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CORONADO INDUSTRIES, INC.
PLACEMENT AGENT WARRANT AGREEMENT
For the Issuance of Up to
800,000 Common Stock Purchase Warrants
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PLACEMENT AGENT WARRANT AGREEMENT
THIS PLACEMENT AGENT WARRANT AGREEMENT (the "AGREEMENT") is made
effective as of the 18th day of March, 1998, among CORONADO INDUSTRIES, INC., a
Nevada corporation (the "COMPANY"), and Fox & COMPANY INVESTMENTS, INC.
(the "PLACEMENT AGENT").
RECITALS:
A. The Company has entered into a letter agreement dated effective
February 23, 1998 (the "PLACEMENT AGREEMENT") with the Placement Agent pursuant
to which the Placement Agent has agreed to assist the Company in the placement
of up to 1,600,000 shares of Company Common Stock subject to the terms of the
Placement Agreement (the "OFFERING").
B. Under the terms of the Placement Agreement, the Company has agreed
to issue the Placement Agent or its assignee up to 800,000 Placement Agent
Warrants (the "PLACEMENT AGENT WARRANTS") as additional compensation under the
Offering.
C. Each Placement Agent Warrant entitles the holder to purchase one
share of the Company's Common Stock at any time commencing six months after the
issuance thereof and through December 1, 2000.
D. The Company desires to provide for the form and provisions of the
Placement Agent Warrants, the terms upon which the Placement Agent Warrants
shall be issued and exercised, and the respective rights, limitation of rights,
privileges and immunities of the Company, and the registered holders of the
Placement Agent Warrants.
E. All acts and things necessary to make the Placement Agent Warrants,
when executed and delivered on behalf of the Company as provided in this
Agreement, the valid, binding and legal obligations of the Company, and to
authorize the execution and delivery of this Agreement, have been done and
performed.
AGREEMENT:
Now, THEREFORE, it is hereby agreed as follows:
SECTION 1
ISSUE OF PLACEMENT AGENT WARRANTS
1.1 ISSUANCE OF DEFINITIVE PLACEMENT AGENT WARRANTS. On the closing
under the Placement Agreement (the "WARRANT DATE"), the Company will issue
certificates, in substantially the form attached as Exhibit A hereto ("WARRANT
CERTIFICATES"), which are exchangeable for shares of the Company's common stock
("COMMON STOCK') only as provided in Article 2 hereof and not after December 1,
2000. Each Placement Agent Warrant evidences the right of the
registered holder thereof, subject to the terms and conditions hereof, to
subscribe for one share of Common Stock of the Company.
1.2 EXECUTION AND DELIVERY OF PLACEMENT AGENT WARRANTS. Each Warrant
Certificate shall be dated as of the Warrant Date and shall be signed on behalf
of the Company by the facsimile or manual signature of the President and
Secretary. The Company may adopt and use the facsimile or manual signature of
any person who is such an officer of the Company at the time of the execution of
any Warrant Certificate, irrespective of the date as of which the same is
executed, or of any person now or hereafter holding such office, notwithstanding
the fact that at the time the Warrant Certificate is issued such person has
ceased to be an officer of the Company. No Placement Agent Warrant shall be
valid unless it shall have been signed and delivered as provided in this Section
1.2.
SECTION 2
DURATION, EXERCISE AND REDEMPTION OF PLACEMENT AGENT WARRANTS
2.1 DURATION OF PLACEMENT AGENT WARRANTS AND TERMS OF EXERCISE. Each
Placement Agent Warrant entitles the holder to purchase one share of Common
Stock or equivalent security of any successor to the Company at a price of $2.00
per share if exercised on or before December 1, 1998 and $2.50 per share
thereafter (the "PURCHASE PRICE"), subject to adjustment as provided herein, for
a term, commencing on the day following the one year anniversary of the Warrant
Date and ending December 1, 2000 (the "EXERCISE PERIOD"). The foregoing
notwithstanding, if notice has been given as provided in Section 4.1 in
connection with the liquidation, dissolution or winding up of the Company, the
right to exercise Placement Agent Warrants shall expire at the close of business
on the third full business day before the date specified in such notice as the
record date for determining registered holders entitled to receive any
distribution upon such liquidation, dissolution or winding up.
2.2 EXERCISE OF PLACEMENT AGENT WARRANTS. Placement Agent Warrants may
be exercised by surrendering, at the office of the Company, the Warrant
Certificate evidencing such Placement Agent Warrants, together with a
subscription in the form set forth on the reverse side of the Warrant
Certificate, duly executed, and accompanied by the tender, in U.S. dollars, of
either federal funds or a certified check or bank cashier's check, payable to
the order of the Company for the applicable Purchase Price. The Placement Agent
Warrants may be exercised from time to time and at any time during the Exercise
Period, in minimum denominations of 100. As soon as practicable after any
Placement Agent Warrants have been so exercised, the Company shall cause to be
issued and delivered to the holder, or upon the order of the registered holder
of such Placement Agent Warrants, in such name or names as may be directed by
the holder, a certificate or certificates for the number of full shares of
Common Stock to which the holder is entitled, and if such Warrant Certificate
shall not have been exercised in full, a new Warrant Certificate for the number
of Placement Agent Warrants as to which such Warrant Certificate shall not have
been exercised. All Warrant Certificates so surrendered shall be delivered to
and cancelled by the Company.
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2.3 COMMON STOCK ISSUED UPON EXERCISE OF PLACEMENT AGENT WARRANTS. All
shares of Common Stock issued upon the exercise of Placement Agent Warrants
shall be duly authorized, validly issued and outstanding, fully-paid and
nonassessable. Fractional shares of Common Stock will not be issued upon
exercise of a Placement Agent Warrant. With respect to any fraction of a share
called for upon any such exercise hereof, the Company shall pay to the holder an
amount in cash equal to such fraction multiplied by the "CURRENT MARKET PRICE
PER SHARE," which on any date shall be determined as follows:
(a) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on any such exchange, the
Current Market Price Per Share shall be the average of the daily closing prices
for the 30 consecutive trading days commencing 35 trading days before such date.
If no sale is made on any trading day, the closing price shall be deemed to be
the average of the closing bid and asked prices for such day on such exchange;
or
(b) If the Common Stock is not listed or admitted to unlisted
trading privileges on any exchange, the Current Market Price Per Share shall be
the avenge of the 30 consecutive reported sale price (or prices, if applicable)
or the mean of the last reported bid and asked prices reported by the National
Association of Securities Dealers Automated Quotations System ("NASDAQ") or, if
not so quoted on NASDAQ, as quoted by the National Quotations Bureau, Inc., for
the 30 consecutive trading days commencing 35 days before such date; or
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and prices are not reported on NASDAQ or the
National Quotations Bureau, Inc., the Current Market Price Per Share shall be
the fair market value of the Common Stock as determined by the Board of
Directors of the Company in good faith, whose determination shall be conclusive.
