WARRANT AGREEMENT
VOID AFTER 5:00 P.M., NEW YORK TIME, ON NOVEMBER 20, 2002, OR IF NOT A BUSINESS
DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING
BUSINESS DAY.
WARRANT TO PURCHASE
50,000
SHARES OF COMMON STOCK
OF
ZEVEX INTERNATIONAL, INC.
No. W-__
This certificates that, for and in consideration of services rendered and
in connection with the public offering of Common Stock of the Company named
below (the "Offering") and other good and valuable consideration, Everen
Securities, Inc., (the "Representative") and its registered, permitted assigns
(collectively, the "Warrantholder"), is entitled to purchase from ZEVEX
International, Inc., a corporation incorporated under the laws of the State of
Delaware (the "Company"), subject to the terms and conditions hereof, at any
time on or after 9:00 a.m., New York time, on November 21, 1998 and before 5:00
p.m., New York time on November 20, 2002 (or, if such day is not a Business Day,
at or before 5:00 p.m., New York time, on the next following Business Day), up
to 50,000 fully paid and nonassessable shares of Common Stock of the Company at
the Exercise Price (as defined herein). The Exercise Price and the number of
shares purchasable hereunder are subject to adjustment from time to time as
provided in Article 3 hereof.
ARTICLE 1
DEFINITION OF TERMS
As used in this Warrant, the following capitalized terms shall have the
following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day
on which banks in the State of New York are authorized by law to remain Closed.
(b) Common Stock: Common Stock, $0.001 par value, of the Company.
(c) Common Stock Equivalents: Securities that are convertible into
or exercisable for shares of Common Stock.
(d) Demand Registration: See Section 6.2.
(e) Exchange Act: The Securities Exchange Act of 1934, as amended.
(f) Exercise Price: $15.00 per Warrant Share, 120% of the initial
price to public in the Offering as set forth on the cover page of the Prospectus
with respect to the Offering as such Price may be adjusted from time to time
pursuant to Article 3 hereof.
(g) Expiration Date: 5:00 p.m., New York time on November 20, 2002
or if such day is not a Business Day, the next succeeding day which is a
Business Day.
(h) 25% Holder: At any time as to which a Demand Registration is
requested, the Holder and/or the holders of any other Warrants and/or the
holders of Warrant Shares who have the right to acquire or hold, as the case may
be, not less than 25% of the continued total of Warrant Shares issuable and
Warrant Shares outstanding at the time such Demand registration is requested.
(i) Holder: A Holder of Registrable Securities.
(j) NASD: National Association of Securities Dealers, Inc.
(k) Net Issuance Exercise Date: See Section 2.2.
(l) Net Issuance Right: See Section 2.3.
(m) Net Issuance Warrant Shares: See Section 2.3.
(n) Person: An individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.
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(o) Piggyback Registration: See Section 6.1.
(p) Prospectus: Any prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the Prospectus, including post-effective amendments and all materials
incorporated by reference in such Prospectus.
(q) Public Offering: A public offering of any of the Company's
equity or debt securities pursuant to a Registration Statement under the
Securities Act.
(r) Registration Expenses: Any and all expenses incurred in
connection with any registration or action incident to performance of or
compliance by the Company with Article 6, including, without limitation, (i) all
SEC, national securities exchange and NASD registration and filing fees; all
listing fees and all transfer agent fees; (ii) all fees and expenses of
complying with state securities or blue sky laws (including the fees and
disbursements of counsel of the underwriters in connection with blue sky
qualifications of the Registrable Securities); (iii) all printing, mailing,
messenger and delivery expenses; (iv) all fees and disbursements of counsel for
the Company and of its accountants, including the expenses of any special audits
and/or "cold comfort" letters (provided that the Company shall not be required
to incur expenses in respect of such special audits or "cold comfort" letters in
excess of $15,000) required by or incident to such performance and compliance;
and (v) any disbursements of underwriters customarily paid by issuers or sellers
of securities including the reasonable fees and expenses of any special experts
retained by the underwriters in connection with the requested registration, but
excluding underwriting discounts and commissions, brokerage fees and transfer
taxes, if any, and fees of counsel or accountants retained by the holders of
Registrable Securities to advise them in their capacity as Holders of
Registrable Securities.
(s) Registrable Securities: Any Warrant Shares issued to the
Representative and/or its designees or transferees and/or other securities that
may be or are issued by the Company upon exercise of the Warrants, including
those which may thereafter be issued by the Company in respect of any such
securities by means of any stock splits, stock dividends, recapitalizations,
reclassifications or the like, and as adjusted pursuant to Article 3 hereof;
provided, however, that as to any particular security contained in Registrable
Securities, such securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such Registration Statement; or (ii) they shall
have been sold to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act.
(t) Registration Statement: Any Registration Statement of the
Company filed or to be filed with the SEC which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including all
amendments (including post-effective amendments) and supplements thereto, all
exhibits thereto and all material incorporated therein by reference.
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(u) SEC: The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
(v) Securities Act: The Securities Act of 1933, as amended.
(w) Warrantholder: The person(s) or entity(ies) to whom this Warrant
is originally issued, or any successor in interest thereto, or any assignee or
transferee thereof, in whose name this Warrant is registered upon the books to
be maintained by the Company for that purpose.
