of the Company
while the Warrant remains outstanding, the Holder of the Warrant shall
thereafter be entitled to purchase pursuant to the Warrant (in lieu of the kind
and number of shares of Common Stock comprising Warrant Stock that such Holder
would have been entitled to purchase or acquire immediately before such
reorganization or reclassification) the kind and number of shares of stock of
any class or classes or other securities or property for or into which such
shares of Common Stock would have been exchanged, converted or reclassified if
the Warrant Stock had been purchased immediately before such reorganization or
reclassification. In case of any such reorganization or reclassification,
appropriate provision (as determined by resolution of the Board of Directors of
the Company) shall be made with respect to the rights and interest thereafter
of the Holder of the Warrant, to the end that all the provisions of the Warrant
(including adjustment provisions) shall thereafter be applicable, as nearly as
reasonably practicable, in relation to such stock or other securities or
property.
4.8 Statement of Adjustment of Warrant Stock. Whenever the number
or kind of shares comprising Warrant Stock or the Exercise Price is adjusted
pursuant to this Article 4, the Company shall promptly give notice to the
Holder of record of the outstanding Warrant, stating that such an adjustment
has been effected and setting forth the number and kind of shares purchasable
and the
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amount of the then-current Exercise Price, and stating in reasonable detail the
facts requiring such adjustment and the calculation of such adjustment.
4.9 No Other Adjustments. No adjustments in the number or kind or
price of shares constituting Warrant Stock shall be made except as provided in
this Article 4.
Article 5 Covenants of the Company.
The Company covenants and agrees that:
5.1 Reservation of Shares. At all times, the Company will reserve
and set apart and have, free from preemptive rights, a sufficient number of
shares of authorized but unissued Common Stock or other securities, if
applicable, to enable it at any time to fulfill all its obligations hereunder.
5.2 Adjustment of Par Value. Before taking any action that
would cause an adjustment reducing the Exercise Price per share below the then
par value of the shares of Warrant Stock issuable upon exercise of the Warrant,
the Company will take any corporate action that may be necessary in order that
the Company may validly and legally issue fully paid and nonassessable shares
of such Warrant Stock at such adjusted price.
5.3 Notice of Significant Events. In case the Company proposes:
(a) to pay any dividend, payable in stock (of any class
or classes) or in convertible securities, upon its Common Stock or to make any
distribution (other than ordinary cash dividends) to the holders of its Common
Stock; or
(b) to subdivide as a whole (by reclassification, by the
issuance of a stock dividend on Common Stock, or otherwise) the number of
shares of Common Stock then outstanding into a greater number of shares of
Common Stock, with or without par value; or
(c) to grant to the holders of its Common Stock generally
any rights or options; or
(d) to effect any capital reorganization or
reclassification of capital stock of the Company; or
(e) to consolidate with, or merge into, any other
corporation or business or transfer its property as an entirety or
substantially as an entirety; or
(f) to effect the liquidation, dissolution, or winding up
of the Company; or
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(g) to make any other fundamental change in respect of
which the Holder of this Warrant would have been entitled to vote, pursuant to
the corporation law of Delaware, if the Warrant had been previously exercised;
then the Company shall cause notice of any such intended action to be given to
the Holder of record of the Warrant (i) not less than thirty (30) days before
the date on which the transfer books of the Company shall close or a record be
taken for such stock dividend, distribution, granting of rights or options, or
for determining rights to vote in respect of any fundamental change, including
any capital reorganization, reclassification, consolidation, merger, transfer,
liquidation, dissolution, winding up, or any other fundamental change, and (ii)
in the case of any such capital reorganization, reclassification,
consolidation, merger, transfer, liquidation, dissolution, winding up, or other
fundamental change not less than thirty (30) days before the same shall be
effective.
Article 6 Limitation of Liability.
No provision of this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to consent or to receive dividends or to
receive notice as a stockholder in respect of meetings of stockholders for the
election of directors of the Company or any other matter whatsoever as
stockholders of the Company. In the absence of affirmative action by the
Holder hereof to purchase shares of Common Stock, no provision hereof shall
give rise to any liability of such Holder for the purchase price or as a
stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
Article 7 ▇▇▇▇▇▇, Consolidation, or Change.
7.1 Continuation of Warrant. Except as provided in Section 7.2,
in the event that the Company proposes to consolidate with, or merge into, any
other corporation or business or to transfer its property as an entirety or
substantially as an entirety, or to effect the liquidation, dissolution, or
winding up of the Company, or to change the Common Stock in any manner (other
than to change its par value), then after the Company causes notice of such
proposed action to be given to the Holder of record as provided in Section 5.3,
the Holder shall be entitled, on or before the effective date of such merger,
consolidation, transfer, liquidation, dissolution, winding up, or change to
require the Company of the successor or purchasing entity, as the case may be,
to (a) execute with the Holder an agreement providing that the Holder shall
have the right thereafter and throughout the remaining term of the Warrant upon
payment of the exercise price per Warrant Share in effect immediately prior to
such action to purchase with respect to each share of Warrant Stock issuable
upon exercise of this Warrant the kind and amount of shares of stock and other
securities, property (including cash) or any combination thereof which the
Holder would have owned or have been entitled to receive after the happening of
such consolidation, merger, sale, conveyance, or change had this Warrant been
exercised with
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respect to such share of the Warrant Stock immediately prior to such action and
(b) make effective provision in its Articles of Incorporation or otherwise, if
necessary, in order to effect such agreement. Such agreement shall provide for
adjustments which shall be as nearly equivalent as practicable to the
adjustments in Article 4 of this Warrant. The provisions of this Section 7.1
shall similarly apply to successive consolidations, mergers, sales, conveyances
or changes.