2.4 RECORD DATE OF SHARES. Irrespective of the date of issue and
delivery of certificates for any Common Stock issuable upon the exercise of
Placement Agent Warrants, each person in whose name any such certificate is
issued shall be deemed to have become the holder of record of the shares
represented thereby on the date on which the Warrant Certificate surrendered in
connection with the subscription therefor was surrendered and payment of the
Purchase Price was tendered. No surrender of Warrant Certificates on any date
when the stock transfer books of the Company are closed, however, shall be
effective to constitute the person or persons entitled to receive shares upon
such surrender as the record holder of such shares on such date, but such person
or persons shall be constituted the record holder or holders of such shares at
the close of business on the next succeeding date on which the stock transfer
books are opened. Except as otherwise provided in Section 3.2, each person
holding any shares received upon exercise of Placement Agent Warrants shall be
entitled to receive only dividends or distributions payable to holders of record
on or after the date on which such person shall be deemed to have become the
holder of record of such shares.
2.5 REDEMPTION OF PLACEMENT AGENT WARRANTS. The Company may not redeem
the Warrants.
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SECTION 3
ADJUSTMENT OF PURCHASE PRICE,
NUMBER OF SHARES OR NUMBER OF PLACEMENT AGENT WARRANTS
3.1 GENERAL. The Purchase Price and the number of shares of Common
Stock covered by each Placement Agent Warrant and the number of Placement Agent
Warrants outstanding are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Article 3.
3.2 STOCK DIVIDENDS, STOCK SPLITS, COMBINATIONS, RECLASSIFICATION,
ETC. In case the Company shall at any time after the date of this Agreement (a)
declare a dividend on the Common Stock payable in shares of Common Stock, (b)
subdivide the outstanding Common Stock into a larger number of shares, (c)
combine the outstanding Common Stock into a smaller number of shares, or (d)
issue any shares of its capital stock in connection with a reclassification of
the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation), the
Purchase Price in effect at the time of the record date for such dividend or the
effective date of such subdivision, combination or reclassification, and/or the
number and kind of shares of stock issuable on such date shall be
proportionately adjusted so that the holder of any Placement Agent Warrant
exercised after such time shall be entitled, at no additional expense, to
receive the aggregate number and kind of shares of stock and Placement Agent
Warrants which, if such Placement Agent Warrant had been exercised immediately
prior to such date, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur.
3.3 DISTRIBUTION OF ASSETS. If at any time after the date hereof the
Company shall make any distribution of its assets upon or with respect to its
Common Stock, as a liquidating or partial liquidating dividend (other than upon
a liquidation, dissolution or winding up of the Company as provided for in
Section 4.1, or other than as a dividend payable out of earnings or any surplus
legally available for dividends under the laws of Nevada), each registered
holder of any Placement Agent Warrant then outstanding shall, upon the exercise
of such Placement Agent Warrant after the record date for such distribution or,
in the absence of a record date, after the date of such distribution, receive in
addition to the shares of Common Stock to which the holder would otherwise be
entitled hereunder, such assets (or, at the option of the Company, a sum equal
to the value thereof at the time of the distribution as determined by its Board
of Directors in its sole discretion) which would have been distributed to such
registered holder if the holder had exercised its Placement Agent Warrants
immediately prior to the record date for such distribution or, in the absence of
a record date, immediately prior to the date of such distribution.
3.4 CONSOLIDATION, MERGER AND SALE OF ASSETS. If, prior to the end of
the Exercise Period, the Company shall at any time consolidate with or merge
into another corporation, the
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holder of any Placement Agent Warrant will thereafter receive, upon exercise
thereof, in lieu of the shares of Common Stock of the Company immediately
theretofore issuable upon exercise of the rights then represented by the
Placement Agent Warrants, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of the Common Stock of the Company equal to the number of shares of such
Common Stock immediately theretofore issuable upon exercise of the Placement
Agent Warrants, had such consolidation or merger not taken place. The Company
shall take such steps in connection with such consolidation or merger as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to any securities or property
thereafter deliverable upon the exercise of the Placement Agent Warrants. The
Company or the successor corporation, as the case may be, shall execute and
deliver to the Placement Agent a supplemental agreement so providing. The
provisions of this Section 3.4 shall similarly apply to successive mergers or
consolidations. A sale of all or substantially all of the assets of the Company
for a consideration (apart from the assumption of obligations) consisting
primarily of securities, shall be deemed a consolidation or merger for the
foregoing purposes.
3.5 DIVIDENDS IN CONVERTIBLE SECURITIES, OPTIONS, RIGHTS OR PLACEMENT
AGENT WARRANTS. In case the Company shall issue stock, securities, rights,
options, convertible securities or warrants to all holders of the Common Stock
entitling such holders to subscribe for or purchase Common Stock or securities
convertible into Common Stock, each registered holder of any Placement Agent
Warrant then outstanding shall, upon the exercise of such Placement Agent
Warrant after the record date for such distribution or, in the absence of a
record date, after the date of such distribution, receive in addition to the
shares of Common Stock to which the holder would otherwise be entitled
hereunder, such stock, securities, rights, options, convertible securities or
warrants which would have been distributed to such registered holder if the
holder had exercised its Placement Agent Warrants immediately prior to the
record date for such distribution or, in the absence of a record date,
immediately prior to the date of such distribution.
3.6 FORM OF PLACEMENT AGENT WARRANT. The form of Placement Agent
Warrant need not be changed because of any change in the Purchase Price or the
number of shares of Common Stock or Placement Agent Warrants issuable upon
exercise of the Placement Agent Warrants pursuant to this Article 3 and
Placement Agent Warrants issued after such change may state the same terms with
respect to the Purchase Price and number of shares of Common Stock and Placement
Agent Warrants issuable thereunder as stated in the Placement Agent Warrants
initially issued pursuant to this Agreement. The Company may at any time, in its
sole discretion, make any change in the form of Placement Agent Warrant that the
Company may deem appropriate and that does not affect the substance thereof in a
manner inconsistent with this Agreement. Any Placement Agent Warrant thereafter
issued or countersigned, whether in exchange or substitution for an outstanding
Placement Agent Warrant or otherwise, may be in the form so changed.
3.7 DIVIDENDS. No registered holder of any Placement Agent Warrant
shall, upon the exercise thereof, be entitled to any dividend that may have
accrued or which may previously
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have been paid with respect to shares of stock issuable upon exercise of the
Placement Agent Warrants except as specifically provided in this Section 3.
3.8 CERTIFICATION OF ADJUSTED PURCHASE PRICE AND NUMBER OF SHARES AND
PLACEMENT AGENT WARRANTS ISSUABLE. Whenever the Purchase Price and the number of
shares of Common Stock and Placement Agent Warrants issuable upon the exercise
of each Placement Agent Warrant are adjusted as provided in this Section 3, the
Company shall (a) promptly prepare an Officer's Certificate setting forth the
Purchase Price as so adjusted, the number of shares of Common Stock and
Placement Agent Warrants issuable upon the exercise of each Placement Agent
Warrant as so adjusted and/or the number of Placement Agent Warrants as so
adjusted and a brief statement of the facts accounting for such adjustment, (b)
promptly file with the Placement Agent and with each transfer agent for the
Common Stock a copy of such certificate and (c) mail a brief summary thereof to
each registered holder of Placement Agent Warrants in accordance with Section
8.1. The term "OFFICER'S CERTIFICATE" in this Agreement shall mean a certificate
or instrument signed by one of the following: the Chief Executive Officer, the
President, a Vice President, the Treasurer or the Secretary of the Company.