(x) Warrants: This Warrant, all other warrants issued on the date
hereof and all other warrants that may be issued in its or their place (together
evidencing the right to purchase an aggregate of up to 100,000 shares of Common
Stock), originally issued as set forth in the definition of Registrable
Securities.
(y) Warrant Shares: Common Stock, Common Stock Equivalents and other
securities purchased or purchasable upon exercise or conversion of the Warrants.
ARTICLE 2
DURATION AND EXERCISE OF WARRANT
2.1 Duration of Warrant
The Warrantholder may exercise this Warrant at any time and from
time to time after 9:00 a.m., New York time, on November 21, 1998 and before
5:00 p.m., New York time, on the Expiration Date (which is the date five years
after the effective date of the Offering). If this Warrant is not exercised on
the Expiration Date, it shall become void, and all rights hereunder shall
thereupon cease.
2.2 Method of Exercise
(a) The Warrantholder may exercise this Warrant, in whole or in
part, by presentation and surrender of this Warrant to the Company at its
corporate office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or at the
office of its stock transfer agent, if any, with the Exercise Form annexed
hereto duly executed and, in the event of an exercise for cash pursuant to
Section 2.3(a), accompanied by payment of the full Exercise Price for each
Warrant Share to be purchased.
(b) Upon receipt of this Warrant with the Exercise Form fully
executed and, in the event of an exercise for cash pursuant to Section 2.3(a),
accompanied by payment of the aggregate Exercise Price for the Warrant Shares
for which this Warrant is then being exercised, the Company shall cause to be
issued certificates for the total number of whole shares of Common Stock
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for which this Warrant is being exercised (adjusted to reflect the effect of the
anti-dilution provisions contained in Article 3 hereof, if any, and as provided
in Section 2.5 hereof) in such denominations as are requested for delivery to
the Warrantholder, and the Company shall thereupon deliver such certificates to
the Warrantholder. A net issuance exercise pursuant to Section 2.3(b) shall be
effective upon receipt by the Company of this Warrant together with the
aforesaid written statement, or on such later date as is specified therein (the
"Net Issuance Exercise Date"), and, at the election of the Holder hereof may be
made contingent upon the closing of the sale of the Warrant Shares in a Public
Offering. The Warrantholder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise as of the time of receipt of
the Exercise Form and payment in accordance with the preceding sentence, in the
case of an exercise for cash pursuant to Section 2.3(a), or as of the Net
Issuance Exercise Date, in the case of a net issuance exercise pursuant to
Section 2.3(b), notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Warrantholder. If at the time
this Warrant is exercised, a Registration Statement is not in effect to register
under the Securities Act the Warrant Shares issuable upon exercise of this
Warrant, the Company may, in the case of an exercise for cash pursuant to
Section 2.3(a) or in the case of a net issuance exercise prior to the
satisfaction of any holding period required by Rule 144 promulgated under the
Securities Act require the Warrantholder to make such representations, and may
place such legends on certificates representing the Warrant Shares, as may be
reasonably required in the opinion of counsel to the Company to permit Warrant
Shares to be issued without such registration.
(c) In case the Warrantholder shall exercise this Warrant with
respect to less than all of the Warrant Shares that may be purchased under this
Warrant, the Company shall execute as of the exercise date (or, if later, the
Net Issuance Exercise Date) a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the Warrantholder
within 30 days following the exercise date (or, if later, the Net Issuance
Exercise Date).
(d) The Company shall pay any and all stock transfer and similar
taxes which may be payable in respect of the issuance of any Warrant Shares.
2.3 Exercise of Warrant
(a) Right to Exercise for Cash. This Warrant may be exercised by the
Holder by delivery of payment to the Company, for the account of the Company, by
cash, by certified or bank cashier's check or by wire transfer, of the Exercise
Price for the number of Warrant Shares specified in the Exercise Form in lawful
money of the United States of America.
(b) Right to Exercise on a Net Issuance Basis. In lieu of exercising
this Warrant for cash pursuant to Section 2.3(a), the Holder shall have the
right to exercise this Warrant or any portion thereof (the "Net Issuance Right")
into shares of Common Stock as provided in this Section 2.3(b) at any time or
from time to time during the period specified in Section 2.1 hereof by the
surrender of this Warrant to the Company, with a duly executed and completed
Exercise Form
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marked to reflect net issuance exercise. Upon exercise of the Net Issuance Right
with respect to a particular number of shares subject to this Warrant and noted
on the Exercise Form (the "Net Issuance Warrant Shares"), the Company shall
deliver to the Holder (without payment by the Holder of any Exercise Price or
any cash or other consideration) (X) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing the value
of this Warrant (or the specified portion hereof) on the Net Issuance Exercise
Date, which value shall be determined by subtracting (A) the aggregate Exercise
Price of the Net Issuance Warrant Shares immediately prior to the exercise of
the Net Issuance Right from (B) the aggregate fair market value of the Net
Issuance Warrant Shares issuable upon exercise of this Warrant (or the specified
portion hereof) on the Net Issuance Exercise Date (as herein defined) by (Y) the
fair market value of one share of Common Stock on the Net Issuance Exercise Date
(as herein defined).
