EXHIBIT 10.21
WARRANT AGREEMENT BETWEEN
APPLIED DIGITAL SOLUTIONS, INC.
AND
IBM CREDIT CORPORATION
TABLE OF CONTENTS
PAGE
1. Exercise and Expiration of Warrant......................................1
2. Representations.........................................................2
3. Certain Agreements of the Company.......................................3
4. Antidilution Adjustments................................................4
5. Registration Rights.....................................................4
6. Treatment of Warrant in the Event of an Acquisition Transaction.........4
7. Transfer, Exchange, Replacement, Underwriter's Lockup...................5
8. Notices.................................................................6
9. Governing Law; Jurisdiction and Venue...................................6
10. Miscellaneous...........................................................6
Appendix A -- Definitions
Appendix B -- Antidilution Provisions
Appendix C -- Registration Rights
-i-
STOCK PURCHASE WARRANT
Neither this Warrant nor the Warrant Shares as defined herein have
been registered under the Securities Act of 1933, as amended, or
any applicable state securities laws. Neither this Warrant nor the
Warrant Shares may be sold or transferred in the absence of such
registration or any exemption from such registration.
Right to Purchase 2,894,714 Shares of Common Stock
Dated as of August 21, 2002
Applied Digital Solutions, Inc., a Missouri corporation (the
"Company"), grants IBM Credit Corporation, a Delaware corporation, ("IBM"
------- ---
and each of its successors and assigns, a "Holder") a warrant (this
------
"Warrant") to purchase the Warrant Shares at the Purchase Price. Capitalized
-------
terms not otherwise defined have the definitions set forth in Appendix A.
----------
1. Exercise and Expiration of Warrant.
----------------------------------
(a) This Warrant is immediately exercisable and will expire
upon the fifth anniversary of the date of this Warrant. "Exercise Period"
---------------
shall mean the period of time between the date hereof and the expiration of
this Warrant in accordance with the terms hereof.
(b) This Warrant may be exercised during the Exercise Period
by the Holder, in whole or in part, by delivering this Warrant to the
Company with (i) payment of the Purchase Price in U.S. dollars, or (ii) by
delivery to the Company of a written notice of an election to effect a
cashless exercise for Warrant Shares pursuant to this Section l(b)
("Cashless Exercise"). To effect a Cashless Exercise, the Holder will
-----------------
surrender this Warrant for that number of shares of Common Stock determined
by multiplying the number of Warrant Shares to which it would otherwise be
entitled by a fraction, the numerator of which shall be the difference
between (i) the then current Market Price of a share of the Common Stock on
the date of exercise and (ii) the Purchase Price, and the denominator of
which shall be the then current Market Price per share of Common Stock. In
the event that this Warrant is not exercised in full immediately prior to
the end of the Exercise Period and at such time the then current Market
Price of a share of the Common Stock is greater than the Purchase Price,
this Warrant shall be deemed automatically exercised as to the remaining
Warrant Shares at such time by Cashless Exercise without the delivery of any
written notice from the Holder.
(c) Upon exercise of this Warrant, the Company will issue to
the Holder (i) a certificate or certificates for the number of full Warrant
Shares to which the Holder shall be entitled upon such exercise plus the
value of any fractional share to which the Holder would otherwise be
entitled, and (ii) in case such exercise is in part only, a new warrant or
warrants representing the remaining Warrant Shares.
(d) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered pursuant to Section l(b).
2. Representations.
---------------
(a) By the Holder. The Holder represents and warrants to the
Company as follows:
(i) It is an "accredited investor" within the meaning
of Rule 501 of the Securities Act. This Warrant is acquired for the Holder's
own account for investment purposes and not with a view to any offering or
distribution within the meaning of the Securities Act and any applicable
state securities laws. The Holder has no present intention of selling or
otherwise disposing of the Warrant or the Warrant Shares in violation of
such laws; and
(ii) The Holder has sufficient knowledge and
expertise in financial and business matters so as to be capable of
evaluating the merits and risks of its investment in the Company. The Holder
understands that this investment involves a high degree of risk and could
result in a substantial or complete loss of its investment. The Holder is
capable of bearing the economic risks of such investment.
The Holder acknowledges that the Company has indicated that the Warrant and
the Warrant Shares have not been registered under the Securities Act by
reason of their issuance in a transaction exempt from the registration
requirements thereof, and that the Warrant Shares will bear a legend stating
that such securities have not been registered under the Securities Act and
may not be sold or transferred in the absence of such registration or an
exemption from such registration.
(b) By the Company. The Company represents and warrants that:
(i) It (A) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
organization, (B) has all requisite power and authority to conduct its
business as now conducted and as presently contemplated and to consummate
the transactions contemplated hereby and (C) is duly qualified to do
business and is in good standing in each jurisdiction in which the character
of the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary.
(ii) It has outstanding as of the date hereof but
before giving effect to this Warrant, 277,572,699 shares of Common Stock,
calculated on a fully diluted basis, giving effect to the conversion of all
options, warrants, rights and other securities convertible into, or
exchangeable for, Common Stock.
(iii) The execution, delivery and performance by the
Company of this Warrant (A) has been duly authorized by all necessary
corporate action, (B) does not and will not contravene the Company's charter
or bylaws or any other organizational document and (C) does not and will not
contravene any applicable law or any contractual restriction binding on or
otherwise affecting the Company or any of its properties or result in a
default under any agreement or instrument to which the Company is a party or
by which the Company or its properties may be subject.