SECTION 4
OTHER PROVISIONS FOR PROTECTION OF PLACEMENT AGENT WARRANT HOLDERS
4.1 LIQUIDATION OF THE COMPANY. In the event of the liquidation,
dissolution or winding up of the Company, a notice thereof shall be filed by the
Company with the Placement Agent and each transfer agent for the Common Stock
(if the transfer agent is a person other than the Company) at least 30 days
before the record date (which date shall be specified in such notice) for
determining holders of the Common Stock entitled to receive any distribution
upon such liquidation, dissolution or winding up. Such notice shall also specify
the date on which the right to exercise Placement Agent Warrants shall expire,
as provided in Section 2.1. A copy of such notice shall be published once in an
Authorized Newspaper in Phoenix, Arizona, not more than 30 nor less than 20 days
from such record date. Failure to give such notice, or any defect therein, shall
not affect the legality or validity of the liquidation, dissolution or winding
up, or of any distribution in connection therewith. The term "AUTHORIZED
NEWSPAPER" when used with reference to the publication of a notice provided for
in this Agreement shall mean a newspaper printed in the English language and
customarily published on each business day (whether or not published on
Saturdays, Sundays or legal holidays) and of general circulation.
4.2 RESERVATION OF SHARES. The Company shall reserve and keep available
out of its authorized but unissued Common Stock such number thereof as shall
from time to time be sufficient to permit the exercise of all outstanding
Placement Agent Warrants. If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient for such purposes, the Company
will take such corporate action as may, in the opinion of its counsel be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
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4.3 NO RIGHTS AS STOCKHOLDER CONFERRED BY PLACEMENT AGENT WARRANTS.
THE Placement Agent Warrants shall not entitle the registered holders thereof to
any of the rights, either at law or in equity, of a stockholder of the Company.
4.4 LOST, STOLEN, MUTILATED OR DESTROYED PLACEMENT AGENT WARRANTS. If
any Placement Agent Warrant becomes lost stolen, mutilated or destroyed, the
Company may, on such terms as to indemnify or otherwise as may be reasonably
required to save it harmless, issue a new Placement Agent Warrant of the
denomination, tenor and date as the Placement Agent Warrant so lost stolen
mutilated or destroyed. Any such new Placement Agent Warrant shall constitute an
original contractual obligation of the Company whether or not the allegedly
lost, stolen, mutilated or destroyed Placement Agent Warrant shall be at any
time enforceable by any person.
4.5 ENFORCEMENT OF PLACEMENT AGENT WARRANT RIGHTS. All rights of
action in respect of this Agreement are vested in the respective registered
holders of the Placement Agent Warrants. Any registered holder of any Placement
Agent Warrant may in its own behalf and for its own benefit enforce, and may
institute and maintain any suit action or proceeding against the Company
suitable to enforce, or otherwise in respect of, the holder's right to exercise
its Placement Agent Warrant for the purchase of stock in the manner provided in
the Placement Agent Warrant and in this Agreement.
SECTION 5
REGISTRATION OF PLACEMENT AGENT WARRANTS
5.1 PIGGYBACK REGISTRATION OF COMMON STOCK.
(a) If the Company proposes to register any of its Common
Stock under the Securities Act of 1933, as amended ("SECURITIES ACT"), on any
registration statement, whether OR not for its own account (other than by a
registration statement on Form 5-8 or other form which does not include
substantially the same information as would be required in a form for the
general registration of securities, would not be available for the Common Stock
or relates to any employee benefit plan or reorganization of the Company), it
shall as expeditiously as possible give written notice to all registered holders
of Placement Agent Warrants of such holders' "PIGGYBACK REGISTRATION RIGHTS" as
set forth in this Section 5.1. Upon the written request (which request shall, if
applicable, specify that a holder shall be required to exercise the Placement
Agent Warrants and the number of shares of Common Stock intended to be sold by
such holder after exercise) of any holder made within 20 days after receipt of
any such notice, the Company shall (subject to the additional terms of this
Agreement) include in the registration statement the Placement Agent Warrants
and/or the shares of Common Stock issuable upon exercise of such warrants (
"REGISTRABLE SECURITIES") which the Company has been so requested to register by
the holder thereof and the Company shall keep such registration statement in
effect and maintain compliance with each federal and state law or regulation for
the period necessary for such holder to effect the proposed sale or other
disposition (but in no event for a period greater than 120 days).
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(b) If, at any time after giving written notice of its
intention to register Registrable Securities in a Piggyback Registration but
prior to the effective date of the related registration statement, the Company
shall determine for any reason not to register any Common Stock, the Company
shall give notice of such determination to each holder and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in connection
with such Piggyback Registration (and shall not convert any of the shares into
shares of Common Stock pursuant to Section 2, if applicable). All best efforts
obligations of the Company shall cease if the Company determines to terminate
prior to such effective date any registration pursuant to this Section 5.1.
(c) If a Piggyback Registration involves an offering by or
through underwriters, all holders requesting to have their Registrable
Securities included in the Company's registration statement must sell their
Registrable Securities to the underwriters selected by the Company on the same
terms and conditions as apply to other selling shareholders, and any holder
requesting to have its Registrable Securities included in such registration
statement may elect in writing, not later than three business days prior to the
effectiveness of the registration statement filed in connection with such
registration, not to have its Registrable Securities so included in connection
with such registration.
(d) If a Piggyback Registration involves an offering by or
through underwriters, the Company, except as otherwise provided herein, shall
not be required to include Registrable Securities therein if and to the extent
the underwriter managing the offering reasonably believes in good faith and
advises each holder requesting to have Registrable Securities included in the
Company's registration statement that such inclusion would materially adversely
affect such offering, PROVIDED that if other selling shareholders who are
employees, officers, directors or other affiliates of the Company have requested
registration of securities in the proposed offering, the Company will reduce or
eliminate such other selling shareholders' securities before any reduction or
elimination of Registrable Securities held by holders of Placement Agent
Warrants, and any such reduction or elimination (after taking into account the
effect of preceding clause) shall be PRO RATA to all other holders of the
securities of the Company exercising "PIGGYBACK REGISTRATION RIGHTS" similar to
those set forth herein in proportion to the respective number of shares of
Registrable Securities they have requested to be registered.
5.2 DEMAND REGISTRATION.
(a) At any time after the 12 month anniversary of the final
Warrant Date and provided the Registrable Securities, upon exercise, are not
otherwise qualified for sale under an exemption available under the Securities
Act, holders of an aggregate of 50% of all outstanding Placement Agent Warrants
may exercise their "DEMAND REGISTRATION RIGHTS" as described herein for
registration covering the public sale of Registrable Securities hereunder. As
soon as practicable thereafter, the Company shall use its best efforts to file a
registration statement with respect to the Registrable Securities which holders
have requested to be registered and obtain the effectiveness thereof, and to
take all other action necessary under any federal or state law or regulation to
permit such Registrable Securities to be sold or otherwise disposed of, and the
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Company shall maintain such compliance with each such federal and state law and
regulation for the period necessary for such holders to effect the proposed sale
or other disposition; PROVIDED THAT the Company shall have the right to delay
such registration under certain circumstances for up to 90 days during any 12
month period. The Company shall be required to effect one registration or
qualification pursuant to this Section 5.2, and shall not be obligated to effect
a registration during the six month period commencing with the date of any other
registration under the Securities Act in which Registrable Securities were
registered.
