EX-4 FORM OF SUBSCRIPTION AGREEMENT
FORM OF SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of
March ___, 2004, by and among Force Protection, Inc., a Colorado
corporation (the "Company"), and the subscribers identified on the
signature page hereto (each a "Subscriber" and collectively
"Subscribers").
WHEREAS, the Company and the Subscribers are executing and
delivering this Agreement in reliance upon an exemption from
securities registration afforded by the provisions of Section 4(2),
Section 4(6) and/or Regulation D ("Regulation D") as promulgated by
the United States Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "1933 Act").
WHEREAS, the parties desire that, upon the terms and subject to
the conditions contained herein, the Company shall issue and sell to
the Subscribers, as provided herein, and the Subscribers shall
purchase, in the aggregate, up to $3,000,000 (the "Purchase Price")
of the Company's common stock, no par value (the "Common Stock" or
"Shares"), and share purchase warrants (the "Warrants"), in the forms
attached hereto as Exhibit A and Exhibit B, to purchase shares of
Common Stock (the "Warrant Shares"). The per Share Purchase Price
("Per Share Purchase Price") shall be $0.20. The Purchase Price
shall be payable to the Company on the Closing Date, as defined in
Section 13(b) hereof. The Common Stock, the Warrants and the
Warrant Shares are collectively referred to herein as the
"Securities"; and
WHEREAS, the aggregate proceeds of the sale of the Common Stock
and the Warrants contemplated hereby shall be held in escrow pursuant
to the terms of a Funds Escrow Agreement to be executed by the
parties substantially in the form attached hereto as Exhibit C (the
"Escrow Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and
other agreements contained in this Agreement the Company and the
Subscribers hereby agree as follows:
1. Purchase and Sale of Shares and Warrants. Subject to
the satisfaction (or waiver) of the conditions to Closing set forth
in this Agreement and the Escrow Agreement, each Subscriber shall
purchase the Shares and Warrants for the portion of the Purchase
Price indicated on the signature page hereto, and the Company shall
sell such Shares and Warrants to the Subscriber. The Purchase Price
for the Shares and Warrants shall be paid in cash. The entire
Purchase Price shall be allocated to the Shares.
2. Escrow Arrangements; Form of Payment. Upon execution
hereof by the parties and pursuant to the terms of the Escrow
Agreement, each Subscriber agrees to make the deliveries required of
such Subscriber as set forth in the Escrow Agreement and the Company
agrees to make the deliveries required of the Company as set forth in
the Escrow Agreement.
3. Warrants.
(a) A Warrants. On the Closing Date the Company
will issue A Warrants to the Subscribers. One (1) A Warrant will be
issued for each Share issued on the Closing Date. The per Warrant
Share exercise price to acquire a Warrant Share upon exercise of an A
Warrant shall be $0.24. The A Warrants shall be exercisable for two
(2) years after the Closing Date. The A Warrants shall be callable
by the Company as described in Exhibit A hereto.
(b) Green Shoe Warrants. On the Closing Date, the
Company will deliver to each Subscriber one (1) Warrant for each
Share purchased by each such Subscriber on the Closing Date ("Green
Shoe Warrants"). The per Warrant Share exercise price to acquire a
Warrant Share upon exercise of a Green Shoe Warrant shall be $0.20.
The Green Shoe Warrants shall be exercisable from the issue date and
for the first one hundred and eighty (180) business days after the
actual effective date of the Registration Statement ("Actual
Effective Date") during which such Registration Statement shall be
current and available for use in connection with the public resale
and delivery of Warrant Shares. The Green Shoe Warrants shall be
callable by the Company as described in Exhibit B hereto.
Collectively, the A Warrants and Green Shoe Warrants are referred to
herein as Warrants, and the common stock issuable upon exercise of
the A Warrants and Green Shoe Warrants is referred to as "Warrant
Shares".
4. Subscriber's Representations and Warranties. Each
Subscriber hereby represents and warrants to and agrees with the
Company only as to such Subscriber that:
(a) Information on Company. The Subscriber has been
furnished with or has had access at the ▇▇▇▇▇ Website of the
Commission to the Company's Form 10-KSB for the year ended December
31, 2003 as filed with the Commission, together with all subsequently
filed Forms 10-QSB, 8-K, and filings made with the Commission
available at the ▇▇▇▇▇ website (hereinafter referred to collectively
as the "Reports"). In addition, the Subscriber has received in
writing from the Company such other information concerning its
operations, financial condition and other matters as the Subscriber
has requested in writing (such other information is collectively, the
"Other Written Information"), has had an opportunity to ask questions
and receive answers from the Company's management, and considered all
factors the Subscriber deems material in deciding on the advisability
of investing in the Securities.
(b) Information on Subscriber. The Subscriber is and
will be at the time of the exercise of any of the Warrants, an
"accredited investor", as such term is defined in Regulation D
promulgated by the Commission under the 1933 Act, is experienced in
investments and business matters, has made investments of a
speculative nature and has purchased securities of United States
publicly-owned companies in private placements in the past and, with
its representatives, has such knowledge and experience in financial,
tax and other business matters as to enable the Subscriber to utilize
the information made available by the Company to evaluate the merits
and risks of and to make an informed investment decision with respect
to the proposed purchase, which represents a speculative investment.
The Subscriber has the authority and is duly and legally qualified to
purchase and own the Securities. The Subscriber is able to bear the
risk of such investment for an indefinite period and to afford a
complete loss thereof. The information set forth on the signature
page hereto regarding the Subscriber is accurate.
(c) Purchase of Common Stock and Warrants. On each
closing date, the Subscriber will purchase the Common Stock and
Warrants as principal for its own account and not with a view to any
distribution thereof.
(d) Compliance with Securities Act. The Subscriber
understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason
of their issuance in a transaction that does not require registration
under the 1933 Act (based in part on the accuracy of the
representations and warranties of Subscriber contained herein), and
that such Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state
securities laws or is exempt from such registration. In any event,
and subject to compliance with applicable securities laws including
the 1933 Act and Regulation M, the Subscriber may enter into hedging
transactions with third parties, which may in turn engage in short
sales of the Securities in the course of hedging the position they
assume and the Subscriber may also enter into short positions or
other derivative transactions relating to the Securities, or
interests in the Securities, and deliver the Securities, or interests
in the Securities, to close out their short or other positions or
otherwise settle short sales or other transactions, or loan or pledge
the Securities, or interests in the Securities, to third parties that
in turn may dispose of these Securities.
(e) Shares Legend. The Shares and the Warrant Shares
shall bear the following or similar legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO FORCE PROTECTION, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED."
(f) Warrants Legend. The Warrants shall bear the
following or similar legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO FORCE PROTECTION, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED."
(g) Reserved.
(h) Authority; Enforceability. This Agreement and
other agreements delivered together with this Agreement or in
connection herewith have been duly authorized, executed and delivered
by the Subscriber and are valid and binding agreements enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights
generally and to general principles of equity; and Subscriber has
full corporate power and authority necessary to enter into this
Agreement and such other agreements and to perform its obligations
hereunder and under all other agreements entered into by the
Subscriber relating hereto.
(i) Correctness of Representations. Each Subscriber
represents as to such Subscriber that the foregoing representations
and warranties are true and correct as of the date hereof and, unless
a Subscriber otherwise notifies the Company prior to the Closing Date
(as hereinafter defined), shall be true and correct as of the Closing Date.
(j) Survival. The foregoing representations and
warranties shall survive the Closing Date for a period of two years.
5. Company Representations and Warranties. The Company
represents and warrants to and agrees with each Subscriber that:
(a) Due Incorporation. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the respective jurisdictions of their
incorporation and have the requisite corporate power to own their
properties and to carry on their business as now being conducted.
The Company and each of its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property
owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the business, operations or financial
condition of the Company.
(b) Outstanding Stock. All issued and outstanding
shares of capital stock of the Company and each of its subsidiaries
has been duly authorized and validly issued and are fully paid and
non-assessable.
(c) Authority; Enforceability. This Agreement, the
Common Stock, the Warrants, the Escrow Agreement and any other
agreements delivered together with this Agreement or in connection
herewith (collectively "Transaction Documents") have been duly
authorized, executed and delivered by the Company and are valid and
binding agreements enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general
principles of equity. The Company has full corporate power and
authority necessary to enter into and deliver the Transaction
Documents and to perform its obligations.
(d) Additional Issuances. There are no outstanding
agreements or preemptive or similar rights affecting the Company's
common stock or equity and no outstanding rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of
any shares of common stock or equity of the Company or other equity
interest in any of the subsidiaries of the Company except as
described on Schedule 5(d), or the Reports.
(e) Consents. No consent, approval, authorization or
order of any court, governmental agency or body or arbitrator having
jurisdiction over the Company, or any of its affiliates, the American
Stock Exchange, the National Association of Securities Dealers, Inc.,
Nasdaq, SmallCap Market, the OTC Bulletin Board ("Bulletin Board")
nor the Company's shareholders is required for the execution by the
Company of the Transaction Documents and compliance by the Company of
its obligations under the Transaction Documents, including, without
limitation, the issuance and sale of the Securities, and the
performance of the Company's obligations under the Transaction Documents.
(f) No Violation or Conflict. Assuming the
representations and warranties of the Subscribers in Section 4 are
true and correct, neither the issuance and sale of the Securities nor
the performance of the Company's obligations under this Agreement and
all other agreements entered into by the Company relating thereto by
the Company will:
(i) violate, conflict with, result in a breach
of, or constitute a default (or an event which with the giving of
notice or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company's
knowledge, any decree, judgment, order, law, treaty, rule, regulation
or determination applicable to the Company of any court, governmental
agency or body, or arbitrator having jurisdiction over the Company or
any of its subsidiaries or over the properties or assets of the
Company or any of its affiliates, (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any
agreement, stock option or other similar plan, indenture, lease,
mortgage, deed of trust or other instrument to which the Company or
any of its affiliates or subsidiaries is a party, by which the
Company or any of its affiliates or subsidiaries is bound, or to
which any of the properties of the Company or any of its affiliates
or subsidiaries is subject, or (D) the terms of any "lock-up" or
similar provision of any underwriting or similar agreement to which
the Company, or any of its affiliates or subsidiaries is a party
except the violation, conflict, breach, or default of which would not
have a material adverse effect on the Company; or
(ii) result in the creation or imposition of any
lien, charge or encumbrance upon the Securities or any of the assets
of the Company, its subsidiaries or any of its affiliates; or
(iii) result in the activation of any anti-
dilution rights or a reset or repricing of any debt or security
instrument of any other creditor or equity holder of the Company, nor
result in the acceleration of the due date of any obligation of the
Company; or
(iv) result in the activation of any piggy-
back registration rights of any person or entity holding
securities of the Company or having the right to receive
securities of the Company.
(g) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any
security interests, liens, claims or other encumbrances, subject to
restrictions upon transfer under the 1933 Act and any applicable
state securities laws;
(ii) have been, or will be, duly and validly
authorized and on the date of issuance of the Shares and upon
exercise of the Warrants, the Shares and Warrant Shares will be duly
and validly issued, fully paid and nonassessable (and if registered
pursuant to the 1933 Act, and resold pursuant to an effective
registration statement will be free trading and unrestricted,
provided that each Subscriber complies with the prospectus delivery
requirements of the 1933 Act);
(iii) will not have been issued or sold in
violation of any preemptive or other similar rights of the holders of
any securities of the Company; and
(iv) will not subject the holders thereof to
personal liability by reason of being such holders.
(h) Litigation. There is no pending or, to the best
knowledge of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its
affiliates that would affect the execution by the Company or the
performance by the Company of its obligations under this Agreement,
and all other agreements entered into by the Company relating hereto.
Except as disclosed in the Reports, there is no pending or, to the
best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or
body, or arbitrator having jurisdiction over the Company, or any of
its affiliates which litigation if adversely determined could have a
material adverse effect on the Company.
(i) Reporting Company. The Company is a publicly-
held company subject to reporting obligations pursuant to Section 13
of the Securities Exchange Act of 1934, as amended (the "1934 Act")
and has a class of common shares registered pursuant to Section 12(g)
of the 1934 Act. Pursuant to the provisions of the 1934 Act, the
Company has timely filed all reports and other materials required to
be filed thereunder with the Commission during the preceding twelve months.
(j) No Market Manipulation. The Company has not
taken, and will not take, directly or indirectly, any action designed
to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of the common stock of the
Company to facilitate the sale or resale of the Securities or affect
the price at which the Securities may be issued or resold.
(k) Information Concerning Company. The Reports
contain all material information relating to the Company and its
operations and financial condition as of their respective dates which
information is required to be disclosed therein. Since the date of
the financial statements included in the Reports, and except as
modified in the Other Written Information or in the Schedules hereto,
there has been no material adverse change in the Company's business,
financial condition or affairs not disclosed in the Reports. The
Reports do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances when made.
(l) Stop Transfer. The Securities, when issued, will
be restricted securities. The Company will not issue any stop
transfer order or other order impeding the sale, resale or delivery
of any of the Securities, except as may be required by any applicable
federal or state securities laws and unless contemporaneous notice of
such instruction is given to the Subscriber.
(m) Defaults. The Company is not in violation of its
articles of incorporation or bylaws. The Company is (i) not in
default under or in violation of any other material agreement or
instrument to which it is a party or by which it or any of its
properties are bound or affected, which default or violation would
have a material adverse effect on the Company, (ii) not in default
with respect to any order of any court, arbitrator or governmental
body or subject to or party to any order of any court or governmental
authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters, or (iii) to its
knowledge not in violation of any statute, rule or regulation of any
governmental authority which violation would have a material adverse
effect on the Company.
