EXHIBIT 4.26
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR COMPLIANCE WITH
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
RAPTOR NETWORKS TECHNOLOGY, INC.
▇-▇▇▇-▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇ TO PURCHASE
SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, and subject to the provisions
and upon the terms and conditions hereinafter set forth, STRATEGIC GROWTH
INTERNATIONAL, INC., is entitled to subscribe for and purchase, at an exercise
price per share equal to Three Dollars and Fifty Cents ($3.50) (as adjusted
herein, the "WARRANT Price"), one hundred twenty-five thousand (125,000) shares
of the fully paid and nonassessable Common Stock (as adjusted herein) of RAPTOR
NETWORKS TECHNOLOGY, INC., a Colorado corporation (the "COMPANY") located at
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. As used herein, (i)
"DATE OF GRANT" shall mean the date first set forth above, and (ii) "SHARES"
shall mean the Common Stock issued or issuable upon the exercise of this
Warrant.
1. TERM. The purchase right represented by this Warrant is fully vested
and immediately exercisable, in whole or in part, at any time from the date
hereof through the date which is five (5) years from the Date of Grant.
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. Subject to
SECTION 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder or holder's assignee hereof, in whole or in part and
from time to time, by the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A duly executed) at the principal office of the
Company and by the payment to the Company, by check, of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
purchased. The person or persons in whose name(s) any certificate(s)
representing Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. This Warrant
may be subsequently assigned by the holder. If so assigned, the assignee shall
be the subsequent holder and all provisions contained herein shall apply as if
the assignee was the original holder. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of stock so purchased
shall be delivered to the holder hereof as soon as possible and in any event
within thirty days after such exercise and, unless this Warrant has been fully
exercised or expired, a new Warrant representing the portion of the Shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be issued to the holder hereof as soon as possible and in any event within
such thirty day period.
3. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) RECLASSIFICATION OR MERGER. In case of any reclassification,
change or conversion of securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from 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 merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, or its
parent corporation, shall duly execute and deliver to the holder of this Warrant
a new Warrant (in form and substance reasonably satisfactory to the holder of
this Warrant), so that the holder of this Warrant shall have the right to
receive, at a total purchase price not to exceed that payable upon the exercise
of the unexercised portion of this Warrant, and in lieu of the Shares
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change or merger by a holder of the number of Shares then
purchasable under this Warrant. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this SECTION 3. The provisions of this subparagraph (a) shall
similarly apply to successive reclassifications, changes, mergers,
consolidations, transfers, amendments and waivers.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding Shares, the Warrant Price shall be proportionately
decreased in the case of a subdivision or increased in the case of a
combination, effective at the close of business on the date the subdivision or
combination becomes effective.
(c) STOCK DIVIDENDS AND OTHER DISTRIBUTIONS. In case the Company
shall make or issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution with
respect to the Shares (or any shares of stock or other securities at the time
issuable upon exercise of the Warrant) payable in (a) securities of the Company
or (b) assets (excluding cash dividends paid or payable solely out of retained
earnings), then, in each such case, the holder of this Warrant on exercise
hereof at any time after the consummation, effective date or record date of such
dividend or other distribution, shall receive, in addition to the Shares (or
such other stock or securities) issuable on such exercise prior to such date,
and without the payment of additional consideration therefor, the securities or
such other assets of the Company to which such Holder would have been entitled
upon such date if such holder had exercised this Warrant on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period giving effect to all adjustments
called for by this SECTION 3.
-2-
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Warrant Price, the number of Shares purchasable hereunder shall be adjusted, to
the nearest whole share, to the product obtained by multiplying the number of
Shares purchasable immediately prior to such adjustment in the Warrant Price by
a fraction, the numerator of which shall be the Warrant Price immediately prior
to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
(e) CONVERSION OF SHARES. In the event that all of the authorized
and outstanding Shares are redeemed or converted or reclassified into other
securities or property pursuant to the Company's Articles of Incorporation or
otherwise, or the Shares otherwise ceases to exist, then, in such case, the
Holder of this Warrant, upon exercise hereof at any time after the date on which
the Shares are so redeemed or converted, reclassified or ceases to exist (the
"TERMINATION DATE"), shall receive, in lieu of the number of Shares that would
have been issuable upon such exercise immediately prior to the Termination Date,
the securities or property that would have been received if this Warrant had
been exercised in full and the Shares received thereupon had been simultaneously
converted immediately prior to the Termination Date, all subject to further
adjustment as provided in this Warrant. Additionally, the Warrant Price shall be
immediately adjusted to equal the quotient obtained by dividing (x) the
aggregate Warrant Price of the maximum number of Shares for which this Warrant
was exercisable immediately prior to the Termination Date by (y) the number of
Shares for which this Warrant is exercisable immediately after the Termination
Date, all subject to further adjustment as provided herein.
4. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to SECTION 3 hereof, the
Company shall make a certificate signed by either its chief executive officer or
chief financial officer setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price and the number of Shares
purchasable hereunder after giving effect to such adjustment, which shall be
sent pursuant to SECTION 12 hereof to the holder of this Warrant.
5. FRACTIONAL SHARES. No fractional Shares will be issued in connection
with any exercise hereunder, but in lieu of such fractional Shares the Company
shall make a cash payment therefor based on the fair market value of the Shares
on the date of exercise as reasonably determined in good faith by the Company's
Board of Directors.
6. COMPLIANCE WITH SECURITIES ACT; REGISTRATION RIGHTS; DISPOSITION OF
WARRANT OR SHARES OF COMMON STOCK. Subject to the provisions of this SECTION 6,
this Warrant may be assigned or transferred in whole or in part by the holder
hereof. The holder of this Warrant, by acceptance hereof, agrees that this
Warrant, and the Shares to be issued upon exercise hereof are being acquired for
investment and that such holder will not offer, sell or otherwise dispose of
this Warrant, or any Shares to be issued upon exercise hereof except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the "Act"), or any state securities laws. This Warrant and all
Shares issued upon exercise of this Warrant (unless registered under the Act)
shall be stamped or imprinted with a legend in substantially the following form:
-3-
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
COMPLIANCE WITH AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS".
The shares to be issued upon exercise of this Warrant shall be subject
to certain registration rights as set forth on EXHIBIT B attached hereto and, by
this reference, made a part hereof, and may bear additional legends relating
thereto.
7. RIGHTS AS STOCKHOLDERS; INFORMATION. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Shares or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
8. RIGHT TO CONVERT WARRANT INTO SHARES; NET ISSUANCE.
(a) RIGHT TO CONVERT. In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "CONVERSION RIGHT")
into Shares as provided in this SECTION 8 at any time or from time to time
during the term of this Warrant, provided, however, that the holder shall not be
permitted to employ the cashless exercise rights under this SECTION 8 if there
is effective with the Securities and Exchange Commission a registration
statement which registers the Shares issuable upon exercise of this Warrant
under SECTION 2. Upon exercise of the Conversion Right with respect to a
particular number of shares subject to this Warrant (the "Converted Warrant
Shares"), the Company shall deliver to the holder (without payment by the holder
of any exercise price or any cash or other consideration) (X) that number of
shares of fully paid and nonassessable Shares equal to the quotient obtained by
dividing the value of this Warrant (or the specified portion hereof) on the
Conversion Date (as hereinafter defined), which value shall be determined by
subtracting (A) the aggregate Warrant Price of the Converted Warrant Shares
immediately prior to the exercise of the Conversion Right from (B) the aggregate
fair market value of the Converted Warrant Shares issuable upon exercise of this
Warrant (or the specified portion hereof) on the Conversion Date (as herein
defined) by (Y) the fair market value of one Share on the Conversion Date (as
herein defined).
-4-
Expressed as a formula, such conversion shall be computed as follows:
X= B-A
---
Y
Where: X = The number of Shares that may be issued to holder.
Y = The fair market value (FMV) of one Share.
A = The aggregate Warrant Price (i.e., Converted Warrant Shares x
Warrant Price).
B = The aggregate FMV (i.e., FMV x Converted Warrant Shares).
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). All references
herein to an "exercise" of the Warrant shall include an exchange pursuant to
this SECTION 8.