(b) The managing underwriter and the co-manager (if any), and
the independent price required under the rules of the NASD (if any), of the
offering pursuant to any registration under this Section 5.2 shall be selected
and obtained by the Company.
(c) The Company may delay any registration under this Section
5.2 for not more than 90 days if management determines in good faith that such
delay is necessary to consummate a pending transaction, If the registration is
delayed, management will notify the holders of Placement Agent Warrants within
three weeks after receipt of notice specified in Section 5.2(a) of the delay but
shall not be required to provide any information to any holder regarding the
existence or the nature of any pending transactions.
5.3 CONDITIONS RELATING TO REGISTRATION AND OFFER OF REGISTRABLE
SECURITIES
(a) Subject to paragraph (b) of this Section 5.3, the
registration rights of the holders pursuant to this Agreement and the ability to
offer and sell Registrable Securities pursuant to a registration statement are
subject to the following conditions and limitations, and each holder agrees with
the Company that:
(i) If the Company determines in its good faith judgment
that the filing of a registration statement under Section 5.1 or
Section 5.2 hereof or the use of any prospectus would require the
disclosure of important information which the Company has a bona fide
business purpose for preserving as confidential or the disclosure of
which would impede the Company's ability to consummate a significant
transaction, upon written notice of such determination by the Company,
the rights of the holders to offer, sell or distribute any securities
pursuant to the registration statement or to require the Company to
take action with respect to the registration or sale of any securities
pursuant to the registration statement (including any action
contemplated by Section 5.4 hereof) will for up to 60 days in any 12
month period be suspended until the date upon which the Company
notifies the holders in writing that suspension of such rights for the
grounds set forth in this Section 5.3(a)(i) is no longer necessary.
(ii) If all reports required to be filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended ("EXCHANGE
ACT"), have not been filed by the required date without regard to any
extension, or if consummation of any business combination by the
Company has occurred or is probable for purposes of Rule 3-05 or
Article 11 of Regulation S-X under the Securities Act, upon written
notice thereof by the
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Company to the holders, the rights of the holders to offer, sell or
distribute any securities pursuant to the registration statement or to
require the Company to take action with respect to the registration or
sale of any securities pursuant to the registration statement
(including any action contemplated by Section 5.4 hereof) will for up
to 60 days in any 12 month period be suspended until the date upon
which the Company has filed such reports or obtained the financial
information required by Rule 3-05 or Article 11 of Regulation S-X to be
included in the registration statement.
(iii) In the case of the registration of any
underwritten primary equity offering initiated by the Company (other
than any registration by the Company on Form S-8, or a successor or
substantially similar form, of (A) an employee stock option, stock
purchase or compensation plan or of securities issued or issuable
pursuant to any such plan, or (B) a dividend reinvestment plan), each
holder agrees, if requested in writing by the managing underwriter or
underwriters administering such offering, not to effect any offer,
sale or distribution of securities (or any option or right to acquire
securities) during the period commencing on the 10th day prior to the
effective date of the registration statement covering such
underwritten primary equity offering and ending on the date specified
by such managing underwriter in such written request to such holder,
which period may be of a duration of 90 days or more.
(iv) In the event that the Company plans to repurchase
or bid for securities of the Company in the open market, on a private
solicited basis or otherwise, and the Company determines, in its
reasonable good faith judgment and based upon the advice of counsel to
the Company (which counsel shall be experienced in securities laws
matters), that any such repurchase or bid may not, under Rule lOb-6
under the Exchange Act, or any successor or similar rule ("RULE
10b-6"), be commenced or consummated due to the existence or the
possible commencement of a "DISTRIBUTION" (within the meaning of Rule
lOb-6) as a result of any offers or sales by holders of any
Registrable Securities, as the case may be, under any registration
statement filed pursuant to this Agreement, the Company shall be
entitled, for a period of 90 days or more, to request that holders of
Registrable Securities, to suspend or postpone such distribution
pursuant to such registration statement (a "10b-6 ELECTION"). The
Company shall, as promptly as practicable, give such holder or holders
written notice of such 10b-6 Election, stating the basis for the
Company's determination. As promptly as practicable following the
determination by the Company that the holders or holders may commence
or recommence their distribution pursuant to the registration
statement without causing the Company to be in violation of Rule
l0b-6, the Company shall give such holder or holders written notice of
such determination.
(b) Notwithstanding the provisions of Section 5.3(a) above,
the aggregate number of days (whether or not consecutive) during which the
Company may delay the effectiveness of a registration statement or prevent
offerings, sales or distribution by the holders thereunder pursuant to Section
5.3(a) shall in no event exceed 180 days during any 12-month period.
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(c) The Company may require each selling holder of
REGISTRABLE Securities, as a condition to the inclusion of the Registrable
Securities of such selling holder in the registration statement or in any
offering thereunder, as the case may be, to furnish to the Company such
information regarding the holder and the distribution of such securities as the
Company may from time to time reasonably request (which request shall be
confirmed in writing if requested by the Company) in order to comply with
applicable law and such other information as may be legally required in
connection with such registration or offering, and the holder shall promptly
provide such information and a written consent to the inclusion of such
information in the registration statement or any prospectus or supplement
thereto; PROVIDED that the failure of any holder to provide such information to
the Company shall not in any way affect the obligations of the Company hereunder
with respect to any other holder.
5.4 REGISTRATION PROCEDURES. In connection with the obligations of the
Company with respect to the registration statement pursuant to Section 5.1 or
Section 5.2, hereof and subject to Section 5.3 hereof, the Company shall:
(a) (i) prepare and file with the Commission a registration
statement on the appropriate form under the Securities Act, (A) which form shall
be selected by the Company and shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution by the selling holders thereof (PROVIDED that the Company shall not
be required to use any form other than Form ▇-▇, ▇-▇ or S-3 or any successor
form and shall not be required to file more than one registration statement with
the Commission) and (B) which registration statement shall comply as to form in
all material respects with the requirements of the applicable form and include
or incorporate by reference all financial statements required by the Commission
to be so included or incorporated by reference, FURTHER PROVIDED that subject to
the registration statement and prospectus being in compliance with the
requirements of the Securities Act and the Exchange Act (including all rules and
regulations of the Commission thereunder), the Company has the sole discretion
to determine the form, substance and presentation of any financial or other
information included in any registration statement or prospectus, and whether
such information should be included in such registration statement or
prospectus; and (ii) use its reasonable best efforts to cause such registration
statement to become effective and remain effective in accordance with Section
5.1 and Section 5.2 hereof;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the registration statement as may be necessary to
keep such registration statement effective for the applicable period; and cause
each prospectus to be supplemented by any required prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Securities Act;
(c) in the event that any federal law or regulation binding
on the Company and adopted after the date hereof so requires (and would also so
require if the Registrable Securities were being offered in a primary offering
by the Company rather than by the holders), use its reasonable best efforts to
cause such Registrable Securities to be registered with or approved by
11
such other federal governmental agencies or authorities in the United States, if
any, as may be required by virtue of the business and operations of the Company
to enable the selling holders to consummate the disposition of such Registrable
Securities;
(d) furnish to each holder of Registrable Securities and to
each managing underwriter of an underwritten offering of Registrable Securities
pursuant to Section 4(1) of the Securities Act, if any, without charge, as many
copies of each prospectus, including each preliminary prospectus, and any
amendment or supplement thereto as such holder or underwriter may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Securities;
(e) use its reasonable best efforts to register or qualify
the Registrable Securities under all applicable state securities or "BLUE SKY"
laws of such jurisdictions as any holder of Registrable Securities of such class
covered by the registration statement shall, on 20 days prior written notice,
reasonably request in writing. Such notice to be sent at any time prior to the
applicable registration statement being declared effective by the Commission.