(n) No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security
or solicited any offers to buy any security under circumstances that
would cause the offer of the Securities pursuant to this Agreement to
be integrated with prior offerings by the Company for purposes of the
1933 Act or any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of the
Bulletin Board. Nor will the Company or any of its affiliates or
subsidiaries take any action or steps that would cause the offer of
the Securities to be integrated with other offerings. The Company
will not conduct any offering other than the transactions
contemplated hereby that will be integrated with the offer or
issuance of the Securities.
(o) No General Solicitation. Neither the Company,
nor any of its affiliates, nor to its knowledge, any person acting on
its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under the
▇▇▇▇ ▇▇▇) in connection with the offer or sale of the Securities.
(p) Listing. The Company's common stock is quoted on
the Bulletin Board. The Company has not received any oral or written
notice that its common stock is not eligible nor will become
ineligible for quotation on the Bulletin Board nor that its common
stock does not meet all requirements for the continuation of such
quotation and the Company satisfies and as of the Closing Date, the
Company will satisfy all the requirements for the continued quotation
of its common stock on the Bulletin Board.
(q) No Undisclosed Liabilities. The Company has no
liabilities or obligations which are material, individually or in the
aggregate, which are not disclosed in the Reports and Other Written
Information, other than those incurred in the ordinary course of the
Company's businesses since December 31, 2003 and which, individually
or in the aggregate, would reasonably be expected to have a material
adverse effect on the Company's financial condition, other than as
set forth in Schedule 5(q).
(r) No Undisclosed Events or Circumstances. Since
December 31, 2003, no event or circumstance has occurred or exists
with respect to the Company or its businesses, properties, operations
or financial condition, that, under applicable law, rule or
regulation, requires public disclosure or announcement prior to the
date hereof by the Company but which has not been so publicly
announced or disclosed in the Reports.
(s) Capitalization. The authorized and outstanding
capital stock of the Company as of the date of this Agreement and the
Initial Closing Date are set forth on Schedule 5(s). Except as set
forth in the Reports and Other Written Information and Schedule 5(d),
there are no options, warrants, or rights to subscribe to,
securities, rights or obligations convertible into or exchangeable
for or giving any right to subscribe for any shares of capital stock
of the Company. All of the outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and are
fully paid and nonassessable.
(t) Dilution. The Company's executive officers and
directors understand the nature of the Securities being sold hereby
and recognize that the issuance of the Securities will have a
potential dilutive effect on the equity holdings of other holders of
the Company's equity or rights to receive equity of the Company. The
board of directors of the Company has concluded, in its good faith
business judgment, that the issuance of the Securities is in the best
interests of the Company. The Company specifically acknowledges that
its obligation to issue the Securities is binding upon the Company
and enforceable regardless of the dilution such issuance may have on
the ownership interests of other shareholders of the Company or
parties entitled to receive equity of the Company.
(u) No Disagreements with Accountants and Lawyers.
There are no disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company
and the accountants and lawyers formerly or presently employed by the
Company, including but not limited to disputes or conflicts over
payment owed to such accountants and lawyers.
(v) Investment Company. The Company is not, and is
not an Affiliate (as defined in Rule 405 under the ▇▇▇▇ ▇▇▇) of, an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(w) Correctness of Representations. The Company
represents that the foregoing representations and warranties are true
and correct as of the date hereof in all material respects, and,
unless the Company otherwise notifies the Subscribers prior to the
Closing Date, shall be true and correct in all material respects as
of the Closing Date.
(x) Survival. The foregoing representations and
warranties shall survive the Closing Date for a period of two years.
6. Regulation D Offering. The offer and issuance of the
Securities to the Subscribers is being made pursuant to the exemption
from the registration provisions of the 1933 Act afforded by Section
4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of Regulation D
promulgated thereunder. On the Closing Date, the Company will
provide an opinion reasonably acceptable to Subscriber from the
Company's legal counsel opining on the availability of an exemption
from registration under the 1933 Act as it relates to the offer and
issuance of the Securities and other matters reasonably requested by
Subscribers. A form of the legal opinion is annexed hereto as
Exhibit D. The Company will provide, at the Company's expense, such
other legal opinions in the future as are reasonably necessary for
the resale of the Common Stock and exercise of the Warrants and
resale of the Warrant Shares.
7. Legal Fees. The Company shall pay to Grushko &
▇▇▇▇▇▇▇, P.C., a fee of $30,000 ("Legal Fees") as reimbursement for
services rendered to the Subscribers in connection with this
Agreement and the purchase and sale of the Shares and Warrants (the
"Offering") and acting as Escrow Agent for the Offering. The Legal
Fees will be payable out of funds held pursuant to the Escrow
Agreement.
8. Placement Agent. The Company on the one hand, and
each Subscriber (for himself only) on the other hand, agree to
indemnify the other against and hold the other harmless from any and
all liabilities to any persons claiming brokerage commissions or
finder's fees other than Westor Online, Inc. ("Placement Agent") on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the
transactions contemplated hereby and arising out of such party's
actions. Anything to the contrary in this Agreement notwithstanding,
each Subscriber is providing indemnification only for such
Subscriber's own actions and not for any action of any other
Subscriber. Each Subscriber's liability hereunder is several and not
joint. The Company agrees that it will pay the Placement Agent a
cash placement agent's fee of ten percent (10%) of the Purchase Price
("Placement Agent's Fees") directly out of the funds held pursuant to
the Escrow Agreement. The Company represents that there are no other
parties entitled to receive fees, commissions, or similar payments in
connection with the Offering except the Placement Agent and the
Company's attorneys.
9. Covenants of the Company. The Company covenants and
agrees with the Subscribers as follows:
(a) Stop Orders. The Company will advise the
Subscribers, promptly after it receives notice of issuance by the
Commission, any state securities commission or any other regulatory
authority of any stop order or of any order preventing or suspending
any offering of any securities of the Company, or of the suspension
of the qualification of the Common Stock of the Company for offering
or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.
(b) Listing. The Company shall promptly secure the
listing of the shares of Common Stock and the Warrant Shares upon
each national securities exchange, or automated quotation system upon
which they are or become eligible for listing (subject to official
notice of issuance) and shall maintain such listing so long as any
Warrants are outstanding. The Company will maintain the listing of
its Common Stock on the American Stock Exchange, Nasdaq SmallCap
Market, Nasdaq National Market System, Bulletin Board, or New York
Stock Exchange (whichever of the foregoing is at the time the
principal trading exchange or market for the Common Stock (the
"Principal Market")), and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or
rules of the Principal Market, as applicable. The Company will
provide the Subscribers copies of all notices it receives notifying
the Company of the threatened and actual delisting of the Common
Stock from any Principal Market. As of the date of this Agreement
and the Closing Date, the Bulletin Board is and will be the Principal Market.
(c) Market Regulations. The Company shall notify the
Commission, the Principal Market and applicable state authorities, in
accordance with their requirements, of the transactions contemplated
by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities to
the Subscribers and promptly provide copies thereof to Subscriber.
(d) Reporting Requirements. From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing
Date, or (ii) until all the Shares and Warrant Shares have been
resold or transferred by all the Subscribers pursuant to the
Registration Statement or pursuant to Rule 144, without regard to
volume limitation, the Company will (v) cause its Common Stock to
continue to be registered under Section 12(b) or 12(g) of the 1934
Act, (x) comply in all respects with its reporting and filing
obligations under the 1934 Act, (y) comply with all reporting
requirements that are applicable to an issuer with a class of shares
registered pursuant to Section 12(b) or 12(g) of the 1934 Act, as
applicable, and (z) comply with all requirements related to any
registration statement filed pursuant to this Agreement. The Company
will use its best efforts not to take any action or file any document
(whether or not permitted by the 1933 Act or the 1934 Act or the
rules thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under said
acts until two (2) years after the Closing Date. Until the earlier
of the resale of the Common Stock and the Warrant Shares by each
Subscriber or at least two (2) years after the Warrants have been
exercised, the Company will use its best efforts to continue the
listing or quotation of the Common Stock on the Principal Market or
other market with the reasonable consent of Subscribers holding a
majority of the Shares and Warrant Shares, and will comply in all
respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the Principal Market. The Company
agrees to file a Form D with respect to the Securities as required
under Regulation D and to provide a copy thereof to each Subscriber
promptly after such filing.
(e) Use of Proceeds. The Company undertakes to use
the proceeds of the Subscribers' funds for the purposes set forth on
Schedule 9(e) hereto. A deviation from the use of proceeds set forth
on Schedule 9(e) of more than 15% per item or more than 25% in the
aggregate shall be deemed a material breach of the Company's
obligations hereunder. Notwithstanding same, the company shall be
entitled to deviate from the use of proceeds set forth in Schedule
9(e) with the prior written consent of Subscribers holding a majority
of the Shares issued in the Offering. Except as set forth on Schedule
9(e), the Purchase Price may not and will not be used for accrued and
unpaid officer and director salaries, payment of financing related
debt, redemption of outstanding redeemable notes or equity
instruments of the Company nor non-trade obligations outstanding on
the Closing Date.
(f) Reservation. The Company undertakes to reserve,
pro rata on behalf of each Subscriber and holder of a Warrant, from
its authorized but unissued common stock, a number of common shares
equal to the amount of Warrant Shares issuable upon exercise of the
Warrants. Failure to have sufficient shares reserved pursuant to
this Section 9(f) for three (3) consecutive business days or ten (10)
days in the aggregate shall be a material default of the Company's
obligations under this Agreement.
(g) Taxes. From the date of this Agreement and until
the sooner of (i) two (2) years after the Closing Date, or (ii) until
all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or
pursuant to Rule 144, without regard to volume limitations, the
Company will promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits,
property or business of the Company; provided, however, that any such
tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate
proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that
the Company will pay all such taxes, assessments, charges or levies
forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefore.
(h) Insurance. From the date of this Agreement and
until the sooner of (i) two (2) years after the Closing Date, or (ii)
until all the Shares and Warrant Shares have been resold or
transferred by all the Subscribers pursuant to the Registration
Statement or pursuant to Rule 144, without regard to volume
limitations, the Company will keep its assets which are of an
insurable character insured by financially sound and reputable
insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company's line of
business, in amounts sufficient to prevent the Company from becoming
a co-insurer and not in any event less than 100% of the insurable
value of the property insured; and the Company will maintain, with
financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and property to the extent
and in the manner customary for companies in similar businesses
similarly situated and to the extent available on commercially
reasonable terms.
(i) Books and Records. From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing
Date, or (ii) until all the Shares and Warrant Shares have been
resold or transferred by all the Subscribers pursuant to the
Registration Statement or pursuant to Rule 144, without regard to
volume limitations, the Company will keep true records and books of
account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and affairs in
accordance with generally accepted accounting principles applied on a
consistent basis.
(j) Governmental Authorities. From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing
Date, or (ii) until all the Shares and Warrant Shares have been
resold or transferred by all the Subscribers pursuant to the
Registration Statement or pursuant to Rule 144, without regard to
volume limitations, the Company shall duly observe and conform in all
material respects to all valid requirements of governmental
authorities relating to the conduct of its business or to its
properties or assets.
(k) Intellectual Property. From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing
Date, or (ii) until all the Shares and Warrant Shares have been
resold or transferred by all the Subscribers pursuant to the
Registration Statement or pursuant to Rule 144, without regard to
volume limitations, the Company shall maintain in full force and
effect its corporate existence, rights and franchises and all
licenses and other rights to use intellectual property owned or
possessed by it and reasonably deemed to be necessary to the conduct
of its business.
(l) Properties. From the date of this Agreement and
until the sooner of (i) two (2) years after the Closing Date, or (ii)
until all the Shares and Warrant Shares have been resold or
transferred by all the Subscribers pursuant to the Registration
Statement or pursuant to Rule 144, without regard to volume
limitation, the Company will keep its properties in good repair,
working order and condition, reasonable wear and tear excepted, and
from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company
will at all times comply with each provision of all leases to which
it is a party or under which it occupies property if the breach of
such provision could reasonably be expected to have a material
adverse effect.
(m) Confidentiality/Public Announcement. From the
date of this Agreement and until the sooner of (i) two (2) years
after the Closing Date, or (ii) until all the Shares and Warrant
Shares have been resold or transferred by all the Subscribers
pursuant to the Registration Statement or pursuant to Rule 144,
without regard to volume limitations except as required in the
Registration Statement, the Company agrees that it will not disclose
publicly or privately the identity of the Subscribers unless
expressly agreed to in writing by a Subscriber or only to the extent
required by law and then only upon ten days prior notice to
Subscriber. In any event and subject to the foregoing, the Company
undertakes to file a form 8-K or make a public announcement
describing the Offering not later than the Closing Date. A copy of
the Form 8-K or press release will be made available to Subscriber's
counsel for review prior to filing or release. In the form 8-K or
public announcement, the Company will specifically disclose the
amount of common stock outstanding immediately after the Closing.
(n) Blackout. The Company undertakes and covenants
that until the first to occur of (i) the registration statement
described in Section 11.1(iv) having been effective for one hundred
and eighty (180) business days, or (ii) until all the Shares and
Warrant Shares have been resold pursuant to said registration
statement, the Company will not enter into any acquisition, merger,
exchange or sale or other transaction, which could have the effect of
delaying the effectiveness of any pending registration statement or
causing an already effective registration statement to no longer be
effective or current.