2
(iv) This Warrant has been duly executed and
delivered by the Company, and is a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, moratorium
and other laws affecting the rights of creditors generally and general
principles of equity.
(v) Assuming the accuracy of the representations made
by the Holder in Section 2(a) hereof, no authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any governmental authority is or
will be necessary in connection with the execution and delivery by the
Company of this Warrant, the issuance by the Company of the Warrant Shares,
the consummation of the transactions contemplated hereby, the performance of
or compliance with the terms and conditions hereof, or to ensure the
legality, validity, and enforceability hereof.
(vi) The Company has reserved solely for issuance and
delivery upon the exercise of this Warrant, such number of shares of Common
Stock to provide for the exercise in full of this Warrant.
(vii) Neither the Company, nor any of its Affiliates,
nor any person acting on its or their behalf, has directly or indirectly
made any offers or sales of any security or solicited any offers to buy any
security under circumstances that would require registration, or the filing
of a prospectus qualifying the distribution, of this Warrant being issued
hereby under the Securities Act or cause the issuance of this Warrant to be
integrated with any prior offering of securities of the Company for purposes
of the Securities Act.
3. Certain Agreements of the Company. The Company agrees as
---------------------------------
follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and nonassessable and free from all taxes, liens, claims and
encumbrances.
(b) Authorization and Reservation of Shares. During the
Exercise Period, the Company shall have duly authorized a sufficient number
of shares of Common Stock, free from preemptive rights and from any other
restrictions imposed by the Company without the consent of the Holder, to
provide for the exercise in full of this Warrant. The Company shall at all
times during the Exercise Period reserve and keep available out of such
authorized but unissued shares of Common Stock such number of shares to
provide for the exercise in full of this Warrant.
(c) Listing. In connection with the Holder's exercise of
Registration Rights hereunder, the Company shall use its best efforts to
promptly secure the listing of the shares of Common Stock issuable upon
exercise of this Warrant upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
or become listed (subject to official notice of issuance upon exercise of
this Warrant) and shall maintain such listing for so long as any other
shares of Common Stock shall be so listed.
(d) Certain Actions Prohibited. The Company will not, by
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance
3
of any of the terms to be observed or performed by it hereunder, but will at
all times in good faith assist in the carrying out of all the provisions of
this Warrant and in the taking of all such action as may reasonably be
requested by the Holder of this Warrant in order to protect the exercise
privilege of the Holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant.
(e) Successors and Assigns. Except as expressly provided
otherwise herein, this Warrant will be binding upon any entity succeeding to
the Company by merger, consolidation, or acquisition of all or substantially
all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the date of
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or
obtain exemption for the Warrant Shares for, sale to the Holder of this
Warrant upon the exercise hereof under applicable securities or "blue sky"
laws of the states of the United States, and shall provide written evidence
of any such action so taken to the Holder of this Warrant prior to such
date; provided, however, that the Company shall not be required to qualify
as a foreign corporation or file a general consent to service of process in
any such jurisdiction.
(g) Rule 144 Reports. For so long as the Company is subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall take all actions reasonably necessary to enable the Holder to
sell the Registrable Securities without registration under the Securities
Act within the limitations of the exemptions provided by Rule 144 under the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC, including filing on
a timely basis all reports required to be filed by the Exchange Act. Upon
the request of the Holder, the Company shall deliver to the Holder a written
statement as to whether it has complied with such requirements.
4. Antidilution Adjustments. The Purchase Price and the
------------------------
number of Warrant Shares may be adjusted from time to time as set forth in
Appendix B.
----------
5. Registration Rights. The Warrant shall have the
-------------------
Registration Rights set forth in Appendix C.
----------
6. Treatment of Warrant in the Event of an Acquisition
---------------------------------------------------
Transaction. If the Company undertakes an Acquisition Transaction then the
-----------
Company shall give prompt notice of such transaction to the Holder and, at
the Holder's election, either (i) cause the Company Acquiror to assume this
Warrant and cause provision to be made so that the Holder shall thereafter
be entitled to receive, upon exercise of this Warrant, the Warrant Shares
(as such term is modified in accordance with this Section 6), whereupon the
Company shall be released from this Warrant, or (ii) cause the Company to
pay the Warrant Value to the Holder upon consummation of the Acquisition
Transaction. If the Company undertakes an Acquisition Transaction and does
not pay the Warrant Value to the Holder pursuant to the foregoing clause
(ii), this Warrant shall remain outstanding in accordance with its terms and
all references to the "Company" shall apply to the Company Acquiror and all
references to the "Warrant Shares" shall apply to the common stock of the
Company Acquiror, and appropriate modifications to the other terms of this
Warrant, including without limitation the amount of Warrant Shares and the
Purchase Price, shall be made
4
to take into account the Warrant Value as of the date of the Acquisition
Transaction.
7. Transfer, Exchange, Replacement, Underwriter's Lockup.
-----------------------------------------------------
(a) Transferability. (i) The Holder covenants not to transfer
this Warrant or the Warrant Shares except in compliance with this Section
7(a). Subject to compliance with the transfer restrictions set forth in
clause (ii) of this Section 7(a), this Warrant, the Warrant Shares and the
rights granted to the Holder hereof are freely transferable, in whole or in
part, upon surrender of this Warrant, together with an assignment form, at
the office or agency of the Company referred to in Section 8 below.
