THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IF IN THE OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON AUGUST 1, 2007 OR IF NOT A BUSINESS DAY,
AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS
DAY.
WARRANT TO PURCHASE
135,000 Shares of Common
Stock
WARRANT TO PURCHASE
COMMON STOCK
OF
FIRST SOUTH AFRICA CORP., LTD.
This certifies that, for good and valuable consideration, VALUE
INVESTING PARTNERS, INC., a Delaware corporation, having an address at 1853 Post
Road East, Westport, Connecticut 06880, and its registered, permitted assigns
(collectively, the "Warrantholder"), is entitled to purchase from FIRST SOUTH
AFRICA CORP., LTD., a Bermuda corporation (the "Company"), subject to the terms
and conditions hereof, at any time before 5:00 P.M., New York time, on August 1,
2007, (or, if such day is not a Business Day, as defined herein, at or before
5:00 P.M., New York time on the next following Business Day), the number of
fully paid and non-assessable shares of Common Stock, $.01 par value per share,
of the Company (the "Common Stock") stated above at the Exercise Price (as
defined herein). The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment as provided in Article III hereof.
ARTICLE I
SECTION 1.01: DEFINITION OF TERMS. As used in this Warrant, the
following capitalized terms shall have the following respective meanings:
(a) BUSINESS DAY: A day other than a Saturday, Sunday or other
day on which banks in the State of New York are authorized by law to remain
closed.
(b) COMMON STOCK: Common Stock, $.01 par value per share, of the
Company.
(c) COMMON STOCK EQUIVALENTS: Securities that are convertible
into or exercisable for shares of Common Stock.
(d) DEMAND REGISTRATION: See Section 7.02.
(e) EXCHANGE ACT: Securities Exchange Act of 1934, as amended.
(f) EXERCISE PRICE: $6.00 per share, subject to adjustment.
(g) EXPIRATION DATE: 5:00 P.M., New York time, on August 1,
2007.
(h) HOLDER: A Holder of Registrable Securities.
(i) NASD: National Association of Securities Dealers, Inc.
(j) PERSON: An individual, partnership, joint corporation,
trust, unincorporated organization or government or any department of agency
thereof.
(k) PIGGYBACK REGISTRATION: See Section 7.01.
(l) PROSPECTUS: Any prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the Prospectus, including post-effective amendments and all material
incorporated by reference in such Prospectus.
(m) PUBLIC OFFERING: A public offering of any of the Company's
equity or debt securities pursuant to a registration statement under the
Securities Act.
(n) REGISTRATION EXPENSES: Any and all expenses incident to the
performance of or compliance with Article VII, including, without limitation,
(i) all SEC, stock exchange, NASD and Nasdaq registration and filing fees; (ii)
all fees and expenses of complying with securities or blue sky laws (including
reasonable fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities); (iii) all printing,
mailing, messenger and delivery expenses; (iv) the fees and disbursements of
counsel for the Company and of its independent certified public accountants,
including the expenses of any special audits and/or "cold comfort" letters
required by or incident to such performance and compliance; and (v) any
disbursements of underwriters customarily paid by issuers or sellers of
securities including liability insurance if the Company so desires, and the
reasonable fees and expenses of any
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special experts retained in connection with the requested registration, but
excluding underwriting fees, discounts and commissions and transfer taxes if
any.
(o) REGISTRABLE SECURITIES: Any Warrant Shares and/or other
securities that may be or are issued by the Company upon exercise of this
Warrant (and upon exercise of other Warrants as defined below), including those
which may thereafter be issued by the Company in respect of any such securities
by means of any stock splits, stock dividends, recapitalization or the like, and
as adjusted pursuant to Article III hereof; PROVIDED, HOWEVER, that as to any
particular security contained in Registrable Securities, such securities shall
cease to be Registrable Securities when (i) a Registration Statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such Registration Statement; or (ii) they shall have been sold pursuant to
Rule 144 (or any successor provision) under the Securities Act.
(p) REGISTRATION STATEMENT: Any registration statement of the
Company filed or to be filed with the SEC which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference by such registration statement.
(q) SEC: The Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.
(r) SECURITIES ACT: Securities Act of 1933, as amended.
(s) WARRANTS: This Warrant and all other warrants that have been
or may be issued to Value Investing Partners, Inc., or its assignees or
transferees, as additional compensation as placement agent for a 1997 private
placement of the Company's 9% Senior Subordinated Convertible Debentures, in its
or their place.