The Company shall maintain such registration or qualification in effect during
the applicable period provided in Section 5.1 or Section 5.2 hereof; PROVIDED,
HOWEVER, that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 4(e); (ii) subject itself to taxation in any such
jurisdiction; (iii) make any change to its Articles or Incorporation or Bylaws;
or (iv) become subject to general service of process in any jurisdiction where
it is not then so subject;
(f) notify each holder of Registrable Securities as promptly
as practicable after becoming aware thereof and (if requested by any such
holder) confirm such notice in writing (i) when the registration statement has
become effective and when any post-effective amendments and supplements thereto
become effective; (ii) of any request by the Commission or any state securities
authority for amendments and supplements to the registration statement and any
prospectus or for additional information relating to the Registrable Securities
or the registration or qualification thereof after the registration statement
has become effective; (iii) of the issuance by the Commission or any state
securities authority of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose;
(iv) if the representations and warranties of the Company contained in any
underwriting agreement, securities sales agreement or other similar agreement,
if any, relating to the Registrable Securities cease to be true and correct in
any material respect prior to the closing date specified in such agreement
(PROVIDED such notice shall be given only to holders which are parties to the
agreements pursuant to which such representations and warranties are made), or
if the Company receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (v) of the happening of any
event during the period (other than any suspension period referred to in Section
5.3(a)) during which the registration statement is required hereunder to be
effective as a result of which the registration statement or any prospectus
would contain an untrue statement of material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading;
12
(g) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of the registration statement or the
qualification of the Registrable Securities for sale in any jurisdiction as
promptly as practicable;
(h) furnish to each holder of Registrable Securities, without
charge, at least one conformed copy of the registration statement and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested in writing);
(i) cooperate with the holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to the registration statement and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the selling holders may
reasonably request (in each case, PROVIDED such certificates are requested in
writing at least three business days prior to any delivery thereof);
(j) upon the occurrence of any event contemplated by Section
5 .4(f)(v) hereof, use its reasonable best efforts as promptly as practicable to
prepare and file with the Commission a supplement or post-effective amendment to
the registration statement or the related prospects or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such prospects will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(k) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act;
(l) use its reasonable best efforts to (i) cause all
Registrable Securities to be listed or quoted on any securities exchange or
quotation system on which the Company's outstanding Common Stock is then listed
or quoted; and
(m) obtain a CUSIP number for all Registrable Securities not
later than the effective date of the registration statement.
Each holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5.4(f)(v) hereof, such
holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement covering such Registrable Securities until such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 5.4(j) hereof, or until it is advised in writing by the
13
Company that the use of such prospectus may be resumed and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice; PROVIDED, HOWEVER, that the Company shall use its
reasonable best efforts to promptly prepare and provide to the holders a
supplemented or amended prospectus contemplated by such Section 5.4(j) hereof.
In the event the Company shall give any such notice, the period during which
such registration statement shall be maintained effective shall be extended by
the number of days during the period from and including the date of the giving
of such notice pursuant to Section 5.4(f)(v) hereof to including the date when
each holder of Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 5.4(j) hereof.
5.5 REGISTRATION EXPENSES.
(a) The Company will bear all reasonable expenses incident to
the performance of or compliance with its obligations under this Agreement,
including, without limitations, all registration and filing fees, all fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of one firm of counsel for the holders and any
underwriters in connection with blue sky qualifications of the Registrable
Securities), printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of the
officers and employees of the Company performing legal or accounting duties),
and reasonable fees and disbursement of counsel for the Company and its
independent certified public accountants (including the reasonable expenses of
any special audit or comfort letters required by or incident to such
performance), securities acts liability insurance (if the company elects to
obtain such insurance), the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration, reasonable fees
and expenses of any other persons retained by the Company and the fees and
expenses associated with any required filing with the National Association of
Securities Dealers, Inc. ("NASD") (all such expenses being herein called
"REGISTRATION EXPENSES"). Notwithstanding the foregoing, the Company is not
required to pay any fees or expenses of holders, underwriters, the holder's or
any underwriter's counsel (other than the blue sky counsel referred to above) or
accountant or any other advisers, including any transfer taxes, underwriting,
brokerage and other discounts and commissions and finders' and similar fees
payable in the respect of Registrable Securities.
(b) Each holder shall pay all costs and expenses incurred by
such holder (including all transfer taxes, underwriting, brokerage and other
discounts and commissions and finders' and similar fees payable in respect of
Registrable Securities). To the extent that any Registration Expenses are
incurred, assumed or paid by any holder or any placement or sales agent therefor
or underwriter thereof with the Company's prior written consent, the Company
shall reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid within a reasonable time after receipt of a written
request therefor. Any Registration Expenses submitted by any holder, placement
or sales agent or underwriter or on
14
behalf of any such person for payment by the Company shall be itemized in detail
and contain clear and accurate receipts of all expenditures made by such
parties.
5.6 INDEMNIFICATION; CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
holder and each "PERSON," if any, that controls such holder within the meaning
of Section 15 of the Securities Act for, from and against any and all loss,
liability, claim, damage and expense (including attorneys' fees) to the extent
resulting from any untrue statement or alleged untrue statement of a material
fact contained in any registration statement pursuant to which Registrable
Securities were registered under the Securities Act (or any amendment thereto),
including all documents incorporated therein by reference, or from the omission
or alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statement therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto), including all documents
incorporated therein by reference, or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
insofar as any such misstatement or omission or alleged misstatement or omission
is made therein in reliance upon and in conformity with information furnished to
the Company by such holder in writing expressly for use in a registration
statement (or any amendment thereto) or any prospectus (or any amendment or
supplement thereto) relating to the Registrable Securities. As used in this
Section 5.6(a), the term "HOLDER" shall include its officers, directors and
agents.
(b) Each holder agrees to indemnify and hold harmless the
Company, its directors and officers and each "PERSON," if any, who controls the
Company within the meaning of Section 15 of the Securities Act to the same
extent as the foregoing indemnity from the Company to such holder, but only with
respect to information furnished in writing by such holder or on such holder's
behalf expressly for use in any registration statement (or any amendment
thereto) or any prospectus (or any amendment or supplement thereto) relating to
the Registrable Securities, or any amendment or supplement thereto; PROVIDED
that the obligations or any holder to indemnify the Company and the other
persons referred to above shall be limited to the proceeds received by such
holder from the sale of such Registrable Securities pursuant to such
registration statement.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any person entitled to
indemnification hereunder, the indemnified party shall give prompt written
notice to the indemnifying party, and the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the indemnified party, and shall assume the payment of all expenses in
connection with such defense. The indemnified party or any controlling person of
such indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the indemnified party or such
controlling person unless (i) the indemnifying party shall have agreed to pay
such fees and
15
expenses; or (ii) the indemnifying party shall have failed to assume the defense
for such action or proceeding and to employ counsel reasonably satisfactory to
the indemnified party in any such action or proceeding; or (iii) the named
parties to any such action or proceeding (including any impleaded parties)
include both the indemnified party or such controlling person and the
indemnifying party, and such indemnified party or such controlling person shall
have been advised by counsel that counsel employed by the indemnifying party
would, under applicable professional standards, have a conflict in representing
both the indemnifying party and the indemnified party or such controlling
person, in which case, if such indemnified person or such controlling person
notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such action or proceeding of
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, and
shall not be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any time
for such indemnified party and such controlling persons, which firm shall be
designated, if the holders (or their controlling persons) are the indemnified
parties, in writing by the holders of a majority of the outstanding Registrable
Securities owned by holders who are then entitled to such indemnity in
connection with such action or proceeding and if the Company is the indemnified
party, by the Company. No party shall be liable for any settlement of any such
action or proceeding effected without its written consent (which consent shall
not be unreasonably withheld), but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or proceeding,
the indemnifying party agrees to indemnify and hold harmless such indemnified
party and such controlling person from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment.