(ii) The Holder shall not effect any transfer except
pursuant to a transaction either registered, or exempt from registration,
under the Securities Act. Prior to any transfer in reliance upon an
exemption from such registration other than Rule 144 of the Securities Act,
the Holder shall provide to the Company an opinion letter from counsel to
the Holder (which counsel may include in-house counsel), reasonably
satisfactory to the Company, opining that such transfer does not require
registration under the Securities Act. The transferee, by acceptance of this
Warrant, acknowledges that it takes such warrant subject to the terms and
conditions hereof. Until due presentment for registration of transfer on the
books of the Company, the Company may treat the registered Holder hereof as
the owner hereof for all purposes, and the Company shall not be affected by
any notice to the contrary.
(b) Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Holder hereof at
the office or agency of the Company referred to in Section 8 below, for new
warrants of like tenor of different denominations representing in the
aggregate the right to purchase the number of shares of Common Stock which
may be purchased hereunder, each of such new warrants to represent the right
to purchase such number of shares as shall be designated by the Holder
hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such logs, theft, or
destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation,
upon surrender and cancellation of this Warrant, the Company, at its
expense, will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of
this Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 7, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities transfer
taxes) and all other expenses (other than legal expenses, if any, incurred
by the Holder or transferees) and charges payable in connection with the
preparation, execution, and delivery of warrants pursuant to this Section 8.
The Company shall indemnify and reimburse the Holder of this Warrant for all
costs and expenses (including legal fees) incurred by such Holder in
connection with the enforcement of its rights hereunder.
5
(e) Warrant Register. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company
as it may designate by notice to the Holder hereof), a register for this
Warrant, in which the Company shall record the name and address of the
person in whose name this Warrant has been issued, as well as the name and
address of each transferee and each prior owner of this Warrant.
8. Notices. Any notices required or permitted to be given
-------
under the terms of this Warrant shall be sent by certified or registered
mail (return receipt requested) or delivered personally or by courier or by
confirmed telecopy, and shall be effective five days after being placed in
the mail, if mailed, or upon receipt or refusal of receipt, if delivered
personally or by courier, or by confirmed telecopy, in each ease addressed
to a party. The addresses for such communications shall be:
-----------------------------------------------------------------------
If to the Company: If to IBM:
APPLIED DIGITAL SOLUTIONS, INC. IBM Credit Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇, VP,
SVP, COO and Assistant Treasurer Finance & Planning
-----------------------------------------------------------------------
If to any other Holder, at such address as such Holder shall have provided
in writing to the Company, or at such other address as any Holder furnishes
by notice given in accordance with this Section 8.
9. Governing Law; Jurisdiction and Venue. This Warrant shall
-------------------------------------
be governed by the laws of the State of New York, without regard to
conflicts or choice of law roles or principles. Each of the Company and the
Holder submits to the exclusive jurisdiction and venue of the federal and
state courts of New York, County of Westchester, to resolve all issues that
may arise out of or relate to this Warrant. The parties waive any right to a
jury trial.
10. Miscellaneous.
-------------
(a) Amendments. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and all Holders
hereof.
(b) U.S. Dollars. All references in this Warrant to "dollars"
-------
or "$" shall mean the U.S. dollar.
-
(c) Fractional Shares. The Company shall not be required upon
the exercise of this Warrant to issue any fractional shares, but shall make
an adjustment therefor in cash on the basis of the fair market value per
share of Common Stock, as determined in good faith by the Board.
(d) Descriptive Headings. The descriptive headings of the
several sections of this Warrant are inserted for purposes of reference
only, and shall not affect the meaning or construction of any of the
provisions hereof.
6
(e) Business Day. For purposes of this Warrant, the term
"business day" means any day, other than a Saturday or Sunday or a day on
------------
which banking institutions in New York, New York or the city and state
provided in Section 8 hereof for notices to the Company, are authorized or
obligated by law, regulation or executive order to close.
(f) Counterparts. This agreement may be executed in
counterparts, and any such executed counterpart shall be, and shall be
deemed to be, an original instrument.
(g) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.
(h) Successors and Assigns. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns, including all Holders.
(i) Survival. The representations, warranties and covenants
made by the parties hereto shall survive the execution and delivery of this
Agreement until (A) in the case of representations and warranties, three (3)
years after the date hereof and (B) in the case of covenants, until such
time as the Holder no longer holds either of the Warrant or any Warrant
Shares.
7
IN WITNESS WHEREOF, the undersigned have executed this Warrant as
of the date first written above.
APPLIED DIGITAL SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Operating Officer
IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------
For: Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager, Special Handling
8
APPENDIX A -- DEFINITIONS
-------------------------
"Acquisition Transaction" shall mean (i) the sale, lease or other
-----------------------
transfer, in one or a series of transactions, of all or substantially all of
the Company's assets to any person or Group, or (ii) the consummation of any
transaction or series of transactions the result of which is that any person
or Group beneficially owns, directly or indirectly, 50% or more of the
voting power or the voting stock of the Company.
"Affiliate" shall mean any entity directly or indirectly controlled
---------
by, controlling or under common control with another entity.
"Board" shall mean the Board of Directors of the Company.
-----
"Cashless Exercise" shall have the meaning specified in Section
-----------------
l(b) of the Warrant.
"Company" shall have the meaning specified in the initial paragraph
-------
of the Warrant.