(t) WARRANTHOLDER: The person(s) or entity(ies) to whom this
Warrant is originally issued, or any successor in interest thereto, or any
assignee or transferee thereof, in whose name this Warrant is registered upon
the books to be maintained by the Company for that purpose.
(u) WARRANT SHARES: Common Stock purchasable upon exercise of
the Warrants.
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ARTICLE II
DURATION AND EXERCISE OF WARRANT
SECTION 2.01: DURATION OF WARRANT. Subject to the terms contained
herein, this Warrant may be exercised at any time before 5:00 P.M., New York
time, on the Expiration Date (or, if such day is not a Business Day, at or
before 5:00 P.M., New York time, on the next following Business Day). If this
Warrant is not exercised at or before 5:00 P.M., New York time, on the
Expiration Date, it shall become void, and all rights hereunder shall thereupon
cease.
SECTION 2.02: EXERCISE OF WARRANT.
(a) The Warrantholder may exercise this Warrant, in whole or in
part, upon surrender of this Warrant with the Subscription Form hereon duly
executed, to the Company at its principal executive office, or to such other
office as the Company has given due notice thereof to the Warrantholder,
together with the full Exercise Price for each Warrant Share to be purchased by
wire transfer, certified check or bank draft payable in United States Dollars to
the order of the Company or by delivering to the Company the number of shares of
the Company's Common Stock having a value on the date of exercise equal to such
Exercise Price. In lieu of a monetary payment or delivery of shares for the
applicable Exercise Price, a Warrantholder may elect to receive, without the
payment of any additional consideration, shares equal to the value of its
Warrant Shares or portion thereof by the surrender of such Warrant to the
Company with the net issuance election marked in the Exercise Form. Thereupon,
the Company shall issue to the Holder, such number of fully paid and
nonassessable shares of Common Stock as is computed using the following formula:
X = Y(A-B)
------
A
where X = the number of shares to be issued to the Warrantholder pursuant to
this Section 2.02.
Y = the number of Warrant Shares in respect of which the net
issuance election is made pursuant to this Section 2.02.
A = the closing price of one share of Common Stock for the
last trading day immediately preceding the date of the
notice of election is given pursuant to this Section 2.02,
which closing price shall be the last sale price regular
way or if no reported last sale price regular way for
such, the last high bid price, in either case on the
principals national
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securities or stock quotation system on which the Common
Stock is listed.
B = the applicable Exercise Price in effect at the time the
net issuance election is made pursuant to this Section
2.02.
(b) Within seven (7) Business Days after receipt of this Warrant
with the Exercise Form duly executed and accompanied by payment of the aggregate
Exercise Price for the Warrant Shares for which this Warrant is then being
exercised, the Company shall cause to be issued and delivered to the
Warrantholder (or its designee) certificates for the total number of whole
shares of Common Stock for which this Warrant is being exercised (adjusted to
reflect the effect of the anti-dilution provisions contained in Article III
hereof, if any, and as provided in Section 4.04 hereof) in such denominations in
multiples as are requested by the Warrantholder. If at the time this Warrant is
exercised, a Registration Statement is not in effect to register under the
Securities Act the Warrant Shares issuable upon exercise of this Warrant, the
Company may require the Warrantholder to make such investment intent
representations, and may place such legends on certificates representing the
Warrant Shares, as may be reasonably required in the opinion of counsel to the
Company to permit the Warrant Shares to be issued without such registration.
(c) In case the Warrantholder shall exercise this Warrant with
respect to less than all of the Warrant Shares that may be purchased under this
Warrant, the Company will execute a warrant in the form and on the terms of this
Warrant for the balance of such Warrant Shares and deliver such new warrant to
the Warrantholder.
(d) The Company covenants and agrees that it will pay when due
and payable any and all stock transfer and similar taxes which may be payable in
respect of the issue of this Warrant or in respect of the issue of any Warrant
Shares. The Company shall not, however, be required to pay any tax imposed on
income or gross receipts or any tax which may be payable in respect of any
transfer involved in the issuance or delivery of this Warrant or at the time of
surrender.
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article III.
-5-
SECTION 3.01: MECHANICAL ADJUSTMENTS.
