Exhibit 10.12
THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER
SAID ACT AND LAWS.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
PROVANT, INC.
Expires November 21, 2012
No. W-_ (Tranche 4)
November 21, 2002
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, PROVANT, INC., a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that
_________
or its registered assigns is entitled to subscribe for and purchase, during the
period specified in this Warrant, _______ shares of Common Stock (the "Warrant
Number") (subject to adjustment as hereinafter provided) of the duly authorized,
validly issued, fully paid and non-assessable Common Stock of the Issuer, at an
initial exercise price of $.01 per share, subject, however, to the provisions
and upon the terms and conditions hereinafter set forth. Capitalized terms used
in this Warrant and not otherwise defined herein shall have the respective
meanings specified in Section 8 hereof.
Background. On November 21, 2002, the Issuer agreed to issue warrants
pursuant to the Loan Agreement (as defined below) in four tranches, which,
including this Warrant, are exercisable to purchase an aggregate of Five Million
One Hundred Thirty Two Thousand Two Hundred Fifty (5,132,250) shares of Common
Stock, constituting 15% of the Diluted Common Stock of the Issuer. This Warrant
and other warrants of similar tenor in this tranche are exercisable to purchase
up to an aggregate of Two Million Fifty Two Thousand Nine Hundred (2,052,900)
shares of Common Stock, (the "Aggregate Tranche Warrant Number"), constituting
6% of the Diluted Common Stock, after giving effect to the issuance of all
tranches of warrants pursuant to the Loan Agreement.
1. Term. The right to subscribe for and purchase shares of Warrant
Stock represented hereby shall commence on the earlier to occur of (i) April 15,
2003 or (ii) such date (the "Commencement Date") on which (x) an Event of
Default (as defined in the Loan Agreement) (other than the Events of Default set
forth in Exhibit II to the Seventeenth Amendment to the Loan Agreement) pursuant
to Sections 12.1(a) or (b) of the Loan Agreement has occurred or (y) the
maturity of the Revolving Credit Loans has been accelerated, and shall expire at
5:00 P.M., Eastern Time, on November 21, 2012 (such period being the "Term");
provided that this Warrant shall expire and terminate and be of no further force
and effect if, (a) prior to the Commencement Date, the outstanding principal
balance of the Revolving Credit Loans (as defined in the Loan Agreement) has
been paid in full or (b) the Issuer shall have paid to the Holder the Fee in
Lieu of Warrant Amount at any time prior to the issuance of Warrant Stock upon
exercise.
2. Method of Exercise; Payment; Issuance of New Warrant; Transfer and
Exchange.
(a) Time of Exercise. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and from time to time
during the Term.
(b) Method of Exercise. The Holder hereof may exercise this Warrant,
in whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
whole shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check, or (ii) by surrender to the Issuer for cancellation of a portion of this
Warrant representing that number of unissued shares of Warrant Stock which is
equal to the quotient obtained by dividing (A) the product obtained by
multiplying the Warrant Price by the number of shares of Warrant Stock being
purchased upon such exercise by (B) the Current Market Price per share of
Warrant Stock as of the date of such exercise, or (iii) by a combination of the
foregoing methods of payment selected by the Holder of this Warrant. In any case
where the consideration payable upon such exercise is being paid in whole or in
part pursuant to the provisions of clause (ii) of this Section 2(b), such
exercise shall be accompanied by written notice from the Holder of this Warrant
specifying the manner of payment thereof and containing a calculation showing
the number of shares of Warrant Stock with respect to which rights are being
surrendered thereunder and the net number of shares to be issued after giving
effect to such surrender.
(c) Issuance of Stock Certificates. In the event of any exercise of
the rights represented by this Warrant in accordance with and subject to the
terms and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three Business Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof
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which shall have been canceled in payment or partial payment of the Warrant
Price as hereinabove provided) shall also be issued to the Holder hereof within
such time.
(d) Transferability of Warrant. Subject to the provisions of
Section 2(e) hereof, this Warrant may be transferred on the books of the Issuer
by the Holder hereof in person or by duly authorized attorney, upon surrender of
this Warrant at the principal office of the Issuer, properly endorsed (by the
Holder executing an assignment in the form attached hereto) and upon payment of
any necessary transfer tax or other governmental charge imposed upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants for the purchase of the same aggregate number of shares of Warrant
Stock, each new Warrant to represent the right to purchase such number of shares
of Warrant Stock as the Holder hereof shall designate at the time of such
exchange. All Warrants issued on transfers or exchanges shall be dated the
Closing Date and shall be identical with this Warrant except as to the number of
shares of Warrant Stock issuable pursuant hereto.
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, all
Warrants and certificates representing shares of Warrant Stock issued
upon exercise hereof shall be stamped or imprinted with a legend in
substantially the following form:
"THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT AND
LAWS."
(iii) The restrictions imposed by this Section 2(e)
upon the transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, or (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer (it being understood
that in-house counsel to the Holder shall be deemed to be acceptable
counsel), addressed to the Issuer to the effect that such restrictions
are no longer required to ensure compliance with the Securities Act.
Whenever such restrictions shall cease and terminate as to any such
securities, the Holder thereof shall be entitled to receive from the
Issuer (or its transfer
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agent and registrar), without expense (other than applicable transfer
taxes, if any), new Warrants (or, in the case of shares of Warrant
Stock, new stock certificates) of like tenor not bearing the
applicable legends required by paragraph (ii) above relating to the
Securities Act and state securities laws.
(f) Continuing Rights of Holder. The Issuer will, at the time
of or at any time after each exercise of this Warrant, upon the request of the
Holder hereof or of any shares of Warrant Stock issued upon such exercise,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.
3. Registration Rights.
(a) Registration on Request.
(i) Right to Registration on Request. Commencing on
April 15, 2003, upon the written request of the Agent or the Holder or
Holders of thirty percent (30%) or more of the Registrable Securities
that the Issuer effect the registration under the Securities Act in
connection with a sale of such securities in the United States of all
or part of such Holders' Registrable Securities and specifying the
intended method of disposition thereof (including whether or not such
disposition is intended to be effected as an underwritten offering),
the Issuer will promptly give written notice of such requested
registration to all other Holders and thereupon the Issuer will use its
best efforts to effect the registration under the Securities Act of:
(A) the Registrable Securities which the
Issuer has been so requested to register by the
Holder or Holders submitting the request, and
(B) all other Registrable Securities which
the Issuer has been requested to register by the
Holder or Holders thereof by written request given to
the Issuer within fifteen (15) days after the giving
of such written notice by the Issuer (which request
shall specify the intended method of disposition of
such Registrable Securities), all to the extent
requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered.