Expressed as a formula such net issuance exercise shall be computed as
follows:
X = B-A
---
Y
Where: X = the number of shares of Common Stock that may be issued
to the Holder
Y = the fair market value (FMV) of one share of Common
Stock as of the Net Issuance Exercise Date
A = the aggregate Exercise Price (i.e., Net Issuance Warrant
Shares x Exercise Price)
B = the aggregate FMV (i.e., FMV x Net Issuance Warrant
Shares)
(c) Determination of Fair Market Value. For purposes of this Section
2.3, "fair market value" of a share of Common Stock as of the Net Issuance
Exercise Date shall mean:
(i) If the Net Issuance Right is exercised in connection
with a Public Offering, and if the Company's Registration Statement relating to
such Public Offering has been declared effective by the SEC, then the initial
"Price to Public" specified in the final Prospectus with respect to such
offering.
(ii) If the Net Issuance Right is not exercised in
connection with and contingent upon a Public Offering, then as follows:
(A) If the Common Stock is traded on a securities
exchange, the fair market value of a share of the Common Stock shall be deemed
to be the average of the closing
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prices of the Common Stock on such exchange over the 20 consecutive trading days
ending five business days prior to the Net Issuance Exercise Date;
(B) If the Common Stock is traded on the Nasdaq National
Market or the Nasdaq SmallCap Market, the fair market value of a share of the
Common Stock shall be deemed to be the average of the last reported sales prices
of the Common Stock on such Market over the 30-day period ending five business
days prior to the Net Issuance Exercise Date;
(C) If the Common Stock is traded over-the-counter other
than on the Nasdaq National Market or the Nasdaq SmallCap Market, the fair
market value of a share of the Common Stock shall be deemed to be the average of
the closing bid prices of the Common Stock over the 30-day period ending five
business days prior to the Net Issuance Exercise Date; and
(D) If there is no public market for the Common Stock,
then the fair market value of a share of the Common Stock shall be determined by
mutual agreement of the Warrantholder and the Company, and if the Warrantholder
and the Company are unable to so agree, at the Company's sole expense, by an
investment banker of national reputation selected by the Company and reasonably
acceptable to the Warrantholder.
2.4 Reservation of Shares
The Company hereby agrees that at all times there shall be reserved
for issuance and delivery upon exercise of this Warrant such number of shares of
Common Stock or other shares of capital stock of the Company from time to time
issuable upon exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except as contemplated
by Sections 2.2(b) and 5.2) and free and clear of all preemptive rights.
2.5 Fractional Shares
The Company shall not be required to issue any fraction of a share
of its capital stock in connection with the exercise of this Warrant, and in any
case where the Warrantholder would, except for the provisions of this Section
2.5, be entitled under the terms of this Warrant to receive a fraction of a
share upon the exercise of this Warrant, the Company shall, upon the exercise of
this Warrant, pay to the Warrantholder an amount in cash equal to the fair
market value of such fractional share as of the exercise date (or, if applicable
and a later date, the Net Issuance Exercise Date).
2.6 Listing
Prior to the issuance of any shares of Common Stock upon exercise of
this Warrant, the Company shall secure the listing of such shares of Common
Stock upon each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed
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(subject to official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same class shall be
listed on such national securities exchange or automated quotation system.
ARTICLE 3
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article 3.
3.1 Mechanical Adjustments
(a) If at any time prior to the exercise of this Warrant in full,
the Company shall (i) declare a dividend or make a distribution on the Common
Stock payable in shares of its capital stock (whether shares of Common Stock or
of capital stock of any other class); (ii) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares; (iii) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares; or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing corporation),
the number of Warrant Shares issuable upon exercise of the Warrant and/or the
Exercise Price in effect at the time of the record date of such dividend,
distribution, subdivision, combination, reclassification or recapitalization
shall be adjusted so that the Warrantholder shall be entitled to receive the
aggregate number and kind of shares which, if this Warrant had been exercised in
full immediately prior to such event, the Warrantholder would have owned upon
such exercise and had been entitled to receive by virtue of such dividend,
distribution, subdivision, combination, reclassification or recapitalization.
Any adjustment required by this Section 3.1(a) shall be made successively
immediately after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination, reclassification
or recapitalization, to allow the purchase of such aggregate number and kind of
shares.
(b) If at any time prior to the exercise of this Warrant in full,
the Company shall fix a record date for the issuance or making of a distribution
to all holders of the Common Stock (including any such distribution to be made
in connection with a consolidation or merger in which the Company is to be the
continuing corporation) of evidences of its indebtedness, any other securities
of the company or any cash, property or other assets (excluding a combination,
reclassification or recapitalization referred to in Section 3.1(a), regular cash
dividends or cash
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distributions paid out of net profits legally available therefor and in the
ordinary course of business or subscription rights, options or warrants for
Common Stock or Common Stock Equivalents (excluding those referred to in Section
3.1(b)) (any such nonexcluded event being herein called a "Special Dividend"),
the Exercise Price shall be decreased immediately after the record date for such
Special Dividend to a price determined by multiplying the Exercise Price then in
effect by a fraction, the numerator of which shall be the then current market
price of the Common Stock (as defined in Section 3.1(e)) on such record date
less the fair market value (as determined by the Company's Board of Directors)
of the evidences of indebtedness, securities or property, or other assets issued
or distributed in such Special Dividend applicable to one share of Common Stock
or of such subscription rights or warrants applicable to one share of Common
Stock and the denominator of which shall be such then current market price per
share of Common Stock (as so determined). Any adjustments required by this
Section 3.1 (b) shall be made successively whenever such a record date is fixed
and in the event that such distribution is not so made, the Exercise Price shall
again be adjusted to be the Exercise Price that was in effect immediately prior
to such record date.
