THE HARTCOURT COMPANIES, INC.
AMERICAN EQUITIES LLC
WARRANT AGREEMENT
Dated as of December 20, 1996
Warrant Agreement
[GRAPHIC OMITTED]
Warrant Agreement
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement"), dated as of December 20,
1996, is made and entered into by and between THE HARTCOURT COMPANIES, INC., a
Utah corporation (the "Company") and AMERICAN EQUITIES LLC, a California limited
liability company (the AConsultant").
ssue and sell to the Consultant and
the Consultant agrees to purchase from the Company, for the price of $100, a
warrant, as hereinafter described (the "Warrant" and together with any warrants
subsequently issued hereunder, the "Warrants"), to purchase up to 2,000,000
shares, as may be adjusted from time to time as set forth herein, of the
Company's common stock, $0.01 par value (the "Common Stock"). The Warrant is
being issued in connection with a consulting agreement between the Company and
the Consultant of even date herewith. The shares of Common Stock issuable upon
exercise of the Warrants are hereinafter referred to as the "Warrant Stock." The
Warrants shall be issued pursuant to this Agreement on or within five business
days of the date hereof.
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants, the Warrant Stock and the respective
rights and obligations thereunder, the Company and the Consultant, for value
received, hereby agree as follows:
Section 1. Transferability and Form of Warrants.
1.1 Registration. All Warrants shall be numbered and
shall be registered on the books of the Company when issued.
1.2 Transfer. The Warrants shall be transferable only on the
books of the Company maintained at its principal office, wherever its principal
office may then be located, upon delivery thereof duly endorsed by a
Warrantholder ( "Warrantholder") or by its duly authorized attorney or
Consultant and with the signatures properly guaranteed, accompanied by proper
evidence of succession, assignment or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver a new
certificate evidencing each such Warrant to each person entitled thereto.
1.3 Limitations on Transfer of the Warrants. The Warrants and
Warrant Stock may be sold, transferred, assigned or hypothecated by the
Consultant at any time. The Warrants may be divided or combined, upon request to
the Company by a Warrantholder, into a certificate or certificates representing
the right to purchase the same aggregate number of Warrant Stock. Unless the
context indicates otherwise, the term "Warrant holder" shall include the
Consultant and any transferee or transferees of the Warrants pursuant to this
subsection 1.3 and as otherwise permitted by this Agreement, and the term
"Warrants" shall include any and all Warrants outstanding pursuant to this
Agreement, including those evidenced by a certificate or certificates issued
upon division, exchange, substitution or transfer pursuant to this Agreement.
1.4 Form of Warrants. The text of the Warrant certificates and
of the form of election to purchase Warrant Stock shall be substantially as set
forth in Exhibit A attached hereto. The aggregate number of shares of Common
Stock issuable upon exercise of the Warrants is subject to adjus ment upon the
occurrence of certain events, all as hereinafter or therein provided. The
Warrants shall be executed on behalf of the Company by its President or by a
Vice President and attested to by its Secretary or by an assistant Secretary. A
Warrant certificate bearing the signature of an individual who was at any time
the proper officer of the Company shall bind the Company, notwithstanding that
such individual shall have ceased to hold such office prior to the delivery of
such Warrant certificate or did not hold such office on the date of this
Agreement or at any time thereafter.
The Warrant certificate shall be dated as of the
date of signature thereof by the Company either upon initial issuance or upon
division, exchange, substitution or transfer.
1.5 Legends. Each certificate for any of the
Securities and Warrant Stock shall not bear a legend.
Section 2. Exchange of Warrant Certificate. Any Warrant
certificate may be exchanged for ano her certificate or certi-
ficates entitling the Warrant holder to purchase a like aggregate number of
shares of Warrant Stock as the certificate or certificates surrendered then
entitled such Warrant holder to purchase. Any Warrant holder desiring to
exchange a Warrant certificate shall make such request in writing delivered to
the Company, and shall surrender, properly endorsed, the certificate evidencing
the Warrant to be so exchanged. Thereupon, the Company shall execute and deliver
to the person entitled thereto a new Warrant certificate or certificates as so
requested.
Section 3. Term of Warrants; Exercise of Warrants.
3.1 Exercise of Warrants. Subject to the terms of this
Agreement, the Warrant holder shall have the right, at any time and from time to
time until 5:00 p.m., Pacific Time, on December 20, 2002 (the "Termination
Date"), to purchase from the Company up to the number of fully paid and
nonassessable shares of Warrant Stock to which the Warra t holder may at the
time be entitled to purchase pursuant to this Agreement, upon surrender to the
Company, at its principal office, of the certificate evidencing the Warrants to
be exercised, together with the purchase form on the reverse thereof duly
completed and executed, and upon payment to the Company of the respective
Warrant Price (as defined in and determined in accordance with the provisions of
this Section 3 and Sections 7 and 8 hereof) for the number of shares of Warrant
Stock in respect of which such Warrants are then exercised, but in no event for
less than 100 shares of Warrant Stock (unless less than an aggregate of 100
shares of Warrant Stock are then purchasable under all outstanding Warrants held
by such Warrant holder). This Warrant may be exercised from time to time in
whole or in part, upon 75 days written notice.
3.2 Payment of Warrant Price. Payment of the Warrant Price
shall be made in cash, by certified or official bank check (next day funds),
business check issued by American Equities LLC, a promissory note issued by
American Equities LLC bearing
interest at six percent (6%) per annum and due in five equal annual
installments, or any combination thereof.
3.3 Cashless Exercise. In addition to the method of payment
set forth in Section 3.2 above and in lieu of any cash payment required
thereunder, unless otherwise prohibited by law, the Warrantholders shall have
the right at any time and from time to time to exercise the Warra ts in full or
in part (i) by receiving from the Company the number of shares of Warrant Stock
equal to the number of shares of Warrant Stock otherwise issuable upon such
exercise less the number of shares of Warrant Stock having an aggregate value on
the date of exercise equal to the respective Warrant Price multiplied by the
number of shares of Warrant Stock for which this Warrant is being exercised
and/or (ii) by delivering to the Company the number of shares of Common Stock
having an aggregate value on the date of exercise equal to the respective
Warrant Price multiplied by the number of shares of Warrant Stock for which this
Warrant is being exercised.
Upon surrender of the Warrants and payment of the
respective Warrant Price as aforesaid, and after the expiration of a 75 day
period commencing upon the date Consultant notifies the Company of its exercise
of the Warrant, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Warrant holder, and in
such name or names as the Warrant holder may designate, certificates for the
number of full shares of Warrant Stock so purchased upon such exercise of the
Warrant, together with cash, as provided in Section 9 hereof, in respect of any
fractional shares otherwise issuable upon such surrender. Such certificate or
certificates, to the extent permitted by law, shall be deemed to have been
issued and any person so designated to be named therein shall be defined to have
become a holder of record of such securities as of the date of surrender of the
Warrants and payment of the respective Warrant Price, as aforesaid,
notwithstanding that the certificate or certificates representing such
securities shall not actually have been delivered or that the stock transfer
books of the Company shall then be closed. The Warrants shall be exercisable, at
the election of the Warrant holder, either in full or from time to time in part
for Common Stock and, in the
event that a Warrant is exercised in respect of less than all of the shares of
Warrant Stock specified therein at any time prior to the Termination Date, a new
Warrant evidencing the remaining shares of the Warrant Stock purchasable by such
Warrantholders hereunder shall be issued by the Company to such Warrantholders.
Section 4. Validity; Payment of Taxes. All securities delivered upon
exercise of a Warrant shall be duly and validly issued and non-assessable. The
Company shall pay all documentary stamp taxes, if any, attr butable to the
initial issuance of the Warrants and the shares of Warrant Stock issuable upon
the exercise of the Warrants; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any secondary
transfer of the Warrants, the Warrant Stock.
Section 5. Mutilated or Missing Warrants. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warr nt holder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certi-
ficate or certificates, or in lieu of and substitution for the certificate or
certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and repre-
senting an equivalent right or interest, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction of
such Warrant. A written declaration executed and acknowledged by a Warrantholder
shall be deemed reasonably satisfactory evidence of such loss, theft or
destruction.