(ii) Priority in Requested Registrations. If a
requested registration pursuant to this Section 3(a) involves an
underwritten offering, and the managing underwriter shall advise the
Issuer in writing (with a copy to each Holder requesting registration)
that, in its opinion, the number of Registrable Securities and other
securities of the Issuer held by any other party requested to be
included in such registration exceeds the number which can be sold in
(or during the time of) such offering within a price range acceptable
to the Holders of a majority (by number of shares) of the Registrable
Securities requested to be included in such registration, the Issuer
will include in such registration all Registrable Securities requested
to be included in such registration (unless
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the provisions of the following sentence apply) and will include in
such registration other securities of the Issuer (including any
securities proposed to be issued and sold by the Issuer) held by any
other party only to the extent that the number of shares which the
Issuer is advised can be so sold in (or during the time of) such
offering exceeds the number of Registrable Securities to be included in
such registration. If a requested registration pursuant to this Section
3 involves an underwritten offering, and the managing underwriter shall
advise the Issuer in writing (with a copy to each Holder requesting
registration) that, in its opinion, the number of Registrable
Securities requested to be included in such registration exceeds the
number which can be sold in (or during the time of) such offering
within a price range acceptable to the Holders of a majority (by number
of shares) of the Registrable Securities requested to be included in
such registration, the Issuer will include in such registration only
the number of Registrable Securities that the managing underwriter
advises can be sold in (or during the time of) such offering. In such
event, such Registrable Securities will be included in such
registration only to the extent of the number of shares which the
Issuer is advised can be so sold in (or during the time of) such
offering; the Registrable Securities to be included in such
registration shall be taken up pro rata from the Holders requesting
such registration on the basis of the percentage of Registrable
Securities requested to be included in such registration; and all
shares proposed to be sold by the Issuer or any other party shall be
deleted from such registration prior to effecting any reduction of
Registrable Securities by the Holders thereof under this Section 3(a).
(iii) Registration Statement Form. Registrations
under this Section 3(a) shall be on such appropriate registration form
of the Commission (i) for which the Issuer qualifies, and which the
Issuer's counsel (after consultation with counsel or counsels for
Holders) deem appropriate, and (ii) as shall permit the disposition of
such Registrable Securities in accordance with the intended method or
methods of disposition specified in the request for such registration.
The Issuer agrees to include in any such registration statement all
information as to the Holders of the Registrable Securities to be
registered which the Holders of the Registrable Securities being
registered shall reasonably request or which shall be required by
applicable law.
(iv) Expenses. The Issuer will pay all Registration
Expenses incurred in connection with any registration requested
pursuant to this Section 3(a) which the Issuer is obligated to effect,
whether or not such registration is effected.
(v) Effected Registration Statement. A registration
requested pursuant to this Section 3(a) shall not be deemed to have
been effected unless a registration statement with respect thereto has
become effective except: (i) if the registration statement is withdrawn
prior to its effectiveness pursuant to the request of all of the
Holders who have requested the inclusion in such registration statement
of some or all of their Registrable Securities, (ii) if, after the
registration statement has become effective, such registration is
interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for
any reason, unless such stop order, injunction or other order or
requirement results from any action or inaction of a Holder or Holders,
or (iii) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with
such
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registration are not satisfied due to a failure by a Holder to satisfy
a condition required to be satisfied by such Holder pursuant to the
purchase agreement or underwriting.
(vi) Selection of Underwriter. If a requested
registration pursuant to this Section 3(a) involves an underwritten
offering, the underwriter or underwriters thereof shall be selected by
the Holders of a majority of the Registrable Securities to be so
registered.
(vii) Limitation on Registrations. The Issuer's
obligations under this Section 3(a) shall be limited to effecting three
(3) registrations within the meaning of paragraph (v) of this Section
3(a); provided, however, that (i) if all of the Holders who have
requested the inclusion of Registrable Securities held by them in a
registration requested under this Section 3(a) withdraw such request
prior to the time the registration statement has become effective and
any or all of such Holders pay all Registration Expenses relating
thereto, such proposed registration shall not count as one of the
registrations provided for by this Section 3(a); and (ii) if a
registration is deemed to be effected pursuant to paragraph (v) of this
Section 3(a) because a condition to closing specified in the purchase
agreement or underwriting agreement entered into in connection with
such registration is not satisfied due to a failure by a Holder to
satisfy a condition required to be satisfied by such holder pursuant to
such agreement and one or more of the Holders elects to pay (and shall
actually have paid) all Registration Expenses relating thereto, such
registration shall not count as one of the registrations provided for
by this Section 3(a).
(b) Incidental Registration.
(i) Right to Incidental Registration. If the Issuer
at any time proposes to register any of its securities under the
Securities Act (other than by a registration on Form S-8 or Form S-4 or
any successor or similar form and other than pursuant to Section 3(a)
of this Warrant), whether or not for sale for its own account, it will
each such time give prompt written notice to all Holders of its
intention to do so and of such Holders' rights under this Section 3(b).
Upon the written request of any such Holder made within fifteen (15)
days after the receipt of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by such Holder
and the intended method of disposition thereof), the Issuer will use
its best efforts to effect the registration under the Securities Act in
connection with a sale of all Registrable Securities which the Issuer
has been so requested to register by the Holders, to the extent
requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be
registered, provided that if, at any time after giving written notice
of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Issuer shall determine for any reason, after
consultation with the Holders which have requested inclusion in such
registration, not to register or to delay such registration, the Issuer
may, at its election, give written notice of such determination to each
Holder and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not
from its obligation to pay the Registration Expenses in connection
therewith), without prejudice,
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however, to the rights of any Holder or Holders entitled to do so to
request that such registration be effected as a registration under
Section 3(a) above, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. No registration effected under this Section 3(b) shall
relieve the Issuer of its obligation to effect any registration upon
request under Section 3(a) above. The Issuer will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Section 3(b).