(c) If at any time prior to the exercise of this Warrant in full,
the Company shall make a distribution to all holders of the Common Stock of
stock of a subsidiary or securities convertible into or exercisable for such
stock, then in lieu of an adjustment in the Exercise Price or the number of
Warrant Shares purchasable upon the exercise of this Warrant, each
Warrantholder, upon the exercise hereof at any time after such distribution,
shall be entitled to receive from the Company, such subsidiary or both, as the
Company shall determine, the stock or other securities to which such
Warrantholder would have been entitled if such Warrantholder had exercised this
Warrant immediately prior thereto, all subject to further adjustment as provided
in this Article 3, and the Company shall reserve, for the life of the Warrant,
such securities of such subsidiary, or other corporation; provided, however,
that no adjustment in respect of dividends or interest on such stock or other
securities shall be made during the term of this Warrant or upon its exercise.
(d) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to paragraph (b) of this Section 3.1, the Warrant
Shares shall simultaneously be adjusted by multiplying the number of Warrant
Shares then issuable upon exercise of each Warrant by the Exercise Price in
effect on the date thereof and dividing the product so obtained by the Exercise
Price, as adjusted.
(e) For the purpose of any computation under this Section 3.1, the
current market price per share of Common Stock at any date shall be deemed to be
the average of the daily closing prices for 20 consecutive trading days
commencing 30 trading days before such date. The closing price for each day
shall be the last sale price regular way or, in case no such reported sales take
place on such day, the average of the last reported bid and asked prices regular
way, in either case on the principal national securities exchange on which the
Common Stock is admitted to trading or listed, or if not listed or admitted to
trading on such exchange, the representative closing bid price as reported by
Nasdaq, or other similar organization if Nasdaq is no longer reporting such
information, or if not so available, the fair market price as determined in good
faith by the Board of Directors of the Company.
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(f) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least five cents
($.05) in such price; provided, however, that any adjustments which by reason of
this paragraph (f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 3.1 shall be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be. Notwithstanding anything in this Section 3.1 to the
contrary, the Exercise Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.
(g) In the event that at any time, as a result of any adjustment
made pursuant to Section 3.1(a), the Warrantholder thereafter shall become
entitled to receive any shares of the Company other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 3.1(a) or this Section 3.1(g).
3.2 Notices of Adjustment
Whenever the number of Warrant Shares or the Exercise Price is
adjusted as herein provided, the Company shall prepare and deliver forthwith to
the Warrantholder a certificate signed by its President, and by any Vice
President, Treasurer or Secretary, setting forth the adjusted number of shares
purchasable upon the exercise of this Warrant and the Exercise Price of such
shares after such adjustment setting forth a brief statement of the facts
requiring such adjustment, and setting forth the computation by which such
adjustment was made.
3.3 No Adjustment for Dividends
Except as provided in Section 3.1 of this Agreement, no adjustment
in respect of any cash dividends shall be made during the term of this Warrant
or upon the exercise of this Warrant.
3.4 Preservation of Purchase Rights in Certain Transactions
In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or in case of any consolidation or merger of the
Company with or into another corporation (other than merger with a subsidiary in
which the Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in the
case of any sale, lease, transfer or conveyance to another corporation of the
property and assets of the Company as an entirety or substantially as an
entirety, the Company may, as a condition precedent to such transaction cause
such successor or purchasing corporation, as the case may be, to execute with
the Warrantholder an agreement granting the Warrantholder the right thereafter,
upon payment of the Exercise Price in effect immediately prior
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to such action, to receive upon exercise of this Warrant the kind and amount of
shares and other securities and property which he would have owned or have been
entitled to receive after the happening of such reclassification, change,
consolidation, merger, sale, or conveyance had this Warrant been exercised
immediately prior to such action. In the event that in connection with any such
reclassification, capital reorganization, change, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for, or of, a security
of the Company other than Common Stock, any such issue shall be treated as an
issue of Common Stock covered by the provisions of Article 3. The provisions of
this Section 3.4 shall similarly apply to successive reclassifications, capital
reorganizations, consolidations, mergers, sales or conveyances.
3.5 Form of Warrant After Adjustments
The form of this Warrant need not be changed because of any
adjustments in the Exercise Price or the number or kind of the Warrant Shares,
and Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in this Warrant, as initially
issued.
3.6 Treatment of Warrantholder
Prior to due presentment for registration of transfer of this
Warrant, the Company may deem and treat the Warrantholder as the absolute owner
of this Warrant (notwithstanding any notation of ownership or other writing
hereon) for all purposes and shall not be affected by any notice to the
contrary.