Section 6. Reservation of Shares. The Company represents and warrants
to the Warrant holder that there has been reserved, and the Company shall at all
times keep reserved so long as the Warrants remain outstanding, out of its
authorized Common Stock, such number of shares of Common Stock as shall be
subject to purchase under the Warrants. Every transfer agent for the Common
Stock and o her securities of the Company issuable upon the exercise of the
Warrants shall be irrevocably authorized and directed at all times to reserve
such number of authorized shares
and other securities as shall be required for such purpose. The Company shall
keep a copy of this Agreement on file with every transfer agent for the Common
Stock and other securities of the Company issuable upon the exercise of the
Warrants. The Company shall supply every such transfer agent with duly executed
stock and other certificates, as appropriate, for such purpose and shall provide
or otherwise make available any cash which may be payable in lieu of the
issuance of fractional shares, as provided in Section 9 hereof.
Section 7. Warrant Price. The price per share at which
shares of Warrant Stock shall be purchasable upon the exercise of
the Warrants shall be as follows:
(A) $0.30 per share for 400,000 shares
(B) $0.60 per share for 400,000 shares
(C) $1.50 per share for 400,000 shares
(D) $1.80 per share for 400,000 shares
(E) $2.10 per share for 400,000 shares
The prices above are each subject to adjustment pursuant to Section 8
hereof (as so adjusted from time to time, the "Purchase Price" or AWarrant
Price@).
Section 8. Adjustment of Purchase Price and Number of
Shares of Common Stock Deliverable.
8.1 Adju tment of Purchase Price.
(a) Except as hereinafter provided, in the event
the Company shall, at any time or from time to time after the date hereof, sell
any shares of Common Stock, including shares held in the Company=s treasury and
shares of Common Stock issued upon the exercise of any options, rights or
warrants to subscribe for shares of Common Stock and shares of Common Stock
issued upon the direct or indirect conversion or exchange of securities for a
consideration per share ess than the Market Price (as defined in Section 8.8)
then in effect, or issue any shares of Common Stock as a stock dividend to the
holders of Common Stock, or subdivide or combine the outstanding shares of
Common Stock into a greater
or lesser number of shares (any such sale, issuance, subdivision or combination
being herein called a "Change of Shares"), then, and thereafter upon each
further Change of Shares, the Purchase Price for the Warrants in effect
immediately prior to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent to the nearest cent) determined by
dividing (A) the sum of (x) the total number of shares of Common Stock
outstanding immediately prior to such Change of Shares, multiplied by the
Purchase Price in effect immediately prior to such Change of Shares, and (y) the
consideration, if any, received by the Company upon such sale, issuance,
subdivision or combination by (B) the total number of shares of Common Stock
outstanding immediately after such Change of Shares; provided, however, that in
no event shall the Purchase Price be adjusted pursuant to this computation to an
amount in excess of the Purchase Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Common
Stock.
For the purposes of any adjustment to be made in accordance
with this Section 8.1(a) the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of
Common Stock (or of other securities deemed hereunder to involve the issuance or
sale of shares of Common Stock) for a considera-
tion part or all of which shall be cash, the amount of the cash portion of the
consideration therefor deemed to have been received by the Company shall be (i)
th subscription price, if shares of Common Stock are offered by the Company for
subscrip-
tion, or (ii) the public offering price (before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith), if such securities are sold to
under-
writers or dealers for public offering without a subscription offering, or (iii)
the gross amount of cash actually received by the Company for such securities,
in any other case.
(ii) In case of the issuance or sale (otherwise
than as a dividend or other distribution on any stock of the Company of shares
of Common Stock (or of other securities deemed hereunder to involve the issuance
or sale of shares of Common Stock) for a consideration part or all of which
shall be other than cash or as part of a unit, the amount of the consideration
therefor other than cash deemed to have been received by the Company or the
amount received per share as part of a unit shall be the value of such
consideration as determined in good faith by the Board of Directors of the
Company on the basis of a record of values of similar property, services or
securities. Such determination shall be subject to change in the event the
Warrantholder elects, at its own expense, to retain a qualified appraiser to set
the value of such consideration.
(iii) Shares of Common Stock issuable by way of
dividend or ot er distribution on any stock of the Company shall be deemed to
have been issued immediately after the opening of business on the day following
the record date for the determination of shareholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued without
consideration.
(iv) The reclassification of securities of the
Company other than shares of Common Stock into securities including shares of
Common Stock shall be deemed to involve the issu nce of such shares of Common
Stock for a consideration other than cash immediately prior to the close of
business on the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such shares
of Common Stock shall be determined as provided in Section 8.1(a)(ii) hereof.
(v) The number of shares of Common Stock at any
one time outstanding shall be deemed to include the aggregate maximum number of
shares issuable subject to readjustment upon the actual issuance thereof) upon
the exercise of options, rights or warrants and upon the conversion or exchange
of convertible or exchangeable securities.
(b) Upon each adjustment of the Purchase Price
pursuant to this Section 8, the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall be the number derived by multiplying the
number of shares of Common Stock purchasable immediately prior to such
adjustment by the Purchase
rice in effect prior to such adjustment and dividing the product so obtained by
the applicable adjusted Purchase Price.
8.2 Adjustments for Options, etc. In case the Company shall at
any time after the date hereof issue options, rights or warrants to subscribe
for shares of Common Stock, or issue any securities convertible into or
exchangeable for shares of Common Stock, for a consideration per share
(determined as provided in Section 8.1(a) hereof and as provided below) less t
an the Market Price (as defined in Section 8.8) in effect immediately prior to
the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration (including the issuance of any
such securities by way of dividend or other distribution), the Purchase Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, as the case may be, shall be
reduced to a price determined by making the computation in accordance with the
provisions of Section 8.1(a) hereof, provided that:
(a) The aggregate maximum number of shares of
Common Stock, as the case may be, issuable or that may become issuable under
such options, rights or warrants (assuming exercise in full even if not then
currently exercisable or currently exercisable in full) shall be deemed to be
issued and outstanding at the time such options, rights or warrants were issued,
for a consideration equal to the minimum p rchase price per share provided for
in such options, rights or warrants at the time of issuance, plus the
consideration, if any, received by the Company for such options, rights or
warrants; provided, however, that upon the expiration or other termination of
such options, rights or warrants, if any thereof shall not have been exercised,
the number of shares of Common Stock deemed to be issued and outstanding
pursuant to this subsection (a) (and for the purposes of Section 8.1(a)(v)
hereof) shall be reduced by the number of shares as to which options, warrants
and/or rights shall have
expired, and such number of shares shall no longer be deemed to be issued and
outstanding, and the Purchase Price then in effect shall forthwith be readjusted
and thereafter be the price that it would have been had adjustment been made on
the basis of the issuance only of the shares actually issued plus the shares
remaining issuable upon the exercise of those options, rights or warrants as to
which the exercise rights shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of
Common Stock issuable or that may become issuable upon conversion or exchange of
any convertible or exchangeable securities (assum-
ing conversion or exchange in full even if not then currently convertible or
exchangeable in full) shall be deemed to be issued and outstanding at the time
of issuance of such securities, for a consideration equal to the consideration
received by the Company f r such securities, plus the minimum consideration, if
any, receivable by the Company upon the conversion or exchange thereof;
provided, however, that upon the termination of the right to convert or exchange
such convertible or exchangeable securities (whether by reason of redemption or
otherwise), the number of shares of Common Stock deemed to be issued and
outstanding pursuant to this subsection (b) (and for the purposes of Section
8.1(a)(v) hereof) shall be reduced by the number of shares as to which the
conversion or exchange rights shall have expired or terminated unexercised, and
such number of shares shall no longer be deemed to be issued and outstanding,
and the Purchase Price then in effect shall forthwith be readjusted and
thereafter be the price that it would have been had adjustment been made on the
basis of the issuance only of the shares actually issued plus the shares
remaining issuable upon conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised.
(c) If any change shall occur in the price per
share provided for in any of the options, rights or warrants referred to in
Section 8.2(a) hereof, or in the price per share or ratio at which the
securities referred to in Section 8.2(b) hereof are convertible or exchangeable,
such options, rights or
warrants or conversion or exchange rights, as the case may be, to the extent not
theretofore exercised, shall be ▇▇▇ ▇▇ to have expired or terminated on the date
when such price change became effective in respect of shares not theretofore
issued pursuant to the exercise or conversion or exchange thereof, and the
Company shall be deemed to have issued upon such date new options, rights or
warrants or convertible or exchangeable securities.