(ii) Priority in Incidental Registrations. If (i) a
registration pursuant to this Section 3(b) involves an underwritten
offering of the securities so being registered, whether or not for sale
for the account of the Issuer, and (ii) the managing underwriter of
such underwritten offering shall inform the Issuer and the Holders
requesting such registration by letter of its belief that the number of
securities requested to be included in such registration exceeds the
number which can be sold in (or during the time of) such offering, then
(A) in the case of an offering for the account of the Issuer, the
Issuer will include in such registration all Registrable Securities
requested to be included in such registration (allocated among the
Holders pro rata on the basis of the number of Registrable Securities
requested to be included therein by each such Holder) and, thereafter,
such securities registered for sale for the account of the Issuer only
to the extent such managing underwriter believes can be sold in (or
during the time of) such offering without adversely affecting the sale
of the Registrable Securities, and (B) in the case of an offering that
was commenced as a result of the exercise of demand registration rights
by Persons other than the Holders, the Persons commencing such
registration and the Holders shall be entitled to include such other
Person's securities of the Issuer and Registrable Securities in an
amount up to the amount such managing underwriters or underwriters
advise may be included therein, allocated first to the Holders and
thereafter among other Persons commencing such registration.
(c) Registration Procedures. If and whenever the Issuer is required
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 3(a) or 3(b) above, the Issuer
will, as expeditiously as possible:
(i) prepare and (as soon thereafter as possible) file
with the Commission the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such
registration statement to become effective, provided that the Issuer
may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in
Section 3(b)(i) above, its securities which are Registrable Securities)
at any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions
of the Securities Act with respect to the disposition of all securities
covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended
methods of disposition by the
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seller or sellers thereof as set forth in such registration statement
but in no event for a period which would exceed one hundred twenty
(120) days from the date on which the registration statement became
effective;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement such number of
conformed copies of such registration statement and of each amendment
and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such jurisdictions in the United States as each seller thereof shall
reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect,
and take any other action which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Issuer shall not for any such purpose be required to either qualify
generally to do business as a foreign corporation, or subject itself to
taxation or to general service of process in any jurisdiction wherein
it would not, but for the requirements of this clause (iv), be
obligated to be so qualified or subject to taxation or service of
process, other than as to matters and transactions related to such
registration or qualification;
(v) cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other
United States governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition
of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities
a copy of each of the following, if any, addressed to the underwriters:
(A) an opinion of counsel for the Issuer,
dated the effective date of such registration
statement (and, if such registration includes an
underwritten public offering, dated the date of the
closing under the underwriting agreement) reasonably
satisfactory in form and substance to such seller,
and
(B) a "comfort" letter, dated the effective
date of such registration statement (and, if such
registration includes an underwritten public
offering, dated the date of the closing under the
underwriting agreement), signed by the independent
public accountants who have certified the Issuer's
financial statements included in such registration
statement, covering substantially the same matters
with respect to such registration statement (and the
prospectus included therein) and, in the case of the
accountants' letter, with respect to events
subsequent to the
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date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in
underwritten public offerings of securities and, in
the case of the accountants' letter, such other
financial matters, and, in the case of the legal
opinion, such other legal matters, as such seller (or
the underwriters, if any) may reasonably request;
(vii) (A) notify each seller of Registrable
Securities covered by such registration statement, their counsel and
the managing underwriters, if any, promptly, and (if requested in
writing by any such Person), confirm such notice in writing: (1) when a
registration statement or any amendment thereto has been filed, and,
with respect to a registration statement or any post-effective
amendment, when the same has become effective, (2) of any request by
the Commission or any other federal or state governmental authority for
amendments or supplements to a registration statement or related
prospectus or for additional information, (3) of the issuance by the
Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that
purpose, (4) if at any time the representations and warranties of the
Issuer contained in any agreement (including any underwriting
agreement) contemplated by this Section 3 cease to be true and correct,
(5) of the receipt by the Issuer of any notification with respect to
the suspension of the qualification or exemption from qualification of
any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, and (6)
of the happening of any event that makes any statement made in such
registration statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes to
such registration statement, prospectus or documents so that, in the
case of the registration statement, it 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, and that in the case of the prospectus, it
will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (B) at the request of any such seller promptly prepare
and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary
(and a post-effective amendment to such registration statement as may
be necessary in connection therewith) so that, as thereafter delivered
to the purchasers of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made;
(viii) use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of a registration statement,
or the lifting of any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in
any jurisdiction;
(ix) if requested by the managing underwriters, if
any, or the Holders of a majority in interest of the Registrable
Securities being sold in connection with an
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underwritten offering, promptly include in a prospectus supplement or
post-effective amendment such information as the managing underwriters,
if any, and such Holders may reasonably request in order to permit the
intended method of distribution of such securities and make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Issuer has received such
request;
(x) comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon
as reasonably practicable, a historical earnings statement covering the
period of at least twelve (12) months, but not more than eighteen (18)
months, beginning with the first month of the first full fiscal quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and will furnish to each such seller at least five
business days prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus and shall not
file any thereof to which any such seller shall have reasonably
objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the Securities
Act or the rules or regulations thereunder;
(xi) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the
effective date of such registration statement;
(xii) use its best efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange or trading system on which any of the Common Stock is then
listed;
(xiii) cooperate with the selling Holders and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
sold, which certificates shall be in a form eligible for deposit with
The Depository Trust Company; and enable such Registrable Securities to
be in such denominations and registered in such names as the managing
underwriters, if any, or Holders may request in writing at least two
(2) business days prior to any sale of Registrable Securities; and
(xiv) cooperate and assist in any filings required to
be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter" that is required to be retained in accordance with the
rules and regulations of the NASD).
Each Holder of Registrable Securities as to which any
registration is being effected shall furnish the Issuer such information
regarding such Holder and the distribution of such securities as the Issuer may
from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the
Issuer of the happening of any event of the kind described in clause (vii)(A)
(3) or (6) of this Section 3(c), such holder will forthwith discontinue such
holder's disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's
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receipt of the copies of the supplemented or amended prospectus contemplated by
clause (vii)(B) of this Section 3(c) and, if so directed by the Issuer, will
deliver to the Issuer (at the Issuer's expense) all copies, other than permanent
file copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice.
(d) Underwritten Offerings. If requested by the underwriters
for any underwritten offering by Holders pursuant to a registration requested
under Section 3(a) above, the Issuer will enter into an underwriting agreement
with such underwriters for such offering, such agreement to contain such
representations and warranties by the Issuer and such other terms as are
generally prevailing in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in Section 3(f) below. The
Holders will reasonably cooperate with the Issuer in the negotiation of the
underwriting agreement, provided that nothing herein contained shall diminish
the foregoing obligations of the Issuer. The Holders of Registrable Securities
to be distributed by such underwriters shall be parties to such underwriting
agreement and any necessary or appropriate custody agreements and appropriate
powers of attorney, and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Issuer to and for the benefit of such underwriters shall also be made to and for
the benefit of such Holders and that any or all of the conditions precedent to
the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such Holders. Any such Holder shall
not be required to make any representations or warranties to or agreements with
the Issuer or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law.