(b) METHOD OF EXERCISE. The Conversion Right may be exercised by
the holder by the surrender of this Warrant at the principal office of the
Company together with a notice of exercise substantially in the form attached
hereto as EXHIBIT A-1, specifying that the holder thereby intends to exercise
the Conversion Right and indicating the number of shares subject to this Warrant
that are being surrendered (referred to in subsection (a) hereof as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion
shall be effective upon receipt by the Company of this Warrant together with the
aforesaid notice of exercise, or on such later date as is specified therein (the
"CONVERSION DATE"), and, at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company's Common Stock to the
public in an offering pursuant to a Registration Statement under the Act (a
"PUBLIC OFFERING"). Certificates for the shares issuable upon exercise of the
Conversion Right and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to this Warrant, shall be issued as of the Conversion
Date and shall be delivered to the holder within thirty days following the
Conversion Date.
(c) DETERMINATION OF FAIR MARKET VALUE. For purposes of this
SECTION 8, "FAIR MARKET VALUE" of a Share as of a particular date (the
"DETERMINATION DATE") shall mean:
(i) If the Conversion Right is exercised in connection with
and contingent upon a Public Offering, and if the Company's Registration
Statement relating to such Public Offering ("REGISTRATION STATEMENT") has been
declared effective by the Securities and Exchange Commission, then the initial
"PRICE TO PUBLIC" specified in the final prospectus with respect to such
offering.
(ii) If the Conversion Right is not exercised in connection
with and contingent upon a Public Offering, then as follows:
-5-
(A) If traded on a securities exchange or The Nasdaq Stock
Market, the fair market value of the Common Stock shall be deemed to be the
average of the closing or last reported sale prices of the Common Stock on such
exchange or market over the thirty day period ending five business days prior to
the Determination Date, and the fair market value of the Shares shall be deemed
to be such fair market value of the Common Stock;
(B) If otherwise traded in an over-the-counter market, the
fair market value of the Common Stock shall be deemed to be the average of the
closing ask prices of the Common Stock over the thirty day period ending five
business days prior to the Determination Date, and the fair market value of the
Shares shall be deemed to be such fair market value of the Common Stock; and
(C) If there is no public market for the Common Stock,
then fair market value shall be the price reasonably determined in good faith by
the Board of Directors of the Company.
9. RESERVATION OF COMMON STOCK. The Company hereby covenants that at
all times following the date hereof there shall be reserved for issuance and
delivery upon exercise of this Warrant such number of Shares as are from time to
time issuable upon exercise of this Warrant. The Company hereby further
covenants that from time to time following the date hereof, the Company will
take all steps necessary to amend its Articles of Incorporation to provide
sufficient reserves of Shares issuable upon exercise of this Warrant. All such
shares shall be duly authorized, and when issued upon such exercise, shall be
validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and
free and clear of all preemptive rights, except encumbrances or restrictions
arising under federal or state securities laws.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
11. MARKET STANDOFF. The holder of this Warrant hereby agrees not to
sell, transfer or otherwise dispose of any part of this Warrant or any shares
acquired pursuant hereto during a period specified by the representative of the
underwriters of the Company's initial public offering (not to exceed 180 days)
following the effectiveness of such initial public offering, and such holder
further agrees that the Company may impose stop-transfer instructions with
respect to such securities during such period.
12. NOTICES. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at its address as shown on the books of the
Company or to the Company at the address indicated therefor on the first page of
this Warrant.
-6-
13. BINDING EFFECT ON SUCCESSORS. Until the issuance of any new warrant
required to be issued under SECTION 3(A), this Warrant shall be binding upon any
corporation that issues securities in exchange for securities of the class
issuable upon exercise of this Warrant in connection with any merger,
consolidation or acquisition of all or substantially all of the Company's
assets, and all of the obligations of the Company relating to the Shares
issuable upon the exercise or conversion of this Warrant shall survive the
exercise, conversion and termination of this Warrant and all of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof. The Company will, at the time of the exercise or
conversion of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights (including, without
limitation, any right to registration of the shares) to which the holder hereof
shall continue to be entitled after such exercise or conversion in accordance
with this Warrant; provided, that the failure of the holder hereof to make any
such request shall not affect the continuing obligation of the Company to the
holder hereof in respect of such rights.
14. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
15. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
16. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
internal laws of the State of California without regard to its conflicts of laws
principles and the venue for any controversy concerning this Warrant shall be
the state and federal courts located in Orange County, California.
17. SURVIVAL. All agreements of the Company and the holder hereof
contained herein shall survive indefinitely until, by their respective terms,
they are no longer operative.
18. REMEDIES. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.
19. ACCEPTANCE. Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
20. NO IMPAIRMENT OF RIGHTS. The Company will not, by amendment of its
Articles of Incorporation or through any other means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable Shares upon exercise of this Warrant.
-7-
21. SEVERABILITY. If any term, provision, covenant, or restriction of
this Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
22. NOTICES OF RECORD DATE. In case:
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities or to receive any other right; or
(b) of any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or
(c) of any voluntary dissolution, liquidation or winding-up of the
Company; or
(d) of any redemption or conversion of all outstanding Common
Stock;
then, and in each such case, the Company will mail or cause to be mailed to the
holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, winding-up,
redemption or conversion is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock shall be entitled to exchange
their shares of Common Stock, for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
seven (7) days prior to the date therein specified.
ACKNOWLEDGED AND AGREED:
STRATEGIC GROWTH RAPTOR NETWORKS
INTERNATIONAL, INC. TECHNOLOGY, INC.
By: By: /s/ ▇▇▇ ▇▇▇ ▇▇▇▇▇
------------------------------ -----------------------------
Name: Name: ▇▇▇ ▇▇▇ ▇▇▇▇▇
Title: Title: CFO
-8-
EXHIBIT A
NOTICE OF EXERCISE
To: RAPTOR NETWORKS TECHNOLOGY, INC.
1. The undersigned hereby elects to purchase __________ shares of
Common Stock of RAPTOR NETWORKS TECHNOLOGY, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
___________________________________
(Name)
___________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule 1.
__________________________________
Signature
Name:_____________________________
Title:____________________________
Date:_____________________________
-9-
EXHIBIT A-1
NOTICE OF EXERCISE OF NET ISSUANCE CONVERSION RIGHTS
To: RAPTOR NETWORKS TECHNOLOGY, INC.
1. The undersigned, the registered holder of the Warrant delivered
herewith (the "Warrant"), hereby elects to exercise the Conversion Right (as
defined in SECTION 8 of the Warrant) as provided herein. __________ shares
subject to the Warrant are being surrendered hereby in exercise of the
Conversion Right. The number of shares to be issued pursuant to this exercise
shall be determined by reference to the formula in SECTION 8(A) of the Warrant,
which requires the use of the "fair market value" of the Company's stock. As of
the Determination Date (as defined in the Warrant), the "fair market value" of
one of the Shares shall be determined in the manner provided in SECTION 8(C) of
the Warrant, which amount has been determined by the undersigned (or agreed to
by the holder of the Warrant and RAPTOR NETWORKS TECHNOLOGY, INC.) to be $_____
per share. Therefore, ___________ shares are to be issued to the undersigned
pursuant to this exercise.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
___________________________________
(Name)
___________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule l.
__________________________________
Signature
Name:_____________________________
Title:____________________________
Date:_____________________________
-10-
SCHEDULE 1
----------
INVESTMENT REPRESENTATION STATEMENT
Purchaser: ___________________________________
Company: RAPTOR NETWORKS TECHNOLOGY, INC.
Security: Common Stock
Amount: ___________________________________
Date: ___________________________________
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
(b) The Purchaser understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Purchaser's investment intent as expressed herein. In this
connection, the Purchaser understands that, in the view of the Securities and
Exchange Commission ("SEC"), the statutory basis for such exemption may be
unavailable if the Purchaser's representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Act or unless an exemption
from registration is otherwise available. Moreover, the Purchaser understands
that the Company is under no obligation to register the Securities except as set
forth in the Warrant under which the Securities are being acquired. In addition,
the Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased.