"Company Acquiror" means the person or Group (i) to whom the
----------------
Company's assets are transferred as described in clause (i) of the
definition of Acquisition Transaction or (ii) that would beneficially own
50% or more of the voting power or voting stock of the Company as described
in clause (ii) of such definition.
"Common Stock" shall mean the common shares of the Company.
------------
"Demand Registration Rights" shall mean a right of the Holder under
--------------------------
Appendix C(b).
-------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Exercise Period" shall have the meaning specified in Section l(a)
---------------
of the Warrant.
"Group" shall have the meaning specified in Section 13(d)(3) of the
-----
Exchange Act.
"IBM" shall have the meaning specified in the initial paragraph of
---
the Warrant.
"Holder" shall have the meaning specified in the initial paragraph
------
of the Warrant.
"Market Price" shall mean the following: (i) the average of the
------------
closing sale prices for the shares of Common Stock as reported on the
principal trading market for the Common Stock for the five (5) consecutive
trading days immediately preceding such date, or if no sale price is so
reported for such period, the last bid price for such period, or (ii) if the
foregoing does not apply, the last sale price of such security in the
over-the-counter market on the pink sheets or bulletin board for such
security on the last trading day immediately preceding such date, or if no
sale price is so reported for such security, the average of the last bid and
ask price for such security on the last trading day immediately preceding
such date, or (iii) if market value cannot be calculated as of such date on
any of the foregoing bases, the Market Price shall be the fair market value
as reasonably determined by an investment banking firm selected by the
Company and reasonably acceptable to the Holder, with the costs of the
appraisal to be borne by the Company,
1
provided, however, that for purposes of determining Warrant Value in
-------- -------
accordance with Section 6 in the event of a Stock Acquisition, Market Price
shall have the meaning as sot forth in the definition of "Warrant Value".
"Person" or "person" shall mean all natural persons, corporations,
------ ------
business trusts, associations, companies, partnerships, joint ventures,
governments, agencies, political subdivisions and other entities.
"Piggyback Registration Right" shall mean a right of the Holder
----------------------------
under Appendix C(a).
-------------
"Purchase Price" shall mean $0.15 (fifteen cents) per share of
--------------
Common Stock, as may be adjusted from time to time pursuant to Appendix B.
----------
"Registrable Securities" shall mean the Warrant Shares issued or
----------------------
issuable with respect to the Warrant.
"Registration Expenses" shall mean all expenses incident to the
---------------------
Company's performance of or compliance with the registration provisions of
Appendix C herein, including without limitation (i) all fees and expenses of
----------
compliance with federal securities and state securities laws; (ii) all U.S.
Securities and Exchange Commission and state securities laws filing fees;
(iii) all printing expenses; (iv) all fees and disbursements of counsel for
the Company; and (v) all fees and disbursements of accountants of the
Company, but excluding (i) underwriter's discounts relating to securities
sold by the Selling Holder; (ii) filings made with the NASD and counsel fees
in connection therewith; and (iii) fees and disbursements of counsel for the
Selling Holder.
"Registration Rights" shall mean the Piggyback Registration Right,
-------------------
the Demand Registration Rights and the S-3 Registration Rights set forth in
Appendix C.
----------
"S-3 Registration Rights" shall mean a right of the Holder under
-----------------------
Appendix C(c).
-------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Selling Holder" shall have the meaning specified in Appendix
-------------- --------
C(d)(ii) of the Warrant.
--------
"Stock Acquisition" shall mean an Acquisition Transaction described
-----------------
in clause (ii) of the definition of Acquisition Transaction.
"Warrant" shall have the meaning specified in the initial paragraph
-------
of the Warrant.
"Warrant Shares" shall mean 2,894,714 shares of Common Stock, as
--------------
may be adjusted from time to time pursuant to Appendix B.
----------
"Warrant Value" shall mean the value of this Warrant calculated as
-------------
if the Holder had exercised this Warrant in full at such time by Cashless
Exercise pursuant to Section 1(b) hereof, except that Market Price for
purposes of determining Warrant Value in the event of a Stock Acquisition
shall be equal to the per share consideration paid in the Stock Acquisition.
2
APPENDIX B -- ANTIDILUTION PROVISIONS
-------------------------------------
(a) Diluting Issuances.
(i) Special Definitions. For purposes of this
Appendix B, the following definitions shall apply: (A) "Option" shall mean
---------- ------
rights, options or warrants to subscribe for, purchase or otherwise acquire
Common Stock or Convertible Securities; (B) "Conversion Date" shall mean the
---------------
first day of the Exercise Period; (C) "Convertible Securities" shall mean
----------------------
any evidences of indebtedness, shares or other securities directly or
indirectly convertible into or exchangeable for Common Stock; (D)
"Additional Shares of Common Stock" shall mean all shares of Common Stock
---------------------------------
issued (or, pursuant to (a)(iii) below, deemed to be issued) by the Company
after the Conversion Date other than shares of Common Stock issued upon
exercise of this Warrant.
(ii) No Adjustment of Purchase Price. No adjustments
to the Purchase Price under this Appendix B shall be made unless the
----------
consideration per share (determined pursuant to (a)(v) below) for an
Additional Share of Common Stock issued or deemed to be issued by the
Company is less than the Purchase Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares of Common Stock.
Notwithstanding anything to the contrary contained herein, no adjustments to
the Purchase Price under this Appendix B shall be made for Common Stock
----------
issued or deemed to be issued upon the conversion of convertible preferred
stock of the Company issued and outstanding as of the date hereof.