(e) Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Warrant, the Issuer will give the Holders of Registrable
Securities registered under such registration statement, the underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Issuer with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such Holders, and such
underwriters, respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
(f) Indemnification.
(i) Indemnification by the Issuer. In the event of
any registration of any securities of the Issuer under the Securities
Act, the Issuer will, and hereby does, indemnify and hold harmless the
seller of any Registrable Securities covered by such registration
statement, its directors and officers, each other Person who
participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or
any such underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which
such seller or any such director or officer or underwriter or
controlling Person may become subject
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under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities
were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Issuer
will reimburse such seller and each such director, officer, underwriter
and controlling Person for any legal or any other expenses incurred by
them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided that the Issuer shall
not be obligated to reimburse the sellers for more than one counsel and
shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Issuer through an instrument duly executed by such
seller specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of such seller or
any such director, officer, underwriter or controlling Person and shall
survive the transfer of such securities by such seller and the
termination or expiration of this Warrant.
(ii) Indemnification by the Sellers. The Issuer may
require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to Section 3(c) above, that the
Issuer shall have received an undertaking reasonably satisfactory to it
from the prospective seller of such securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
subparagraph (i) of this Section 3(f)) the Issuer, each director of the
Issuer, each officer of the Issuer and each other Person, if any, who
controls the Issuer within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Issuer by such
seller specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made
by or on behalf of the Issuer or any such director, officer or
controlling Person and shall survive the transfer of such securities by
such seller and the termination or expiration of this Warrant. The
obligations of any seller under this subparagraph (ii) shall be limited
to the net proceeds to such seller of the Registrable Securities sold
pursuant to the registration statement to which the loss, claim,
damage, judgment, expense or liability relates.
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(iii) Contribution. If the indemnification provided
for in subparagraphs (i) and (ii) above for any reason is held by a
court of competent jurisdiction to be unavailable to an indemnified
party in respect of any losses, claims, damages, judgments, expenses or
liabilities referred to therein, then each indemnifying party under
such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
judgments, expenses or liabilities in such proportion as is appropriate
to reflect the relative fault, if any, of the Issuer and the other
selling holders in connection with the statements or omissions which
resulted in such losses, claims, damages, expenses or liabilities, as
well as any other relevant equitable considerations. The relative fault
of the Issuer and the selling holders shall be determined by reference
to, among other things, whether the untrue statement 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 Issuer or
the selling Holders and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Issuer, the Holders, and the underwriters agree that it
would not be just and equitable if contribution pursuant to this
subparagraph (iii) were determined by pro rata or per capita allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
sentence. The obligations of any seller under this subparagraph (iii)
are several, not joint, and shall be limited to an amount equal to the
net proceeds to such seller of Registrable Securities sold pursuant to
the registration statement to which the loss, claim, damage, judgment
expense or liability relates. No person found guilty 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 guilty of such fraudulent misrepresentation.
(iv) Notices of Claims and Procedures. Promptly after
receipt by an indemnified Person of notice of the commencement of any
action or proceeding involving a claim referred to in the preceding
subparagraphs of this Section 3(f), such indemnified Person will, if a
claim in respect thereof is to be made against an indemnifying party,
give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified Person to give notice as
provided herein shall not relieve the indemnifying party of his, her or
its obligations under the preceding subparagraphs of this Section 3(f),
except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought
against an indemnified Person, unless in such indemnified Person's
reasonable judgment a conflict of interest between such indemnified
Person and such indemnifying party may exist in respect of such claim,
the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified Person, and after notice
from the indemnifying party to such indemnified Person of its election
so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified Person for any legal or other expenses
subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified Person, consent to
entry of any judgment or enter into any settlement which does not
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include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified Person of a release from all liability in
respect to such claim or litigation and otherwise in form and substance
reasonably satisfactory to the indemnified Person. No indemnified
Person shall consent to entry of any judgment or enter into any
settlement without the prior written consent of the indemnifying party.
(v) Indemnification Payments. The indemnification
required by this Section 3(f) shall be made by prompt payments of the
amount thereof during the course of the investigation or defense, as
and when bills are received or expense, loss, damage or liability is
incurred.
(vi) Not Exclusive. The indemnification and
contribution provisions of this Section 3(f) are in addition to any
other rights to indemnification or contribution that an indemnified
party may have under law or contract.
(g) Adjustments Affecting Registrable Securities. The Issuer
will not effect or permit to occur any combination or subdivision of shares
which would materially adversely affect the ability of the Holders to include
such Registrable Securities in any registration of its securities contemplated
by this Section 3 or the marketability of such Registrable Securities under any
such registration.
(h) Rules 144 and 144A. The Issuer will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder (or, if the Issuer is
not required to file such reports, the Issuer will, upon the request of any
Holder, make publicly available other information) and will take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rules 144 and 144A under the Securities Act, as such Rules may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder, the Issuer will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
(i) Amendments and Waivers. This Warrant may be amended and
the Issuer may take any action herein prohibited or omit to perform any act
herein required to be performed by it, only if the Issuer shall have obtained
the written consent to such amendment, action or omission to act, of the Holder
or Holders of eighty percent (80%) or more of the Registrable Securities at the
time outstanding. Each Holder at the time or thereafter outstanding shall be
bound by a consent authorized by this Section 3.
(j) Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at his, her or its election, be treated as the
holder of such Registrable Securities for purposes of any request or other
action by any holder or Holders pursuant to this Warrant or any determination of
any number or percentage of shares of Registrable Securities held by any holder
or Holders contemplated by this Warrant. If the beneficial owner of any
Registrable Securities so elects, the Issuer may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
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(k) Limitation of Subsequent Registration Rights. From and
after the date of this Warrant, the Issuer shall not, without the written
consent of the Holders of a majority of the outstanding Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Issuer which would allow such holder or prospective holder to include
such securities in any registration filed by the Issuer, unless under the terms
of such agreement, such holder or prospective holder may include such securities
in any such registration only to the extent that the inclusion of its securities
will not reduce the amount of Registrable Securities of the Holders which is
included.
4. Stock Fully Paid; Reservation and Listing of Shares; Covenants. (a)
The Issuer represents, warrants, covenants and agrees that all shares of Warrant
Stock which may be issued upon the exercise of this Warrant or otherwise
hereunder will, upon issuance, be duly authorized, validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
issuance. The Issuer further covenants and agrees that during the period within
which this Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant and, without limiting the foregoing, will take any
actions necessary to effectuate the foregoing, including without limitation
increasing its authorized capital stock.