(o) Further Registration Statements. Except for a
registration statement filed on behalf of the Subscribers pursuant to
Section 11 of this Agreement, or in connection with employee stock
options approved by the shareholders of the Company relating to no
more than 2,000,000 common shares of the Company's Common Stock, the
Company will not file any registration statements, including but not
limited to Form S-8, with the Commission or with state regulatory
authorities without the consent of Subscribers holding a majority of
the then outstanding Shares and Warrant Shares until one hundred and
eighty (180) days after the Actual Effective Date and during which
such Registration Statement shall be current and available for use in
connection with the public resale of the Shares and Warrant Shares
("Exclusion Period"). Notwithstanding the foregoing, the Subscribers
acknowledge that the Company will be registering those shares in the
Registration Statement that have already been included in the
registration statement initially filed on January 27, 2004 under SEC
File Number 333-11222, as amended on February 11, 2004 and withdrawn
on March 18, 2004 (the "Pending Registration Statement").
(p) Credit Line. Until after the Exclusion Period,
the Company will not exercise, access, employ or drawdown, directly
or indirectly an equity line of credit available to the Company from
Dutchess Capital Management, LLC, which equity line of credit is
described in the Pending Registration Statement, nor any other equity
line of credit or similar capital raising mechanism.
10. Covenants of the Company and Subscriber Regarding
Indemnification.
(a) The Company agrees to indemnify, hold harmless,
reimburse and defend the Subscribers, the Subscribers' officers,
directors, agents, affiliates, control persons, and principal
shareholders, against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Subscriber or any such person
which results, arises out of or is based upon (i) any material
misrepresentation by Company or breach of any warranty by Company in
this Agreement or in any Exhibits or Schedules attached hereto, or
other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in
performance by the Company of any covenant or undertaking to be
performed by the Company hereunder, or any other agreement entered
into by the Company and Subscriber relating hereto.
(b) Each Subscriber agrees to indemnify, hold
harmless, reimburse and defend the Company and each of the Company's
officers, directors, agents, affiliates, control persons against any
claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or
imposed upon the Company or any such person which results, arises out
of or is based upon (i) any material misrepresentation by such
Subscriber in this Agreement or in any Exhibits or Schedules attached
hereto, or other agreement delivered pursuant hereto; or (ii) after
any applicable notice and/or cure periods, any breach or default in
performance by such Subscriber of any covenant or undertaking to be
performed by such Subscriber hereunder, or any other agreement
entered into by the Company and Subscribes relating hereto.
(c) In no event shall the liability of any Subscriber
or permitted successor hereunder or under any other agreement
delivered in connection herewith be greater in amount than the dollar
amount of the net proceeds actually received by such Subscriber upon
the sale of Registrable Securities (as defined herein).
(d) The procedures set forth in Section 11.6 shall
apply to the indemnifications set forth in Sections 10(a) and 10(b)
above.
11.1. Registration Rights. The Company hereby grants
the following registration rights to holders of the Securities.
(i) On one occasion, for a period commencing one
hundred and six (106) days after the Closing Date, but not later than
two (2) years after the Closing Date ("Request Date"), upon a written
request therefor from any record holder or holders of more than 50%
of the Shares and Warrant Shares actually issued upon exercise of the
Warrants, the Company shall prepare and file with the Commission a
registration statement under the 1933 Act registering the Shares and
Warrant Shares (collectively "Registrable Securities") which are the
subject of such request for unrestricted public resale by the holder
thereof. For purposes of Sections 11.1(i) and 11.1(ii), Registrable
Securities shall not include Securities which are registered for
resale in an effective registration statement or included for
registration in a pending registration statement, or which have been
issued without further transfer restrictions after a sale or transfer
pursuant to Rule 144 under the 1933 Act. Upon the receipt of such
request, the Company shall promptly give written notice to all other
record holders of the Registrable Securities that such registration
statement is to be filed and shall include in such registration
statement Registrable Securities for which it has received written
requests within ten (10) days after the Company gives such written
notice. Such other requesting record holders shall be deemed to have
exercised their demand registration right under this Section 11.1(i).
(ii) If the Company at any time proposes to register
any of its securities under the 1933 Act for sale to the public,
whether for its own account or for the account of other security
holders or both, except with respect to registration statements on
Forms ▇-▇, ▇-▇ or another form not available for registering the
Registrable Securities for sale to the public, provided the
Registrable Securities are not otherwise registered for resale by the
Subscribers or Holder pursuant to an effective registration
statement, each such time it will give at least fifteen (15) days'
prior written notice to the record holder of the Registrable
Securities of its intention so to do. Upon the written request of the
holder, received by the Company within ten (10) days after the giving
of any such notice by the Company, to register any of the Registrable
Securities not previously registered and Subscriber has provided
information required by the securities laws to be included in the
registration statement, the Company will cause such Registrable
Securities as to which registration shall have been so requested to
be included with the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent
required to permit the sale or other disposition of the Registrable
Securities so registered by the holder of such Registrable Securities
(the "Seller" or "Sellers"). In the event that any registration
pursuant to this Section 11.1(ii) shall be, in whole or in part, an
underwritten public offering of common stock of the Company, the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced by the managing underwriter if and to the
extent that the Company and the underwriter shall reasonably be of
the opinion that such inclusion would adversely affect the marketing
of the securities to be sold by the Company therein; provided,
however, that the Company shall notify the Seller in writing of any
such reduction. Notwithstanding the foregoing provisions, or Section
11.4 hereof, the Company may withdraw or delay or suffer a delay of
any registration statement referred to in this Section 11.1(ii)
without thereby incurring any liability to the Seller.
(iii) If, at the time any written request for
registration is received by the Company pursuant to Section 11.1(i),
the Company has determined to proceed with the actual preparation and
filing of a registration statement under the 1933 Act in connection
with the proposed offer and sale for cash of any of its securities
for the Company's own account and the Company actually does file such
other registration statement, such written request shall be deemed to
have been given pursuant to Section 11.1(ii) rather than Section
11.1(i), and the rights of the holders of Registrable Securities
covered by such written request shall be governed by Section 11.1(ii).
(iv) The Company shall file with the Commission not
later than fifteen (15) days after the Closing Date (the "Filing
Date"), and cause to be declared effective within one hundred and
five (105) days after the Closing Date (the "Effective Date"), a Form
SB-2 registration statement (the "Registration Statement") (or such
other form that it is eligible to use) in order to register the
Registrable Securities for resale and distribution under the 1933
Act. The Company will register not less than a number of shares of
common stock in the aforedescribed registration statement that is
equal to all of the Shares and Warrant Shares issuable pursuant to
this Agreement. The Registrable Securities shall be reserved and
set aside exclusively for the benefit of each Subscriber, pro rata,
and not issued, employed or reserved for anyone other than each such
Subscriber. The Registration Statement will immediately be amended
or additional registration statements will be immediately filed by
the Company as necessary to register additional shares of Common
Stock to allow the public resale of all Common Stock included in and
issuable by virtue of the Registrable Securities. Without the
written consent of Subscribers holding a majority of the then
outstanding Shares and Warrant Shares, no securities of the Company
other than the Registrable Securities will be included in the
Registration Statement except Common Stock included for registration
in the Pending Registration Statement as of February 11, 2004.
11.2. Registration Procedures. If and whenever the
Company is required by the provisions of Section 11.1(i), 11.1(ii),
or (iv) to effect the registration of any Registrable Securities
under the 1933 Act, the Company will, as expeditiously as possible:
(a) subject to the timelines provided in this
Agreement, prepare and file with the Commission a registration
statement required by Section 11, with respect to such securities and
use its best efforts to cause such registration statement to become
and remain effective for the period of the distribution contemplated
thereby (determined as herein provided), and make available to the
holders of Registrable Securities copies of all filings and
Commission letters of comment;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective until such registration
statement has been effective for a period of two (2) years, and
comply with the provisions of the 1933 Act with respect to the
disposition of all of the Registrable Securities covered by such
registration statement in accordance with the Sellers' intended
method of disposition set forth in such registration statement for
such period;
(c) furnish to the Sellers, at the Company's expense,
such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus)
as such persons reasonably may request in order to facilitate the
public sale or their disposition of the securities covered by such
registration statement;
(d) use its best efforts to register or qualify the
Sellers' Registrable Securities covered by such registration
statement under the securities or "blue sky" laws of such
jurisdictions as the Sellers shall request in writing, provided,
however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) if applicable, list the Registrable Securities
covered by such registration statement with any securities exchange
on which the Common Stock of the Company is then listed;
(f) immediately notify the Sellers when a prospectus
relating thereto is required to be delivered under the 1933 Act, of
the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; and
(g) provided same would not be in violation of the
provision of Regulation FD under the 1934 Act, make available for
inspection by the Sellers, and any attorney, accountant or other
agent retained by the Seller or underwriter, all publicly available,
non-confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all publicly available,
non-confidential information reasonably requested by the seller,
attorney, accountant or agent in connection with such registration statement.
11.3. Provision of Documents. In connection with each
registration described in this Section 11, each Seller will furnish
to the Company in writing such information and representation letters
with respect to itself and the proposed distribution by it as
reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws.
11.4. Non-Registration Events. The Company and the
Subscribers agree that the Sellers will suffer damages if the
Registration Statement is not filed by the Filing Date and not
declared effective by the Commission by the Effective Date, and any
registration statement required under Section 11.1(i) or 11.1(ii) is
not filed within 60 days after written request and declared effective
by the Commission within 120 days after such request, and maintained
in the manner and within the time periods contemplated by Section 11
hereof, and it would not be feasible to ascertain the extent of such
damages with precision. Accordingly, if (i) the Registration
Statement is not filed on or before the Filing Date or is not
declared effective on or before the sooner of the Effective Date, or
within three (3) business days of receipt by the Company of a written
or oral communication from the Commission that the Registration
Statement will not be reviewed or that the Commission has no further
comments, (ii) if the registration statement described in Sections
11.1(i) or 11.1(ii) is not filed within 60 days after such written
request, or is not declared effective within 120 days after such
written request, or (iii) any registration statement described in
Sections 11.1(i), 11.1(ii) or 11.1(iv) is filed and declared
effective but shall thereafter cease to be effective (without being
succeeded within ten (10) business days by an effective replacement
or amended registration statement) for a period of time which shall
exceed 30 days in the aggregate per year (defined as a period of 365
days commencing on the date the Registration Statement is declared
effective) or more than 20 consecutive days (each such event referred
to in clauses (i), (ii) and (iii) of this Section 11.4 is referred to
herein as a "Non-Registration Event"), then the Company shall deliver
to the holder of Registrable Securities, as Liquidated Damages, an
amount equal to two percent (2%) for each thirty days or part thereof
of the Purchase Price of the Shares and actually paid "Purchase
Price" (as defined in the Warrants) of Warrant Shares issued or
issuable upon actual exercise of the Warrants, for the Registrable
Securities owned of record by such holder as of and during the
pendency of such Non-Registration Event which are subject to such
Non-Registration Event. In the alternative, the Company may elect to
pay the cash Liquidated Damages by delivery of free-trading,
unrestricted common stock valued at fifty percent (50%) of the
closing bid price of the Company's common stock for each trading day
for which each Liquidated Damages is due. For non-trading days, the
valuation of common stock to be delivered in lieu of cash Liquidated
Damages shall be determined based upon the closing bid price of the
common stock on the next succeeding trading day. Such common stock
must be delivered on the same day that the cash Liquidated Damages
would otherwise be payable. The Company must pay the Liquidated
Damages in cash within ten (10) days after the end of each thirty
(30) day period or shorter part thereof for which Liquidated Damages
are payable. In the event a Registration Statement is filed by the
Filing Date but is withdrawn prior to being declared effective by the
Commission, then such Registration Statement will be deemed to have
not been filed.
11.5. Expenses. All expenses incurred by the Company
in complying with Section 11, including, without limitation, all
registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the
Company, fees and expenses (including reasonable counsel fees)
incurred in connection with complying with state securities or "blue
sky" laws, fees of the National Association of Securities Dealers,
Inc., transfer taxes, fees of transfer agents and registrars, costs
of insurance and fee of one counsel for all Sellers (in an amount not
to exceed $5,000) are called "Registration Expenses." All
underwriting discounts and selling commissions applicable to the sale
of Registrable Securities, including any fees and disbursements of
any additional counsel to the Seller, are called "Selling Expenses."
The Company will pay all Registration Expenses in connection with the
registration statement under Section 11. Selling Expenses in
connection with each registration statement under Section 11 shall be
borne by the Seller and may be apportioned among the Sellers in
proportion to the number of shares sold by the Seller relative to the
number of shares sold under such registration statement or as all
Sellers thereunder may agree.
11.6. Indemnification and Contribution.
(a) In the event of a registration of any Registrable
Securities under the 1933 Act pursuant to Section 11, the Company
will, to the extent permitted by law, indemnify and hold harmless the
Seller, each officer of the Seller, each director of the Seller, each
underwriter of such Registrable Securities thereunder and each other
person, if any, who controls such Seller or underwriter within the
meaning of the 1933 Act, against any losses, claims, damages or
liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such
Registrable Securities was registered under the 1933 Act pursuant to
Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances when
made, and will subject to the provisions of Section 11.6(c) reimburse
the Seller, each such underwriter and each such controlling person
for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company
shall not be liable to the Seller to the extent that any such damages
arise out of or are based upon an untrue statement or omission made
in any preliminary prospectus if (i) the Seller failed to send or
deliver a copy of the final prospectus delivered by the Company to
the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which
such damages arise, (ii) the final prospectus would have corrected
such untrue statement or alleged untrue statement or such omission or
alleged omission, or (iii) to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by any such Seller,
or any such controlling person in writing specifically for use in
such registration statement or prospectus.