(d) In case of any reclassification or change of
outstanding shares of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or fr m par value to no par value, or from no par
value to par value or as a result of a subdivision or combination), or in case
of any consolidation or merger of the Company with or into another corporation
(other than a merger with a Subsidiary in which merger the Company is the
continuing corporation and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants), or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the Company, or such
successor or purchasing corporation, as the case may be, shall make lawful and
adequate provision whereby the Registered Holder of each Warrant then
outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance and shall forthwith file at the Corporate Office of the Warrant Agent
a statement signed by its Chairman of the Board, President or a Vice President
and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary evidencing such provision. Such provisions shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Sections 8.1 and 8.2 hereof. The above provisions of
this Section 8.2(d) shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(e) Irrespective of any adjustments or changes
in the Warrant Price or the number of shares of Common Stock p rchasable upon
exercise of the Warrants, no changes shall be necessary to the face of the
Warrant Certificates theretofore and thereafter issued.
(f) After each adjustment of the Purchase Price
and the Warrant Exercise Price pursuant to this Section 8, the Company will
promptly prepare a certificate signed by the Chairman of the Board, President,
or a Vice President and by the Treasurer or the Secretary of the Company setting
forth: (i) the Purchase Price and Warrant Exercise Price, a so adjusted, (ii)
the number of shares of Common Stock purchasable upon exercise of each Warrant,
after such adjustment, and (iii) a brief statement of the facts accounting for
such adjustment. The Company will promptly file such certificate with the
Company's Transfer Agent and cause a brief summary thereof to be sent by
ordinary first class mail to each Registered Holder at his last address as it
shall appear on the registry books of the Warrant Agent or the Company. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary or
an Assistant Secretary of the Company that such notice has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts stated therein.
(g) No adjustment of the Purchase Price shall be
made as result of or in connection with the issuance or sale of shares of Common
Stock if the amount of said adjustment shall be less than one cent ($.01);
provided, however, that in such case, any adjustment that would otherwise be
required then to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment that shall amount, together
with any adjustment so carried forward, to at least one
cent ($.01). In addition, Registered Holders shall not be entitled to cash
dividends paid by the Company prior to the exercise of any Warrant or Warrants
held by them.
8.3 Intentionally Left Blank.
8.4 Preservation of Purchase Rights upon Reclassifica-
tion, Consolidation, etc. In case of any consolidation of the Company with or
merger of the Company into another corporation or other entity or in case of any
sale, lease, conveyance or other transfer to another corporation, person or
other enti y of the property, assets or business of the Company as an entirety
or substantially as an entirety, the Company or such successor or purchasing
corporation, person or other entity, as the case may be, shall execute with the
Warrantholder, and the agreements governing such consolidation, merger, sale,
lease, conveyance or other transfer shall require such execution of, an
agreement that the Warrantholder shall have the right thereafter upon payment of
the Warrant Price in effect immediately prior to such event, upon exercise of
the Warrants, to receive the kind and amount of shares and other securities and
property which it would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, lease, conveyance or other
transfer had the Warrants (and each underlying security) been exercised
immediately prior to such action. The Company shall promptly mail to each
Warrantholder by first class mail, postage prepaid, notice of the execution of
any such agreement. In the event of a merger described in Section 368(a)(2)(E)
of the Internal Revenue Code of 1986, in which the Company is the surviving
corporation, the right to purchase shares of Warrant Stock under the Warrants
shall terminate on the date of such merger and thereupon the Warrants shall
become null and void, but only if the controlling corporation shall agree to
substitute for the Warrants its warrant which entitles the holder thereof to
purchase upon its exercise the kind and amount of shares and other securities
and property which it would have owned or been entitled to receive had the
Warrants been exercised immediately prior to such merger. Any such agreements
referred to in this Section 8.4 shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in Section 8 hereof, and shall provide for terms and provisions at
least as favorable to the Warrantholder as those contained in this Agreement.
The provisions of this Section 8.4 shall similarly apply to successive
consolidations, mergers, sales, leases, conveyances or other transfers.
8.5 Par Value of Shares of Common Stock. Before taking any
action which would cause an adjustment effectively reducing the portion of the
Warrant Price allocable to each share of Warrant Stock below the then par value
per share, if any, of the Warrant Stock issuable upon exercise of the Warrants,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in rder that the Company may validly and legally issue
fully paid and nonassessable Warrant Stock upon exercise of the Warrants.
8.6 Independent Public Accountants. The Company may retain
Coopers & ▇▇▇▇▇▇▇ L.L.P. (or such other accounting firm qualified to practice in
front of the Securities and Exchange Commission (the "Commission") as is
reasonably acceptable to the Consultant) to make any computation required under
this Section 8, and a certificate signed by such firm shall be onclusive
evidence of the correctness of any computation made under this Section 8.
8.7 Redemption of Warrants. Notwithstanding anything to the
contrary contained in this Agreement or elsewhere, the Warrants cannot be
redeemed by the Company under any circumstances.
8.8 Market Price. For purposes of this Agreement, the term
ACurrent Market Price@ shall mean (i) if the Common Stock is traded on the
Nasdaq National Market (ANNM ) or on a national securities exchange, the per
share closing price of the Common Stock in the NNM or on the principal stock
exchange on which it is listed, as the case may be, on the date of exercise of
the Warrant or, with respect to any adjustment pursuant to Section 8.1 or 8.2
hereof, on the date immediately preceding the announcement of the event causing
such adjustment or (ii) if the Common Stock is traded in the over-the-counter
market and not in
the NNM or on any national securities exchange, the average of the per share
closing bid prices of the Common Stock on the thirty (30) consecutive trading
days immediately preceding the date in question, as reported by The Nasdaq Small
Cap Market (or an equivalent generally accepted reporting service if quotations
are not reported on the Nasdaq Small Cap Market). The closing price referred to
in clause (i) above shall be the last reported sale price or, in the case no
such reported sale takes place on such day, the average of the reported closing
bid and asked prices, in either case in the NNM or on the principal stock
exchange on which the Common Stock is then listed. For purposes of clause (ii)
above, if trading in the Common Stock is not reported by The Nasdaq Small Cap
Market, the bid price referred to in said clause shall be the lowest bid price
as reported in the Nasdaq Electronic Bulletin Board or, if not reported thereon,
as reported in the Apink sheets@ published by National Quotation Bureau,
Incorporated, and, if such Common Stock is not so reported, shall be the price
of a share of Common Stock determined by the Company=s Board of Directors in
good faith.
Section 9. Fractional Shares; Current Market Price. The Company shall
not be required to issue fractional shares of Common Stock on the exercise of a
Warrant. If any fraction of a share of Common Stock would, except for the
provisions of this Section 9, be issuable upon the exercise of a Warrant (or
specified portion thereof), the Company shall in lieu thereof pay an amount in
cash equal to the then Current Market Price multiplied by such fraction. For
purposes of this Agreement, the term "Current Market Price" shall mean (i) if
the Common Stock is traded on the Nasdaq National Market ("NNM") or on a
national securities exchange, the per share closing price of the Common Stock in
the NNM or on the principal stock exchange on which it is listed, as the case
may be, on the date of exercise of the Warrant or, with respect to any
adjustment pursuant to Section 8.1 hereof, on the date immediately preceding the
announcement of the event causing such adjustment or (ii) if the Common Stock is
traded in the over-the-counter market and not in the NNM or on any national
securities exchange, the average of the per share closing bid prices of the
Common Stock on the thirty (30) conse-
cutive trading days immediately preceding the date in question,
as reported by The Nasdaq Small Cap Market (or an equivalent generally accepted
reporting service if quotations are not reported on The Nasdaq Small Cap
Market). The closing price referred to in clause (i) above shall be the last
reported sale price or, in the case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case in
the NNM or on the principal stock exchange on which the Common Stock is then
listed. For purposes of clause (ii) above, if trading in the Common Stock is not
reported by The Nasdaq Small Cap Market, the bid price referred to in said
clause shall be the lowest bid price as reported in the Nasdaq Electronic
Bulletin Board or, if not reported thereon, as reported in the "pink sheets"
published by National Quotation Bureau, Incorporated, and, if such Common Stock
is not so reported, shall be the price of a share of Common Stock determined by
the Company's Board of Directors in good faith.