(b) If any shares of the Common Stock required to be reserved
for issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its best efforts as expeditiously as possible at its expense to
cause such shares to be duly registered or qualified. If the Issuer shall list
any shares of Common Stock on any securities exchange it will, at its expense,
list thereon, maintain and increase when necessary such listing of, all shares
of Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder, and, to the extent permissible under the
applicable securities exchange rules, all unissued shares of Warrant Stock which
are at any time issuable hereunder, so long as any shares of Common Stock shall
be so listed. The Issuer will also so list on each securities exchange, and will
maintain such listing of, any other securities which the Holder of this Warrant
shall be entitled to receive upon the exercise of this Warrant if at the time
any securities of the same class shall be listed on such securities exchange by
the Issuer.
(c) The Issuer shall not by any action including, without
limitation, amending the Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of the Holder
hereof against impairment. Without limiting the generality of the foregoing, the
Issuer will (i) not permit the par value, if any, of its Common Stock to exceed
the then effective Warrant Price, (ii) not amend or modify any provision of the
Certificate of Incorporation or by-laws of the Issuer in any manner that would
adversely affect in any way the powers, preferences or relative participating,
optional or other special rights of the Common Stock or which would adversely
affect the rights of the Holders of the Warrants, (iii) not, other than pursuant
to the Rights Agreement, dated July 18, 2000,
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between the Issuer and Fleet National Bank, as Rights Agent, issue any Capital
Stock of any class which is preferred as to dividends or as to the distribution
of assets upon the voluntary or involuntary dissolution, liquidation or winding
up of the Issuer, (iv) take all such action as may be reasonably necessary in
order that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (v) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.
(d) The Issuer shall not declare, make or pay any dividend or
other distribution, whether in cash, securities or other property, other than
Common Stock of the same class or series (a "Distribution"), with respect to its
Common Stock or any Common Stock Equivalent unless the Issuer concurrently makes
a cash payment to the Holder of this Warrant equal to the product of (1) the
amount of cash plus the fair market value of any property or securities
distributed with respect to each outstanding share of Common Stock or any Common
Stock Equivalent computed as provided in subparagraph (i) of Section 5(f) hereof
multiplied by (2) the Warrant Share Number.
5. Adjustment of Warrant Price and Warrant Share Number. The number and
kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale.
(i) In case the Issuer after the Closing Date shall
do any of the following (each a "Triggering Event") (a) consolidate
with or merge into any other Person and the Issuer shall not be the
continuing or surviving corporation of such consolidation or merger, or
(b) permit any other Person to consolidate with or merge into the
Issuer and the Issuer shall be the continuing or surviving Person but,
in connection with such consolidation or merger, any Capital Stock of
the Issuer shall be changed into or exchanged for securities of any
other Person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other Person, or
(d) effect a capital reorganization or reclassification of its Capital
Stock, then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms and in
the manner provided in this Warrant, the Holder of this Warrant shall
thereafter only be entitled (x) upon the exercise hereof at any time
after the consummation of such Triggering Event, to the extent this
Warrant is not exercised prior to such Triggering Event, or is redeemed
in connection with such Triggering Event, to receive in exchange for
the Warrant Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering
Event, the securities, cash and property to which such Holder would
have been entitled upon the consummation of such Triggering Event if
such Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments (subsequent to such
corporate action) as
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nearly equivalent as possible to the adjustments provided for in
Section 5 hereof or (y) to sell this Warrant (or, at such Holder's
election, a portion hereof) to the Person continuing after or surviving
such Triggering Event, or to the Issuer (if Issuer is the continuing or
surviving Person) at a sales price equal to the amount, if any, of
cash, property and/or securities to which a holder of the number of
shares of Common Stock which would otherwise have been delivered upon
the exercise of this Warrant (the "Event Consideration"), less the
amount or portion of such Event Consideration having a fair value equal
to the aggregate Warrant Price applicable to this Warrant or the
portion hereof so sold.
(ii) Notwithstanding anything contained in this
Warrant to the contrary, the Issuer will not effect any Triggering
Event unless, prior to the consummation thereof, each Person (other
than the Issuer) which may be required to deliver any securities, cash
or property upon the exercise of this Warrant as provided herein shall
assume, by written instrument delivered to, and reasonably
satisfactory, to the Holder of this Warrant, (a) the obligations of the
Issuer under this Warrant (and if the Issuer shall survive the
consummation of such Triggering Event, such assumption shall be in
addition to, and shall not release the Issuer from, any continuing
obligations of the Issuer under this Warrant) and (b) the obligation to
deliver to such Holder such shares of securities, cash or property as,
in accordance with the foregoing provisions of this paragraph (a), such
Holder shall be entitled to receive. In addition, such Person shall
have similarly delivered to such Holder an opinion of counsel for such
Person (which may be in-house counsel), which counsel shall be
reasonably satisfactory to such Holder, stating that this Warrant shall
thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this paragraph
(a)) shall be applicable to the securities, cash or property which such
Person may be required to deliver upon any exercise of this Warrant or
the exercise of any rights pursuant hereto.
(iii) In case any Triggering Event shall be proposed
to be effected, the Holder of this Warrant may, and the Issuer agrees
that as a condition to the consummation of any such Triggering Event
the Issuer shall secure the right of such Holder to, sell this Warrant
(or, at such Holder's election, a portion thereof) to the Person
continuing after or surviving such Triggering Event, or the Issuer (if
the Issuer is the continuing or surviving Person), simultaneously with
the effective date or closing of such Triggering Event, as provided in
clause (y) of subparagraph (i) of this Section 5(a). The obligation of
the Issuer to secure such right of the Holder to sell this Warrant
shall be subject to such Holder's cooperation with the Issuer,
including, without limitation, the giving of customary representations
and warranties to the purchaser in connection with any such sale.