(d) (i) If the indemnification provided for in this Section
5.6 is unavailable to an indemnified party hereunder in respect of any losses,
claims, damages, liabilities or expenses, then each such indemnifying party' in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying party
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the indemnified party and the
indemnifying party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.6(d) were determined by PRO
RATA allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, expenses, liabilities, or judgements referred to in the
16
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 5.6(d), no
holder shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such selling holder
were offered to the public pursuant to such registration statement exceeds the
amount of any damages which such selling holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person found guilty by a court of competent jurisdiction of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
found guilty by a court of competent jurisdiction of such fraudulent
misrepresentation.
(e) Neither the Company nor the holders shall have any
obligation under this Agreement (other than as set forth in this Section 5.6) to
provide the other with indemnification or contribution in respect of any losses,
claims, damages, liabilities or expenses referred to in this Section 5.6;
PROVIDED, HOWEVER, that the provisions of this Section 5.6 shall not relieve an
indemnifying party from liability which it may have to an indemnified party
other than with respect to the matters referred to in this Section 5.6.
5.7 COMMISSION FILINGS.
The Company covenants that it will file the reports required
to be filed by it under the Exchange Act and the rules and regulations adopted
by the Commission thereunder in a timely manner as determined by applicable
rules and interpretations under the Exchange Act. Upon the written request of
any holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such requirements.
SECTION 6
TRANSFER AND OWNERSHIP OF PLACEMENT AGENT WARRANTS
6.1 NEGOTIABILITY AND OWNERSHIP. Placement Agent Warrants issued
hereunder shall be registered and transferable only by transfer on the books of
the Company. Presentations may be made and notices and demands may be served at
the office of the Company. The foregoing notwithstanding, Placement Agent
Warrants shall not be transferable, except by operation of law, until after the
one year anniversary of the Warrant Date of any such Placement Agent Warrant.
6.2 PLACEMENT AGENT WARRANT REGISTER. The Company shall, cause to be
kept a register or registers in which, subject to such reasonable regulations as
the Company may prescribe, the Company shall register transfer of Placement
Agent Warrants as herein provided. Upon surrender for transfer of any Placement
Agent Warrant, the Company shall sign, authenticate and deliver in the name of
the transferee or transferees a new Warrant Certificate for a like amount of
Placement Agent Warrants.
17
6.3 EXCHANGE OF PLACEMENT AGENT WARRANTS. On and after the Placement
Agent Warrant Date and prior to the end of the Exercise Period, Warrant
Certificates may be surrendered at the office of the Company for exchange, and,
upon cancellation thereof, there shall be issued and delivered in exchange
therefor, one or more new Warrant Certificates, as requested by the registered
holder of the cancelled Warrant Certificate, for the same aggregate number of
shares of Placement Agent Warrants evidenced by the Warrant Certificate so
cancelled. In case of any exchange pursuant to this Section 6 or a transfer of a
Warrant Certificate, the Company may make a charge for reimbursement of any
stamp or other tax or governmental charge required to be paid in connection
therewith, but no other charge shall be made to the Placement Agent Warrant
holder for any transfer or issue of new Warrant Certificate in case of any such
exchange.
6.4 RESTRICTIONS ON TRANSFERABILITY.
(a) The Placement Agent Warrants and the Common Stock
issuable upon exercise of a Placement Agent Warrant (the "EXERCISE SHARES")
shall not be transferable except upon the conditions hereinafter specified,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and any applicable state securities laws, in respect of the
transfer of any Placement Agent Warrants or Exercise Shares.
(b) Each Warrant Certificate initially issued under this
Agreement and each Warrant Certificate issued in exchange therefor shall bear on
the face thereof a legend substantially as follows:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED
UNDER APPLICABLE SECURITIES LAWS OR IF AN EXEMPTION THEREFROM IS
AVAILABLE. THIS WARRANT AND THE SHARESOF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF ARE TRANSFERABLE ONLY UPON THE CONDITIONS
SPECIFIED IN THE WARRANT AGREEMENT REFERRED TO HEREIN. A COPY OF
THE WARRANT AGREEMENT WILL BE PROVIDED TO THE REGISTERED HOLDER
THEREOF UPON REQUEST TO THE COMPANY.
(c) Each certificate for Exercise Shares initially issued
upon the exercise of any Placement Agent Warrant and each certificate for shares
of Exercise Shares issued to a subsequent transferee of such certificate shall,
unless otherwise permitted by the provisions of Section 6.4(d), bear on the fact
thereof a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER APPLICABLE
SECURITIES LAW OR PURSUANT TO AN OPINION OF COUNSEL
18
SATISFACTORY TO THE COMPANY STATING THAT SUCH REGISTRATION IS NOT
REQUIRED. THE TRANSFER OF SUCH SHARES IS SUBJECT TO CERTAIN
CONDITIONS. THE PROVISIONS OF WHICH WILL BE PROVIDED TO THE
REGISTERED HOLDER HEREOF UPON REQUEST BY THE COMPANY, AND NO
TRANSFER OF SUCH SHARES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED.
(d) In the event that a registration statement covering any
Placement Agent Warrant or Exercise Shares shall become effective under the
Securities Act and under any applicable state securities laws or in the event
tat the Company shall receive an opinion of its counsel tat, in the opinion or
such counsel, such legend is not, or is no longer, necessary or required with
respect to such shares (including, without limitation, because of the
availability of the exemption afforded by Rule 144 of the general rules and
regulations of the Commission), the Company shall or shall instruct its transfer
agents and registrars to, remove such legend from the certificates evidencing
such Placement Agent Warrant or Exercise Shares or issue new certificates
without such legend in lieu thereof. Upon the written request of the holder of
any Placement Agent Warrants or Exercise Shares, the Company covenants and
agrees forthwith to request its counsel to render an opinion wit respect to the
matters covered by this paragraph and to bear all expenses in connection wit
such opinion of its counsel.