(a) If at any time prior to the full exercise of this Warrant,
the Company shall (i) pay a dividend or make a distribution on its shares of
Common Stock in shares of Common Stock (other than cash dividends or
distributions out of surplus or earnings); (ii) subdivide, reclassify or
recapitalize its outstanding Common Stock into a greater number of shares; or
(iii) combine, reclassify or recapitalize its outstanding Common Stock into a
smaller number of shares, the Exercise Price in effect at the time of the record
date of such subdivision, combination, reclassification or recapitalization
shall be proportionately adjusted so that the Warrantholder shall be entitled to
receive the aggregate number and kind of shares which, if this Warrant had been
exercised in full immediately prior to such time, he would have owned upon such
exercise and been entitled to receive upon such dividend, subdivision,
combination, reclassification or recapitalization. Such adjustment shall be made
successively whenever any event listed in this paragraph 3.01(a) shall occur.
(b) If the Company shall hereafter issue rights, options or
warrants (the "Rights") to all holders of its outstanding Common Stock, without
charge to such holders, entitling them to subscribe for or purchase shares of
Common Stock (or Common Stock Equivalents) at a price (or having a conversion
price per share) (such price being the "Rights Price") less than the Exercise
Price on the record date described below, the Exercise Price shall be adjusted
so that the Exercise Price shall equal the price determined by multiplying the
Exercise Price in effect immediately prior to the date of such sale or issuance
(which date in the event of distribution to shareholders shall be deemed to be
the record date set by the Company to determine shareholders entitled to
participate in such distribution) by a fraction, the numerator of which shall be
(i) the number of shares of Common Stock outstanding on the date of such sale or
issuance, plus (ii) the number of additional shares of Common Stock which the
aggregate consideration received by the Company upon such issuance or sale (plus
the aggregate of any additional amount to be received by the Company upon the
exercise of such Rights) would purchase at such current Exercise Price; and the
denominator of which shall be (i) the number of shares of Common Stock
outstanding on the date of such issuance or sale, plus (ii) the number of
additional shares of Common Stock offered for subscription or purchase (or into
which the Common Stock Equivalents so offered are convertible). Such adjustments
shall be made successively whenever such Rights are issued; provided that if
Rights Price is greater than $4.00 per share (or as adjusted pursuant to
paragraph 3.01(a) hereof) the adjustment shall be made upon exercise of such
Rights. To the extent that shares of Common Stock are not delivered (or Common
Stock Equivalents are not delivered) after the expiration of such Rights which
caused an adjustment at the time of issuance thereof,
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the Exercise Price shall be readjusted to the Exercise Price which would then be
in effect had the adjustments been made upon the issuance of such Rights been
made upon the basis of delivery of only the number of shares of Common Stock (or
Common Stock Equivalents) actually delivered.
(c) In case the Company shall hereafter fix a record date for
making a distribution to the holders of Common Stock of assets or evidences of
its indebtedness (excluding cash dividends or distributions out of earnings and
dividends or distributions referred to in paragraph (a) of this Section 3.01) or
Common Stock subscription rights, options or warrants for Common Stock or Common
Stock Equivalents (excluding those referred to in paragraph (b) of this Section
3.01), then in each such case the Exercise Price in effect after such record
date shall be adjusted to the price determined by multiplying the Exercise Price
in effect immediately prior thereto by a fraction, the numerator of which shall
be the total number of shares of Common Stock outstanding multiplied by the
current market price per share of Common Stock (as defined in paragraph (e) of
this Section 3.01), less the fair market value (as determined by the Company's
Board of Directors) of said assets or evidences of indebtedness so distributed
or of such Common Stock subscription rights, option and warrants or of such
Common Stock Equivalents applicable to one share of Common Stock, and the
denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per share of Common Stock.
Such adjustment shall be made successively whenever the record date for such
distribution is fixed and shall become effective immediately after such record
date.
(d) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to paragraphs (a), (b) or (c) of this Section 3.01,
the adjustment shall be effective upon the record date as to paragraphs (a) and
(c) or the issue date as to paragraph (b) giving rise to the adjustment and the
Warrant Shares shall simultaneously be adjusted by multiplying the number of
Warrant Shares initially issuable upon exercise of each Warrant by the Exercise
Price in effect on the date thereof and dividing the product so obtained by the
Exercise Price, as adjusted.