Section 10. No Rights as Stockholder; Notices to Warrantholder. Except
as expressly provided herein, nothing contained in this Agreement or in the
Warrants shall be c nstrued as conferring upon the Warrantholder or its
transferees any rights as a shareholder of the Company, including the right to
vote, receive dividends, consent or receive notices as a share-
holder in respect of any meeting of shareholders for the election of directors
of the Company or any other matter. If, however, at any time prior to the
expiration of the Warrants and prior to their exercise, any one or more of the
following events shall occur:
(a) any action which would req ire an adjustment
pursuant to Section 8 hereof;
(b) an issuance by the Company of rights,
options, warrants or convertible securities to all or substantially all holders
of its Common Stock, without any charge to such holders, containing the right to
subscribe for or purchase Common Stock; or
(c) a dissolution, liquidation or winding up of
the Company (other than in connection with a consolidation,
merger or sale of its property, assets and business as an
entiret or substantially as an entirety) shall be proposed;
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 13 hereof, at least 20 days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to any relevant dividend,
distribution or other rights or for the determination of stockholders entitled
to vote on such proposed dissolution, liquidation or winding up. Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be.
Section 11. Registration Rights; Obligations in
Registration.
11.1 Intentionally Left Blank.
11.2 Registration of Securities. The Company shall be
obligated to prepare and file a registration statement, and amendments thereto,
with the Commission for the registration of the Securities under the Act and
shall be obligated to cause such registrat on statement, and amendments thereto,
to be declared effective by the Commission on or prior to May 1, 1997. The
Company shall be obligated to the registered holders of the Securities to
continually maintain, at the Company's own expense, the currency and
effectiveness of such registration statement of the Company, including the
filing of any and all applications and other notifications, filings and
post-effective amendments and supplements (collectively, the "Current
Registration Statement"), as may be necessary, so as to permit the resale of the
Securities until the earlier of the time that all shares of Securities have been
sold pursuant to the Current Registration Statement or the Termination Date.
11.3 Further Rights of Warrant Holders. If at any time after
the date hereof the Current Registration Statement is no longer in effect other
than because all Securities have been sold pursuant to the Current Registration
Statement or because the Termination Date has already occurr d, the Company
shall be
obligated to the registered holders of the Securities as follows:
(a) Whenever during the period beginning on May
1, 1997 and ending on December 20, 2002, the Company proposes to file with the
Commission a registration statement (other than as to securities issued pursuant
to an employee benefit plan or as to a transaction subject to Rule 145
promulgated under the Act), it shall, at least thirty (30) days prior to each
such filing, give written notice of such p oposed filing to each holder of the
Securities at their respective addresses as they appear on the records of the
Company, and shall offer to include and shall include in such filing any
proposed disposition of the Securities upon receipt by the Company, not more
than twenty (20) days following the receipt of such notice, of a request
therefor setting forth the facts with respect to such proposed disposition and
all other information with respect to such person reasonably necessary to be
included in such Registration Statement. In the event that such registration
statement relates to an underwritten offering on a "firm commitment" basis and
the managing underwriter for said offering advises the Company in writing that
the inclusion of such Securities in the offering would be materially and
substantially detrimental to the completion of the offering, such Securities
shall nevertheless be included in the Registration Statement, provided that the
Warrantholder and each holder of Securities desiring to have such Securities
included in the Registration Statement agrees in writing for a period of ninety
(90) days following such offering not to sell or otherwise dispose of such
Securities pursuant to such Registration Statement, which Registration Statement
the Company shall keep effective for a period of at least nine (9) months
following the expiration of such ninety (90) day period.
(b) In addition to any Registration Statement
pursuant to subparagraph (I) above, during the four-year perio beginning on
January 1, 1997 and ending on the Termination Date, the Company will, as
promptly as practicable (but in any event within sixty (60) days), after written
request (the "Request") by the Consultant, or by a person or persons holding (or
having the right to acquire by virtue of holding the Warrants) at least sixty
percent (60%) of the shares of Warrant Stock which have
been (or may be) issued upon exercise of the Warrants underlying the Warrants,
prepare and file at the Company's expense a Registration Statement with the
Commission and such applications or other filings as required under applicable
state securities or blue sky laws sufficient to permit the public offering of
the Securities, and shall use its reasonable best efforts at its own expense
through its officers, directors, auditors and counsel, in all matters necessary
or advisable, to cause such Registration Statement to become effective as
promptly as practicable and to maintain such effectiveness so as to permit
resale of the Securities covered by the Request until the earlier of the time
that all such Securities have been sold or the expiration of one year from the
effective date of the Registration Statement. Notwithstanding the foregoing,
once and only once during the period the Company would have an obligation to
register the Securities pursuant to this Section 11.3(b), the Company shall not
be obligated to effect a registration pursuant to this Section 11.3(b) during
the three (3) month period starting with the date thirty (30) days prior to the
Company's estimated date of filing of an underwritten public offering of
securities solely for the account of the Company; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and that the Company's estimate of
the date of filing such registration statement is made in good faith; provided
further, that the Company shall furnish to the Warrant holder and each holder of
Securities a certificate signed by the managing underwriter stating that it
would be seriously detrimental to the Company or its shareholders for the
registration statement to be filed in the near future.
(c) All fees, disbursements and out-of-pocket
expenses (other than the Warrant holder's brokerage fees and commissions and
legal fees of counsel to the Warrant holder, if any) in connection with the
filing of any Registration Statement or maintaining the currency and
effectiveness of the Current Registration Statement ( r obtaining the opinion of
counsel and any no-action position of the commission with respect to sales under
Rule 144) and in complying with applicable federal securities and state
securities and blue sky laws shall be borne
by the Company. The Company at its expense shall supply any holder of the
Securities with copies of such Registration Statement and the prospectus
included therein and other related documents and any opinions and no-action
letters in such quan-
tities as may be reasonably requested by such holder of the
Securities.
(d) The Company shall not be required by this
Section 11 to file such Registration Statement if, in the opinion of counsel for
the Consultant, which counsel shall be reasonably satisfactory to the Company,
or in the opinion of another counsel experienced in securities law matters
acceptable to counsel for such holders, the proposed public offering or other
transfer as to which such Registration Statement is requested is exempt from
applicable federal secu ities and state securities and blue sky laws and would
result in all purchasers or transferees obtaining securities which are not
"restricted securities," as defined in Rule 144 under the Act.
(e) The provisions of this Section 11 and of
Section 12 hereof shall apply to the extent provided herein if the Company
chooses to file an offering statement under Regulation A promulgated under the
Act.
(f) Notwithstanding the other provisions of this
Section 11, the Compa y may, in full satisfaction of its obligations under this
Section 11, register the Securities with the Commission pursuant to the Act on
any form then available to it so as to allow the unrestricted sale of the
Securities to the public from time to time commencing at 9:00 a.m. Pacific time
on May 1, 1997 and ending at 5:00 p.m. Pacific time on the Termination Date (the
"Registration Period"). If the Company elects to so satisfy its obligations
under this Section 11, the Company shall also file such applications and other
documents necessary to permit the sale of the Securities to the public during
the Registration Period in all states. In order to comply with the provisions of
this Section 11.3(f), the Company may, but is not required to, file more than
one Registration Statement. The Company shall file such post-effective
amendments and supplements as may be necessary to maintain the currency of such
Registration Statement(s) during the period of its (their) use. In addition, if
the holders of the Securities participating in such registration are advised by
counsel that such Registration Statement, in their opinion, is deficient in any
material respect, the Company shall use its best efforts to cause such
Registration Statement to be amended to eliminate the concerns raised.
(g) The Company agrees that until all the
Securities have been sold under a Registration Statement or pursuant to Rule 144
under the Act, it shall keep current in filing all materials required to be
filed with th Commission in order to permit the holders of such securities to
sell the same under Rule 144.