7.2 Exception. Section 7.1 shall not apply to a consolidation or
merger with a Person in which the Company is the surviving entity.
Article 8 Registration Rights
8.1 Piggyback Registration Rights. If, at any time on or before
the expiration of the Warrant, the Company proposes to file a registration
statement for the public sale of any of its Common Stock under the Securities
Act of 1933 the Company shall, not later than thirty (30) days prior to the
initial filing of the registration statement, deliver notice of its intent to
file such registration statement to the Holder, setting forth the minimum and
maximum proposed offering price, commissions, and discounts in connection with
the offering, and other relevant information. Within twenty (20) days after
receipt of notice of the Company's intent to file a registration statement, the
Holder shall be entitled to request that the Warrant Stock be included in such
registration statement, and the Company will use its best efforts to cause such
Warrant Stock to be included in the offering covered by such registration
statement. In the event the Warrant Stock is included in the registration
statement, the Holder may transfer the Warrant to an underwriter or broker for
exercise by such underwriter or broker in connection with a distribution of the
Warrant Stock.
8.2 Filing Obligations of the Company. In connection with any
registration of the Warrant Stock effected under Section 8.1, the Company
shall:
(a) prepare and file the registration statement and such
amendments and supplements to the registration statement and the prospectus or
offering circular used in connection therewith as may be necessary to keep the
registration statement effective for a period of ninety (90) days and to comply
with the provisions of the 1933 Act and the rules and regulations thereunder
with respect to the disposition of the Warrant Stock covered by the
registration statement for the period required to effect the distribution
thereof, but in no event shall the Company be required to do so for a period of
more than ninety (90) days following the effective date of such registration
statement;
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(b) furnish to the Holder such number of copies of any
prospectus or offering circular, including a preliminary prospectus, and of a
full registration statement and exhibits in conformity with the requirements of
the 1933 Act and rules and regulations thereunder, as the Holder may reasonably
request in order to facilitate the disposition of such securities;
(c) use its best efforts to register or qualify the
Warrant Stock covered by the registration statement, as the case may be, under
the securities or blue sky laws of such jurisdictions as the Holder may
reasonably request, and accomplish any and all other acts and things which may
be necessary or advisable to permit sale in such jurisdictions of such Warrant
Stock; provided, however, that the Company shall not be required to register as
a dealer or to qualify as a foreign corporation in any such jurisdictions or to
escrow any shares of its capital stock.
8.3 Expenses. All expenses incurred by the Company in connection
with any registration of the Warrant Stock effected under Section 8.1,
including, without limitation, all registration or filing fees, fees and
expenses of complying with state securities and blue sky laws, printing
expenses, fees and expenses of the Company's counsel and accountants and fees
and expenses of counsel for the Holder, shall be paid by the Company; provided,
however, that all underwriting discounts and selling commission applicable to
the Warrant Stock shall be borne by the Company but shall be borne by the
Holder.
8.4 Indemnification.
(a) By the Company. In connection with the filing of any
registration statements and sales of the Warrant Stock thereunder, the Company
shall indemnify and hold harmless the Holder of this Warrant, any underwriter,
and each other Person, if any, who controls the Holder or the underwriter
within the meaning of the 1933 Act, against losses, claims, damages or
liabilities, joint or several (or actions in respect thereto) ("Losses"), to
which any such Holder, underwriter, or controlling Person may become subject
under the 1933 Act or otherwise, insofar as such Losses arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which the Warrant Stock was
registered under the 1933 Act, any preliminary prospectus, offering circular or
final prospectus contained therein, or any amendment or supplement thereto, or
any report filed with the Securities and Exchange Commission (the "Disclosure
Documents"), or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse any such Holder,
underwriter, or controlling Person for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claims, excluding any amounts paid in settlement of litigation, commenced or
threatened, if such settlement is effected without the prior written consent of
the Company;
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provided, however, that the Company shall not be liable in any such case to the
extent that such Losses arise out of or are based upon any untrue statement,
alleged untrue statement or omission or alleged omission made in such
Disclosure Document in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of the Holder of this
Warrant for use specifically in connection with the preparation of such
Disclosure Document.