(e) For the purpose of any computation under this Section 3.01,
the current market price per share of Common Stock at any date shall be deemed
to be the average of the daily closing price for 30 consecutive Business Days
commencing 45 Business Days before such date. The closing price for each day
shall be the last sale price or, in case no such reported sales take place on
such day, the average of the last reported bid and asked prices regular way, in
either case on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or admitted to trading
on such exchange, the representative closing bid price as reported by Nasdaq (or
any stock quotation system on which the Company's Common Stock is then
-7-
primarily traded), or if not so available, the fair market price as determined
by a party mutually agreed to by the Company and the Warrantholders.
(f) No adjustments in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least three (3%)
percent in such price; provided, however, that any adjustments which by reason
of this paragraph (f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 3.01 shall be made to the nearest cent or to the nearest one-hundredth
of a share, as the case may be. Notwithstanding anything in this Section 3.01 to
the contrary, the Exercise Price shall not be reduced to less than the then
existing par value of the Common Stock as a result of any adjustment made
hereunder.
(g) In the event that at any time, as a result of any adjustment
made pursuant to paragraph (a) of this Section 3.01, the Warrantholder
thereafter shall become entitled to receive any shares of the Company, other
than Common Stock, thereafter the number of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in paragraphs (a) to (f), inclusive, of
this Section 3.01.
SECTION 3.02: NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares or the Exercise Price is adjusted as herein provided, the Company shall
prepare and deliver to the Warrantholder a certificate signed by its President,
any Vice President, Treasurer or Secretary, setting forth the adjusted number of
shares purchasable upon the exercise of this Warrant and the Exercise Price of
such shares after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which adjustment
was made.
SECTION 3.03: NO ADJUSTMENTS. Except as provided in Section 3.01 of this
Agreement, no adjustment in respect of any cash dividends shall be made during
the term of this Warrant or upon the exercise of this Warrant. Notwithstanding
anything to the contrary in Section 3.01 of this Agreement, no adjustment shall
be made with respect to (i) options granted under the Company's stock option
plans or otherwise to employees for services or (ii) warrants outstanding on
August 1, 1997.
SECTION 3.04: FORM OF WARRANT AFTER ADJUSTMENTS. The form of this
Warrant need not be changed because of any adjustments in the Exercise Price or
the number or kind of the Warrant Shares, and Warrants theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant, as initially issued.
-8-
SECTION 3.05: PRESERVATION OF PURCHASE RIGHTS IN CERTAIN TRANSACTIONS.
(a) In case of any consolidation of the Company with or a merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, upon any such consolidation, merger, sale or
conveyance and the surviving entity is a publicly traded company, the Company
agrees that a condition of such transaction will be that the Company or such
successor or purchasing corporation, as the case may be, shall assume the
obligations of the Company hereunder in writing. In the case of any such
consolidation, merger or sale or conveyance, the Warrantholder shall have the
right until the expiration date upon payment of the Exercise Price in effect
immediately prior to such action, to receive the kind and amount of shares and
other securities and/or property which it would have owned or have been entitled
to receive after the happening of such consolidation, merger, sale or conveyance
had this Warrant been exercised immediately prior to such action, subject to
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article III. The provisions of this Section
3.05 shall similarly apply to successive consolidations, mergers, sales or
conveyances.
(b) In case of any consolidation of the Company with or a merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, upon any such consolidation, merger, sale or
conveyance and the surviving entity is a non-publicly traded company, the
Company agrees that a condition of such transaction will be that the Company
shall mail to the Warrantholder at the earliest applicable time (and, in any
event not less than 20 days before any record date for determining the persons
entitled to receive the consideration payable in such transaction) written
notice of such record date. Such notice shall also set forth facts as shall
indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Exercise Price of and the kind and amount of the
shares of stock and other securities and property deliverable upon exercise of
this Warrant.
ARTICLE IV
OTHER PROVISIONS RELATING
TO RIGHTS OF WARRANTHOLDERS
SECTION 4.01: NO RIGHTS AS SHAREHOLDERS: NOTICE TO WARRANTHOLDERS.
Nothing contained in this Warrant shall be construed as conferring upon the
Warrantholder or its transferees the right to vote or to receive dividends or to
consent or to receive notice as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or of any
-9-
other matter or any rights whatsoever as shareholders of the Company, except to
the extent specifically provided for herein.
SECTION 4.02: LOST, STOLEN MUTILATED OR DESTROYED WARRANTS. If this
Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms
as to indemnity or otherwise as it may in its discretion impose (which shall, in
the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as, and in substitution for, this
Warrant.
SECTION 4.03: RESERVATION OF SHARES.