(h) In the event any holder of Securities timely
elects to participate in an offering by including Securities in a Registration
Statement pursuant to Section 11.3 hereof, the Company shall use its reasonable
best efforts to effect such registration to permit the sale of Securities in
accordance with the intended method or methods of disposition thereof, and pur-
suant thereto, the Company sh ll, as expeditiously as possible:
(i) Prepare and file with the Commission a
Registration Statement or Registration Statements on a form available for the
sale of the Securities, and to cause any such Registration Statement filed under
the Act pursuant to Section 11.3 hereof to become effective at the earliest
possible date after the filing thereof and remain effective as provided herein
and to comply with all applicable rules and regulations of the Commission (the
"Rules and Regulati ns") in connection therewith, provided, however, that before
filing a Registration Statement or prospectus or any amendments or supplements
thereto, including documents which would be incorporated or deemed to be
incorporated by reference in the Registration Statement after the initial filing
of any Registration Statement, the Company will furnish to the Consultant and
the holders of the Securities, their respective counsel, and the underwriters,
if any, to be engaged in connection with the offering and sale by the Company
(for purposes of this Section 11.3(f), the "Public Underwriter"),
copies of all such documents proposed to be filed, which docu-
ments will be subject to the review of the Consultant and such holders of the
Securities, their respective counsel and the Public Underwriter, if any, and the
Company will not file any Registration Statement, amendment thereto, any
prospectus or any supplement thereto (including such documents incorporated or
deemed to be incorporated by reference) to which the Consultant or the Public
Underwriter, if any, shall reasonably object;
(ii) Prepare and promptly file with the Com-
mission such amendments and post-effective amendments to a Registration
Statement as may be necessary to keep such Registration Statement continuously
effective for a period of twelve (12) months; cause the related prospectus to be
supplemented, by any required prospectus supplement, and as so supplemented, to
be filed pursuant to Rule 424 under the Act; and comply with th provisions of
the Act with respect to the disposition of all Securities covered by such
Registration Statement during the applicable period in accordance with the
intended methods of disposition as set forth in such Registration Statement or
supplement to such prospectus; the Company shall not be deemed to have used its
reasonable best efforts to keep a Registration Statement effective during the
applicable period if it intentionally or voluntarily takes any action that would
result in the Consultant or such Warrantholders not being able to sell their
Securities;
(iii) As soon as the Company is advised or
obtains knowledge thereof, advise the Consultant and confirm the same in writing
(1) when the Registration Statement, as amended, becomes effective and when any
post-effective amendment to the Registration Statement becomes effective, (2) of
the issuance by the Commission or any State or other regulatory body of any stop
order or other order, or of the initiation or the threat or contemplat on of any
proceeding, the outcome of which may result in the suspension of the
effectiveness of the Registration Statement or the issuance of any order
preventing or suspending the use of any preliminary prospectus or the
prospectus, or any amendment or supplement thereto, or the institution of any
proceedings for that purpose, (3) of the issuance by the Commission or any State
or other regulatory body of any proceedings for the suspension of the
qualification of any of the Securities for offering or sale in any jurisdiction
or of the initiation or the threat or contemplation of any proceeding for that
purpose, (4) of the receipt of any comments from the Commission and (5) of any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the prospectus related thereto or for additional
information; if the commission or any State or other regulatory body shall enter
a stop order or other order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any preliminary prospectus or
the prospectus, or any amendment or supplement thereto, or suspend such
qualification at any time, make every effort to obtain promptly the lifting of
such order or suspension;
(iv) If requested by the Public Underwriter,
if any, or the Consultant, or any holder of Securities (1) immediately
incorporate in a prospectus supplement or post-effective amendment such
information as the Consultant or such Warrant holder and the Public Underwriter,
if any, agree should be included therein relating to such sale and distribution
of the Securities, including, without limitation, information with respect to
the number of Securities being sold to such Public Underwriter, the purchase
price being paid therefor by such Public Underwriter and with respect to any
other terms of the underwritten offering of the Securities to be sold in such
offering; (2) make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be so
incorporated in such prospectus supplement or post-effective amendment; and (3)
supplement or amend any Registration Statement if requested by the Consultant,
the holders of Securities or any underwriter of Securities;
(v) Furnish to the Consultant, each of the
holders of Securities and their respective counsel, without charge and at such
place as the Consultant may designate, copies of each preliminary prospectus,
the Regist ation Statement and any pre-effective or post-effective amendments
thereto (two of
which will be signed and will include all financial statements and exhibits, one
for the Consultant and one for the Consultant=s Counsel), the Prospectus, and
all amendments and supplements thereto, including any prospectus prepared after
the effective date of the Registration Statement and any term sheet, in each
case as soon as available and in such quantities as the Consultant and each
holder of the Securities may request;
(vi) During the time when a prospectus is
required to be delivered under the Act, it shall comply with all requirements
imposed upon it by the Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the prospectus, or
any amendments or supplements thereto; if at any
ime when a prospectus relating to the Securities is required to be delivered
under the Act, any event shall have occurred as a result of which, in the
opinion of the Company or counsel for the Company or the Consultant or counsel
for the Consultant , the prospectus, as then amended or supplemented, would
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances in which they were made, not misleading, or if
it is necessary at any time to amend or supplement the Prospectus to comply with
the Act, notify the underwriter and prepare and file, at the Company's expense,
with the Commission an appropriate amendment or supplement to the Registration
Statement or an amendment or supplement to the prospectus which will correct
such statement or omission, or effect such compliance, each such amendment or
supplement to be reasonably satisfactory to the Consultant and the counsel for
the Consultant; and furnish to the Consultant copies of such amendment or
supplement as soon as available and in such quantities as the Consultant may
request;
(vii) As soon as practicable, but in any
event not later than forty-five (45) days after the end of the twelve (12) month
period beginning after the effective date of the Registration Statement, make
generally available to its
security holders, in the manner specified in Rule 158(b) promulgated under the
Act, and to the Consultant, n earnings statement which will comply with the
provisions of Section 11(a) of the Act and Rule 158(a) promulgated under the
Act;
(viii) Deliver to the Consultant and each
of the holders of Securities, their respective counsel and the Public
Underwriter, if any, without charge, as many copies of the prospectus or
prospectuses (including each preliminary prospec-
tus) and any amendment or supplement thereto as such persons may reasonably
request; the Company consents to the use of any such prospectus or any amendment
or supplement thereto by the Consultant, the holders of Securities and the
Public Underwriter, if any, in connection with the offering and sale of the
Securities covered by such prospectus or any amendment or supplement thereto;
(ix) Prior to any public offering of
Securities, use its best efforts, at or prior to the time the Registration
Statement becomes effective, to qualify the Securities for offering and sale
under the securities or "blue sky" law of such jurisdictions as the Consultant
may reasonably designate to permit the continuance of sales and dealings therein
for as long as may be necessary to complete the distribution, and make such
applications, file such documents and furnish such information as may be
required for such purpose; provided, however, the Company shall not be required
to qualify as a foreign corporation or to execute a general consent to service
of process in any such jurisdiction; in each jurisdiction where such
qualification shall be effected, use its best efforts to file and make such
statements or reports at such times as are or may be required by the laws of
such jurisdiction to continue such qualification;
(x) Cooperate with the Consultant, the
holders of the Securities and the Public Underwriter, if any, to facilitate the
timely preparation and delivery of certificates representing Securities to be
sold, which certificates shall not
bear any restrictive legends; and enable such Securities to e in such
denominations and registered in such names as the Public Underwriter, if any,
may request at least two (2) business days prior to any sale of such Securities;
(xi) Use its reasonable best efforts to
cause the Securities covered by the Registration Statement to be registered with
or approved by such other governmental bodies, agencies or authorities as may be
necessary to enable the Consultant, the holders of the Securities or the Public
Underwriter, if any, to consummat the disposition of such Securities;
(xii) Make every reasonable effort to cause
all Securities covered by such Registration Statement to be (1) listed on each
securities exchange, if any, in which equity securities issued by the Company
are then listed or (2) quoted on the NNM if the Company's Common Stock is then
authorized to be quoted on the NNM or, if not authorized to be quoted on the
NNM, quoted on The Nasdaq Small Cap Market if the Company=s Common Stock is then
authorized to be quote on The Nasdaq Small Cap Market;
(xiii) Enter into such agreements
(including, without limitation, if applicable, an underwriting agreement, in
form, scope and substance as is customary in underwritten offerings) and take
all such other actions in connection therewith in order to expedite or
facilitate the disposition of such Securities and, in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (1) mak such representations and
warranties to the Consultant and the holders of the Securities with respect to
the business of the Company and its subsidiaries and the Public Underwriter, if
any, the Registration Statement, the prospectus, the prospectus supplement (if
any) and documents, if any, incorporated or deemed to be incorporated by
reference in the Registration Statement, in each case in such form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (2) obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Consultant and the
holders of the Securities), addressed to the Consultant and the holders of the