(e) The holder of each Placement Agent Warrant or any
Exercise Shares, by acceptance thereof, agrees to give prior written notice to
the Company of such holders intention to transfer such Placement Agent Warrant
or such Exercise Shares (or any portion thereof), describing briefly the manner
and circumstances of the proposed transfer, together with an opinion of counsel
to the holder to the effect tat the proposed transfer may be effected without
registration or qualification under any federal or state law. Unless the Company
shall have received an opinion from counsel to the Company (which opinion shall
be obtained by the Company not more than ten days after notice of a proposed
transfer) that the proposed transfer may not be effected without registration or
qualification under federal or state law, such holder shall be entitled to
transfer such Placement Agent Warrant or such Exercise Shares, all in accordance
wit the terms of the notice delivered by such holder to the Company. All fees
and expenses of counsel for the Company in connection wit the rendition or the
opinion provided for in this Section 6.4(e) shall be paid by the Company.
(f) If in the opinion of either counsel referred to in
Section 6.4(e) a proposed transfer of a Placement Agent Warrant or Exercise
Shares requested by the holder thereof may not be effected without registration
or qualification under applicable federal or state law, the Company shall
promptly give written notice to the holder who proposed to transfer the
Placement Agent Warrant or Exercise Shares (or any portion thereof) that the
holder shall not consummate the proposed transfer and the reasons therefor. No
Placement Agent Warrant or Exercise Shares (or any portion thereof) for which a
transfer has been proposed pursuant to Section 6.4(e) may be transferred in the
manner proposed if registration thereof under the Securities Act would be
required in the opinion of either counsel mentioned above.
19
6.5 AGREEMENT OF PLACEMENT AGENT WARRANT HOLDERS. Every holder of a
Warrant Certificate, by accepting the same, consents and agrees with the Company
and wit all other Placement Agent Warrant holders that: (a) the Placement Agent
Warrants are transferrable only as permitted by Section 6. 1 above; (b) the
Placement Agent Warrants are transferable only on the registry books of the
Company as herein provided; and (c) the Company may deem and treat the person in
whose name the Warrant Certificate is registered as the absolute owner thereof
and of the Placement Agent Warrants evidenced thereby for all purposes
whatsoever, and the Company shall not be affected by any notice to the contrary,
whether such notice be in the form of notations on the Warrant Certificates or
otherwise.
SECTION 7
MODIFICATION
7.1 MODIFICATION OF AGREEMENT. The Placement Agent may, without the
consent or concurrence of the registered holders of the Placement Agent Warrants
by supplemental agreement or otherwise, concur with the Company in making any
changes or corrections in these presents. as to which it shall have been advised
by counsel (who may but need not also be counsel for the Company) that the same
are not prejudicial to the rights of the Placement Agent Warrant holders as
indicated by the general sense or intent of the original language and are
required for the purpose of curing or correcting the inconsistent provision or
clerical omission or mistake or manifest error herein or as otherwise provided
in Section 7.2 below.
7.2 CONSOLIDATION OF PLACEMENT AGENT WARRANT CLASSES.
(a) At any time and from time to time after the final Warrant
Date, the Company may consolidate the Placement Agent Warrants with any other
class of warrants of the Company outstanding provided at the time of such
consolidation the right, limitation of rights, privilege and immunities of the
holders of Placement Agent Warrants or set forth in this Agreement are not
altered and the rights, limitations of rights, privileges and immunities of the
class or classes of Placement Agent Warrants which the Placement Agent Warrants
may be consolidated with are substantially similar to the rights, limitations or
rights, privileges and immunities of the Placement Agent Warrants.
(b) Upon determination by the Company to consolidate any other
class of Placement Agent Warrants and as provided in Section 7.2(a), the Company
shall give notice thereof to the Placement Agent and provide the modification to
this Agreement as necessary to effectuate the consolidation and the Placement
Agent may enter into and execute such agreements to so modify this Agreement as
provided in Section 7.1 above.
20
SECTION 8
CERTAIN DEFINITIONS AND OTHER MATTERS
8.1 NOTICE OF PROPOSED ACTIONS. In case the Company shall propose (a)
to pay any dividend payable in stock of any class, or to make any other
distribution, to the holders of its Common Stock (other than a cash dividend),
or (b) to offer to the holders of its Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock, or (c) to
effect any stock dividend, stock split, combination or reclassification of its
Common Stock, or (d) to effect any distribution of assets to holders of its
Common Stock or capital reorganization, merger, consolidation or sale, transfer
or other disposition of all or substantially all of its assets or business, or
(e) to effect the liquidation, dissolution or winding-up of the Company, or (f)
to effect any other transaction which would, upon consummation, result in a
change in the Purchase Price of the Placement Agent Warrants or the number of
shares of Common Stock and Placement Agent Warrants issuable upon exercise of
the Placement Agent Warrants pursuant to Section 2 and 3 hereof, the Company
shall give notice to each holder of a Placement Agent Warrant in accordance with
Section 8.02 of such proposed action, which shall specify the date on which a
record is to be taken for purposes of such proposed transaction. Such notice
shall be given not later than 1 5 days prior to the record date for determining
the holders of Common Stock for purposes of such action or, if no record date is
required, not. later than 15 days prior to the date of the taking of such
proposed action.
8.2 NOTICES. Any notice or demand authorized by this Agreement to be
given or made by the Placement Agent or by the holder of any Warrant Certificate
to or upon the Company shall be sent by first class mail, postage prepaid,
addressed (until another address or notice of address change is filed in writing
by the Company with the Placement Agent) and received by the noticed party as
follows:
Coronado Industries, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice or demand authorized by this Agreement to be given or made by the
Company or by the holder of any Warrant Certificate to or on the Placement Agent
shall be deemed given or made if sent by first class mail, postage prepaid,
addressed (until another address is filed in writing by the Placement Agent with
the Company) and received by the noticed party as follows:
Fox & Company Investments, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices or demands authorized by this Agreement to be given or made by the
Company or the Placement Agent to the holder of any Warrant Certificate shall be
deemed given or made if sent
21
first class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
8.3 PAYMENT OF TAXES. The Company will from time to time promptly pay
or make provision for the payment of any and all taxes and charges which may
hereafter be imposed by the laws of the United States or of any state or any
local governmental unit thereof and which shall be payable with respect to the
issuance or delivery to or upon the order of the registered holders of the
Placement Agent Warrants (upon the exercise of the right to subscribe) of Common
Stock of the Company pursuant to the terms of such Placement Agent Warrants and
of this Agreement, but the Company shall not be obligated to pay any transfer
taxes in respect of the Placement Agent Warrants or such shares.
8.4 APPLICABLE LAW. The validity, interpretation and performance of
this Agreement and the validity and interpretation of the Placement Agent
Warrants shall be governed by the laws of the State of Arizona.
8.5 COPIES OF AGREEMENT. A copy of this Agreement shall be provided to
any registered holder of a Placement Agent Warrant or Exercise Shares upon
written request thereof to the Company. A copy of this Agreement shall also be
available at all reasonable times at the office of the Company for examination
by the registered holder of any Placement Agent Warrant. Any such registered
holder may be required to submit his Placement Agent Warrant for inspection
before being entitled to receive a copy of this Agreement or to make such
examination.
IN WITNESS WHEREOF, this Agreement shall been duly executed by the
parties hereto under theft respective corporate seals, as of the date first
above written.