(a) The Company covenants and agrees that at all times it shall
reserve and keep available for the exercise of this Warrant such number of
authorized shares of Common Stock as are sufficient to permit the exercise in
full of this Warrant.
(b) Prior to the issuance of any shares of Common Stock upon
exercise of this Warrant, the Company shall use its best efforts to secure the
listing of such shares of Common Stock upon the securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed.
(c) The Company covenants that all shares of Common Stock issued
on exercise of this Warrant will be validly issued, fully paid, non-assessable
and free of preemptive rights.
SECTION 4.04: NO FRACTIONAL SHARES. Anything contained herein to the
contrary notwithstanding, the Company shall not be required to issue any
fraction of a share in connection with the exercise of this Warrant, and in any
case where the Warrantholder would, except for the provisions of this Section
4.04, be entitled under the terms of this Warrant to receive a fraction of a
share upon exercise of this Warrant and receipt of the Exercise Price, issue the
larger number of whole shares purchasable upon exercise of this Warrant. The
Company shall not be required to make any cash or other adjustment in respect of
such fraction of a share to which the Warrantholder would otherwise be entitled.
ARTICLE V
TREATMENT OF WARRANTHOLDER
Prior to due presentment for registration or transfer of this Warrant,
the Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
the purpose of any exercise hereof and for all other purposes of the Company
shall not be affected by any notice to the contrary.
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ARTICLE VI
SPLIT-UP, COMBINATION
EXCHANGE AND TRANSFER OF WARRANTS
SECTION 6.01: SPLIT-UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANTS.
Subject to and limited by the provisions of Section 6.02 hereof, this Warrant
may be split up, combined or exchanged for another Warrant or Warrants
containing the same terms to purchase a like aggregate number of Warrant Shares.
If the Warrantholder desires to split up, combine or exchange this Warrant, it
shall make such request in writing delivered to the Company and shall surrender
to the Company this Warrant and any other Warrants to be so split up, combined
or exchanged. Upon any such surrender for a split-up, combination or exchange,
the Company shall execute and deliver to the person entitled thereto a Warrant
or Warrants, as the case may be, as so requested. The Company shall not be
required to effect any split-up, combination or exchange which will result in
the issuance of a Warrant entitling the Warrantholder to purchase upon exercise
a fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Warrantholder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split-up,
combination or exchange of Warrants.
SECTION 6.02: RESTRICTIONS ON TRANSFER. This Warrant may be sold,
hypothecated exercised, assigned or transferred (a "Transfer") only in
accordance with and subject to the provisions of the Securities Act and the
rules and regulations promulgated thereunder. At the time of a Transfer, the
Company may require the Warrantholder and its transferee to make such
representations, and may place such legends on certificates representing this
Warrant, as may be reasonably required in the opinion of counsel to the Company
to permit such a Transfer without such registration.
ARTICLE VII
REGISTRATION UNDER THE SECURITIES ACT OF 1933
SECTION 7.01: PIGGYBACK REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If at any time prior
to the Expiration Date the Company proposes to register any class of debt or
equity security or any Common Stock Equivalent under the Securities Act on any
form for the registration of securities under such Act, whether or not for its
own account (other than a registration form relating to (i) a registration of a
stock option, stock purchase or compensation or incentive plan or of stock
issued or issuable pursuant to any such plan, or a dividend investment plan;
(ii) a registration of securities proposed to be issued in exchange for
securities or assets of, or in connection with a merger or consolidation with,
another
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corporation; or (iii) a registration of securities proposed to be issued in
exchange for other securities of the Company) in a manner which would permit
registration of Registrable Securities for sale to the public under the
Securities Act (a "Piggyback Registration"), it will at such time give prompt
written notice to all Holders of Registrable Securities of its intention to do
so and of such Holders' rights under this Section 7.01. Such rights are referred
to hereinafter as "Piggyback Registration Rights". Upon the written request of
any such Holder made within 20 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 Company will
include in the Registration Statement the Registrable Securities which the
Company has been so requested to register by the Holders thereof provided that
the Company need not include any such Registrable Securities in Registration
Statements filed after the Expiration Date.