(b) In the event of a registration of any of the
Registrable Securities under the 1933 Act pursuant to Section 11,
each Seller severally but not jointly will, to the extent permitted
by law, indemnify and hold harmless the Company, and each person, if
any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement,
each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the 1933 Act, against
all losses, claims, damages or liabilities, joint or several, to
which the Company or such officer, director, underwriter or
controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the registration statement under which such Registrable Securities
were registered under the 1933 Act pursuant to Section 11, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with information pertaining
to such Seller, as such, furnished in writing to the Company by such
Seller specifically for use in such registration statement or
prospectus, and provided, further, however, that the liability of the
Seller hereunder shall be limited to the net proceeds actually
received by the Seller from the sale of Registrable Securities
covered by such registration statement.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party hereunder, notify the indemnifying
party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it
may have to such indemnified party other than under this Section
11.6(c) and shall only relieve it from any liability which it may
have to such indemnified party under this Section 11.6(c), except and
only if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such
indemnified party, and, after notice from the indemnifying party to
such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Section 11.6(c) for any legal expenses
subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation and
of liaison with counsel so selected, provided, however, that, if the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have
reasonably concluded that there may be reasonable defenses available
to it which are different from or additional to those available to
the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified parties, as a group, shall have
the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action,
with the reasonable expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(d) In order to provide for just and equitable
contribution in the event of joint liability under the 1933 Act in
any case in which either (i) a Seller, or any controlling person of a
Seller, makes a claim for indemnification pursuant to this Section
11.6 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 this Section 11.6 provides for
indemnification in such case, or (ii) contribution under the 1933 Act
may be required on the part of the Seller or controlling person of
the Seller in circumstances for which indemnification is not provided
under this Section 11.6; then, and in each such case, the Company and
the Seller will contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject (after contribution from
others) in such proportion so that the Seller is responsible only for
the portion represented by the percentage that the public offering
price of its securities offered by the registration statement bears
to the public offering price of all securities offered by such
registration statement, provided, however, that, in any such case,
(y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities offered by
it pursuant to such registration statement; and (z) no person or
entity guilty of fraudulent misrepresentation (within the meaning of
Section 10(f) of the ▇▇▇▇ ▇▇▇) will be entitled to contribution from
any person or entity who was not guilty of such fraudulent
misrepresentation.
11.7. Delivery of Unlegended Shares.
(a) Within three (3) business days (such third
business day, the "Unlegended Shares Delivery Date") after the
business day on which the Company has received (i) a notice that
Registrable Securities have been sold either pursuant to the
Registration Statement or Rule 144 under the 1933 Act, (ii) a
representation that the prospectus delivery requirements, or the
requirements of Rule 144, as applicable, have been satisfied, and
(iii) the original share certificates representing the shares of
Common Stock that have been sold, and (iv) in the case of sales under
Rule 144 customary representation letters of the Subscriber and
Subscriber's Placement Agent regarding compliance with the
requirements of Rule 144, the Company at its expense, (y) shall
deliver, and shall cause legal counsel selected by the Company to
deliver, to its transfer agent (with copies to Subscriber) an
appropriate instruction and opinion of such counsel, directing the
delivery of shares of Common Stock without any legends including the
legends set forth in Sections 4(e) and 4(f) above, issuable pursuant
to any effective and current registration statement described in
Section 11 of this Agreement or pursuant to Rule 144 under the 1933
Act (the "Unlegended Shares"); and (z) cause the transmission of the
certificates representing the Unlegended Shares together with a
legended certificate representing the balance of the unsold shares of
Common Stock, if any, to the Subscriber at the address specified in
the notice of sale, via express courier, by electronic transfer or
otherwise on or before the Unlegended Shares Delivery Date. Transfer
fees shall be the responsibility of the Seller.
(b) In lieu of delivering physical certificates
representing the Unlegended Shares, if the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, upon request of a Subscriber,
so long as the certificates therefor do not bear a legend and the
Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer
agent to electronically transmit the Unlegended Shares by crediting
the account of Subscriber's prime Placement Agent with DTC through
its Deposit Withdrawal Agent Commission system. Such delivery must
be made on or before the Unlegended Shares Delivery Date.
(c) The Company understands that a delay in the
delivery of the Unlegended Shares pursuant to Section 11 hereof
beyond the Unlegended Shares Delivery Date could result in economic
loss to a Subscriber. As compensation to a Subscriber for such loss,
the Company agrees to pay late payment fees (as liquidated damages
and not as a penalty) to the Subscriber for late delivery of
Unlegended Shares in the amount of $100 per business day after the
Delivery Date for each $10,000 of purchase price of the Unlegended
Shares subject to the delivery default. If during any 360 day
period, the Company fails to deliver Unlegended Shares as required by
this Section 11.7 for an aggregate of thirty (30) days, then each
Subscriber or assignee holding Securities subject to such default
may, at its option, require the Company to purchase all or any
portion of the Shares and Warrant Shares subject to such default at a
price per share equal to 130% of the Purchase Price of such Common
Stock and Warrant Shares. The Company shall pay any payments
incurred under this Section in immediately available funds upon demand.
(d) In addition to any other rights available to a
Subscriber, if the Company fails to deliver to a Subscriber
Unlegended Shares as required pursuant to this Agreement, within ten
(10) calendar days after the Unlegended Shares Delivery Date and the
Subscriber purchases (in an open market transaction or otherwise)
shares of common stock to deliver in satisfaction of a sale by such
Subscriber of the shares of Common Stock which the Subscriber
anticipated receiving from the Company (a "Buy-In"), then the Company
shall pay in cash to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A)
the Subscriber's total purchase price (including brokerage
commissions, if any) for the shares of common stock so purchased
exceeds (B) the aggregate purchase price of the shares of Common
Stock delivered to the Company for reissuance as Unlegended Shares,
together with interest thereon at a rate of 15% per annum, accruing
until such amount and any accrued interest thereon is paid in full
(which amount shall be paid as liquidated damages and not as a
penalty). For example, if a Subscriber purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to $10,000 of purchase price of shares of Common Stock
delivered to the Company for reissuance as Unlegended Shares, the
Company shall be required to pay the Subscriber $1,000, plus
interest. The Subscriber shall provide the Company written notice
indicating the amounts payable to the Subscriber in respect of the Buy-In.
(e) In the event a Subscriber shall request delivery
of Unlegended Shares as described in Section 11.7(a), the Company may
not refuse to deliver Unlegended Shares based on any claim that such
Subscriber or any one associated or affiliated with such Subscriber
has been engaged in any violation of law, or for any other reason,
unless, an injunction or temporary restraining order from a court, on
notice, restraining and or enjoining delivery of such Unlegended
Shares or exercise of all or part of said Warrant shall have been
sought and obtained and the Company has posted a surety bond for the
benefit of such Subscriber in the amount of 130% of the amount of the
aggregate purchase price of the Common Stock and Warrant Shares which
are subject to the injunction or temporary restraining order, which
bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall
be payable to such Subscriber to the extent Subscriber obtains
judgment in Subscriber's favor.
12. Offering Restrictions. From the date of this
Agreement until after the Exclusion Period, except in connection with
(i) employee stock options or compensation plans, (ii) as full or
partial consideration in connection with any merger, consolidation or
purchase of substantially all of the securities or assets of any
corporation or other entity, or (iii) as has been described in the
Reports or Other Written Information filed or delivered prior to the
Closing Date (collectively "Excepted Issuances"), or the Offering,
the Company will not enter into any agreement to, nor issue any
equity, convertible debt or other securities convertible into common
stock without the prior written consent of Subscribers holding a
majority of the then outstanding Shares and Warrant Shares, which
consent may be withheld for any reason.
13. Miscellaneous.
(a) Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein,
shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or
delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated
below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or
(b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be: (i) if to the
Company, to: Force Protection, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, #▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO, telecopier: (▇▇▇) ▇▇▇-▇▇▇▇, with a
copy by telecopier only to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopier: (562) 983-
0662, (ii) if to the Subscribers, to: the one or more addresses and
telecopier numbers indicated on the signature pages hereto, with an
additional copy by telecopier only to: Grushko & ▇▇▇▇▇▇▇, P.C., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telecopier
number: (▇▇▇) ▇▇▇-▇▇▇▇, and (iii) if to the Placement Agent, to:
Westor Online, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇, telecopier: (▇▇▇) ▇▇▇-▇▇▇▇.
(b) Closing. The consummation of the transactions
contemplated herein shall take place at the offices of Grushko &
▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, upon the satisfaction of all conditions to Closing set forth
in this Agreement ("Closing Date").
(c) Entire Agreement; Assignment. This Agreement and
other documents delivered in connection herewith represent the entire
agreement between the parties hereto with respect to the subject
matter hereof and may be amended only by a writing executed by both
parties. Neither the Company nor the Subscribers have relied on any
representations not contained or referred to in this Agreement and
the documents delivered herewith. No right or obligation of either
party shall be assigned by that party without prior notice to and the
written consent of the other party.
(d) Counterparts/Execution. This Agreement may be
executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument. This Agreement may
be executed by facsimile signature and delivered by facsimile
transmission.
(e) Law Governing this Agreement. This Agreement
shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of laws.
Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in
the state courts of New York or in the federal courts located in the
state of New York. The parties and the individuals executing this
Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing
party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any
provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform with such statute or rule of law. Any
such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other
provision of any agreement.
(f) Specific Enforcement, Consent to Jurisdiction.
The Company and Subscriber acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent
or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 13(e) hereof, each of the Company,
Subscriber and any signator hereto in his personal capacity hereby
waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction in New York of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner
permitted by law.
(g) Independent Nature of Subscribers' Obligations
and Rights. The obligations of each Subscriber hereunder are several
and not joint with the obligations of any other Subscriber hereunder,
and no such Subscriber shall be responsible in any way for the
performance of the obligations of any other hereunder.
(h) Equitable Adjustment. The Securities and the
purchase prices of Securities shall be equitably adjusted to offset
the effect of stock splits, stock dividends, and distributions of
property or equity interests of the Company to its shareholders.
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned
whereupon it shall become a binding agreement between us.
FORCE PROTECTION, INC.
a Colorado corporation
By:_______________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: CEO
Dated: March _____, 2004
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Warrant (regular)
Exhibit B Form of Warrant (Green Shoe)
Exhibit C Escrow Agreement
Exhibit D Form of Legal Opinion
Schedule 5(d) Additional Issuances
Schedule 5(q) Undisclosed Liabilities
Schedule 5(s) Capitalization
Schedule 8 Placement Agent
Schedule 9(e) Use of Proceeds
EXHIBIT A
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO FORCE PROTECTION,
INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase _________ shares of
Common Stock of Force Protection, Inc.
(subject to adjustment as provided herein)
FORM OF COMMON STOCK PURCHASE WARRANT A
No. 2004-A-MAR-001 Issue Date: March ___, 2004
FORCE PROTECTION, INC., a corporation organized under the laws of
the State of Colorado (the "Company"), hereby certifies that, for
value received, __________________________________,
____________________________________________, or its assigns (the
"Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company at any time after the Issue Date until 5:00
p.m., E.S.T on the second anniversary of the Issue Date (the
"Expiration Date"), up to ________ fully paid and nonassessable shares
of the common stock of the Company (the "Common Stock"), no par value
per share at a per share purchase price of $0.24. The aforedescribed
purchase price per share, as adjusted from time to time as herein
provided, is referred to herein as the "Purchase Price." The number
and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein. The Company may reduce
the Purchase Price without the consent of the Holder. Capitalized
terms used and not otherwise defined herein shall have the meanings
set forth in that certain Subscription Agreement (the "Subscription
Agreement"), dated March ___, 2004, entered into by the Company and
the Holder.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include Force Protection, Inc. and
any corporation which shall succeed or assume the obligations of Force
Protection, Inc. hereunder.
(b) The term "Common Stock" includes (a) the Company's Common
Stock, no par value per share, as authorized on the date of the
Subscription Agreement, and (b) any other securities into which or for
which any of the securities described in (a) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and
after the Issue Date through and including the Expiration Date, the
Holder hereof shall be entitled to receive, upon exercise of this
Warrant in whole in accordance with the terms of subsection 1.2 or
upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Common Stock of the Company, subject to
adjustment pursuant to Section 4.
1.2. Full Exercise. This Warrant may be exercised in full
by the Holder hereof by delivery of an original or facsimile copy of
the form of subscription attached as Exhibit A hereto (the
"Subscription Form") duly executed by such Holder and surrender of the
original Warrant within seven (7) days of exercise, to the Company at
its principal office or at the office of its Warrant Agent (as
provided hereinafter), accompanied by payment, in cash, wire transfer
or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of
Common Stock for which this Warrant is then exercisable by the
Purchase Price then in effect.
1.3. Partial Exercise. This Warrant may be exercised in
part (but not for a fractional share) by surrender of this Warrant in
the manner and at the place provided in subsection 1.2 except that the
amount payable by the Holder on such partial exercise shall be the
amount obtained by multiplying (a) the number of whole shares of
Common Stock designated by the Holder in the Subscription Form by
(b) the Purchase Price then in effect. On any such partial exercise,
the Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in
the name of the Holder hereof or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may request, the whole number
of shares of Common Stock for which such Warrant may still be exercised.
1.4. Fair Market Value. Fair Market Value of a share of
Common Stock as of a particular date (the "Determination Date") shall mean:
(a) If the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ"), National Market System,
the NASDAQ SmallCap Market or the American Stock Exchange, LLC, then
the closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date;
(b) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System, the NASDAQ SmallCap
Market or the American Stock Exchange, Inc., but is traded in the
over-the-counter market, then the average of the closing bid and ask
prices reported for the last business day immediately preceding the
Determination Date;
(c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and
the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the American
Arbitration Association, before a single arbitrator to be chosen from
a panel of persons qualified by education and training to pass on the
matter to be decided; or
(d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the Company's
charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter,
assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are
outstanding at the Determination Date.