(b) Subdivision or Combination of Shares. If the Issuer, at
any time while this Warrant is outstanding, shall subdivide or combine any
shares of Common Stock, (i) in case of subdivision of shares, the Warrant Price
shall be proportionately reduced (as at the effective date of such subdivision
or, if the Issuer shall take a record of Holders of its Common Stock for the
purpose of so subdividing, as at the applicable record date, whichever is
earlier) to reflect the increase in the total number of shares of Common Stock
outstanding as a result of such
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subdivision, or (ii) in the case of a combination of shares, the Warrant Price
shall be proportionately increased (as at the effective date of such combination
or, if the Issuer shall take a record of Holders of its Common Stock for the
purpose of so combining, as at the applicable record date, whichever is earlier)
to reflect the reduction in the total number of shares of Common Stock
outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any
time while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any
other distribution to its stockholders (without consideration therefor)
of, shares of Common Stock, the Warrant Price shall be adjusted, as at
the date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(ii) Liquidating Dividends, etc. Make a distribution
of its property to the Holders of its Common Stock as a dividend in
liquidation or partial liquidation or by way of return of capital other
than as a dividend payable out of funds legally available for dividends
under the laws of the State of Delaware, the Holder of this Warrant
shall, upon exercise (including without limitation payment of the
Warrant Price), be entitled to receive, in addition to the number of
shares of Warrant Stock receivable thereupon, and without payment of
any additional consideration therefor, a sum equal to the amount of
such property as would have been payable to such Holder had such Holder
been the Holder of record of such Warrant Stock on the record date for
such distribution or if no such record is taken, on the date of such
distribution; and appropriate provision therefor shall be made a part
of any such distribution.
(d) Issuance of Additional Shares of Common Stock. If the
Issuer, at any time while this Warrant is outstanding, shall issue any
Additional Shares of Common Stock (otherwise than as provided in the foregoing
subsections (a) through (c) of this Section 5), the Warrant Price in effect
hereunder shall simultaneously with such issuance or sale be reduced (or, in the
event that the Warrant Price is reduced below the then par value of the Common
Stock, deemed reduced) and the number of shares of Common Stock issuable upon
exercise hereof shall be increased (regardless of whether the Warrant Price was
reduced below the then par value of the Common Stock) so that the percentage of
the Diluted Common Stock of the Issuer represented by the shares of Common Stock
issuable upon exercise of this Warrant is not reduced as a result of such
issuance or sale. The provisions of this subsection (d) shall not apply under
any of the
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circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 5. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 5 or (y) no adjustment was required pursuant to
subsection (e) of this Section 5.
(e) Issuance of Common Stock Equivalents. If the Issuer, at
any time while this Warrant is outstanding, shall issue any Common Stock
Equivalent, then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (d) of this Section 5
on the basis that the maximum number of Additional Shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (1) the date on which the Issuer shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (2) the date of actual issuance of
such Common Stock Equivalent. No adjustment of the Warrant Price shall be made
under this subsection (e) (i) upon the issuance of any Convertible Security
which is issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any adjustment shall previously have been made
in the Warrant Price then in effect upon the issuance of such warrants or other
rights pursuant to this subsection (e) or (ii) issuances of Common Stock
Equivalents to purchase up to one hundred fifty thousand (150,000) shares (such
number of shares to be subject to adjustment, as appropriate, to reflect
adjustments made under Sections 5(a), 5(b), and 5(c) of this Warrant
(f) Other Provisions Applicable to Adjustments Under this
Section 4. The following provisions shall be applicable to the making of
adjustments in the Warrant Price herein before provided in Section 5:
(i) Computation of Consideration. The consideration
received by the Issuer shall be the following: to the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents shall
be issued for cash consideration, the consideration received by the
Issuer therefor, or if such Additional Shares of Common Stock or Common
Stock Equivalents are offered by the Issuer for subscription, the
subscription price, or, if such Additional Shares of Common Stock or
Common Stock Equivalents are sold to underwriters or dealers for public
offering without a subscription offering, the public offering price, in
any such case excluding any amounts paid or receivable for accrued
interest or accrued dividends and without deduction of any
compensation, discounts, commissions, or expenses paid or incurred by
the Issuer for or in connection with the underwriting thereof or
otherwise in connection with the issue thereof; to the extent that such
issuance shall be for a consideration other than cash, then, except as
herein otherwise expressly provided, the fair market value of such
consideration at the time of such issuance as determined in good faith
by the Board. The consideration for any Additional Shares of Common
Stock issuable pursuant to any Common Stock Equivalents shall be the
consideration received by the Issuer for issuing such Common Stock
Equivalents, plus the additional consideration payable to the Issuer
upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case
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of the issuance at any time of any Additional Shares of Common Stock or
Common Stock Equivalents in payment or satisfaction of any dividend
upon any class of Capital Stock of the Issuer other than Common Stock,
the Issuer shall be deemed to have received for such Additional Shares
of Common Stock or Common Stock Equivalents a consideration equal to
the amount of such dividend so paid or satisfied. In any case in which
the consideration to be received or paid shall be other than cash, the
Board shall notify the Holder of this Warrant of its good faith
determination of the fair market value of such consideration prior to
payment or accepting receipt thereof. If, within thirty days after
receipt of said notice, the Majority Holders shall notify the Board in
writing of their objection to such determination, a determination of
the fair market value of such consideration shall be made by an
Independent Appraiser selected by the Majority Holders with the
approval of the Board (which approval shall not be unreasonably
withheld), whose fees and expenses shall be paid by the Issuer.
(ii) Readjustment of Warrant Price. Upon the
expiration or termination of the right to convert, exchange or exercise
any Common Stock Equivalent the existence or issuance of which effected
an adjustment in the Warrant Price, if such Common Stock Equivalent
shall not have been converted, exercised or exchanged in its entirety,
the number of shares of Common Stock deemed to be issued and
outstanding by reason of the fact that they were issuable upon
conversion, exchange or exercise of any such Common Stock Equivalent
shall no longer be computed as set forth above, and the Warrant Price
shall forthwith be readjusted and thereafter be the price which it
would have been (but reflecting any other adjustments in the Warrant
Price made pursuant to the provisions of this Section 5 after the
issuance of such Common Stock Equivalent) had the adjustment of the
Warrant Price been made in accordance with the issuance or sale of the
number of Additional Shares of Common Stock actually issued upon
conversion, exchange or issuance of such Common Stock Equivalent and
thereupon only the number of Additional Shares of Common Stock actually
so issued shall be deemed to have been issued.
(iii) Outstanding Common Stock. The number of shares
of Common Stock at any time outstanding shall (a) not include any
shares thereof then directly or indirectly owned or held by or for the
account of the Issuer or any of its Subsidiaries, and (b) shall be
deemed to include all shares of Common Stock then issuable upon
conversion, exercise or exchange of any then outstanding Common Stock
Equivalents or any other evidences of Indebtedness, shares of Capital
Stock or other Securities which are or may be at any time convertible
into or exchangeable for shares of Common Stock or Other Common Stock.
(iv) Par Value. Subject to Section 5(i), this Warrant
shall not be exercisable at a price per share less than the par value
per share of the Common Stock.