(iii) Issue of Securities Deemed Issue of Additional
Shares of Common Stock. If the Company at any time or from time to time
after the Conversion Date shall issue any Options or Convertible Securities
or shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities,
then the maximum number of shares of Common Stock (as set forth in the
instrument relating thereto without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock issued as of the
time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional
Shares of Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to (a)(v) below) of such
Additional Shares of Common Stock would be less than the Purchase Price in
effect on the date of and immediately prior to such issue, or such record
date, as the case may be, and provided further that in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the Purchase
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(B) If such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise,
for any increase in the consideration payable to the Company, upon the
exercise, conversion or exchange thereof, the Purchase Price computed upon
1
the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
any such increase becoming effective, be recomputed to reflect such increase
insofar as it affects such Options or the rights of conversion or exchange
under such Convertible Securities;
(C) Upon the expiration or termination of
any unexercised Option, the Purchase Price shall be readjusted, and the
Additional Shares of Common Stock deemed issued as the result of the
original issue of such Option shall not be deemed issued for the purposes of
any subsequent adjustment of the Purchase Price;
(D) In the event of any change in the number
of shares of Common Stock issuable upon the exercise, conversion or exchange
of any Option or Convertible Security, including, but not limited to, a
change resulting from the anti-dilution provisions thereof, the Purchase
Price then in effect shall forthwith be readjusted to such Purchase Price as
would have been obtained had the adjustment which was made upon the issuance
of such Option or Convertible Security not exercised or converted prior to
such change been made upon the basis of such change; and
(E) No readjustment pursuant to Clause (B)
or (D) above shall have the effect of increasing the Purchase Price to an
amount which exceeds the lower of (i) the Purchase Price on the original
adjustment date, or (ii) the Purchase Price that would have resulted from
any issuances of Additional Shares of Common Stock between the original
adjustment date and such readjustment date.
(iv) Adjustment of Purchase Price Upon Issuance of
Additional Shares of Common Stock. In the event the Company shall at any
time after the Conversion Date issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
(a)(iii) above, but excluding shares issued as a dividend or distribution or
upon a stock split or combination as provided in (b) below), without
consideration or for a consideration per share less than the Purchase Price
in effect on the date of and immediately prior to such issue, then and in
such event, such Purchase Price shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by multiplying
such Purchase Price by a fraction, (A) the numerator of which shall be (1)
the number of shares of Common Stock outstanding immediately prior to such
issue plus (2) the number of shares of Common Stock which the aggregate
consideration received or to be received by the Company for the total number
of Additional Shares of Common Stock so issued would purchase at such
Purchase Price; and (B) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue plus the
number of such Additional Shares of Common Stock so issued; provided that,
(i) for the purpose of this (a)(iv), all shares of Common Stock issuable
upon exercise or conversion of Options or Convertible Securities outstanding
immediately prior to such issue shall be deemed to be outstanding (other
than shares excluded from the definition of "Additional Shares of Common
Stock" by virtue of (a)(i)(D) above), and (ii) the number of shares of
Common Stock deemed issuable upon conversion of such outstanding Options and
Convertible Securities shall not give effect to any adjustments to the
conversion price or conversion rate of such Options or Convertible
Securities resulting from the issuance of Additional Shares of Common Stock
that is the subject of this calculation.
2
(v) Determination of Consideration. For purposes of
section (a), the consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property: Such consideration
shall (I) insofar as it consists of cash, be computed at the aggregate of
cash received by the Company, excluding amounts paid or payable for accrued
interest or accrued dividends; (II) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board; and (III) in the event
Additional Shares of Common Stock are issued together with other shares or
securities or other assets of the Company for consideration which covers
both, be the proportion of such consideration so received, computed as
provided in clauses (I) and (II) above, as determined in good faith by the
Board.
(B) Options and Convertible Securities. The
consideration per share received by the Company for Additional Shares of
Common Stock deemed to have been issued pursuant to (a)(iii) above, relating
to Options and Convertible Securities, shall be determined by dividing (x)
the total amount, if any, received or receivable by the Company as
consideration for the issue of such Options or Convertible Securities, plus
the minimum aggregate amount of additional consideration (as set forth in
the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration) payable to the
Company upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by (y) the maximum
number of shares of Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(vi) Multiple Closing Dates. In the event the Company
shall issue on more than one date Additional Shares of Common Stock which
are comprised of shares of the same series or class of capital stock, and
such issuance dates occur within a period of no more than 60 days, then the
Purchase Price shall be adjusted only once on account of such issuances,
with such adjustment to occur upon the final such issuance (but not later
than ten days prior to the end of the Exercise Period) and to give effect to
all such issuances as if they occurred on the date of the final such
issuance.
(b) Recapitalizations. If outstanding shares of the Company's
Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of Common Stock, the
Purchase Price in effect immediately prior to such subdivision or at the
record date of such dividend shall simultaneously with the effectiveness of
such subdivision or immediately after the record date of such dividend be
proportionately reduced. If outstanding shares of Common Stock shall be
combined into a smaller number of shares, the Purchase Price in effect
immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be proportionately increased.