Securities with respect to the matters referred to in the preceding clause in
such form, scope and substance as are customarily rendered to underwriters in
underwritten offerings and such other matters as may be reasonably requested by
counsel to the Consultant, the holders of the Securities or the Public
Underwriter, if any; (3) obtain "cold comfort" letters and updates thereof from
the independent certified public accountants of the Company (and, if necessary,
any other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data is, or is required to be, included in the
Registration Statement) addressed to the Consultant, the holders of the
Securities and each of the Public Underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters to underwriters in connection with underwritten offerings; (4)
if an underwriting agreement is entered into, the same shall set forth in full
the indemnification and contribution provisions and procedures of Section 12
hereof (or such other provisions and procedures as shall be acceptable to the
Consultant, the holders of the Securities and to the Public Underwriter of such
underwritten offering) with respect to all parties to be indemnified pursuant to
said section; and (5) deliver such documents and certificates as may be
reasonably requested by the Consultant , the holders of the Securities and the
Public Underwriter, if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (1) above and to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; the above shall be done at each
closing under such underwriting or similar agreement or as and to the extent
required thereunder;
(xiv) Make available for inspection by a
representative of the Consultant or the holders of the Securities
or any Public Underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant retained
by the Consultant or the holders of the Securitie or such Public Underwriter,
all financial and other records, pertinent corporate documents and properties
and assets of the Company and its subsidiaries and cause the officers,
directors, agents and employees of the Company and its subsidiaries to supply
all information reasonably requested by any such Consultant, Public Underwriter,
attorney or accountant in connection with any registration of the Securities;
provided, however, that any records, information or documents that are
designated by, the Company in writing at the time of delivery of such records,
information or documents as confidential shall be kept confidential by such
persons unless (1) disclosure of such records, information or documents is
required by court or administrative order or is necessary to respond to
inquiries of governmental or regulatory bodies, agencies or authorities, (2)
disclosure of such records, information or documents is, in the opinion of
counsel to the Consultant or the holders of the Securities or to any Public
Underwriter, required by law, regulations or legal process, (3) such records,
information or documents are otherwise publicly available or (4) such records,
information or documents become available to such person from a source other
than the Company, and such source is not bound by a confidentiality agreement;
(xv) If the Company, in the exercise of its
reasonable judgment, objects to any change reasonably requested by the
Consultant, the holders of the Securities or the Public Underwrite , if any, to
any Registration Statement or prospectus or any amendments or supplements
thereto (including documents incorporated or deemed to be incorporated therein
by reference) as provided for in this Section 11.3(h), the Company shall not be
obligated to make any such change and the Consultant or the holders of the
Securities may withdraw Securities from such registration, in which event the
Company shall pay all registration expenses (including, without limitations,
attorneys' fees and expenses) incurred by the Consultant and the holders of the
Securities in connection with such Registration Statement or prospectus or any
amendment thereto or supplement thereof; provided, that if the Company provides
the Consultant and the
holders of the Securities, as applicable, with a written opinion of independent
counsel (which counsel may be the Company's regular outside counsel), upon which
the Consultant and such holders of the Securities may rely, that the change so
requested is not required in order that the Registration Statement comply with
all applicable securities laws (including any rules and regulations promulgated
thereunder), the Consultant and such holders of the Securities may withdraw
Securities from such registration but the Company shall not be obligated to pay
any registration expenses incurred by the Consultant and the holders of the
Securities; and
(xvi) Pay all costs and expenses incident to
the performance of or compliance with the Company's obligations under Section
11.2 hereof nd under this Section 11.3 (collectively, "Registration Expenses")
whether or not any Registration Statement is filed or becomes effective,
including, without limitation, the fees and disbursements of the Company's
auditors, legal counsel, special legal counsel, legal counsel responsible for
qualifying the Securities under blue sky laws, all filing fees and printing
expenses, all expenses in connection with the transfer and delivery of the
Securities, and all expenses in connection with the qualification of the
Securities under applicable blue sky laws; provided, however, that the Company
shall not bear the Public Underwriter's discount or commission with respect to,
or any transfer taxes imposed on, the Securities or the fees and expenses of
counsel to the Consultant or the holders of the Securities; provided, further,
however, that the Consultant shall not be responsible in any way for any fees or
expenses of the Company's counsel, except, in each case, as provided in this
Section 11.3.
(xvii For purposes of this Section 11, a
holder of Securities shall include any holder of the Securities which have not
been offered to the public.
Section 12. Indemnification and Contribution.
12.1 Indemnification of Warrantholders. The Company
agrees to indemnify and hold harmless the Warrantholders and any
Holder of Securities (for purposes of this Section 12, "Holder" shall include
such individuals and the officers, directors, partners, employees, agents and
counsel of a Warrant holder or a holder of Securities), and each person, if any,
who controls a Holder ("controlling person") within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, from and against any and all
losses, claims, damages, expenses (including, without limitation, reasonable
attorneys' fees and expenses) or liabilities and all actions, suits,
proceedings, injuries, arbitrations, investigations, litigation or governmental
or other proceedings (in this Section 12, collectively, "actions") in respect
thereof, whatsoever (including, without limitation, any and all expenses
whatsoever reasonably incurred in investigating preparing or defending against
any action, commenced or threatened, or any claim whatsoever), as such are
incurred, to which a Holder or such controlling person may become subject under
the Act, the Exchange Act or any other statute or at common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained (i) in any preliminary prospectus, the Current
Registration Statement, the Registration Statement or any prospectus (as from
time to time amended and supplemented); (ii) in any post-effective amendment or
amendments or any new registration statement and prospectus in which is included
securities of the Company issued or issuable upon exercise of the Warrants; or
(iii) in any application or other document or written communication (in this
Section 12, collectively, "application") executed by the Company or based upon
written information furnished by the Company in any jurisdiction in order to
qualify the Securities under the securities or blue sky laws thereof or filed
with the Commission, any state securities commission or agency, the National
Association of Securities Dealers, Inc. (the "NASD") or the NNM or any other
securities exchange; or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of any prospectus, in light of the circumstances in
which they were made), unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company with
respect to a Holder by or on behalf of such Holder
expressly for use in any preliminary prospectus, the Current Registration
Statement, the Registration Statement or any prospectus, or any amendment
thereof or supplement thereto, or in any application, as the case may be. In
addition to its other obligations under this Section 12.1, the Company agrees
that, as an interim measure during the pendency of any action arising out of or
based upon any untrue statement or omission, or alleged untrue statement or
alleged omission as described in this Section 12.1, it shall reimburse the
Holders (and, to the extent applicable, each controlling person) on a monthly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such action notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligations to reimburse the Holders (and, to the extent applicable, each
controlling person) for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement is so held to have been
improper as to the Company, the Holders (and, to the extent applicable, each
controlling person) shall promptly return it to the Company, together with
interest compounded daily, based on the "reference rate" announced from time to
time by Bank of America NTSA (the "Prime Rate"). Any such interim reimbursement
payments which are not made to the applicable Holder within thirty (30) days of
a request for reimbursement shall bear interest at the Prime Rate from the date
of such request.
The indemnity agreement in this subsection 12.1
shall be in addition to any liability which the Company may have
at common law o otherwise.
12.2 Intentionally Left Blank.
12.3 Notice of Claim. Promptly after receipt by an indemnified
party under this Section 12 of notice of the commencement of any action, such
indemnified party shall notify each party against whom indemnification is to be
sought in writing of the commencement thereof (but the failure to so notify an
indemnifying party shall not relieve it from any liability
which it may have under this Section 12 except to t e extent that such
indemnifying party has been materially prejudiced by such failure). In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties shall be entitled to participate therein, and to the extent it
or they may elect by written notice delivered to the indemnified party or
parties promptly after receiving the aforesaid notice from such indemnified
party or parties, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, an
indemnified party shall have the right to employ its own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party or parties in connection with
the defense of such action at the expense of the indemnifying party or parties,
(ii) the indemnifying party or parties shall not have employed counsel
reasonably satisfactory to such indemnified party to have charge of the defense
of such action within a reasonable time after notice of commencement of the
action or (iii) such indemnified party shall have reasonably concluded that
there may be one or more defenses available to it which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel (in addition to
appropriate local counsel) shall be borne by the indemnifying parties. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to appropriate local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. Anything in this Section 12 to
the contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent may not be unreasonably withheld.