ARTICLE 4
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
4.1 No Rights as Shareholders; Notice to Warrantholders
Nothing contained in this Warrant shall be construed as conferring
upon the Warrantholder or his or its transferees the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company or of any
other matter, or any rights whatsoever as shareholders of the Company. The
Company shall give notice to the Warrantholder by registered mail if at any time
prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(a) the Company shall authorize the payment of any dividend payable
in any securities upon shares of Common Stock or authorize the making of any
distribution (other than a cash dividend excluded from the definition of
"Special Dividend" by the second parenthetical comment set forth in Section
3.1(b)) to all holders of Common Stock;
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(b) the Company shall authorize the issuance to all holders of
Common Stock of any additional shares of Common Stock or Common Stock
Equivalents or of rights, options or warrants to subscribe for or purchase
Common Stock or Common Stock Equivalents or of any other subscription rights,
options or warrants;
(c) a dissolution, liquidation or winding up of the Company shall be
proposed; or
(d) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock and
other than a change in the par value of the Common Stock) or any consolidation
or merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of Common Stock
outstanding) or in the case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an entirety.
Such giving of notice shall be initiated (i) at least 10 Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Company's stock transfer books for the determination of the
shareholders entitled to such dividend, distribution or subscription rights, or
for the determination of the shareholders entitled to vote on such proposed
merger, consolidation, sale, conveyance, dissolution, liquidation or winding up.
Such notice shall specify such record date or the date of closing the stock
transfer books, as the case may be. Failure to provide such notice shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or proposed merger, consolidation, sale,
conveyance, dissolution, liquidation or winding up.
4.2 Lost, Stolen, Mutilated or Destroyed Warrants
If this Warrant is lost, stolen, mutilated or destroyed, the Company
may, on such terms as to indemnity or otherwise as it may in its reasonable
judgment impose (which shall, in the case of a mutilated Warrant, including the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant.
ARTICLE 5
SPLIT-UP, COMBINATION, EXCHANGE AND
TRANSFER OF WARRANTS AND WARRANTY SHARES
5.1 Split-Up, Combination and Exchange of Warrants
This Warrant may be split-up, combined or exchanged for another
Warrant or Warrants containing the same terms to purchase a like aggregate
number of Warrant Shares. If the Warrantholder desires to split-up, combine or
exchange this Warrant, he or it shall make such request
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in writing delivered to the Company and shall surrender to the Company this
Warrant and any other Warrants to be so split-up, combined or exchanged. Upon
any such surrender for a split-up, combination or exchange, the Company shall
execute and deliver to the person entitled thereto a Warrant or Warrants, as the
case may be, as so requested. The Company shall not be required to effect any
split-up, combination or exchange which will result in the issuance of a Warrant
entitling the Warrantholder to purchase upon exercise a fraction of a share of
Common Stock or a fractional Warrant. The Company may require such Warrantholder
to pay a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any split-up, combination or exchange of Warrants.
5.2 Restrictions on Transfer, Restrictive Legends
Except for transfers of a Warrant by operation of law or by reason
of the reorganization of the issuer, no Warrant may be sold, transferred,
assigned or hypothecated prior to November 21, 1998 (which is the date one year
after the effective date of the Offering), other than Warrants transferred to an
underwriter or dealer participating in the Offering or to an officer or partner
of such a participant. Each Warrant (and each Warrant issued upon direct or
indirect transfer of or in substitution for any Warrant) issued prior to
November 21, 1998, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
OF THIS WARRANT PRIOR TO NOVEMBER 21, 1998 IS
RESTRICTED."
In addition, except as otherwise permitted by this Section 5.2, each
Warrant shall (and each Warrant issued upon direct or indirect transfer or in
substitution for any Warrant issued pursuant to Section 5.1 shall) be stamped or
otherwise imprinted with a legend in substantially the following form:
"THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT."
Except as otherwise permitted by this Section 5.2, each stock certificate
for Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
- 13 -
REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT."
Notwithstanding the foregoing, the Warrantholder may require the Company
to issue a Warrant or a stock certificate for Warrant Shares, in each case
without a legend, if the issuance of such Warrant is not in contravention of the
initial sentence of this Section 5.2 and (i) the issuance of such Warrant Shares
has been registered under the Securities Act, (ii) such Warrant or such Warrant
Shares, as the case may be, have been registered for resale under the Securities
Act or sold pursuant to Rule 144 under the Securities Act (or a successor
thereto) or (iii) the Warrantholder has received an opinion of counsel (who may
be house counsel for such Warrantholder) reasonably satisfactory to the Company
that such registration is not required with respect to such Warrant or such
Warrant Shares, as the case may be.
ARTICLE 6
REGISTRATION UNDER THE SECURITIES ACT OF 1933
6.1 Piggyback Registration
(a) Right to include Registrable Securities. If at any time or from
time to time prior to the second anniversary of the Expiration Date (which is
the date seven years after the effective date of the Offering), the Company
proposes to register any of its securities under the Securities Act on any form
for the registration of securities under such Act, whether or not for its own
account (other than by a registration statement on Form S-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 or would not be available for
the Registrable Securities) (a "Piggyback Registration"), it shall as
expeditiously as possible give written notice to all Holders of its intention to
do so and of such Holders' rights under this Section 6.1. Such rights are
referred to hereinafter as "Piggyback Registration Rights." Upon the written
request of any such Holder made within 20 days after receipt of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such Holder), the Company shall include in the Registration Statement the
Registrable Securities which the Company has been so requested to register by
the Holders 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 90 days).