(b) WITHDRAWAL OF PIGGYBACK REGISTRATION BY COMPANY. If, any time
after giving written notice of its intention to register any securities in a
Piggyback Registration but prior to the effective date of the related
Registration Statement filed in connection with such Piggyback Registration, the
Company shall determine for any reason not to register such securities, the
Company will give written notice of such determination to each Holder and
thereupon shall be relieved of its obligation to register any Registrable
Securities in connection with such Piggyback Registration. All best efforts
obligations of the Company pursuant to Section 7.02 shall cease if the Company
determines to terminate any registration where Registrable Securities are being
registered pursuant to this Section 7.01.
(c) PIGGYBACK REGISTRATION OF UNDERWRITTEN PUBLIC OFFERINGS. If a
Piggyback Registration requested pursuant to this Section 7.01 involves an
underwritten offering, then, (i) all Holders requesting to have their
Registrable Securities included in the Company's registration must sell their
Registrable Securities to the underwriters selected by the Company on the same
terms and conditions as apply to other selling shareholders; and (ii) any Holder
requesting to have its Registrable Securities included in such registration may
elect in writing, not later than three (3) Business Days prior to the
effectiveness of the Registration Statement filed in connection with such
registration, not to have its Registrable Securities so included in connection
with such registration.
(d) PAYMENT OF REGISTRATION EXPENSES FOR PIGGYBACK REGISTRATION.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to a Piggyback
Registration Right contained in this Section 7.01, except for the fees and
disbursements of any
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counsel retained by the Holders of the Registrable Securities being so
registered.
(e) PRIORITY IN PIGGYBACK REGISTRATION. If a Piggyback
Registration involves an underwritten offering and the managing underwriter, in
its sole judgment, advises the Company in writing that the number or kind of
Registrable Securities requested to be included in such Piggyback Registration
would have a material adverse effect on the price or distribution of any
securities to be offered solely for the account of the Company, then the
Registrable Securities to be offered for the accounts of Holders pursuant to a
Piggyback Registration Right shall be eliminated entirely or reduced pro rata as
to all requesting Holders on the basis of the relative number of Registrable
Securities to be included in such offering to the amount recommended by such
managing underwriter; provided, however, that no securities may be offered in
such registration for the account of persons other than the Company by virtue of
their also having "piggyback" registration rights, or otherwise, unless the
Registrable Securities requested to be included in such registration are so
included on a pro rata basis (by percentage of each class of securities) as to
such other persons holding "piggyback" rights and the Holders requesting
registration.
(f) EXPIRATION OF PIGGYBACK REGISTRATION RIGHTS. The Piggyback
Registration Rights shall survive the exercise of the Warrant or the
transactions or events pursuant to which such Registrable Securities were
issued, but all such rights will terminate in all events on the Expiration Date.
The Holders, as a group, shall be limited to three Piggyback Registrations under
this Section 7.01.
SECTION 7.02: DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. Subject to the limitations set
forth below in this Section 7.02, if a Piggyback Registration covering
Registrable Securities has not been declared effective prior to February 1,
1998, any Holder or Holders may from time to time make written requests for the
registration under the Securities Act of their Registrable Securities (a "Demand
Registration") provided the number of Warrant Shares subject to the request is
at least forty (40%) percent of the Warrant Shares issuable under this Warrant
and any other outstanding Warrants. The Company shall use its best efforts to
file and cause to be declared effective under the Securities Act such Demand
Registration. The Holders, as a group, shall be limited to two Demand
Registrations which are declared effective under the Securities Act, and
thereafter may not make any further written requests for registration under this
Section 7.02.
(b) LIMITATIONS ON DEMAND REGISTRATION. The Company shall not be
required to effect a Demand Registration sooner than
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(i) for a sixty (60) day period following the effective date of a registration
statement pertaining to an underwritten Public Offering for the account of the
Company; (ii) if the Company, in its reasonable judgment, determines that
registration at the time requested by the Holders would materially adversely
affect the Company, by, among other things, requiring disclosure of, any
litigation or transactions at an inopportune time, in which case the obligation
of the Company to register any Registrable Securities shall be delayed until the
reason for such adverse affect has ceased to exist, provided that the Company
may apply this limitation not more than once in any period of twelve (12)
months; or (iii) if the timing of the Demand Registration is such that a special
audit of the Company would be required in connection with the preparation of
financial statements for the registration.