-11-
(d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company, the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to
sell the Securities there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the one-year minimum holding period had been
satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
PURCHASER
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Signature:________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
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EXHIBIT B
REGISTRATION RIGHTS
1. Certain Definitions.
As used in this EXHIBIT B, the following terms shall have the following
respective meanings:
"COMMISSION" means the United States Securities and Exchange Commission
or any other federal agency at any time administering the Securities Act and the
Exchange Act.
"COMMON STOCK" means the Common Stock of the Company, any shares into
which such Common Stock shall have been changed, or any shares resulting from
any reclassification of such Common Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute thereto, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
"HOLDER" means a Person holding Registrable Securities to whom these
registration rights have been assigned pursuant to this Agreement.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, joint venture, unincorporated
organization and any government, governmental department or agency or political
subdivision thereof.
"REGISTRABLE SECURITIES" means (i) any Common Stock held by Holder that
was acquired upon conversion of this Warrant, (ii) any Common Stock issued or
issuable as a result of a stock split, stock dividend, recapitalization or
similar event with respect to securities described in clause (i) above and (iii)
securities issued in replacement or exchange of any of the securities issued in
clauses (i) or (ii) above; provided, however, that notwithstanding anything to
the contrary contained herein, "Registrable Securities" shall not at any time
include any shares of Common Stock (i) registered and sold pursuant to the
Securities Act, (ii) sold to the public pursuant to Rule 144 promulgated under
the Securities Act, or (iii) that (in the reasonable opinion of counsel to the
Company) may be immediately sold to the public under Rule 144(k) or any
successor provision.
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration, filing, listing and National Association of Securities
Dealers, Inc. ("NASD") fees, all fees and expenses of complying with securities
or blue sky laws, all word processing, duplicating and printing expenses, all
messenger and delivery expenses, any transfer taxes, the fees and expenses of
the Company's legal counsel and independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, fees and disbursements of not more than one
counsel for the Holder, and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities; provided, however, that
Registration Expenses shall not include underwriting discounts and commissions.
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"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor statute thereto, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.
2. REGISTRATION.
(a) INCIDENTAL REGISTRATION. If the Company for itself or any of
its security holders shall at any time or times after the date hereof determine
to register under the Securities Act any shares of its capital stock (other than
(i) the registration of an offer, sale or other disposition of securities solely
to employees of, or other Persons providing services to, the Company, or any
subsidiary pursuant to an employee or similar benefit plan or (ii) securities to
be issued in connection with a merger, acquisition or other transaction of the
type described in Rule 145 under the Securities Act or a comparable or successor
rule, registered on Form S-4 or similar or successor forms), on each such
occasion the Company will notify Holder of such determination at least thirty
(30) days prior to the filing of such registration statement, and upon the
request of Holder given in writing within twenty (10) days after the receipt of
such notice, the Company will use its best efforts as soon as practicable
thereafter to cause any of the Registrable Securities specified by Holder to be
included in such registration statement to the extent such registration is
permissible under the Securities Act and subject to the conditions of the
Securities Act (an "INCIDENTAL REGISTRATION").
(b) DEMAND REGISTRATION RIGHTS. If at any time after April 23, 2005
the Registrable Securities have not previously been registered pursuant to an
Incidental Registration, or are not then in the process of being registered
pursuant to an Incidental Registration, the Holder may make a written request
for the registration under the Securities Act (a "DEMAND REGISTRATION"), of all
of the Registrable Securities, and the Company shall use its best efforts to
file such Demand Registration as promptly as possible, but in any case within 90
days thereafter. Any request for a Demand Registration shall specify the
aggregate number of Registrable Securities proposed to be sold and shall also
specify the intended method of disposition thereof. The right to cause a
registration of the Registrable Securities under this paragraph (b) of this
SECTION 2 shall be limited to one such registration.
(c) EXPENSES. The Company shall pay all Registration Expenses
incurred in connection with any Incidental Registration or Demand Registration
other than underwriter fees, discounts and commissions which shall be paid pro
rata by each holder of Registrable Securities participating in such
registrations.