12.4 Contribution. In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes a claim for
indemnification pursuant to this Section 12, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Section 12 provide for indemnification in
such case or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of each of the contributing parties, on the one hand, and the
party to be indemnified, on the other hand, in connection with the statements or
omissions that resulted in such losses, claims, damages, expenses or liabilities
(or actions in respect thereof), as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages, expenses or liabilities (or actions in
respect thereof) referred to in the first sentence of this Section 12.4 shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 12.4, in a registration
statement that includes a Holder's Securities pursuant to Sections 11.2 or 11.3
hereof, no Holder shall be required to contribute any amount in excess of the
net proceeds (before deducting expenses) applicable to the Securities sold by
such Holder pursuant to such registration statement and prospectus. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act
and the cases and promulgations thereunder) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action against such party in respect to which a claim for
contribution may be made against another party or parties under this Section
12.4, notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have hereunder or otherwise than under this Section 12.4 except to the extent it
has been materially prejudiced by such failure. The contribution agreement set
forth above shall be in addition to any liabilities which any indemnifying party
may have at common law or otherwise.
Section 13. Notices. All notices and communications hereunder, except
as herein otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed, delivered by hand or transmitted by
any standard form of telecommunication. Notices to the Warrantholders or a
holder of Securities shall be directed to:
X90701
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇.
Section 14. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon, the Consultant, the Company and the Warrantholders
and the holders of Securities and the controlling persons, officers, directors
and others referred to in Section 12 hereof, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, re edy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained.
Section 15. Merger or Consolidation of the Company. The Company shall
not merge or consolidate with or into any other corporation or sell all or
substantially all of its property to another corporation, unless the provisions
of Section 8.4 hereof are complied with.
Section 16. Survival of Representations and Warranties. All statements
contained in this Agreement, ny schedule, exhibit, certificate or other
instrument delivered by or on behalf of the parties hereto, or in connection
with the transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder. Notwithstanding any investigations
made by or on behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement or pursuant
hereto shall survive the termination of this Agreement and the issuance, sale
and delivery of the Warrant and the Securities.
Section 17. Construction. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of California, without giving effect to conflict of laws
principles thereof.
Section 18. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to
be an original, and all of which taken together shall be deemed
to be one and the same instrument.
Section 19. Entire Agreement, Amendments. This Agreement
constitutes the entire agreement of the parties hereto concerning the subject
matter hereof and supersede all prior written or oral agreements, understandings
and negotiations with respect to the subject matter hereof. This Agreement may
not be amended, modified or altered except in a writing signed by the Consultant
and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, al as of the day and year first above written.
HARTCOURT COMPANIES, INC.
By: /S/ ▇▇. ▇▇▇▇ ▇. ▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇
President
AMERICAN EQUITIES LLC
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
President
WARRANT CERTIFICATE NO. 1
WARRANT TO PURCHASE 400,000
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.
PACIFIC TIME, ON DECEMBER 20, 2002
HARTCOURT COMPANIES, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF UTAH
This certifies that, for value received, AMERICAN EQUITIES LLC, the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from HARTCOURT COMPANIES, INC. (the "Company"), at any time and upon 75
days notice, during the period commencing at 9:00 am., Pacific time, on December
20, 1996, and before 5:00 p.m., Pacific time, on December 20, 2002, at the
purchase price per share of Common Stock of $0.30 (the "Purcha e Price"),
400,000 shares of Common Stock of the Company (the "Warrant Stock"). The number
of shares of Common Stock of the Company purchasable upon exercise of each
Warrant or exercise price of such shares and Redeemable Warrants evidenced
hereby shall be subject to adjustment from time to time as set forth in the
Consultant=s Warrant Agreement, dated as of December 20, 1996, by and between
the Company and the Consultant (the "Consultant=s Warrant Agreement").
The Warrants evidenced hereby are issued under and in accordance with
the Consultant=s Warrant Agreement and a Warrant Agreement dated December 20,
1996 between the Company and American Equities LLC, as warrant agent (the
"Redeemable Warrant Agreement"), and are subject to the terms and provisions
contained in the Consultant=s Warrant Agreement, to all of which the
Warrantholder by acceptance hereof consents.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate wit the Purchase Form attached hereto
duly executed (with a signature
Warrant Agreement
guarantee as provided hereon) and, after expiration of a 75 day notice period,
payment of the respective Warrant Price at the principal office of the Company.
Payment of such price shall be made at the option of the Warrantholder in any
manner allowed in the Consultant=s Warrant Agreement.
Upon any partial exercise of the Warrants evidenced hereby, there shall
be signed and issued to the Warrantholder a new Warrant Certificat in respect of
the shares of Warrant Stock as to which the Warrants evidenced hereby shall not
have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of shares of Warrant Stock as
evidenced by the Warrant or Warrants exchanged. No fractional securities shall
be issued upon the exercise of rights to purchase hereunder, but the Company
shall pay the cash value of any fraction upon the exercise of one or more
Warrants. These Warrants are transferable at the office of the Company in the
manner and subject to the limitations set forth in the Consultant=s Warrant
Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a shareholder of the Company.
HARTCOURT COMPANIES, INC.
By: /S/ ▇▇. ▇▇▇▇ ▇. ▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇
President
Dated: December 20, 1996
Warrant Agreement
WARRANT CERTIFICATE NO. 2
WARRANT TO PURCHASE 400,000
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.
PACIFIC TIME, ON DECEMBER 20, 2002
HARTCOURT COMPANIES, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF UTAH
This certifies that, for value received, AMERICAN EQUITIES LLC, the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from HARTCOURT COMPANIES, INC. (the "Company"), at any time and upon 75
days notice, during the period commencing at 9:00 am., Pacific time, on December
20, 1996, and before 5:00 p.m., Pacif c time, on December 20, 2002, at the
purchase price per share of Common Stock of $0.60 (the "Purchase Price"),
400,000 shares of Common Stock of the Company (the "Warrant Stock"). The number
of shares of Common Stock of the Company purchasable upon exercise of each
Warrant or exercise price of such shares and Redeemable Warrants evidenced
hereby shall be subject to adjustment from time to time as set forth in the
Consultant=s Warrant Agreement, dated as of December 20, 1996, by and between
the Company and the Consultant (the "Consultant=s Warrant Agreement").
The Warrants evidenced hereby are issued under and in accordance with
the Consultant=s Warrant Agreement and a Warrant Agreement dated December 20,
1996 between the Company and American Equities LLC, as warrant agent (the
"Redeemable Warrant Agreement"), and are subject to the terms and provisions
contained in the Consultant=s Warrant Agreement, to all of which the
Warrantholder by acceptance hereof consents.
The Warrants e idenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached hereto
duly executed (with a signature
Warrant Agreement
guarantee as provided hereon) and, after expiration of a 75 day notice period,
payment of the respective Warrant Price at the principal office of the Company.
Payment of such price shall be made at the option of the Warrantholder in any
manner allowed in the Consultant=s Warrant Agreement.
Upon any partial exercise of the Warra ts evidenced hereby, there shall
be signed and issued to the Warrantholder a new Warrant Certificate in respect
of the shares of Warrant Stock as to which the Warrants evidenced hereby shall
not have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of shares of Warrant Stock as
evidenced by the Warrant or Warrants exchanged. No fractional securities shall
be issued upon the exercise of rights to purchase hereunder, but the Company
shall pay the cash value of any fraction upon the exercise of one or more
Warrants. These Warrants are transferable at the office of the Company in the
manner and subject to the limitations set forth in the Consultant=s Warrant
Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a shareholder of the Company.
HARTCOURT COMPANIES, INC.
By: /S/ ▇▇. ▇▇▇▇ ▇. ▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇
President Dated: December 20, 1996
Warrant Agreement
WARRANT CERTIFICATE NO. 3
WARRANT TO PURCHASE 400,000
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.
PACIFIC TIME, ON DECEMBER 20, 2002
HARTCOURT COMPANIES, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF UTAH
This certifies that, for value received, AMERICAN EQUITIES LLC, the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from HARTCOURT COMPANIES, INC. (the "Company"), at any time and upon 75
days notice, duri g the period commencing at 9:00 am., Pacific time, on December
20, 1996, and before 5:00 p.m., Pacific time, on December 20, 2002, at the
purchase price per share of Common Stock of $1.50 (the "Purchase Price"),
400,000 shares of Common Stock of the Company (the "Warrant Stock"). The number
of shares of Common Stock of the Company purchasable upon exercise of each
Warrant or exercise price of such shares and Redeemable Warrants evidenced
hereby shall be subject to adjustment from time to time as set forth in the
Consultant=s Warrant Agreement, dated as of December 20, 1996, by and between
the Company and the Consultant (the "Consultant=s Warrant Agreement").