CORONADO INDUSTRIES, INC.,
a Nevada corporation
By /s/
-------------------------------
Its President
-----------------------------
Fox & COMPANY INVESTMENTS, INC.,
an Arizona corporation
By /s/
-------------------------------
Its Executive Vice President
-----------------------------
22
EXHIBIT A
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
BE OFFERED OR SOLD ONLY IF REGISTERED UNDER APPLICABLE SECURITIES LAWS OR IF AN
EXEMPTION THEREFROM IS AVAILABLE. THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE HEREOF ARE TRANSFERABLE ONLY UPON THE CONDITIONS
SPECIFIED IN THE WARRANT AGREEMENT REFERRED TO HEREIN. A COPY OF THE WARRANT
AGREEMENT WILL BE PROVIDED TO THE REGISTERED HOLDER THEREOF UPON REQUEST TO THE
COMPANY.
CORONADO INDUSTRIES, INC.
PLACEMENT AGENT WARRANT CERTIFICATE
No. Warrants to Purchase
Shares
THIS IS TO CERTIFY that, ____________________ or registered assigns, is
the registered holder ("HOLDER") of the number of Placement Agent Warrants
("PLACEMENT AGENT WARRANTS") set forth above, each of which entitles the holder
to purchase, subject to the terms and conditions set forth in the Placement
Agent Warrant Agreement, dated March __ , 1998, which is hereby incorporated
herein and made a part hereof, and as hereinafter set forth, fully paid and
non-assessable shares of the common stock ("COMMON STOCK"), of Coronado
Industries, Inc., a Nevada corporation (the "COMPANY"), or equivalent security
of any successor thereto at a purchase price of $2.00 per share if exercised on
or before December 1, 1998 and $2.50 per share if exercised thereafter, as
adjusted, for a term commencing on the one year anniversary hereof and ending
December 1, 2000, and to receive one or more certificates for the Common Stock
or equivalent securities so purchased, upon satisfaction of one or more
conditions precedent set forth herein and presentation and surrender to the
Company at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with the form of subscription duly executed, and accompanied by payment of the
purchase price of each share purchased, in U.S. dollars, either in cash or by
certified check or bank cashier's check, payable to the order of the Company.
Placement Agent Warrants are exercisable in minimum denominations of 100.
Fractional shares of the Company's Common Stock will not be issued upon the
exercise of the Placement Agent Warrants.
The Company covenants and agrees that all shares of Common Stock
delivered upon the exercise of these Placement Agent Warrants will, upon
delivery, be fully paid and non-assessable. The Placement Agent Warrants shall
not be exercisable in any jurisdiction where exercise would be unlawful. The
Company will use its best efforts to qualify the shares that
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may be purchased upon exercise of these Placement Agent Warrants for sale in all
jurisdictions where holders of the Placement Agent Warrants reside. However, the
Company shall not be required to honor the exercise of the Placement Agent
Warrants if, in the opinion of the Board of Directors, upon advice of counsel,
the sale of securities upon exercise of the Placement Agent Warrants would be
unlawful.
The number of shares of Common Stock, or other equivalent equity
security, issuable upon the exercise of these Placement Agent Warrants and the
purchase price shall be subject to adjustment from time to time, in certain
events, as set forth in the Placement Agent Warrant Agreement, including certain
sales of additional stock, stock options, convertible securities, distribution
of stock dividends, stock splits, reclassifications or mergers.
The Company agrees at all times to reserve or hold available, or cause
to reserve or hold available, a sufficient number or shares of its Common Stock,
or other equivalent equity security, to cover the number of shares, or other
equivalent equity security, issuable upon the exercise of these and all other
Placement Agent Warrants of like tenor then outstanding.
This Warrant Certificate does not entitle the holder hereof, either at
law or in equity, to and voting rights or other rights as a shareholder of the
Company, or to any other rights whatsoever except the rights expressly herein
set forth, and no dividend shall be payable or accrue in respect of these
Placement Agent Warrants or the interest represented hereby, or the shares that
may be purchased upon exercise hereof until or unless, and except to the extent
that, these Placement Agent Warrants shall be duly exercised.
This Warrant Certificate is exchangeable at any time prior to
expiration upon the surrender hereof by the registered holder to the Company for
one or more new Warrant Certificates of like tenor and date representing in the
aggregate the right to purchase the number of shares that may be purchased upon
exercise hereof, each of such new Warrant Certificates to represent the right to
purchase such number of shares as may be designated by the registered holder at
the time of such surrender. The Placement Agent Warrants and the shares of
Common Stock issuable upon exercise of the Placement Agent Warrants are subject
to restriction on transferability as described in the Warrant Agreement.
The Company may deem and treat the registered holder of this Warrant
Certificate at any time as the absolute owner hereof and of the Placement Agent
Warrants covered hereby for all purposes and shall not be affected by any notice
to the contrary.
The Placement Agent Warrants evidenced by this Warrant Certificate are
subject to the terms of the Warrant Agreement which is available upon request by
the registered holder of this Certificate or Company or at the office of the
Company. The Warrant Agreement is incorporated herein by reference and made a
part hereof and reference is hereby made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Company and the holders of the Placement Agent
Warrants.
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This Warrant Certificate shall not be valid or obligatory for any
purpose unless signed by the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed by its duly authorized officers, and the corporate seal hereunto
affixed
Dated:
--------------
CORONADO INDUSTRIES, INC.
By
-------------------------------
President
ATTEST:
By
-------------------------------
Secretary
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[FORM OF REVERSE SIDE OF CERTIFICATE]
ASSIGNMENT FORM
To assign this Placement Agent Warrant, fill in the form below:
I or we assign and transfer this Placement Agent Warrant to: (Insert Assignee's
Social Security OR Tax Identification No.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Pen or type assignee's name, address and zip code)
and irrevocably appoint as agent to transfer this Placement Agent Warrant on the
books of the Company. The agent may substitute another to act for him.
Date: Your Signature:
------------ -------------------------------
(Sign exactly as your name appears on the
other side of this Warrant Certificate)
Signature Guarantee:
------------------------------------------------------------
By
------------------------------
The signature should be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union wit membership in an
approved signature guarantee medallion program) pursuant to Rule l7Ad-15 of the
Securities Exchange Act of 1934.
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SUBSCRIPTION
(To be completed and signed only upon an exercise
of the Placement Agent Warrants in whole or in part)
TO: Coronado Industries, Inc.
The undersigned, the holder of the attached Placement Agent Warrants,
hereby irrevocably elects to exercise the purchase right represented by the
Placement Agent Warrants for, and to purchase thereunder, shares of Commons
Stock (as such terms are defined in the Warrant Agreement dated March , 1998,
from Coronado Industries, Inc. (or other securities or property), and herewith
makes payment of $ therefor in cash or by certified or official bank check. The
undersigned hereby requests that the Certificate(s) for such securities be
issued in the name(s) and delivered to the address(es) as follows:
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
Deliver to:
---------------------------------------------------------------------
Address:
-----------------------------------------------------------
If the foregoing Subscription evidences an exercise of the Placement
Agent Warrants to purchase fewer than all of the shares of Common Stock (or
other securities or property) to which the undersigned is entitled, please issue
a new Placement Agent Warrant Certificate, of like tenor, for the remaining
Placement Agent Warrants (or other securities or property) in the name(s), and
deliver the same to the address(es), as follows:
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
DATED: ,19 .
----------
---------------------------------------------
(Name of Holder)
---------------------------------------------
(Signature of Holder or Authorized Signatory)
---------------------------------------------
(Social Security or Taxpayer Identification
Number of Holder)
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