1.5. Company Acknowledgment. The Company will, at the time
of the exercise of the Warrant, upon the request of the Holder hereof
acknowledge in writing its continuing obligation to afford to such
Holder any rights to which such Holder shall continue to be entitled
after such exercise in accordance with the provisions of this Warrant.
If the Holder shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford to such
Holder any such rights.
1.6. Trustee for Warrant Holders. In the event that a bank
or trust company shall have been appointed as trustee for the Holder
of the Warrants pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as
hereinafter described) and shall accept, in its own name for the
account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to
this Section 1.
1.7 Delivery of Stock Certificates, etc. on Exercise. The
Company agrees that the shares of Common Stock purchased upon exercise
of this Warrant shall be deemed to be issued to the Holder hereof as
the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment
made for such shares as aforesaid. As soon as practicable after the
exercise of this Warrant in full or in part, and in any event within
five (5) days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued
in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may
direct in compliance with applicable securities laws, a certificate or
certificates for the number of duly and validly issued, fully paid and
nonassessable shares of Common Stock (or Other Securities) to which
such Holder shall be entitled on such exercise, plus, in lieu of any
fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value
of one full share of Common Stock, together with any other stock or
other securities and property (including cash, where applicable) to
which such Holder is entitled upon such exercise pursuant to Section 1
or otherwise.
2. Cashless Exercise.
(a) If a Registration Statement as defined in the
Subscription Agreement ("Registration Statement") is effective and the
Holder may sell its shares of Common Stock upon exercise hereof, this
Warrant may be exercisable in whole or in part for cash only as set
forth in Section 1 above. If no such Registration Statement is
available, payment upon exercise may be made at the option of the
Holder either in (i) cash, wire transfer or by certified or official
bank check payable to the order of the Company equal to the applicable
aggregate Purchase Price, (ii) by delivery of Common Stock issuable
upon exercise of the Warrants in accordance with Section (b) below or
(iii) by a combination of any of the foregoing methods, for the number
of Common Stock specified in such form (as such exercise number shall
be adjusted to reflect any adjustment in the total number of shares of
Common Stock issuable to the holder per the terms of this Warrant) and
the holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully-paid and non-assessable shares of
Common Stock (or Other Securities) determined as provided herein.
(b) Notwithstanding any provisions herein to the contrary,
if the Fair Market Value of one share of Common Stock is greater than
the Purchase Price (at the date of calculation as set forth below), in
lieu of exercising this Warrant for cash, the holder may elect to
receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being cancelled) by surrender of this
Warrant at the principal office of the Company together with the
properly endorsed Subscription Form in which event the Company shall
issue to the holder a number of shares of Common Stock computed using
the following formula:
X=Y (A-B)
A
Where X= the number of shares of Common Stock to be
issued to the holder
Y= the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the
Warrant being exercised (at the date of such
calculation)
A= the Fair Market Value of one share of the
Company's Common Stock (at the date of such
calculation)
B= Purchase Price (as adjusted to the date of such
calculation)
(c) The Holder may employ the cashless exercise feature
described above only during the pendency of a Non-Registration Event
as described in Section 11.4 of the Subscription Agreement.
(d) For purposes of Rule 144 promulgated under the 1933
Act, it is intended, understood and acknowledged that the Warrant
Shares issued in a cashless exercise transaction shall be deemed to
have been acquired by the Holder, and the holding period for the
Warrant Shares shall be deemed to have commenced, on the date this
Warrant was originally issued pursuant to the Subscription Agreement.
3. Adjustment for Reorganization, Consolidation, Merger, etc.
3.1. Reorganization, Consolidation, Merger, etc. In case at
any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person or
(c) transfer all or substantially all of its properties or assets to
any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, as a condition to
the consummation of such a transaction, proper and adequate provision
shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1, at any time after the
consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive,
in lieu of the Common Stock (or Other Securities) issuable on such
exercise prior to such consummation or such effective date, the stock
and other securities and property (including cash) to which such
Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder
had so exercised this Warrant, immediately prior thereto, all subject
to further adjustment thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution, shall at
its expense deliver or cause to be delivered the stock and other
securities and property (including cash, where applicable) receivable
by the Holder of the Warrants after the effective date of such
dissolution pursuant to this Section 3 to a bank or trust company (a
"Trustee") having its principal office in New York, NY, as trustee for
the Holder of the Warrants.
3.3. Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 3, this Warrant shall continue
in full force and effect and the terms hereof shall be applicable to
the Other Securities and property receivable on the exercise of this
Warrant after the consummation of such reorganization, consolidation
or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of
any Other Securities, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties or assets
of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant as provided in Section 4. In the
event this Warrant does not continue in full force and effect after
the consummation of the transaction described in this Section 3, then
only in such event will the Company's securities and property
(including cash, where applicable) receivable by the Holder of the
Warrants be delivered to the Trustee as contemplated by Section 3.2.
3.4 Share Issuance. Until the Expiration Date, if the
Company shall issue any Common Stock except for the Excepted Issuances
(as defined in the Subscription Agreement), prior to the complete
exercise of this Warrant for a consideration less than the Purchase
Price that would be in effect at the time of such issue, then, and
thereafter successively upon each such issue, the Purchase Price shall
be reduced to such other lower issue price. For purposes of this
adjustment, the issuance of any security or debt instrument of the
Company carrying the right to convert such security or debt instrument
into Common Stock or of any warrant, right or option to purchase
Common Stock shall result in an adjustment to the Purchase Price upon
the issuance of the above-described security, debt instrument,
warrant, right, or option. The reduction of the Purchase Price
described in this Section 3.4 is in addition to the other rights of
the Holder described in the Subscription Agreement.
4. Extraordinary Events Regarding Common Stock. In the event
that the Company shall (a) issue additional shares of the Common Stock
as a dividend or other distribution on outstanding Common Stock,
(b) subdivide its outstanding shares of Common Stock, or (c) combine
its outstanding shares of the Common Stock into a smaller number of
shares of the Common Stock, then, in each such event, the Purchase
Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of
which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The Purchase Price,
as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this
Section 4. The number of shares of Common Stock that the Holder of
this Warrant shall thereafter, on the exercise hereof as provided in
Section 1, be entitled to receive shall be adjusted to a number
determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 4) be issuable
on such exercise by a fraction of which (a) the numerator is the
Purchase Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price
in effect on the date of such exercise.
5. Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Warrants, the Company at
its expense will promptly cause its Chief Financial Officer or other
appropriate designee to compute such adjustment or readjustment in
accordance with the terms of the Warrant and prepare a certificate
setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable
by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold,
(b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise
of this Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided in this
Warrant. The Company will forthwith mail a copy of each such
certificate to the Holder of the Warrant and any Warrant Agent of the
Company (appointed pursuant to Section 11 hereof).
6. Reservation of Stock, etc. Issuable on Exercise of Warrant;
Financial Statements. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of the Warrant. This Warrant
entitles the Holder hereof to receive copies of all financial and
other information distributed or required to be distributed to the
holders of the Company's Common Stock.
7. Assignment; Exchange of Warrant. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced
hereby, may be transferred by any registered holder hereof (a
"Transferor"). On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") and together with an opinion of counsel
reasonably satisfactory to the Company that the transfer of this
Warrant will be in compliance with applicable securities laws, the
Company at its expense, twice, only, but with payment by the
Transferor of any applicable transfer taxes, will issue and deliver to
or on the order of the Transferor thereof a new Warrant or Warrants of
like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form (each a "Transferee"),
calling in the aggregate on the face or faces thereof for the number
of shares of Common Stock called for on the face or faces of the
Warrant so surrendered by the Transferor. No such transfers shall
result in a public distribution of the Warrant; and the Company shall
only be responsible for "blue sky" compliance expenses for resales
under any registration statement filed in accordance with Section 11
of the Subscription Agreement for two (2) such transfers to two (2)
applicable states of the United States only.
8. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or,
in the case of any such mutilation, on surrender and cancellation of
this Warrant, the Company at its expense, twice only, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
9. Registration Rights. The Holder of this Warrant has been
granted certain registration rights by the Company. These
registration rights are set forth in the Subscription Agreement. The
terms of the Subscription Agreement are incorporated herein by this
reference. During the pendency of a Non-Registration Event (as
defined in the Subscription Agreement, upon written demand made by the
Holder, the Company will pay to the Holder of this Warrant, in lieu of
delivering Common Stock, a sum equal to the closing price of the
Company's Common Stock on the principal market or exchange upon which
the Common Stock is listed for trading on the trading date immediately
preceding the date notice is given by the Holder, less the Purchase
Price, for each share of Common Stock designated in such notice from
the Holder.
10. Maximum Exercise. The Holder shall not be entitled to
exercise this Warrant on an exercise date nor may the Company exercise
its right to give a Call Notice (as defined in Section 11) in
connection with that number of Common Stock which would be in excess
of the sum of (i) the number of Common Stock beneficially owned by the
Holder and its affiliates on an exercise date or Call Date, and
(ii) the number of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is
being made on an exercise date or Call Date, which would result in
beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding Common Stock on such date. For the purposes
of the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises
which would result in the issuance of more than 4.99%. The
restriction described in this paragraph may be revoked upon sixty-one
(61) days prior notice from the Holder to the Company. The Holder may
allocate which of the equity of the Company deemed beneficially owned
by the Subscriber shall be included in the 4.99% amount described
above and which shall be allocated to the excess above 4.99%.
11. Call. The Company shall have the option to "call" the
Warrants in connection with up to an aggregate fifty percent (50%) of
the amount of Common Stock purchasable hereunder (the "Warrant Call"),
one or more times, in accordance with and governed by the following:
(a) The Company shall exercise the Warrant Call by giving
to the Warrant Holder a written notice of call (the "Call Notice")
during the period in which the Warrant Call may be exercised. The
effective date of each Call Notice (the "Call Date") is the date on
which notice is effective under the notice provision of Section 14 of
this Warrant.
(b) The Company's right to exercise the Warrant Call shall
commence thirty trading days after the Actual Effective Date (as
defined in the Subscription Agreement) and end thirty trading days
prior to the Expiration Date.
(c) The number of shares of Common Stock to be issued upon
exercise of the Warrant which are subject to a Call Notice must be
registered in a registration statement effective from twenty-two
trading days prior to the Call Date and through the Delivery Date.
(d) A Call Notice may be given not sooner than thirty
trading days after the prior Call Date.
(e) A Call Notice may be given by the Company only within
five trading days after the Common Stock has had a closing price as
reported for the Principal Market (as defined in the Subscription
Agreement) of not less than two hundred percent (200%) of the
Purchase Price for ten (10) consecutive trading days ("Lookback Period").
(f) The Common Stock must be listed on the Principal Market
for the Lookback Period and through the Delivery Date.
(g) The Company shall not have received a notice from the
Principal Market during the ninety calendar days prior to the Call
Date that the Company or the Common Stock does not meet the
requirements for continued quotation, listing or trading on the
Principal Market.
(h) The Company and the Common Stock shall meet the
requirements for continued quotation, listing or trading on the
Principal Market for the Lookback Period and through the Delivery Date.
(i) Unless otherwise agreed to by the Holder of this
Warrant, a Call Notice must be given to all Warrant Holders who
receive Warrants similar to this Warrant (in terms of exercise price
and other principal terms) issued on or about the same Issue Date as
this Warrant, in proportion to the amounts of Common Stock which may
be purchased by the respective Warrant Holders in accordance with the
respective Warrants held by each.
(j) The Warrant Holder shall exercise his Warrant rights
and purchase the Called Common Stock and pay for same within thirty
(30) days after the Call Date. If the Warrant Holder fails to timely
pay the amount required by the Warrant Call, the Company's sole remedy
shall be to cancel a corresponding amount of this Warrant.
(k) The Company may not exercise the right to Call this
Warrant after the occurrence of a default by the Company of a material
term of this Warrant or the Subscription Agreement, including but not
limited to a Non-Registration Event.
12. Warrant Agent. The Company may, by written notice to the
Holder of the Warrant, appoint an agent (a "Warrant Agent") for the
purpose of issuing Common Stock (or Other Securities) on the exercise
of this Warrant pursuant to Section 1, exchanging this Warrant
pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance,
exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.
13. Transfer on the Company's Books. Until this Warrant is
transferred on the books of the Company, the Company may treat the
registered holder hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
14. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered
by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set
forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice
is to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
(i) if to the Company to: Force Protection, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, #▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO, telecopier: (843) 740-
1973, with a copy by telecopier only to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇, and (ii) if to the Holder, to the address and
telecopier number listed on the first paragraph of this Warrant, with
a copy by telecopier only to: Grushko & ▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telecopier number: (212)
697-3575.
15. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change,
waiver, discharge or termination is sought. This Warrant shall be
construed and enforced in accordance with and governed by the laws of
New York. Any dispute relating to this Warrant shall be adjudicated
in New York County in the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.
IN WITNESS WHEREOF, the Company has executed this Warrant as of
the date first written above.
FORCE PROTECTION, INC.
By:
Name:
Title:
Witness:
Exhibit A
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
TO: FORCE PROTECTION, INC.
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check
applicable box):
___ ________ shares of the Common Stock covered by such Warrant; or
___ the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth in
Section 2.