(c) Mergers; Transfer of Assets. Subject to Section 6 of the
Warrant, if there shall occur any capital reorganization or reclassification
of the Company's Common Stock (other than
3
a subdivision or combination as provided for in (b) above), or any
consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, then,
as part of any such reorganization, reclassification, consolidation, merger
or sale, as the case may be, lawful provision shall be made so that the
Holder of this Warrant shall have the right thereafter to receive upon the
exercise hereof the kind and amount of shares of stock or other securities
or property which such Holder would have been entitled to receive if,
immediately prior to any such reorganization, reclassification,
consolidation, merger or sale, as the case may be, such Holder had held the
number of shares of Common Stock which were then purchasable upon the
exercise of this Warrant. In any such case, appropriate adjustment (as
reasonably determined in good faith by the Board) shall be made in the
application of the provisions set forth herein with respect to the rights
and interests thereafter of the Holder of this Warrant, such that the
provisions set forth in this Appendix B (including provisions with respect
----------
to adjustment of the Purchase Price) shall thereafter be applicable, as
nearly as is reasonably practicable, in relation to any shares of stock or
other securities or property thereafter deliverable upon the exercise of
this Warrant.
(d) Adjustment in Number of Warrant Shares. When any
adjustment is required to be made in the Purchase Price, the number of
Warrant Shares purchasable upon the exercise of this Warrant shall be
changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately
prior to such adjustment, multiplied by the Purchase Price in effect
immediately prior to such adjustment, by (ii) the Purchase Price in effect
immediately after such adjustment.
(e) Certificate of Adjustment. When any adjustment is required
to be made pursuant to this Appendix B, the Company shall promptly mail to
----------
the Holder a certificate setting forth the Purchase Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment. Such certificate shall also set forth the kind and amount of
stock or other securities or property into which this Warrant shall be
exercisable following such adjustment.
(f) Adjustments for Non-Stock Dividends and Distributions. In
the event that the Company shall issue or pay to holders of Common Stock a
dividend or other distribution payable other than in securities of the
Company, then and in each such event provision shall be made so that Holder
shall receive upon exercise of this Warrant, in addition to the Warrant
Shares issued upon exercise, the dividend or other distribution which Holder
would have received if it had been the holder of such Warrant Shares at the
time of such dividend or other distribution.
(g) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the
Common Stock payable in shares of stock of any class or make any other
distribution (other than dividends or distributions payable in cash out of
retained earnings consistent with the Company's past practices with respect
to declaring dividends and making distributions) to the holders of the
Common Stock;
(ii) the Company shall offer for subscription pro
rata to the holders of the Common Stock any additional shares of stock of
any class or other rights;
4
(iii) there shall be any capital reorganization of
the Company, or reclassification of the Common Stock, or consolidation or
merger of the Company with or into, or sale of all or substantially all of
its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company, then, in each such
case, the Company shall give to the Holder (a) notice of the date on which
the books of the Company shall close or a record shall be taken for
determining the holders of Common Stock entitled to receive any such
dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. Such notice shall
also specify the date on which the holders of Common Stock shall be entitled
to receive such dividend, distribution, or subscription rights or to
exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation,
meager, sale, dissolution, liquidation, or winding-up, as the case may be.
Such notice shall be given at least thirty (30) days prior to the record
date or the date on which the Company's books are closed in respect thereto.
Failure to give any such notice or any defect therein shall not affect the
validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv)
above.
(h) Certain Events. If, at any time during the Exercise
Period, any event occurs of the type contemplated by the adjustment
provisions of this Appendix B but not expressly provided for by such
----------
provisions, the Company will give notice of such event, and the Board will
make an appropriate adjustment in the Purchase Price and the number of
shares of Common Stock acquirable upon exercise of this Warrant so that the
rights of the Holder shall be neither enhanced nor diminished by such event.
The Company agrees that any Options or Convertible Securities issued during
the Exercise Period shall be fixed at a sum certain.
5
APPENDIX C -- REGISTRATION RIGHTS
---------------------------------
(a) Piggyback Registration.
(i) Participation. If the Company elects to file a
registration statement under the Securities Act coveting the offer and sale
of any Common Stock (or equity securities converted into Common Stock) in
connection with any public offering, (other than a registration statement on
Form S-8 or Form S-4, or their successors, or any other form for a similar
limited purpose, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation), the Company shall give reasonable written notice thereof to
the Holder before filing and in any event as soon as practicable and in
reasonable time to allow Holder to provide any notice required to fermented
in this Appendix C. Subject to paragraph (h) of this Appendix C, the Holder
---------- ----------
shall have a Piggyback Registration Right to participate in such offering on
a pro rata basis with the Company and any other Holders upon the giving of
notice to the Company. If the Holder notifies the Company of its intent to
exercise such Piggyback Registration Right, subject to (a)(ii) below, the
Company shall include in such registration statement such number of shares
of Registrable Securities as requested by the Holder. Such Registrable
Securities shall be included in the underwriting for the public offering on
the same terms and conditions as the securities otherwise being sold in such
offering.
(ii) Underwriters' Cutback. If, in the opinion of the
managing underwriter of such offering the inclusion of all of the shares of
Registrable Securities and other Common Stock requested to be registered
would be inappropriate, then the number of shares of Registrable Securities
and other Common Stock to be included in the offering shall be reduced, with
the participation in such offering to be in the following order of priority:
(1) first, securities to be issued by the Company shall be included, and (2)
second, any other Common Stock required to be included pursuant to any
demand registration right granted to such other holder of Common Stock shall
be included, and (3) third Registrable Securities and any other Common Stock
requested to be included, on a pro rata basis (based upon the number of
registrable securities owned by the Holder and the holders of Common Stock
requesting participation in the offering), shall be included.