(b) By the Holder. In connection with the filing of any
registration statement and sales of the Warrant Stock thereunder, the Holder
shall indemnify the Company, each of its directors, each of its officers who
signed such registration statement, and each other Person, if any, who controls
the Company within the meaning of the 1933 Act, against any Losses to which the
Company, any of its directors, officers, or controlling Persons may become
subject under the 1933 Act or otherwise, insofar as such Losses arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any of the Disclosure Documents or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, and any of its directors, officers,
or controlling Persons for any legal or any other expenses reasonably incurred
in connection with investigating or defending any such claims, excluding any
amounts paid in settlement of litigation, commenced or threatened, if such
settlement is effected without the prior written consent of the Holder;
provided, however, that such indemnification or reimbursement shall be payable
in any such case only to the extent that such statement or alleged statement or
omission or alleged omission is made in reliance on information furnished to
the Company in writing by or on behalf of the Holder for use specifically in
connection with the preparation of such Disclosure Document.
8.5 Assignability. The rights of the Holder under this Article 8
may not be assigned except in accordance with Section 3.1 of this Agreement and
subject to assumption by the assignee of the corresponding obligations
hereunder.
8.6 Discharge of Registration Obligations. In the event the
Holder requests the Warrant Stock be registered pursuant to Section 8.1 herein,
the Company shall have the right to discharge the registration obligations set
forth in Section 8.1 by repurchasing all or any part of the Warrant or Warrant
Stock, as designated by the Holder, for cash at Fair Market Value as of the
date the Holder demands registration or the date the Company delivers notice of
its election to repurchase, whichever is higher. The Company must deliver
written notice to the Holder of its election to repurchase the Warrant within
fifteen (15) days after receipt of a request by the Holder for registration and
such notification must be accompanied by a non-refundable cash deposit equal to
the purchase price of the Warrant or Warrant Stock under this Section 8.6. The
Company
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shall deliver the balance of the purchase price to the holder upon delivery of
the Warrant or Warrant Stock. In the event the Company does not deliver cash
to the Holder as required under this Section 8.6, the Company's right to
repurchase under this Section 8.6, the Company's shall be terminated.
Article 9 Miscellaneous.
9.1 Governing Law. The rights of the parties arising under this
Warrant shall be construed and enforced under the laws of the State of Texas
without giving effect to any choice of law or conflict of law rules.
9.2 Notices. Any notice or other communication required or
permitted to be given or delivered pursuant to this Warrant shall be in writing
and shall be deemed effective as of the date of receipt if delivered personally
or by facsimile transmission (if receipt is confirmed by the facsimile operator
of the recipient), or delivered by overnight courier service or mailed by
registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following addresses (or at such other address in the United
States of America for a party as shall be specified by like notice; provided
that notices of change of address be effective only upon receipt thereof):
(i) to the Holder as follows:
[address of Holders]
(ii) to the Company as follows:
Rio Grande, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9.3 Severability. If any provision of this Warrant shall be held
invalid, such invalidity shall not affect any other provision of the Warrant
that can be given effect without the invalid provision, and to this end, the
provisions hereof are separable.
9.4 Headings. The headings in this Warrant are for reference
purposes only and shall not affect in any way the meaning of interpretation of
this Warrant.
9.5 Amendment. This Warrant cannot be amended or modified except
by a written agreement executed by the Company and the Holder.
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9.6 Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns except that no party may assign or
transfer its rights or obligations under this Agreement except to the extent
explicitly permitted herein.
9.7 Entire Agreement. This Agreement, together with its
attachments, contains the entire understanding among the parties hereto with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained.
IN WITNESS WHEREOF, the Company has cause this Warrant to be signed in
its name by its President or a Vice President thereunto duly authorized.
Dated: __________________________
RIO GRANDE, INC.
By: ______________________________
Its:______________________________
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SUBSCRIPTION NOTICE
The undersigned, the Holder of a Common Stock Purchase Warrant issued
by Rio Grande, Inc. pursuant to a Note Purchase Agreement dates as of
______________, hereby elects to exercise purchase rights represented by such
Warrant for, and to purchase thereunder, _______________ shares of the Common
Stock covered by such Warrant and herewith makes payment in full therefor of
________________________ and requests that certificates for such shares (and
any securities or the property issuable upon such exercise) be issued in the
name of and delivered to _________________ whose address is
_______________________________________________.
If said number of shares of Common Stock is less than the number of
shares of Warrant Stock purchasable hereunder, the undersigned requests that a
new Warrant representing the balance of the Warrant Stock be registered in the
name of and issued and delivered to _________________ whose address is
_______________________________________________.
The undersigned hereby agrees to pay any transfer taxes on the
transfer of all or any portion of the Warrant or Warrant Stock requested
herein.
The undersigned agrees that, in the absence of an effective
registration statement with respect to Common Stock issued upon this exercise,
the undersigned is acquiring such Common Stock for investment and not, with a
view to distribution thereof and the certificate or certificates representing
such Common Stock may bear a legend substantially as follows: "The shares
represented by this certificate have not been registered under the Securities
Act of 1933, as amended, and may not be transferred except as provided in
Article 3 of the Warrant to purchase Common Stock of Rio Grande, Inc., a copy
of which is on file at the principal office of Rio Grande, Inc."
__________________________________
Signature guaranteed:
Dated:_______________________
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ASSIGNMENT
FOR VALUED RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________ the rights represented by the foregoing
Warrant of Rio Grande, Inc., and appoints __________________ its attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
___________________________
Signature guaranteed:
Dated:_______________________
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