(g) Other Action Affecting Common Stock. In case after the
Closing Date hereof the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections (a) through
(f) of this Section 5, inclusive, and the failure to make any adjustment would
not fairly protect the purchase rights represented by this
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Warrant in accordance with the essential intent and principle of this Section 5,
then the Warrant Price shall be adjusted in such manner and at such time as the
Board may in good faith determine to be equitable in the circumstances.
(h) Adjustment of Warrant Share Number. Upon each adjustment
in the Warrant Price pursuant to any of the foregoing provisions of this Section
5, to the extent not otherwise adjusted pursuant to the foregoing provisions of
this Section 5, the Warrant Share Number shall be adjusted, to the nearest one
hundredth of a whole share, to the product obtained by multiplying the Warrant
Share Number immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately before
giving effect to such adjustment and the denominator of which shall be the
Warrant Price immediately after giving effect to such adjustment. If the Issuer
shall be in default under any provision contained in Section 4 or Section 5(i)
of this Warrant so that shares issued at the Warrant Price adjusted in
accordance with this Warrant would not be validly issued, (i) the adjustment of
the Warrant Share Number provided for in the foregoing sentence shall
nonetheless be made and the Holder of this Warrant shall be entitled to purchase
such greater number of shares at the lowest price at which such shares may then
be validly issued under applicable law and (ii) the Issuer shall immediately use
its best efforts to recapitalize itself, for instance by reducing the par value
of its Common Stock, to enable exercise of this Warrant at the adjusted Warrant
Price and shall indemnify the Holders against any loss, expense or damages
(including attorney fees) arising out of any failure to complete such
recapitalization timely. Such exercise shall not constitute a waiver of any
claim arising against the Issuer by reason of its default under Section 4 or
Section 5(i) of this Warrant.
(i) Further Assurances. The Issuer will take all action as may
be necessary or appropriate in order that the Issuer may validly and legally
issue fully paid and non-assessable shares of Common Stock upon the exercise of
all Warrants from time to time outstanding. Without limitation on the foregoing,
if the Warrant Price, as adjusted, would be less than the par value of the
Common Stock, the Issuer shall use its best efforts to amend its Certificate of
Incorporation to reduce such par value to the Warrant Price, and if the Issuer
fails to effect such amendment by the time the Warrant is exercised, the Issuer
shall be obliged to pay to the Holder damages in an amount equal to the
difference between the par value and the Warrant Price upon exercise of the
Warrant.
6. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 5 hereof (for purposes of this
Section 6, each an "adjustment"), the Issuer shall cause the independent
accounting firm then regularly engaged by it to report on its financial
statements to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment.
7. Fractional Shares. Fractional shares of Warrant Stock shall not be
issued in connection with any exercise hereof, and in lieu of such fractional
shares, the Issuer shall make a
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cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the Current Market Price then in effect.
8. Definitions. For the Purposes of this Warrant, the following terms
have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Closing Date, and all shares of
Other Common Stock, if any, issued by the Issuer after the Closing
Date, except the Warrant Stock.
"Board" shall mean the Board of Directors of the Issuer.
"Business Day" means any day except a Saturday, a Sunday or a
legal holiday in New York City.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Closing Date, and as
hereafter from time to time amended, modified, supplemented or restated
in accordance with its terms and pursuant to applicable law.
"Closing Date" means November 21, 2002.
"Common Stock" means the Common Stock, $.01 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security or any
stock appreciation right or other right to receive any payment based
upon the value of the Common Stock.
"Commission" means the Securities and Exchange Commission.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Current Market Price" as in effect on any day means the
average of the daily market prices of the Common Stock for the period
of 15 consecutive trading days ending two trading days preceding such
date. The market price for each such day shall be the
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last sale price on such day as reported on the New York Stock Exchange
Consolidated Tape, or, if the Common Stock is not listed on the New
York Stock Exchange, Inc. or reported on such Consolidated Tape, then
the last sale price on such day on the principal domestic stock
exchange on which such Stock is then listed or admitted to trading, or,
if no sale takes place on such day on such exchange, the average of the
closing bid and asked prices on such day as officially quoted on such
exchange, or, if the Common Stock is not then listed or admitted to
trading on any domestic stock exchange but is quoted in the National
Market System ("NMS/Nasdaq") of the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq"), then the Current
Market Price for each such trading day shall be the last sale price on
such day as quoted by NMS/Nasdaq, or, if no sale takes place on such
day or if the Common Stock is neither listed or admitted to trading on
any domestic stock exchange nor quoted on such NMS/Nasdaq, then the
Current Market Price for each such trading day shall be the average of
the reported closing bid and asked price quotations on such day in the
over-the-counter market, as reported by Nasdaq, or, if not so reported,
as furnished by the National Quotation Bureau, Inc., or if such firm at
the time is not engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business as selected
by the Issuer, or if there is no such firm, as furnished by any member
of the National Association of Securities Dealers, Inc. selected by the
Issuer with the written approval of the Majority Holders. If at any
time the Common Stock is not listed on any domestic exchange or quoted
in the domestic over-the-counter market, the Current Market Price shall
be deemed to be the fair market value per share of Common Stock as
determined in good faith by the Board and agreed to by the Majority
Holders. If the Majority Holders shall notify the Board in writing of
their disagreement as to such fair market value as determined by the
Board, a determination of the fair market value of such Common Stock
shall be made by an Independent Appraiser selected by the Majority
Holders and consented to by the Issuer (which consent shall not be
unreasonably withheld), whose fees and expenses shall be paid by the
Issuer. The determination of fair market value by the Board and such
Appraiser shall be based upon the fair market value of the Issuer
determined on a going concern basis as between a willing buyer and a
willing seller and taking into account all relevant factors
determinative of value, and shall be final and binding on all parties.
In determining the fair market value of any shares of Common Stock, no
consideration shall be given to any restrictions on transfer of the
Common Stock imposed by agreement or by federal or state securities
laws, or to the existence or absence of, or any limitations on, voting
rights.
"Diluted Common Stock" means the number of shares of Common
Stock outstanding, (a) not including any shares thereof then directly
or indirectly owned or held by or for the account of the Issuer or any
of its Subsidiaries, and (b) including all shares of Common Stock then
issuable upon conversion, exercise or exchange of the then outstanding
Common Stock Equivalents or other evidences of Indebtedness, shares of
Capital Stock or other Securities which are or may be at any time
convertible into or exchangeable for shares of Common Stock or Other
Common Stock, all of which were issued after the Closing Date.