The Warrants evidenced hereby are issued under and in accordance with
the Consultant=s Warrant Agreement and a Warrant Agreement dated December 20,
1996 between the Company and American Equities LLC, as warrant agent (the
"Redeemable Warrant Agreement"), and are subject to the terms and provisions
contained in the Consultant=s Warrant Agr ement, to all of which the
Warrantholder by acceptance hereof consents.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached hereto
duly executed (with a signature
Warrant Agreement
guarantee as provided hereon) and, after expiration of a 75 day notice period,
payment of the respective Warrant Price at the principal office of the Company.
Payment of such price shall be made at the option of the Warrantholder in any
manne allowed in the Consultant=s Warrant Agreement.
Upon any partial exercise of the Warrants evidenced hereby, there shall
be signed and issued to the Warrantholder a new Warrant Certificate in respect
of the shares of Warrant Stock as to which the Warrants evidenced hereby shall
not have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of shares of Wa rant Stock as
evidenced by the Warrant or Warrants exchanged. No fractional securities shall
be issued upon the exercise of rights to purchase hereunder, but the Company
shall pay the cash value of any fraction upon the exercise of one or more
Warrants. These Warrants are transferable at the office of the Company in the
manner and subject to the limitations set forth in the Consultant=s Warrant
Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a hareholder of the Company.
HARTCOURT COMPANIES, INC.
By: /S/ ▇▇. ▇▇▇▇ ▇. ▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇
President
Dated: December 20, 1996
Warrant Agreement
WARRANT CERTIFICATE NO. 4
WARRANT TO PURCHASE 400,000
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.
PACIFIC TIME, ON DECEMBER 20, 2002
HARTCOURT COMPANIES, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF UTAH
This certifies that, for value received, AMERICAN EQUITIES LLC, the
registered holder hereof or assigns (the "Warrantholder"), is entitled t
purchase from HARTCOURT COMPANIES, INC. (the "Company"), at any time and upon 75
days notice, during the period commencing at 9:00 am., Pacific time, on December
20, 1996, and before 5:00 p.m., Pacific time, on December 20, 2002, at the
purchase price per share of Common Stock of $1.80 (the "Purchase Price"),
400,000 shares of Common Stock of the Company (the "Warrant Stock"). The number
of shares of Common Stock of the Company purchasable upon exercise of each
Warrant or exercise price of such shares and Redeemable Warrants evidenced
hereby shall be subject to adjustment from time to time as set forth in the
Consultant=s Warrant Agreement, dated as of December 20, 1996, by and between
the Company and the Consultant (the "Consultant=s Warrant Agreement").
The Warrants evidenced hereby are issued under and in accordance with
the Consultant=s Warrant Agreement and a Warrant Agreement dated December 20,
1996 between the Company and American Equities LLC, as warrant agent (the
"Redeemable Warran Agreement"), and are subject to the terms and provisions
contained in the Consultant=s Warrant Agreement, to all of which the
Warrantholder by acceptance hereof consents.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached hereto
duly executed (with a signature
Warrant Agreement
guarantee as provided hereon) and, after expiration of a 75 day notice period,
payment of the respective Warrant Price at the principal office f the Company.
Payment of such price shall be made at the option of the Warrantholder in any
manner allowed in the Consultant=s Warrant Agreement.
Upon any partial exercise of the Warrants evidenced hereby, there shall
be signed and issued to the Warrantholder a new Warrant Certificate in respect
of the shares of Warrant Stock as to which the Warrants evidenced hereby shall
not have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Cer ificate properly endorsed for one or
more new Warrants of the same aggregate number of shares of Warrant Stock as
evidenced by the Warrant or Warrants exchanged. No fractional securities shall
be issued upon the exercise of rights to purchase hereunder, but the Company
shall pay the cash value of any fraction upon the exercise of one or more
Warrants. These Warrants are transferable at the office of the Company in the
manner and subject to the limitations set forth in the Consultant=s Warrant
Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a shareholder of the Company.
HARTCOURT COMPANIES, INC.
By: /S/ ▇▇. ▇▇▇▇ ▇. ▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇
President
Dated: December 20, 1996
Warrant Agreement
WARRANT CERTIFICATE NO. 5
WARRANT TO PURCHASE 400,000
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.
PACIFIC TIME, ON DECEMBER 20, 2002
HARTCOURT COMPANIES, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF UTAH
This certifies that, for value received AMERICAN EQUITIES LLC, the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from HARTCOURT COMPANIES, INC. (the "Company"), at any time and upon 75
days notice, during the period commencing at 9:00 am., Pacific time, on December
20, 1996, and before 5:00 p.m., Pacific time, on December 20, 2002, at the
purchase price per share of Common Stock of $2.10 (the "Purchase Price"),
400,000 shares of Common Stock of the Company (the "Warrant Stock"). The number
of shares of Common Stock of the Company purchasable upon exercise of each
Warrant or exercise price of such shares and Redeemable Warrants evidenced
hereby shall be subject to adjustment from time to time as set forth in the
Consultant=s Warrant Agreement, dated as of December 20, 1996, by and between
the Company and the Consultant (the "Consultant=s Warrant Agreement").
The Warrants evidenced hereby are issued under and in accordance with
the Consultant=s Warrant Agreement and a Warrant Agreement dated Dece ber 20,
1996 between the Company and American Equities LLC, as warrant agent (the
"Redeemable Warrant Agreement"), and are subject to the terms and provisions
contained in the Consultant=s Warrant Agreement, to all of which the
Warrantholder by acceptance hereof consents.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached hereto
duly executed (with a signature
Warrant Agreement
guarantee as provided hereon) and, after e piration of a 75 day notice period,
payment of the respective Warrant Price at the principal office of the Company.
Payment of such price shall be made at the option of the Warrantholder in any
manner allowed in the Consultant=s Warrant Agreement.
Upon any partial exercise of the Warrants evidenced hereby, there shall
be signed and issued to the Warrantholder a new Warrant Certificate in respect
of the shares of Warrant Stock as to which the Warrants evidenced hereby shall
not have been exer ised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of shares of Warrant Stock as
evidenced by the Warrant or Warrants exchanged. No fractional securities shall
be issued upon the exercise of rights to purchase hereunder, but the Company
shall pay the cash value of any fraction upon the exercise of one or more
Warrants. These Warrants are transferable at the office of the Company in the
manner and subject to the limitations set forth in the Consultant=s Warrant
Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a shareholder of the Company.
HARTCOURT COMPANIES, INC.
By: /S/ ▇▇. ▇▇▇▇ ▇. ▇▇▇▇
▇▇. ▇▇▇▇ ▇. ▇▇▇▇
President
Dated: December 20, 1996
Warrant Agreement
HARTCOURT COMPANIES, INC.
PURCHASE FORM
HARTCOURT COMPANIES, INC. (the "Company")
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, shares of common stock of the Company (the "Warrant Stock") provided
for therein, and requests that certificates for the W rrant Stock be issued in
the name of:
------------------------------------------
(Please print or Type Name, Address and Social Security Number)
------------------------------------------
------------------------------------------
and, if said number of shares of Warrant Stock shall not be all the Warrant
Stock purchasable hereunder, that a new Warrant Certificate for the balance of
the Warrant Stock purchasable under the within Warrant Certificate be registered
in the name of the undersigned Warrantholder or his Assignee as below indicated
and delivered to the address stated below.
Dated:_________________
Name of Warrantholder or Assignee:
-------------------------
(Please Print)
Address: _________________________
-------------------------
Signature: _________________________
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
Warrant Agreement
Signature Guaranteed:_____________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange of the National Association of Securities Dealers, Inc.)
Warrant Agreement
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the right to purchase shares of Warrant Stock represented by the within Warrant
Certificate unto, and requests that a c rtificate for such Warrant be issued in
the name of:
-------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
-------------------------------------
-------------------------------------
hereby irrevocably constituting and appointing _______________ Attorney to
transfer said Warrants on the books of the Company, with full power of
substitution in the premises and, if said number of warrant Stock shall not be
all of the Securities purchasable under the within Warrant Certificate, that a
new Warrant Certificate for the balance of the Securities purchasable under the
within Warrant Certificate be registered in the name of the undersigned
Warrantholder and delivered to such Warrantholder's address as then set forth on
the Company's books.
Dated:_______________
____________________________
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
Signature Guaranteed:_____________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.
Warrant Agreement