(d) EFFECTIVE REGISTRATION STATEMENT. An Incidental Registration or
a Demand Registration shall not be deemed to have been effected until the
registration statement filed pursuant to the Incidental Registration or Demand
Registration (as applicable) has been declared effective by the Commission and
maintained effective for a period of at least 180 days or such shorter period
when (i) all Registrable Securities included therein have been sold in
accordance with such registration statement or Rule 144 of the of the Securities
Act or (ii) the date on which all of the Registrable Securities remaining to be
sold under the registration statement (in the reasonable opinion of counsel to
the Company) may be immediately sold to the public under Rule 144(k) or any
successor provision; provided, however that any days on which such registration
statement is not effective or on which the Holder is not permitted by the
Company or any governmental authority to sell Registrable Securities under such
registration statement shall not count towards such 180 day period.
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3. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration under the Securities Act pursuant to SECTION 2 of any Registrable
Securities covered by such registration, the Company will, and hereby does,
indemnify and hold harmless each Holder of Registrable Securities to be sold
under such registration statement, Holder's legal counsel, each other Person who
participates as an underwriter in the offering or sale of such securities (if so
required by such underwriter as a condition to including the Registrable
Securities of the Holder in such registration) and each other Person, if any,
who controls or is a member (partner) of Holder or any such underwriter within
the meaning of the Securities Act (collectively, the "INDEMNIFIED PARTIES"),
against any losses, claims, damages or liabilities, joint or several, to which
the Indemnified Parties may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary prospectus contained
therein or any document incorporated therein by reference, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or arise out of any violation by the Company of any rule
or regulation promulgated under the Securities Act or state securities law
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, and the Company will reimburse
the Indemnified Parties for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the Company shall not
be liable to any Indemnified Party in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with information furnished to
the Company by such Indemnified Party specifically for use therein; and provided
further, that the Company shall not be required to indemnify any Person against
any liability arising from any untrue or misleading statement or omission
contained in any preliminary prospectus if such deficiency is corrected in the
final prospectus or for any liability that arises out of the failure by an
Indemnified Person seeking indemnity hereunder to deliver a prospectus if and to
the extent required by the Securities Act.
(b) INDEMNIFICATION BY THE HOLDER. In the event of any registration
under the Securities Act pursuant to SECTION 2 of any Registrable Securities
covered by such registration, the Holder will, and hereby does, indemnify and
hold harmless (in the same manner and to the same extent as set forth in
paragraph (a) of this SECTION 3, including the reimbursement for any legal or
other expenses reasonably incurred by the Company in connection therewith) the
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Company, each director of the Company, each officer of the Company and each
other Person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if, and only if, such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with information furnished to the Company directly by such Holder
specifically for use therein; provided, however, that the obligation of Holder
hereunder shall be limited to an amount equal to the proceeds received by Holder
upon the sale of Registrable Securities sold in the offering covered by such
registration. The Company may require, as a condition to including any
Registrable Securities of any Person in any registration statement filed
pursuant to SECTION 2, that the Company shall have received an undertaking
reasonably satisfactory to it from such Person to indemnify and hold harmless
the Company in the same manner and to the same extent as set forth in this
paragraph (b) of this SECTION 3, including the reimbursement for any legal or
other expenses reasonably incurred by the Company in connection therewith.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
Indemnified Party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this SECTION 3,
such Indemnified Party will, if a claim in respect thereof is to be made against
a party required to provide indemnification (an "INDEMNIFYING PARTY"), give
written notice to the latter of the commencement of such action, provided,
however, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligation under the
preceding paragraphs of this SECTION 3, except to the extent that the
Indemnifying Party is actually prejudiced by such failure to give notice. In
case any such action is brought against an Indemnified Party, unless in such
Indemnified Party's reasonable judgment a conflict of interest between such
Indemnified and Indemnifying Parties may exist in respect of such claim, the
Indemnifying Party shall be entitled to participate in and to assume the defense
thereof, jointly with any other Indemnifying Party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
Indemnified Party, and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No Indemnifying
Party shall consent to entry of any judgment or enter into any settlement
without the consent of the Indemnified Party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) INDEMNIFICATION PAYMENT. The indemnification required by this
SECTION 3 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(e) SURVIVAL OF OBLIGATIONS. The obligations of the Company and of
the Holder under this SECTION 3 shall survive the conversion of the Warrant and
the completion of any offering of Registrable Securities pursuant to the terms
hereof.
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