(b) Withdrawal of Piggyback Registration by Company. If, at any time
after giving written notice of its intention to register any 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 such securities, 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. All best
efforts obligations of the Company pursuant
- 14 -
to Section 6.4 shall cease if the Company determines to terminate prior to such
effective date any registration where Registrable Securities are being
registered pursuant to this Section 6.1.
(c) Piggyback Registration of Underwritten Public Offering. If a
Piggyback Registration involves an offering by or through underwriters, then (i)
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 (ii) any Holder requesting to have his or 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
his or its Registrable Securities so included in connection with such
registration.
(d) Payment of Registration Expenses for Piggyback Registration. The
Company shall pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to a Piggyback Registration Right
contained in this Section 6. 1.
(e) Priority in Piggyback Registration. 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 Shares
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 (i) if other
selling shareholders without contractual registration rights have requested
registration of securities in the proposed offering, the Company will reduce or
eliminate such securities held by selling shareholders without registration
rights before any reduction or elimination of Registrable Securities; and (ii)
any such reduction or elimination (after taking into account the effect of
clause (i)) shall be pro rata to all other selling shareholders with contractual
registration rights.
6.2 Demand Registration
(a) Request for Registration. If, at any time prior to the
Expiration Date (which is the date five years after the effective date of the
Offering), any 25% Holders request that the Company file a registration
statement under the Securities Act, as soon as practicable thereafter the
Company shall use its best efforts to file a registration statement with respect
to all Warrant Shares that it has been so requested to include and to obtain the
effectiveness thereof, and shall take all other action necessary under federal
or state law or regulation to permit the Warrant Shares that are held and/or
that may be acquired upon the exercise of the Warrants specified in the notices
of the Holders or holders hereof to be sold or otherwise disposed of, and the
Company shall maintain such compliance with each such federal and state law and
regulation for the period necessary for such Holders or holders to effect the
proposed sale or other disposition; provided, however, the Company shall be
entitled to defer such registration for a period of up to 60 days if and to the
extent that its Board of Directors shall determine that such registration would
interfere with a pending corporate
- 15 -
transaction. The Company shall also promptly give written notice to the Holders
and the holders of any other Warrants and/or the holders of any Warrant Shares
who or that have not made a request to the Company pursuant to the provisions of
this Section 6.2(a) of its intention to effect any required registration or
qualification, and shall use its best efforts to effect as expeditiously as
possible such registration or qualification of all such other Warrant Shares
that are then held and/or that may be acquired upon the exercise of the
Warrants, the Holder or holders of which have requested such registration or
qualification, within 15 days after such notice has been given by the Company,
as provided in the preceding sentence. The Company shall be required to effect a
registration or qualification pursuant to this Section 6.2(a) on one occasion
only.
(b) Payment of Registration Expenses for Demand Registration. The
Company shall pay all Registration Expenses in connection with the Demand
Registration.
(c) Selection of Underwriters. If any Demand Registration is
requested to be in the form of an underwritten offering, the managing
underwriters shall be Wedbush ▇▇▇▇▇▇ Securities and Everen Securities, Inc., and
the independent price required under the rules of the NASD (if any) shall be
selected and obtained by the Holders of a majority of the Warrant Shares to be
registered. Such selection shall be subject to the Company's consent, which
consent shall not be unreasonably withheld. All fees and expenses (other than
Registration Expenses otherwise required to be paid) of any managing
underwriter, any co-manager or any independent underwriter or other independent
price required under the rules of the NASD shall be paid for by such
underwriters or by the Holders or holders whose shares are being registered. If
Wedbush ▇▇▇▇▇▇ Securities and Everen Securities, Inc., should decline to serve
as managing underwriter, the Holders of a majority of the Warrant Shares to be
registered may select and obtain one or more managing underwriters. Such
selection shall be subject to the Company's consent, which shall not be
unreasonably withheld.
(d) Procedure for Requesting Demand Registration. Any request for a
Demand Registration shall specify the aggregate number of Registrable Securities
proposed to be sold and the intended method of disposition. Within 10 days after
receipt of such a request the Company will give written notice of such
registration request to all Holders and, subject to the limitations of Section
6.2(b), the Company will include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 15 Business Days after the date on which such notice is given.
Each such request shall also specify the aggregate number of Registrable
Securities to be registered and the intended method of disposition thereof.
6.3 Buy-Outs of Registration Demand.
In lieu of carrying out its obligations to effect a Piggyback
Registration or Demand Registration of any Registrable Securities pursuant to
this Article 6, the Company may carry out such obligation by offering to
purchase and purchasing such Registrable Securities requested to be registered
in an amount in cash equal to the difference between (a) 95% of the last sale
price of the Common Stock on the day the request for registration is made and
(b) the Exercise Price in effect
- 16 -
on such day; provided, however, that the Holder or Holders may withdraw such
request for registration rather than accept such offer by the Company.