The undersigned herewith makes payment of the full purchase price for
such shares at the price per share provided for in such Warrant, which
is $___________. Such payment takes the form of (check applicable box
or boxes):
___ $__________ in lawful money of the United States; and/or
___ the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock (using a
Fair Market Value of $_______ per share for purposes of this
calculation); and/or
___ the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 2, to
exercise this Warrant with respect to the maximum number of shares of
Common Stock purchasable pursuant to the cashless exercise procedure
set forth in Section 2.
The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to
_____________________________________________________ whose address is
_________________________________________________
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within
Warrant shall be made pursuant to registration of the Common Stock
under the Securities Act of 1933, as amended (the "Securities Act"),
or pursuant to an exemption from registration under the Securities Act.
Dated:___________________ (Signature must conform to name
of holder as specified on the
face of the Warrant)
(Address)
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto the person(s) named below under the heading
"Transferees" the right represented by the within Warrant to purchase
the percentage and number of shares of Common Stock of FORCE
PROTECTION, INC. to which the within Warrant relates specified under
the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each
such person Attorney to transfer its respective right on the books of
FORCE PROTECTION, INC. with full power of substitution in the premises.
Transferees Percentage Transferred Number Transferred
Dated: ______________, Signed in the presence of:
(Name) (address)
ACCEPTED AND AGREED:
[TRANSFEREE]
(Name) (address)
(Signature must conform to name of
holder as specified on the face of
the warrant)
EXHIBIT B
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO FORCE PROTECTION,
INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase _________ shares of
Common Stock of Force Protection, Inc.
(subject to adjustment as provided herein)
FORM OF COMMON STOCK PURCHASE WARRANT (GREEN SHOE)
No. 2004-GS-MAR-001 Issue Date: March ___, 2004
FORCE PROTECTION, INC., a corporation organized under the laws of
the State of Colorado (the "Company"), hereby certifies that, for
value received, __________________________________,
____________________________________________, or its assigns (the
"Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company at any time after the Issue Date until 5:00
p.m., E.S.T on the one hundred and eightieth (180th) day after the
Actual Effective Date (as defined in the Subscription Agreement) (the
"Expiration Date"), up to ________ fully paid and nonassessable shares
of the common stock of the Company (the "Common Stock"), no par value
per share at a per share purchase price of $0.20. The aforedescribed
purchase price per share, as adjusted from time to time as herein
provided, is referred to herein as the "Purchase Price." The number
and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein. The Company may reduce
the Purchase Price without the consent of the Holder. Capitalized
terms used and not otherwise defined herein shall have the meanings
set forth in that certain Subscription Agreement (the "Subscription
Agreement"), dated March ___, 2004, entered into by the Company and
the Holder.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include Force Protection, Inc. and
any corporation which shall succeed or assume the obligations of Force
Protection, Inc. hereunder.
(b) The term "Common Stock" includes (a) the Company's Common
Stock, no par value per share, as authorized on the date of the
Subscription Agreement, and (b) any other securities into which or for
which any of the securities described in (a) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and
after the Issue Date through and including the Expiration Date, the
Holder hereof shall be entitled to receive, upon exercise of this
Warrant in whole in accordance with the terms of subsection 1.2 or
upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Common Stock of the Company, subject to
adjustment pursuant to Section 4.
1.2. Full Exercise. This Warrant may be exercised in full
by the Holder hereof by delivery of an original or facsimile copy of
the form of subscription attached as Exhibit A hereto (the
"Subscription Form") duly executed by such Holder and surrender of the
original Warrant within seven (7) days of exercise, to the Company at
its principal office or at the office of its Warrant Agent (as
provided hereinafter), accompanied by payment, in cash, wire transfer
or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of
Common Stock for which this Warrant is then exercisable by the
Purchase Price then in effect.
1.3. Partial Exercise. This Warrant may be exercised in
part (but not for a fractional share) by surrender of this Warrant in
the manner and at the place provided in subsection 1.2 except that the
amount payable by the Holder on such partial exercise shall be the
amount obtained by multiplying (a) the number of whole shares of
Common Stock designated by the Holder in the Subscription Form by
(b) the Purchase Price then in effect. On any such partial exercise,
the Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in
the name of the Holder hereof or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may request, the whole number
of shares of Common Stock for which such Warrant may still be exercised.
1.4. Fair Market Value. Fair Market Value of a share of
Common Stock as of a particular date (the "Determination Date") shall
mean:
(a) If the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ"), National Market System,
the NASDAQ SmallCap Market or the American Stock Exchange, LLC, then
the closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date;
(b) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System, the NASDAQ SmallCap
Market or the American Stock Exchange, Inc., but is traded in the
over-the-counter market, then the average of the closing bid and ask
prices reported for the last business day immediately preceding the
Determination Date;
(c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and
the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the American
Arbitration Association, before a single arbitrator to be chosen from
a panel of persons qualified by education and training to pass on the
matter to be decided; or
(d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the Company's
charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter,
assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are
outstanding at the Determination Date.
1.5. Company Acknowledgment. The Company will, at the time
of the exercise of the Warrant, upon the request of the Holder hereof
acknowledge in writing its continuing obligation to afford to such
Holder any rights to which such Holder shall continue to be entitled
after such exercise in accordance with the provisions of this Warrant.
If the Holder shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford to such
Holder any such rights.
1.6. Trustee for Warrant Holders. In the event that a bank
or trust company shall have been appointed as trustee for the Holder
of the Warrants pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as
hereinafter described) and shall accept, in its own name for the
account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to
this Section 1.
1.7 Delivery of Stock Certificates, etc. on Exercise. The
Company agrees that the shares of Common Stock purchased upon exercise
of this Warrant shall be deemed to be issued to the Holder hereof as
the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment
made for such shares as aforesaid. As soon as practicable after the
exercise of this Warrant in full or in part, and in any event within
five (5) days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued
in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may
direct in compliance with applicable securities laws, a certificate or
certificates for the number of duly and validly issued, fully paid and
nonassessable shares of Common Stock (or Other Securities) to which
such Holder shall be entitled on such exercise, plus, in lieu of any
fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value
of one full share of Common Stock, together with any other stock or
other securities and property (including cash, where applicable) to
which such Holder is entitled upon such exercise pursuant to Section 1
or otherwise.
2. Cashless Exercise.
(a) If a Registration Statement as defined in the
Subscription Agreement ("Registration Statement") is effective and the
Holder may sell its shares of Common Stock upon exercise hereof, this
Warrant may be exercisable in whole or in part for cash only as set
forth in Section 1 above. If no such Registration Statement is
available, payment upon exercise may be made at the option of the
Holder either in (i) cash, wire transfer or by certified or official
bank check payable to the order of the Company equal to the applicable
aggregate Purchase Price, (ii) by delivery of Common Stock issuable
upon exercise of the Warrants in accordance with Section (b) below or
(iii) by a combination of any of the foregoing methods, for the number
of Common Stock specified in such form (as such exercise number shall
be adjusted to reflect any adjustment in the total number of shares of
Common Stock issuable to the holder per the terms of this Warrant) and
the holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully-paid and non-assessable shares of
Common Stock (or Other Securities) determined as provided herein.
(b) Notwithstanding any provisions herein to the contrary,
if the Fair Market Value of one share of Common Stock is greater than
the Purchase Price (at the date of calculation as set forth below), in
lieu of exercising this Warrant for cash, the holder may elect to
receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being cancelled) by surrender of this
Warrant at the principal office of the Company together with the
properly endorsed Subscription Form in which event the Company shall
issue to the holder a number of shares of Common Stock computed using
the following formula:
X=Y (A-B)
A
Where X= the number of shares of Common Stock to be
issued to the holder
Y= the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the
Warrant being exercised (at the date of such
calculation)
A= the Fair Market Value of one share of the
Company's Common Stock (at the date of such
calculation)
B= Purchase Price (as adjusted to the date of such
calculation)
(e) The Holder may employ the cashless exercise feature
described above only during the pendency of a Non-Registration Event
as described in Section 11.4 of the Subscription Agreement.
(f) For purposes of Rule 144 promulgated under the 1933
Act, it is intended, understood and acknowledged that the Warrant
Shares issued in a cashless exercise transaction shall be deemed to
have been acquired by the Holder, and the holding period for the
Warrant Shares shall be deemed to have commenced, on the date this
Warrant was originally issued pursuant to the Subscription Agreement.
3. Adjustment for Reorganization, Consolidation, Merger, etc.
3.1. Reorganization, Consolidation, Merger, etc. In case at
any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person or
(c) transfer all or substantially all of its properties or assets to
any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, as a condition to
the consummation of such a transaction, proper and adequate provision
shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1, at any time after the
consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive,
in lieu of the Common Stock (or Other Securities) issuable on such
exercise prior to such consummation or such effective date, the stock
and other securities and property (including cash) to which such
Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder
had so exercised this Warrant, immediately prior thereto, all subject
to further adjustment thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution, shall at
its expense deliver or cause to be delivered the stock and other
securities and property (including cash, where applicable) receivable
by the Holder of the Warrants after the effective date of such
dissolution pursuant to this Section 3 to a bank or trust company (a
"Trustee") having its principal office in New York, NY, as trustee for
the Holder of the Warrants.
3.3. Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 3, this Warrant shall continue
in full force and effect and the terms hereof shall be applicable to
the Other Securities and property receivable on the exercise of this
Warrant after the consummation of such reorganization, consolidation
or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of
any Other Securities, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties or assets
of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant as provided in Section 4. In the
event this Warrant does not continue in full force and effect after
the consummation of the transaction described in this Section 3, then
only in such event will the Company's securities and property
(including cash, where applicable) receivable by the Holder of the
Warrants be delivered to the Trustee as contemplated by Section 3.2.
3.4 Share Issuance. Until the Expiration Date, if the
Company shall issue any Common Stock except for the Excepted Issuances
(as defined in the Subscription Agreement), prior to the complete
exercise of this Warrant for a consideration less than the Purchase
Price that would be in effect at the time of such issue, then, and
thereafter successively upon each such issue, the Purchase Price shall
be reduced to such other lower issue price. For purposes of this
adjustment, the issuance of any security or debt instrument of the
Company carrying the right to convert such security or debt instrument
into Common Stock or of any warrant, right or option to purchase
Common Stock shall result in an adjustment to the Purchase Price upon
the issuance of the above-described security, debt instrument,
warrant, right, or option. The reduction of the Purchase Price
described in this Section 3.4 is in addition to the other rights of
the Holder described in the Subscription Agreement.
4. Extraordinary Events Regarding Common Stock. In the event
that the Company shall (a) issue additional shares of the Common Stock
as a dividend or other distribution on outstanding Common Stock,
(b) subdivide its outstanding shares of Common Stock, or (c) combine
its outstanding shares of the Common Stock into a smaller number of
shares of the Common Stock, then, in each such event, the Purchase
Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of
which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The Purchase Price,
as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this
Section 4. The number of shares of Common Stock that the Holder of
this Warrant shall thereafter, on the exercise hereof as provided in
Section 1, be entitled to receive shall be adjusted to a number
determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 4) be issuable
on such exercise by a fraction of which (a) the numerator is the
Purchase Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price
in effect on the date of such exercise.
5. Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Warrants, the Company at
its expense will promptly cause its Chief Financial Officer or other
appropriate designee to compute such adjustment or readjustment in
accordance with the terms of the Warrant and prepare a certificate
setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable
by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold,
(b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise
of this Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided in this
Warrant. The Company will forthwith mail a copy of each such
certificate to the Holder of the Warrant and any Warrant Agent of the
Company (appointed pursuant to Section 11 hereof).
6. Reservation of Stock, etc. Issuable on Exercise of Warrant;
Financial Statements. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of the Warrant. This Warrant
entitles the Holder hereof to receive copies of all financial and
other information distributed or required to be distributed to the
holders of the Company's Common Stock.
7. Assignment; Exchange of Warrant. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced
hereby, may be transferred by any registered holder hereof (a
"Transferor"). On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") and together with an opinion of counsel
reasonably satisfactory to the Company that the transfer of this
Warrant will be in compliance with applicable securities laws, the
Company at its expense, twice, only, but with payment by the
Transferor of any applicable transfer taxes, will issue and deliver to
or on the order of the Transferor thereof a new Warrant or Warrants of
like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form (each a "Transferee"),
calling in the aggregate on the face or faces thereof for the number
of shares of Common Stock called for on the face or faces of the
Warrant so surrendered by the Transferor. No such transfers shall
result in a public distribution of the Warrant; and the Company shall
only be responsible for "blue sky" compliance expenses for resales
under any registration statement filed in accordance with Section 11
of the Subscription Agreement for two (2) such transfers to two (2)
applicable states of the United States only.
8. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or,
in the case of any such mutilation, on surrender and cancellation of
this Warrant, the Company at its expense, twice only, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
9. Registration Rights. The Holder of this Warrant has been
granted certain registration rights by the Company. These
registration rights are set forth in the Subscription Agreement. The
terms of the Subscription Agreement are incorporated herein by this
reference. During the pendency of a Non-Registration Event (as
defined in the Subscription Agreement, upon written demand made by the
Holder, the Company will pay to the Holder of this Warrant, in lieu of
delivering Common Stock, a sum equal to the closing price of the
Company's Common Stock on the principal market or exchange upon which
the Common Stock is listed for trading on the trading date immediately
preceding the date notice is given by the Holder, less the Purchase
Price, for each share of Common Stock designated in such notice from
the Holder.