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"Exchange Act" means the Securities and Exchange Act of 1934,
as amended, or any similar federal statute then in effect.
"Fee in Lieu of Warrant Amount" shall be the product of (i)
$200,000 and (ii) the Warrant Number divided by the Aggregate Tranche
Warrant Number, subject to a proportionate increase if any of the
Strategic Initiatives are consummated at an amount which results in a
valuation of the Common Stock in excess of $0.15 per share (such
valuation to be determined by the Holder in its sole discretion, each a
"Valuation Event"). The calculation of the Fee in Lieu of Warrant
Amount shall be made as provided in the Loan Agreement.
"Holders" means the Persons who shall from time to time own
any Warrant. The term "Holder" means one of the Holders.
"Indebtedness" has the meaning provided in the Loan Agreement.
"Independent Appraiser" means a nationally recognized
investment banking firm or other nationally recognized firm that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means Provant, Inc. and its successors.
"Loan Agreement" means the Revolving Credit Agreement, dated
as of April 8, 1998, by and among Provant, Inc., Fleet National Bank,
as Agent ("Agent") and the other lending institutions a party thereto
(collectively, the "Banks") as amended, and as such agreement may from
time to time be further amended, modified or supplemented in accordance
with its terms.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"NASD" means National Association of Securities Dealers, Inc.
"Other Common Stock" means any Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"Person" means an individual, a corporation, a partnership, a
limited liability company, a trust, an unincorporated organization or a
government organization or an agency or political subdivision thereof.
"Registrable Securities" means the Warrants, the Warrant
Stock, any other Securities issuable or issued upon exercise of the
Warrants, any shares of Common Stock or other securities
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of the Issuer issued as a dividend or other distribution with respect
to, or in exchange or in replacement of such shares of Common Stock.
"Registration Expenses" means all expenses incident to the
Issuer's performance of or compliance with Section 3 of this Warrant,
including, without limitation, all registration, filing and listing or
Nasdaq fees, all fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, all
messenger and delivery expenses, the fees and disbursements of counsel
for the Issuer and of its independent public accountants, including
without limitation the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance,
premiums and other costs of policies of insurance, if any, against
liabilities arising out of the public offering of the Registrable
Securities being registered, any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities and the reasonable
fees and disbursements of any counsel and accountants retained by the
Holder or Holders of the Registrable Securities being registered
(provided that the Issuer shall not be required to pay the fees of more
than one counsel and accountant), but excluding underwriting discounts
and commissions, transfer taxes, if any.
"Strategic Initiatives" means each of the following: (a) the
sale of certain divisions of the Issuer to Drake Beam and βββββ, (b)
the sale of the Government Division (as defined in the Loan Agreement)
of the Issuer, (c) the sale of all of the non-government divisions of
the Issuer to University of Phoenix Apollo Group, or (d) the sale of
all of the non-government divisions of the Issuer to WR Capital, each
as more fully described in the Loan Agreement.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Valuation Event" shall have the meaning provided in the
definition of Fee in Lieu of Warrant Amount.
"Warrants" means the Warrants issued and sold pursuant to the
Loan Agreement, including, without limitation, this Warrant, and any
other warrants of like tenor issued in substitution or exchange for any
thereof pursuant to the provisions of Section 2(c) or 2(d) hereof or of
any of such other Warrants.
"Warrant Price" means the price per share of Common Stock
specified in the first paragraph of this Warrant and such other prices
as shall result from the adjustments specified in Section 5 hereof.
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"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
to such number made or required to be made under the terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants.
9. Information. As long as this Warrant is outstanding, the Issuer
shall deliver to the Holder hereof and to each holder of shares of Warrant Stock
the documents and other information required under the Loan Agreement within the
applicable time period specified therein and regardless of whether or not the
Loan Agreement is then in effect.
10. Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
11. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (excluding the
laws applicable to conflicts or choice of law).
12. Notices. All notices and other communications provided for
hereunder shall be in writing and delivered by hand or sent by first class mail
or sent by fax (with such fax to be confirmed promptly in writing sent by first
class mail), and if to the Holder of this Warrant or of Warrant Stock issued
pursuant hereto, addressed to such Holder at its last known address or fax
number appearing on the books of the Issuer maintained for such purposes, and if
to the Issuer, addressed to:
Provant, Inc.
ββ ββββββββββββ ββββββ, βββββ βββ
ββββββ, ββ βββββ
Attention: President
Fax No.:(βββ) βββ-ββββ
or to such other address or addresses or fax number or numbers as any such party
may most recently have designated in writing to the other parties hereto by such
notice. All such communications shall be deemed to have been given or made when
so delivered by hand or sent by fax, or three business days after being so
mailed.
13. Remedies. The Issuer stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that, to the
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fullest extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.
15. Modification and Severability. If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Integration. This Warrant replaces all prior agreements, supersedes
all prior negotiations and constitutes the entire agreement of the parties with
respect to the transactions contemplated herein. References to the Loan
Agreement herein shall, to the extent that the obligations thereunder have been
repaid and such Loan Agreement has terminated, mean the Loan Agreement as in
effect immediately prior to its termination.
- 27 -
17. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
PROVANT, INC.
By: /s/ βββββ ββββ
-------------------------------
Name: βββββ ββββ
Title: Vice President and Chief
Financial Officer
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EXERCISE FORM
Provant, Inc.
The undersigned, ___________________________, pursuant to the provisions of the
within Warrant, hereby elects to purchase _______ shares of Common Stock of
Provant, Inc. covered by the within Warrant.
Dated: _________ Signature: ___________________
Address: ___________________
___________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
_____________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: __________ Signature: ___________________
Address: ___________________
___________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
________________ the right to purchase ____________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint _________________________, attorney, to
transfer that part of the said Warrant on the books of the within named
corporation.
Dated: ___________ Signature: _____________________
Address: ___________________
___________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W- ___ canceled (or transferred or exchanged) this ___ day of
_______, 20__, shares of Common Stock issued therefor in the name of
________________, Warrant No. W- ____ issued for ____ shares of Common Stock in
the name of ___________________.
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ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
---------------- ------- -------------
shares
------------------
, and hereby irrevocably constitutes and appoints ______________ as agent and
attorney-in-fact to transfer said Warrants on the books of the within named
corporation, with full power of substitution in the premises.
Dated , .
------------------------------ --------
In the presence of
----------------------------------
Name:
-------------------------------
Signature:
--------------------------
Title of Officer or Agent (if any)
Address:
---------------------------
---------------------------
---------------------------
Note: the above signature should
correspond exactly with the name
on the face of the within Warrant
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