6.4 Registration Procedures.
If and whenever the Company is required to use its best efforts to
take action pursuant to any Federal or state law or regulation to permit the
sale or other disposition of any Registrable Securities that are then held or
that may be acquired upon exercise of the Warrants in order to effect or cause
the registration of any Registrable Securities under the Securities Act as
provided in this Article 6, the Company shall, as expeditiously as practicable:
(a) prepare and file with the SEC, as soon as practicable within 90
days after the end of the period within which requests for registration may be
given to the Company (but subject to the provisions for deferral contained in
Section 6.2(a) hereof) a Registration Statement or Registration Statements
relating to the registration on any appropriate form under the Securities Act,
which form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof, subject
to Section 6.1(d) hereof, and use its best efforts to cause such Registration
Statements to become effective; provided that before filing a Registration
Statement or Prospectus or any amendment or supplements thereto, including
documents incorporated by reference after the initial filing of any Registration
Statement, the Company will furnish to the Holders of the Registrable Securities
covered by such Registration Statements and the underwriters, if any, copies of
all such documents proposed to be filed, which documents will be subject to the
review of such Holders and underwriters;
(b) prepare and file with the SEC such amendments and post-effective
amendments to a Registration Statement as may be necessary to keep such
Registration Statement effective for a reasonable period not to exceed 180 days;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement or
supplement to such Prospectus;
(c) notify the selling Holders of Registrable Securities and the
managing underwriters, if any, promptly and (if requested by any such Person)
confirm such advice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contemplated by paragraph (m) below ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the
- 17 -
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purposes; and (vi)
of the happening of any event that makes any statement of a material fact made
in the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
Registration Statement or Prospectus so that they will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriters,
immediately incorporate in a Prospectus supplement or post-effective amendment
such information as the managing underwriters believe (on advice of counsel)
should be included therein as required by applicable law relating to such sale
of Registrable Securities, including, without limitation, information with
respect to the purchase price being paid for the Registrable Securities by such
underwriters and with respect to any other terms of the underwritten (or "best
efforts" underwritten) offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling Holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment therein, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary Prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the Company consents
to the use of such Prospectus or any amendment or supplement thereto by each of
the selling Holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities,
cooperate with the selling Holders of Registrable Securities, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or underwriter reasonably requests in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Registration Statement,
provided that the Company will not be required to qualify to do business in any
jurisdiction where it is not then so
- 18 -
qualified or to take any action which would subject the Company to general
service of process in any jurisdiction where it is not at the time so subject;
(i) cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two Business Days prior to any sale of Registrable Securities
to the underwriters;
(j) use its best efforts to cause the Registrable Securities covered by
the applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by Section 6.4(c)(vi)
above, prepare a post-effective amendment or supplement to the applicable
Registration Statement or related Prospectus 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 being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading;
(l) with respect to each issue or class of Registrable Securities, use its
best efforts to cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange or automated quotation
system, if any, on which similar securities issued by the Company are then
listed if requested by the Holders of a majority of such issue or class of
Registrable Securities;
(m) enter into such agreements (including any underwriting agreement) and
take all such other action reasonably required in connection therewith in order
to expedite or facilitate the disposition of such Registrable Securities and in
such connection, if the registration is in connection with an underwritten
offering (i) make such representations and warranties to the underwriters in
such form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions shall be in form, scope and substance reasonably
satisfactory to the underwriters) addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such underwriters; (iii)
obtain "cold comfort" letters and updates thereof from the Company's accountants
addressed to the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters by
underwriters in connection with underwritten offerings; (iv) set forth in full
in any underwriting agreement entered into the indemnification provisions and
procedures of Section 6.5 hereof with respect to all parties to be indemnified
pursuant to said Section; and (v) deliver such documents and certificates as may
- 19 -
be reasonably requested by the underwriters to evidence compliance with clause
(i) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company; the above shall be
done at each closing under such underwriting or similar agreement as and to the
extent required hereunder;
(n) make available for inspection by one or more representatives of the
Holders of Registrable Securities being sold, any underwriter participating in
any disposition pursuant to such registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other record,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such representatives, in connection with such; and
(o) otherwise use its best efforts to comply with all applicable Federal
and state regulations; and take such other action as may be reasonably necessary
or advisable to enable each such Holder and each such underwriter to consummate
the sale or disposition in such jurisdiction or jurisdictions in which any such
Holder or underwriter shall have requested that the Registrable Securities be
sold.
Except as otherwise provided in this Agreement, the Company shall have
sole control in connection with the preparation, filing, withdrawal, amendment
or supplementing of each Registration Statement, the selection of underwriters,
and the distribution of any preliminary prospectus included in the Registration
Statement, and may include within the coverage thereof additional shares of
Common Stock or other securities for its own account or for the account of one
or more of its other security holders.
The Company may require each Seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such securities and such other information as may
otherwise be required by the Securities Act to be included in such Registration
Statement.
6.5 Indemnification.
(a) Indemnification by Company. In connection with each Registration
Statement relating to the disposition of Registrable Securities, the Company
shall indemnify and hold harmless each Holder and each underwriter of
Registrable Securities and each Person, if any, who controls such Holder or
underwriter (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they, or any
of them, may become subject under the Securities Act, the Exchange Act or other
federal or state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or
- 20 -
any amendment thereof or supplement thereto, or arise out of or are based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that such indemnity shall not inure to the benefit of any
Holder or underwriter (or any person controlling such Holder or underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) on account of any losses, claims, damages or liabilities arising
from the sale of the Registrable Securities if such untrue statement or omission
or alleged untrue statement or omission was made in such Registration Statement,
Prospectus or preliminary prospectus or such amendment or supplement, in
reliance upon and in conformity with information furnished in writing to the
Company by such Holder or underwriter specifically for use therein. The Company
shall also indemnify selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Holders of
Registrable Securities, if requested. This indemnity agreement shall be in
addition to any liability which the Company may otherwise have.