10. Maximum Exercise. The Holder shall not be entitled to
exercise this Warrant on an exercise date nor may the Company exercise
its right to give a Call Notice (as defined in Section 11) in
connection with that number of Common Stock which would be in excess
of the sum of (i) the number of Common Stock beneficially owned by the
Holder and its affiliates on an exercise date or Call Date, and
(ii) the number of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is
being made on an exercise date or Call Date, which would result in
beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding Common Stock on such date. For the purposes
of the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises
which would result in the issuance of more than 4.99%. The
restriction described in this paragraph may be revoked upon sixty-one
(61) days prior notice from the Holder to the Company. The Holder may
allocate which of the equity of the Company deemed beneficially owned
by the Subscriber shall be included in the 4.99% amount described
above and which shall be allocated to the excess above 4.99%.
11. Call. The Company shall have the option to "call" the
Warrants (the "Warrant Call"), one or more times, in accordance with
and governed by the following:
(a) The Company shall exercise the Warrant Call by giving
to the Warrant Holder a written notice of call (the "Call Notice")
during the period in which the Warrant Call may be exercised. The
effective date of each Call Notice (the "Call Date") is the date on
which notice is effective under the notice provision of Section 14 of
this Warrant.
(b) The Company's right to exercise the Warrant Call shall
commence thirty trading days after the Actual Effective Date and end
thirty trading days prior to the Expiration Date.
(c) The number of shares of Common Stock to be issued upon
exercise of the Warrant which are subject to a Call Notice must be
registered in a registration statement effective from twenty-two
trading days prior to the Call Date and through the Delivery Date.
(d) A Call Notice may be given not sooner than thirty
trading days after the prior Call Date.
(e) A Call Notice may be given by the Company only within
five trading days after the Common Stock has had a closing price as
reported for the Principal Market (as defined in the Subscription
Agreement) of not less than two hundred percent (200%) of the
Purchase Price for ten (10) consecutive trading days ("Lookback Period").
(f) The amount of shares of Common Stock in connection with
which a Call Notice may be given shall be for each Call Notice no more
than thirty percent (30%) of the aggregate number of shares of Common
Stock purchasable hereunder.
(g) The Common Stock must be listed on the Principal Market
for the Lookback Period and through the Delivery Date.
(h) The Company shall not have received a notice from the
Principal Market during the ninety calendar days prior to the Call
Date that the Company or the Common Stock does not meet the
requirements for continued quotation, listing or trading on the
Principal Market.
(i) The Company and the Common Stock shall meet the
requirements for continued quotation, listing or trading on the
Principal Market for the Lookback Period and through the Delivery Date.
(j) Unless otherwise agreed to by the Holder of this
Warrant, a Call Notice must be given to all Warrant Holders who
receive Warrants similar to this Warrant (in terms of exercise price
and other principal terms) issued on or about the same Issue Date as
this Warrant, in proportion to the amounts of Common Stock which may
be purchased by the respective Warrant Holders in accordance with the
respective Warrants held by each.
(k) The Warrant Holder shall exercise his Warrant rights
and purchase the Called Common Stock and pay for same within thirty
(30) days after the Call Date. If the Warrant Holder fails to timely
pay the amount required by the Warrant Call, the Company's sole remedy
shall be to cancel a corresponding amount of this Warrant.
(l) The Company may not exercise the right to Call this
Warrant after the occurrence of a default by the Company of a material
term of this Warrant or the Subscription Agreement.
12. Warrant Agent. The Company may, by written notice to the
Holder of the Warrant, appoint an agent (a "Warrant Agent") for the
purpose of issuing Common Stock (or Other Securities) on the exercise
of this Warrant pursuant to Section 1, exchanging this Warrant
pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance,
exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.
13. Transfer on the Company's Books. Until this Warrant is
transferred on the books of the Company, the Company may treat the
registered holder hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
14. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered
by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set
forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice
is to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
(i) if to the Company to: Force Protection, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, #▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO, telecopier: (843) 740-
1973, with a copy by telecopier only to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇, and (ii) if to the Holder, to the address and
telecopier number listed on the first paragraph of this Warrant, with
a copy by telecopier only to: Grushko & ▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telecopier number: (▇▇▇)▇▇▇-▇▇▇▇.
15. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change,
waiver, discharge or termination is sought. This Warrant shall be
construed and enforced in accordance with and governed by the laws of
New York. Any dispute relating to this Warrant shall be adjudicated
in New York County in the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.
IN WITNESS WHEREOF, the Company has executed this Warrant as of
the date first written above.
FORCE PROTECTION, INC.
By:
Name:
Title:
Witness:
Exhibit A
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
TO: FORCE PROTECTION, INC.
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check
applicable box):
___ ________ shares of the Common Stock covered by such Warrant; or
___ the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth in
Section 2.
The undersigned herewith makes payment of the full purchase price for
such shares at the price per share provided for in such Warrant, which
is $___________. Such payment takes the form of (check applicable box
or boxes):
___ $__________ in lawful money of the United States; and/or
___ the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock (using a
Fair Market Value of $_______ per share for purposes of this
calculation); and/or
___ the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 2, to
exercise this Warrant with respect to the maximum number of shares of
Common Stock purchasable pursuant to the cashless exercise procedure
set forth in Section 2.
The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to
_____________________________________________________ whose address is
_________________________________________________
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within
Warrant shall be made pursuant to registration of the Common Stock
under the Securities Act of 1933, as amended (the "Securities Act"),
or pursuant to an exemption from registration under the Securities Act.
Dated:___________________ (Signature must conform to name
of holder as specified on the
face of the Warrant)
(Address)
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto the person(s) named below under the heading
"Transferees" the right represented by the within Warrant to purchase
the percentage and number of shares of Common Stock of FORCE
PROTECTION, INC. to which the within Warrant relates specified under
the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each
such person Attorney to transfer its respective right on the books of
FORCE PROTECTION, INC. with full power of substitution in the premises.
Transferees Percentage Transferred Number Transferred
Dated: ______________, ___________ (Signature must conform to name of
holder as specified on the face of
the warrant)
Signed in the presence of:
(Name) (address)
ACCEPTED AND AGREED:
[TRANSFEREE] (address)
(Name)
EXHIBIT C
FORM OF FUNDS ESCROW AGREEMENT
This Agreement is dated as of the ____ day of March, 2004
among Force Protection, Inc., a Colorado corporation (the "Company"),
the Subscribers identified on Schedule A hereto (each a "Subscriber"
and collectively "Subscribers"), and Grushko & ▇▇▇▇▇▇▇, P.C. (the
"Escrow Agent"):
W I T N E S S E T H:
WHEREAS, the Company and Subscribers have entered into a
Subscription Agreement calling for the sale by the Company to the
Subscriber of no par value Common Stock of the Company ("Common
Stock") for an aggregate purchase price of up to $3,000,000 and the
issuance of Warrants in the amounts set forth on Schedule A hereto;
and
WHEREAS, the parties hereto require the Company to deliver the
Common Stock and Warrants against payment therefor, with such Common
Stock, Warrants and the Escrowed Funds to be delivered to the Escrow
Agent to be held in escrow and released by the Escrow Agent in
accordance with the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent
pursuant to the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Capitalized terms used and not otherwise
defined herein that are defined in the Subscription Agreement shall
have the meanings given to such terms in the Subscription Agreement.
Whenever used in this Agreement, the following terms shall have the
following respective meanings:
(a) "Agreement" means this Agreement and all amendments
made hereto and thereto by written agreement between the parties;
(b) "A Warrants" shall have the meaning set forth in
Section 3(a) of the Subscription Agreement;
(c) "Closing Date" shall have the meaning set forth in
Section 13(b) of the Subscription Agreement;
(d) "Escrowed Payment" means an aggregate cash payment of
up to $3,000,000 which is the Purchase Price as defined in the
Subscription Agreement;
(e) "Green Shoe Warrants" shall have the meaning set forth
in Section 3(b) of the Subscription Agreement;
(f) "Legal Fees" shall have the meaning set forth in
Section 7 of the Subscription Agreement;
(g) "Legal Opinion" means the original signed legal
opinion referred to in Section 6 of the Subscription Agreement;
(h) "Placement Agent" shall have the meaning set forth in
Section 8 of the Subscription Agreement;
(i) "Placement Agent's Fee" shall have the meaning set
forth in Section 8 of the Subscription Agreement;
(j) "Shares" shall have the meaning set forth in Section 1
of the Subscription Agreement;
(k) "Subscription Agreement" means the Subscription
Agreement (and the exhibits thereto) entered into or to be entered
into by the parties in reference to the sale and purchase of the
Shares, A Warrants, and Green Shoe Warrants;
(l) Collectively, the Subscription Agreement executed by
the Company, Shares, A Warrants, Legal Opinion, and Green Shoe
Warrants are referred to as "Company Documents"; and
(m) Collectively, the Escrowed Payment and the
Subscription Agreement executed by the Subscribers are referred to as
"Subscriber Documents".
1.2. Entire Agreement. This Agreement along with the Company
Documents and the Subscriber Documents constitute the entire
agreement between the parties hereto pertaining to the Company
Documents and Subscriber Documents and supersedes all prior
agreements, understandings, negotiations and discussions, whether
oral or written, of the parties. There are no warranties,
representations and other agreements made by the parties in
connection with the subject matter hereof except as specifically set
forth in this Agreement, the Company Documents and the Subscriber
Documents.
1.3. Extended Meanings. In this Agreement words importing the
singular number include the plural and vice versa; words importing
the masculine gender include the feminine and neuter genders. The
word "person" includes an individual, body corporate, partnership,
trustee or trust or unincorporated association, executor,
administrator or legal representative.
1.4. Waivers and Amendments. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms
and conditions hereof may be waived, only by a written instrument
signed by all parties, or, in the case of a waiver, by the party
waiving compliance. Except as expressly stated herein, no delay on
the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder
preclude any other or future exercise of any other right, power or
privilege hereunder.
1.5. Headings. The division of this Agreement into articles,
sections, subsections and paragraphs and the insertion of headings
are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.6. Law Governing this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws. Any
action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in
the state courts of New York or in the federal courts located in the
state of New York. Both parties and the individuals executing this
Agreement and other agreements on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury.
The prevailing party (which shall be the party which receives an
award most closely resembling the remedy or action sought) shall be
entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Agreement or
any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or
enforceability of any other provision of any agreement.
1.7. Specific Enforcement, Consent to Jurisdiction. The Company
and Subscriber acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injuction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled
by law or equity. Subject to Section 1.6 hereof, each of the Company
and Subscriber hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner
permitted by law.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Company Deliveries. On or about the date hereof, the
Company shall deliver to the Escrow Agent the executed Subscription
Agreement, the Shares, A Warrants, Green Shoe Warrants, and Legal
Opinion (collectively, the "Company Documents").
2.2. Subscriber Deliveries. On or before the Closing Date, each
Subscriber shall deliver to the Escrow Agent its portion of the
Purchase Price, and the executed Subscription Agreement. The
Escrowed Payment will be delivered pursuant to the following wire
transfer instructions:
Citibank, N.A.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇
ABA Number: 0210-00089
For Credit to: Grushko & ▇▇▇▇▇▇▇, ▇▇▇▇ Trust Account
Account Number: ▇▇▇▇▇▇▇▇
2.3. Intention to Create Escrow Over Company Documents and
Subscriber Documents. The Subscriber and Company intend that the
Company Documents and Subscriber Documents shall be held in escrow by
the Escrow Agent pursuant to this Agreement for their benefit as set
forth herein.
2.4. Escrow Agent to Deliver Company Documents and Subscriber
Documents. The Escrow Agent shall hold and release the Company
Documents and Subscriber Documents only in accordance with the terms
and conditions of this Agreement.
ARTICLE III
RELEASE OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS
3.1. Release of Escrow. Subject to the provisions of Section
4.2, the Escrow Agent shall release the Company Documents and
Subscriber Documents as follows:
(a) On the Closing Date, the Escrow Agent will
simultaneously release the Company Documents to the Subscriber and
release the Subscription Agreement, and the Purchase Price to or for
the benefit of the Company except that the Legal Fees will be
released to the Subscriber's attorneys, and the Placement Agent's Fee
will be released to or for the benefit of the Placement Agent.
(b) All funds to be delivered to the Company shall be
delivered pursuant to the wire instructions to be provided in writing
by the Company to the Escrow Agent.
(c) Notwithstanding the above, upon receipt by the Escrow
Agent of joint written instructions ("Joint Instructions") signed by
the Company and the Subscriber, it shall deliver the Company
Documents and Subscriber Documents in accordance with the terms of
the Joint Instructions.
(d) Notwithstanding the above, upon receipt by the Escrow
Agent of a final and non-appealable judgment, order, decree or award
of a court of competent jurisdiction (a "Court Order"), the Escrow
Agent shall deliver the Company Documents and Subscriber Documents in
accordance with the Court Order. Any Court Order shall be
accompanied by an opinion of counsel for the party presenting the
Court Order to the Escrow Agent (which opinion shall be satisfactory
to the Escrow Agent) to the effect that the court issuing the Court
Order has competent jurisdiction and that the Court Order is final
and non-appealable.
3.2. Acknowledgement of Company and Subscriber; Disputes. The
Company and the Subscriber acknowledge that the only terms and
conditions upon which the Company Documents and Subscriber Documents
are to be released are set forth in Sections 3 and 4 of this
Agreement. The Company and the Subscriber reaffirm their agreement
to abide by the terms and conditions of this Agreement with respect
to the release of the Company Documents and Subscriber Documents.