(iii) Registrant Controls. The Company may decline to
file a Registration Statement after giving notice to any Holder, or withdraw
a Registration Statement after filing and after such notice, but prior to
the effectiveness thereof, provided that such registrant shall promptly
notify each Holder of Registrable Securities in writing of any such action
and provided further that such registrant shall bear all reasonable expenses
incurred by such Holder of Registrable Securities or otherwise in connection
with such withdrawn Registration Statement.
(iv) Underwriting Agreement. In connection with any
registration under this Section (a) involving an underwriting the Company
shall not be required to include any Registrable Shares in such registration
unless the Holder accepts the terms of the underwriting as determined by the
underwriters selected by the Company (provided that such terms must be
consistent with this Agreement and provided, further, that any inability of
the Holder to agree with the underwriters shall not restrict the ability of
the Company to proceed with the registration).
1
(b) Demand Registration Rights.
(i) In General. Subject to paragraph (h) of this
Appendix C and clause (ii) of this Section (b), the Holder may request on
----------
one occasion by written notice to the Company that the Company file a
Registration Statement under the Securities Act covering the Registrable
Securities at any time, provided, however, that the Holder shall not
exercise such Demand Registration Right unless the reasonably anticipated
aggregate price to the public, net of underwriting discounts and
commissions, is in excess of $500,000.
(ii) Effectiveness. Subject to the following
sentences, the Company shall be obligated to prepare, file and use its best
efforts to cause a Registration Statement to become effective in connection
with each Demand Registration requested pursuant to (b), and to remain
effective for a period of ninety days or until the sale of all securities
registered thereunder. If (A) the Company withdraws a Registration Statement
filed pursuant to a Demand Registration prior to the effectiveness thereof,
or (B) the sale of securities to which a Registration Statement filed
pursuant to a Demand Registration applies is not consummated other than by
action of the Selling Holder, such Registration Statement shall not be
counted in determining the number of registrations in which Holders
securities have been included or otherwise adversely affect Holder's rights
hereunder.
(iii) Piggyback Registrations on Demand Registration
Rights. The Company and other holders of Common Stock of the Company may
include such securities in registrations made pursuant to (b) only if the
managing underwriter concludes that such inclusion will not in interfere
with the successful marketing of all the Registrable Securities requested to
be included in such registration.
(iv) Managing Underwriter. The managing underwriter
or underwriters of any underwritten public offering covered by a Demand
Registration shall be selected by the Holders of a majority of the shares of
Registrable Securities that participate in such registration, subject to the
approval of the Board, which approval shall not be unreasonably withheld.
(v) Company's Right to Defer. If the Company is
requested to effect a Demand Registration and the Company furnishes to the
Holders of Registrable Securities requesting such registration a copy of a
resolution of the Board certified by the Secretary of the Company stating
that in the good faith judgment of the Board it would be seriously
detrimental to the Company and its stockholders for such registration
statement to be filed on or before the date such filing would otherwise be
required hereunder and stating the basis of such good faith judgment, the
Company shall have the right to defer such filing for a period of not more
than 90 days after receipt of the request for such registration from the
Holder or Holders of Registrable Securities requesting such registration;
provided that during such time the Company may not file a registration
statement (other than a registration statement on Form S-4 or Form S-8 or a
registration statement already approved by the Board) for securities to be
issued and sold for its own account or that of anyone than the Holder or
Holders of Restricted Stock requesting such registration.
2
(c) Registration on Form S-3.
(i) The Company will use its best efforts to qualify
for the registration of its securities on Form S-3 (or any successor form).
Subject to paragraph (h) of this Appendix C if the Holder requests that the
----------
Company file a Registration Statement on Form S-3 (or any successor form)
for a public offering of Registrable Securities the reasonably anticipated
aggregate price to the public of which, net of underwriting discounts and
commissions, would exceed $500,000, and the Company is a registrant entitled
to use Form S-3 to register the Registrable Securities for such an offering,
the Company shall use its best efforts to cause such Registrable Shares to
be registered for the offering on such form and to cause such Registrable
Securities to be qualified in such jurisdictions as the Holder may
reasonably request; provided, however, that the Company shall not be
-------- -------
required to effect more than two (2) such registrations at the request of
the Holder. The Company shall prepare and file any amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of
all the Registrable Securities.
(ii) Notwithstanding the foregoing, the Company shall
not be obligated to take any action pursuant to this section (c): (A) if the
Company, within ten days of the receipt of the request of the Holder
pursuant to (c)(i) above, gives notice of its bona fide intention to effect
the filing of a Registration Statement with the U.S. Securities and Exchange
Commission within ninety days of receipt of such request (other than with
respect to a registration statement relating to a Rule 145 transaction, an
offering solely to employees or any other registration which is not
appropriate for the registration of Registrable Securities); or (B) during
the period starting with the date sixty days prior to the Company's
estimated date of filing of, and effective date of any Registration
Statement pertaining to securities of the Company (other than a registration
of securities in a Rule 145 transaction or with respect to an employee
benefit plan), provided that the Company is actively employing in good faith
--------
all reasonable effort to cause such Registration Statement to become
effective.
(d) Indemnification.