(b) Indemnification by ▇▇▇▇▇▇. In connection with each Registration
Statement, each Holder shall indemnify, to the same extent as the
indemnification provided by the Company in Section 6.5(a), the Company, its
directors and each officer who signs the Registration Statement and each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act) but only insofar as such losses, claims,
damages and liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in the
Registration Statement, the Prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
information furnished in writing by such Holder to the Company specifically for
use therein. In no event shall the liability of any selling Holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above, with respect to information
so furnished in writing by such Persons specifically for inclusion in any
Registration Statement, Prospectus or preliminary prospectus or any amendment
thereof or supplement thereto.
(c) Conduct of Indemnification Procedure. Any party that proposes to
assert the right to be indemnified hereunder will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6.5(a) or 6.5(b) shall be available to
any party who shall fail to give notice as provided in this Section 6.5(c) if
the party to whom notice was not given was unaware of the proceeding in which
such notice would have related and was prejudiced by the failure to give such
notice, but the omission so to notify such indemnifying party of any such
action, suit
- 21 -
or proceeding shall not relieve it from any liability that it may have to any
indemnified party for contribution otherwise than under this Section. In case
any such action, suit or proceeding 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
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume 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 the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying parties. An
indemnified party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent.
(d) Contribution. In connection with each Registration Statement
relating to the disposition of Registrable Securities, if the indemnification
provided for in subsection (a) hereof is unavailable to an indemnified party
thereunder in respect to any losses, claims, damages or liabilities referred to
therein, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 6.5 in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
(e) Underwriting Agreement to Control. Notwithstanding the foregoing
provisions of the Section 6.5, to the extent that the provisions on
indemnification and contribution contained in any underwriting agreement entered
into in connection with the underwritten public offering of the Registrable
Securities are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall control.
- 22 -
(f) Specific Performance. The Company and the Holder acknowledge
that remedies at law for the enforcement of this Section 6.5 may be inadequate
and intend that this Section 6.5 shall be specifically enforceable.
(g) Survival of Obligations. The obligations of the Company and the
Holder under this Section 6.5 shall survive the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this Article
6, and otherwise.
6.6 Reports Under Securities Exchange Act of 1934.
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and (iii) such other reports and information as may be
required pursuant to the provisions of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
ARTICLE 7
OTHER MATTERS
7.1 Binding Effects; Benefits.
This Warrant shall inure to the benefit of and shall be binding upon
the Company and the Warrantholder and their respective heirs, legal
representatives, successors and assigns. Nothing in this Warrant, expressed or
implied, is intended to or shall confer on any person other than the Company and
the Warrantholder or their respective heirs, legal representatives, successors
or assigns, any rights, remedies, obligations or liabilities under or by reason
of this Warrant.
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7.2 No Inconsistent Agreements.
The Company will not on or after the date of this Warrant enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders in this Warrant or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to holders of the
Company's securities under any other agreements.
7.3 Adjustments Affecting Registrable Securities.
The Company will not take any action outside the ordinary course of
business, or permit any change within its control to occur outside the ordinary
course of business, with respect to the Registrable Securities which is without
a bona fide business purpose, and which is intended to interfere with the
ability of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.
7.4 Integration/Entire Agreement.
This Warrant is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Warrants.
This Warrant supersedes all prior agreements and understandings between the
parties with respect to such subject matter (other than warrants previously
issued by the Company to the Warrantholder).
7.5 Amendments and Waivers.
The provisions of this Warrant, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the Company has
obtained the written consent of holders of at least a majority of the
outstanding Registrable Securities. Holders shall be bound by any consent
authorized by this Section whether or not certificates representing such
Registrable Securities have been marked to indicate such consent.
7.6 Counterparts.
This Warrant may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
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7.7 Governing Law.
This Warrant shall be governed by and construed in accordance with
the laws of the State of New York.
7.8 Severability.
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
7.9 Attorneys' Fees.
In any action or proceeding brought to enforce any provisions of
this Warrant, or where any provision hereof is validly asserted as a defense,
the successful party shall be entitled to recover reasonable attorneys' fees and
disbursements in addition to its costs and expenses and any other available
remedy.
7.10 Computations of Consent.
Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its affiliates (other than the Warrantholder
or subsequent Holders if they are deemed to be such affiliates solely by reason
of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
7.11 Notice.
Any notices or certificates by the Company to the Holder and by the Holder
to the Company shall be deemed delivered if in writing and delivered in person
or by registered mail (return receipt requested) to the Holder addressed to it
in care of Everen Securities, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇, or, if the Holder has designated by notice in writing to the Company, any
other address, to each other address and if to the Company, addressed to it at:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: President, with a
copy to Jones, Waldo, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq., or if the Company has designated, by notice in writing to the Holder, any
other address, to such other address.
The Company may change its address by written notice to the Holder and the
Holder may change its address by written notice to the Company.
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In Witness Whereof, this Warrant has been duly executed by the Company
under its corporate seal as of the 26th day of November, 1997.
ZEVEX INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President
Attest: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Secretary