Any dispute with respect to the release of the Company Documents and
Subscriber Documents shall be resolved pursuant to Section 4.2 or by
agreement between the Company and Subscriber.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The
Escrow Agent's duties and responsibilities shall be subject to the
following terms and conditions:
(a) The Subscriber and Company acknowledge and agree that
the Escrow Agent (i) shall not be responsible for or bound by, and
shall not be required to inquire into whether either the Subscriber
or Company is entitled to receipt of the Company Documents and
Subscriber Documents pursuant to, any other agreement or otherwise;
(ii) shall be obligated only for the performance of such duties as
are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iii) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction,
instrument, statement, request or document furnished to it hereunder
and believed by the Escrow Agent in good faith to be genuine and to
have been signed or presented by the proper person or party, without
being required to determine the authenticity or correctness of any
fact stated therein or the propriety or validity or the service
thereof; (iv) may assume that any person believed by the Escrow Agent
in good faith to be authorized to give notice or make any statement
or execute any document in connection with the provisions hereof is
so authorized; (v) shall not be under any duty to give the property
held by Escrow Agent hereunder any greater degree of care than Escrow
Agent gives its own similar property; and (vi) may consult counsel
satisfactory to Escrow Agent, the opinion of such counsel to be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by Escrow Agent hereunder in good faith
and in accordance with the opinion of such counsel.
(b) The Subscriber and Company acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and that the
Escrow Agent shall not be liable for any action taken by Escrow Agent
in good faith and believed by Escrow Agent to be authorized or within
the rights or powers conferred upon Escrow Agent by this Agreement.
The Subscriber and Company, jointly and severally, agree to indemnify
and hold harmless the Escrow Agent and any of Escrow Agent's
partners, employees, agents and representatives for any action taken
or omitted to be taken by Escrow Agent or any of them hereunder,
including the fees of outside counsel and other costs and expenses of
defending itself against any claim or liability under this Agreement,
except in the case of gross negligence or willful misconduct on
Escrow Agent's part committed in its capacity as Escrow Agent under
this Agreement. The Escrow Agent shall owe a duty only to the
Subscriber and Company under this Agreement and to no other person.
(c) The Subscriber and Company jointly and severally agree
to reimburse the Escrow Agent for outside counsel fees, to the extent
authorized hereunder and incurred in connection with the performance
of its duties and responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow
Agent hereunder by giving five (5) days prior written notice of
resignation to the Subscriber and the Company. Prior to the
effective date of the resignation as specified in such notice, the
Subscriber and Company will issue to the Escrow Agent a Joint
Instruction authorizing delivery of the Company Documents and
Subscriber Documents to a substitute Escrow Agent selected by the
Subscriber and Company. If no successor Escrow Agent is named by the
Subscriber and Company, the Escrow Agent may apply to a court of
competent jurisdiction in the State of New York for appointment of a
successor Escrow Agent, and to deposit the Company Documents and
Subscriber Documents with the clerk of any such court.
(e) The Escrow Agent does not have and will not have any
interest in the Company Documents and Subscriber Documents, but is
serving only as escrow agent, having only possession thereof. The
Escrow Agent shall not be liable for any loss resulting from the
making or retention of any investment in accordance with this Escrow
Agreement.
(f) This Agreement sets forth exclusively the duties of
the Escrow Agent with respect to any and all matters pertinent
thereto and no implied duties or obligations shall be read into this
Agreement.
(g) The Escrow Agent shall be permitted to act as counsel
for the Subscriber in any dispute as to the disposition of the
Company Documents and Subscriber Documents, in any other dispute
between the Subscriber and Company, whether or not the Escrow Agent
is then holding the Company Documents and Subscriber Documents and
continues to act as the Escrow Agent hereunder.
(h) The provisions of this Section 4.1 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution: Judgments. Resolution of disputes
arising under this Agreement shall be subject to the following terms
and conditions:
(a) If any dispute shall arise with respect to the
delivery, ownership, right of possession or disposition of the
Company Documents and Subscriber Documents, or if the Escrow Agent
shall in good faith be uncertain as to its duties or rights
hereunder, the Escrow Agent shall be authorized, without liability to
anyone, to (i) refrain from taking any action other than to continue
to hold the Company Documents and Subscriber Documents pending
receipt of a Joint Instruction from the Subscriber and Company, or
(ii) deposit the Company Documents and Subscriber Documents with any
court of competent jurisdiction in the State of New York, in which
event the Escrow Agent shall give written notice thereof to the
Subscriber and the Company and shall thereupon be relieved and
discharged from all further obligations pursuant to this Agreement.
The Escrow Agent may, but shall be under no duty to, institute or
defend any legal proceedings which relate to the Company Documents
and Subscriber Documents. The Escrow Agent shall have the right to
retain counsel if it becomes involved in any disagreement, dispute or
litigation on account of this Agreement or otherwise determines that
it is necessary to consult counsel.
(b) The Escrow Agent is hereby expressly authorized to
comply with and obey any Court Order. In case the Escrow Agent obeys
or complies with a Court Order, the Escrow Agent shall not be liable
to the Subscriber and Company or to any other person, firm,
corporation or entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon the release
of all of the Company Documents and Subscriber Documents or at any
time upon the agreement in writing of the Subscriber and Company.
5.2. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered
by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as
set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile,
with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business
day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such
communications shall be:
(a) If to the Company, to:
Force Protection, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, #▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Subscribers, to: the addresses and fax numbers listed
on Schedule A hereto
(c) If to the Placement Agent, to:
Westor Online, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If to the Escrow Agent, to:
Grushko & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as any of them shall give to the others by
notice made pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an
interest bearing account nor will interest be payable in connection
therewith until immediately after the Initial Closing Date when the
Second Closing Purchase Price shall be transferred to an interest
bearing account. Upon deposit of the Second Closing Purchase Price
into an interest bearing account, a Subscriber shall be entitled to
receive any accrued interest thereon, but only if the Escrow Agent
receives from the Subscriber the Subscriber's United States taxpayer
identification number and other requested information and forms. Any
interest not payable to a Subscriber shall be delivered to the New
York State lawyer client protection fund or similar fund.
5.4. Assignment; Binding Agreement. Neither this Agreement nor
any right or obligation hereunder shall be assignable by any party
without the prior written consent of the other parties hereto. This
Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, successors
and assigns.
5.5. Invalidity. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal, or unenforceable in any
respect for any reason, the validity, legality and enforceability of
any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby,
it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted
by law.
5.6. Counterparts/Execution. This Agreement may be executed in
any number of counterparts and by different signatories hereto on
separate counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute but
one and the same instrument. This Agreement may be executed by
facsimile transmission and delivered by facsimile transmission.
5.7 Agreement. Each of the undersigned states that he has read
the foregoing Funds Escrow Agreement and understands and agrees to it.
FORCE PROTECTION, INC.
the "Company"
By:____________________________________
EXHIBIT D
FORM OF LEGAL OPINION
March ____, 2004
TO THE SUBSCRIBERS LISTED ON SCHEDULE A HERETO:
We have acted as counsel to Force Protection, Inc., a Colorado
corporation (the "Company") in connection with the offer and sale by
the Company of shares of the Company's no par value common stock
("Common Stock") and issuance of Class A and Green Shoe common stock
purchase warrants to purchase shares of Common Stock (collectively
"Warrants") in the amounts set forth on Schedule A, to the
Subscribers identified thereto, pursuant to the exemption from
registration under the Securities Act of 1933, as amended (the "Act)
as set forth in Regulation D ("Regulation D") promulgated thereunder.
Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the subscription agreement (the
"Agreement") by and between the Company and (Subscriber) (the
"Purchaser") entered into at or about the date hereof. The
Agreement, and the agreements described below are sometimes
hereinafter referred to collectively as the "Documents".
In connection with the opinions expressed herein, we have made
such examination of law as we considered appropriate or advisable for
purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied, with your permission, upon the
representations and warranties as to factual matters contained in and
made by the Company and the Purchaser pursuant to the Documents and
upon certificates and statements of certain government officials and
of officers of the Company as described below. We have also examined
originals or copies of certain corporate documents or records of the
Company as described below:
(a) Form of Agreement
(b) Form of Common Stock Certificate
(c) Form of A Warrant
(d) Form of Green Shoe Warrant
(e) Funds Escrow Agreement
(f) Certificate of Incorporation of the Company
(g) Bylaws of the Company
(h) Minutes of the action of the Company's Board of Directors,
including unanimous Board of Directors approval of the
Documents, a copy of which is annexed hereto.
In rendering this opinion, we have, with your permission,
assumed: (a) the authenticity of all documents submitted to us as
originals; (b) the conformity to the originals of all documents
submitted to us as copies; (c) the genuiness of all signatures; (d)
the legal capacity of natural persons; (e) the truth, accuracy and
completeness of the information, factual matters, representations and
warranties contained in all of such documents; (f) the due
authorization, execution and delivery of all such documents by
Subscribers, and the legal, valid and binding effect thereof on
Subscribers; and (g) that the Company and the Purchasers will act in
accordance with their respective representations and warranties as
set forth in the Documents.
With regard to our opinion set forth in paragraph 5 below, we
have assumed as of the date hereof and hereafter, in addition to the
foregoing matters, the following: (a) neither the Company nor anyone
acting on its behalf has engaged or will engage in any "directed
selling efforts" as defined in Rule 902(c) under the Securities Act
of 1933, as amended (the "Act"); (b) there is no Distributor (as
defined in Rule 902(d) under the Act) nor will there be a Distributor
of the Common Stock nor the Warrant Shares issuable upon exercise of
the Warrants; (c) Offering Restrictions (as defined in Rule 902(g)
under the Act) were and will continue to be implemented; (d) the
offering of the Common Stock, Warrants, and the Warrant Shares
issuable upon exercise of the Warrants, are each an Offshore
Transaction (as defined in Rule 902(h) under the Act); and (e) the
conditions contained in Rule 903(a), Rule 903(b)(3) under the Act
have been and will remain fulfilled.
We are members of the bar of the State of Colorado and New York.
We express no opinion as to the laws of any jurisdiction other than
Colorado, New York and the federal laws of the United States of
America. We express no opinion with respect to the effect or
application of any other laws. Special rulings of authorities
administering any of such laws or opinions of other counsel have not
been sought or obtained by us in connection with rendering the
opinions expressed herein.
1. The Company and each of its subsidiaries is duly
incorporated, validly existing and in good standing in the states of
their incorporation; have qualified to do business in each state
where required unless the failure to do so would not have a material
impact in the Company's operations; and have the requisite corporate
power and authority to conduct their business, and to own, lease and
operate their properties.
2. The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Documents.
The Documents, and the issuance of the Common Stock and Warrants and
the reservation and issuance of Common Stock issuable upon exercise
of the Warrants ("Warrant Shares") have been duly approved by the
Board of Directors of the Company, and no further consent or
authorization of the Company or Board of Directors or stockholders is
required.
3. The execution, delivery and performance of the Documents by
the Company and the consummation of the transactions contemplated
thereby, will not, with or without the giving of notice or the
passage of time or both:
(a) Violate the provisions of the Certificate of
Incorporation or bylaws of the Company; or
(b) Conflict with, or constitute a material default (or an
event that with notice or lapse of time or both would become a
default) under, require a consent under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any
material agreement, indenture, instrument or any "lock-up", refusal
or similar provision of any underwriting or similar agreement to
which the Company is a party; or
(c) Result in a violation of any federal or state law,
rule or regulation or any rule or regulation of the Principal Market
applicable to the Company or by which any property or asset of the
Company is bound or affected, except for such violations as would
not, individually or in the aggregate, have a material adverse effect.
4. The Documents constitute the valid and legally binding
obligations of the Company and are enforceable against the Company in
accordance with their respective terms.
5. The Common Stock, the Warrants and the Warrant Shares
issuable upon exercise of the Warrants have not been registered under
the Securities Act of 1933, as amended (the "Act") or under the laws
of any state or other jurisdiction, and are and will be issued
pursuant to a valid exemption from registration. The issuance of the
Common Stock, Warrants and the Warrant Shares issuable upon exercise
of the Warrants are issued pursuant to the exemption under Regulation
S under the Act, and will not integrate with any other offering of
the Company's securities.
6. The Company has either obtained the approval of the
transactions described in the Documents from the OTC Bulletin Board
or no such approval is required.
7. The Company and its Board of Directors have taken all
necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover
provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation
that is or could become applicable to the Subscribers as a result of
the Subscribers and the Company fulfilling their obligations or
exercising their rights under the Documents, including without
limitation as a result of the Company's issuance of the Securities
and the Subscribers' ownership of the Securities.
8. The authorized capital stock of the Company consists of
___________ shares of Common Stock, $_____ par value, of which
________ shares are issued and outstanding and _________ shares of
Preferred Stock, $______ par value, of which _______ shares are
issued and outstanding.
9. To our knowledge, the Company is not a party to or subject
to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality.
Our opinions expressed above are specifically subject to the
following limitations, exceptions, qualifications and assumptions:
A. The effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting the relief
of debtors or the rights and remedies of creditors generally,
including without limitation the effect of statutory or other law
regarding fraudulent conveyances and preferential transfers.
B. Limitations imposed by state law, federal law or general
equitable principles upon the specific enforceability of any of the
remedies, covenants or other provisions of any applicable agreement
and upon the availability of injunctive relief or other equitable
remedies, regardless of whether enforcement of any such agreement is
considered in a proceeding in equity or at law.
C. This opinion letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications, exceptions,
definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, including the General
Qualifications and the Equitable Principles Limitation, and this
opinion letter should be read in conjunction therewith.
This opinion is rendered as of the date first written above, is
solely for your benefit in connection with the Agreement and may not
be relief upon or used by, circulated, quoted, or referred to nor may
any copies hereof by delivered to any other person without our prior
written consent. We disclaim any obligation to update this opinion
letter or to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and
which may alter, affect or modify the opinions expressed herein.
Very truly yours,