(i) Indemnification by the Company. The Company
agrees to indemnify and hold harmless any Holder of Registrable Securities
which has included Registrable Securities in a registration statement, its
officers, directors and agents and each Person, if any, who controls such
Holder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable attorneys fees and costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
or final prospectus relating to the Registrable Securities or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of, or are based upon, any such
untrue statement or omission based upon information furnished in writing to
Company by the Holder of the Registrable Securities or on such Holder's
behalf expressly for use therein; provided, that with respect to any untrue
statement or omission made in any preliminary prospectus, the indemnity
3
agreement contained in this paragraph shall not apply to the extent that any
such loss, claim, damage, liability or expense results from the fact that a
current copy of the prospectus was not sent or given to the person asserting
any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Securities concerned if
it is determined that it was the responsibility of the Holder of such
Registrable Securities to provide such person with a current copy of the
prospectus and such current copy of the prospectus would have cured the
defect giving rise to such loss, claim, damage, liability or expense. The
Company also agrees to indemnify any underwriters of the Registrable
Securities, their officers and directors and each person who controls such
underwriters on substantially the same basis as that of the indemnification
of the Holder of such Registrable Securities provided in this section (d).
(ii) Indemnification by the Holder of Registrable
Securities. The Holder of Registrable Securities, to the extent it is
selling Registrable Securities ("Selling Holder"), agrees to indemnify and
--------------
hold harmless the Company, its directors and officers and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to the Selling Holder, but only with
respect to, and to the extent that, information furnished in writing by the
Selling Holder or on the Selling Holder's behalf expressly for use in any
registration statement or final prospectus relating to the Registrable
Securities (or any amendment or supplement thereto, or any preliminary
prospectus) which contained an untrue statement or alleged untrue statement
of a material fact or omitted or allegedly omitted to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Notwithstanding anything to the contrary
contained herein, the liability of the Holder hereunder shall be limited to
the proportion of any such loss, claim, damage, liability or expense that is
equal to the proportion that the public offering price of the shares of
Registrable Securities sold by the Holder bears to the total public offering
price of all securities sold in such offering. In case any action or
proceeding shall be brought against the Company or its directors or
officers, or any such controlling Person, in respect of which indemnity may
be sought against such Selling Holder, such Selling Holder shall have the
rights and duties given to the Company, and the Company or its directors or
officers or such controlling Person shall have the rights and duties given
to such Selling Holder, by the preceding subsection. The Selling Holder also
agrees to indemnify and hold harmless the underwriters on substantially the
same basis of that of the indemnification of the Company provided in the
preceding subsection.
(e) Contribution. If the indemnification provided for in this
Appendix C is unavailable to the Company, the Selling Holder or the
----------
underwriters in respect of any losses, claims, damages, liabilities,
expenses or judgments referred to herein, then each such indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities, expenses and judgments (i) as between the
Company and the Selling Holder on the one hand and the underwriters on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Holder on the one hand and the
underwriters on the other from the offering of the Registrable Securities,
or if such allocation is not permitted by applicable law, in such proportion
as is appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Holder on the one hand and of
the underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities, expenses or
judgments, as well as any other
4
relevant equitable considerations and (ii) as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of such Selling
Holder in connection with such statements or omissions, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Selling Holder on the one hand and the underwriters on the
other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and the Selling Holder bear to
the total underwriting discounts and commissions received by the
underwriters, in each case as set forth in the table on the cover page of
the prospectus. The relative fault of the Company on the one hand and of
each Selling Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this section were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, expenses or judgments
referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this section, no underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling
Holder shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such Selling
Holder were offered to the public exceeds the amount of any damages which
such Selling Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(f) Registration Expenses and Enforcement.
(i) Registration Rights. The Company shall bear all
Registration Expenses incurred in connection with Piggyback Registration
Rights, Demand Registration Rights and S-3 Registration Rights.
(ii) Expenses of Registrant. The Company shall pay
its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit, the fees and expenses incurred in
connection with any listing of the securities to be registered on a
securities exchange, and the fees and expenses of any person, including
special experts, retained by the Company.
5
(iii) Enforcement of Registration Rights.
Notwithstanding anything to the contrary contained herein, the Company
hereby agrees that each Holder of Registrable Securities shall be entitled
to specific performance of the registration rights hereunder, and that the
Company shall pay any expenses, including without limitation attorneys'
fees, in connection with the enforcement by any Holder of such specific
performance.
(g) Assignment of Registration Rights. Any of the rights of
the Holders hereunder, including the right to have the Company register
Registrable Securities pursuant to this Agreement, may be assigned by each
Holder to any transferee of all or any portion of the Warrant or the
Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company after such assignment, (ii) the Company is
furnished with written notice of (A) the name and address of such transferee
or assignee, and (B) the securities with respect to which such registration
rights are being transferred or assigned, (iii) following such transfer or
assignment, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state
securities laws, and (iv) such transfer shall have been made in accordance
with the applicable requirements of the Warrant. The transferee, by
acceptance of the transfer of any registration rights hereunder,
acknowledges that it takes such rights subject to the terms and conditions
hereof. Upon any transfer of less than all of its Registrable Securities,
the Holder retains registration rights with respect to Registrable
Securities held by it.
(h) Exercise of Registration Rights. Notwithstanding anything
to the contrary contained herein, the Holder agrees not to exercise any of
its registration rights set forth in this Appendix C at any time that it is
----------
able to sell all of its Registrable Securities under Rule 144 of the
Securities Act in a single transaction without exceeding the volume
limitations thereunder.
6
\