SECTION 7.03: REGISTRATION PROCEDURES. If and whenever the
Company is required to use its best efforts to effect or cause the registration
of any Registrable Securities under the Securities Act as provided in this
Article VII, the Company will, as expeditiously as practicable:
(a) notify the selling Holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose; (iv) if at any time the representations and warranties of the Company
contemplated by paragraph (h) below ceases to be true and correct; (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose, and (vi) of
the happening of any event that makes any statement made in the Registration
Statement, the Prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes in the Registration Statement
or Prospectus so that they will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(b) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(c) if reasonably requested by the managing underwriters,
immediately incorporate in a Prospectus supplement or
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post-effective amendment such information as the managing underwriters believe
(on advice of counsel) should be included therein as required by applicable law
relating to such sale of Registrable Securities, including, without limitation,
information with respect to the purchase price being paid for the Registrable
Securities by such underwriters and with respect to any other terms of the
underwritten (or "best-efforts" underwritten) offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(d) furnish to each selling Holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by all
exhibits (including those incorporated by reference);
(e) deliver to each selling Holder of Registrable Securities and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary Prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the Company consents
to the use of such Prospectus or any amendment or supplement thereto by each of
the selling Holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto;
(f) prior to any public offering of Registrable Securities,
cooperate with the selling Holders of Registrable Securities, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any seller or underwriter reasonably requests in writing, use its reasonable
efforts to keep each such registration or qualification effective during the
period such Registration Statement is required to be kept effective and any and
all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; PROVIDED that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject the Company to general
service of process in any jurisdiction where it is not at the time so subject or
would subject the principal stockholders of the Company to any restrictions on
the resale or transfer of their shares of the Company's Common Stock;
(g) cooperate with the selling Holders of Registrable Securities
and the managing underwriters, if any, to facilitate the
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timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriters may request at least two Business Days prior to any
sale of Registrable Securities to the underwriters;
(h) upon the occurrence of any event contemplated by paragraph
(a)(vi) above, promptly prepare a supplement or post-effective amendment to the
applicable Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue statement or a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(i) with respect to each issue or class of Registrable
Securities, use its best efforts to cause all Registrable Securities covered by
the Registration Statements to be listed on each securities exchange on which
similar securities issued by the Company are listed, if so requested by the
Holders of a majority of such Registrable Securities; and
(j) except as otherwise provided in this Agreement, the Company
shall have sole control in connection with the preparation, filing, withdrawal,
amendment or supplementing of each Registration Statement, the selection of
underwriters, and the distribution of any preliminary prospectus included in the
Registration Statement, and may include within the coverage thereof additional
shares of Common Stock or other securities for its own account or for the
account of one or more of its other security holders.
SECTION 7.04: AGREEMENTS BY SELLING HOLDERS.
(a) The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities and such other
information as may otherwise be required by the Securities Act to be included in
such Registration Statement, as the Company may from time to time reasonably
request in writing.
(b) Each Holder of Registrable Securities agrees by acquisition
of such Registrable Securities that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 7.03(a) or (b)
hereof, such Holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7.03(h) hereof, or until it is
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advised in writing by the Company that the use of the applicable Prospectus may
be resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in such Prospectus, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. Each Holder of Registrable Securities agrees to notify
the Company upon completion of its distribution of such Registrable Securities.
(c) Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant to Article VII
hereof agrees, if requested by the managing underwriters in any underwritten
offering, not to effect any public sale or distribution of any securities of the
Company of the same class as the securities included in such Registration
Statement, including a sale pursuant to rule 144 under the Securities Act
(except as part of such underwritten registration), during any period during
which the officers and directors of the Company and any other selling
shareholders included in such Registration Statement are similarly restricted in
the sale or distribution of any securities of the Company pursuant to such
Registration Statement, to the extent timely notified in writing by the managing
underwriters.
SECTION 7.05: INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company agrees to indemnify
and hold harmless, to the full extent permitted by the law, each Holder, its
officers, directors and agents and each Person who controls such Holder or
agents (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus 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, except insofar as the same are contained in any
information furnished in writing to the Company by such Holder expressly for use
therein; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or in based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any preliminary prospectus if (i) such
Holder failed to send or deliver a copy of the Prospectus with or prior to the
delivery of written confirmation of the sale of Registrable Securities and (ii)
the Prospectus would have corrected such untrue statement or omission; and
provided, further, that the Company shall not be liable in any such case to the
extent that any such loss claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or
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omission or alleged omission in the Prospectus, if such untrue statement or
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, such Holder thereafter fails to deliver or cause to be delivered
such Prospectus as so amended or supplemented, prior to or concurrently with the
sale of a Registrable Security to the person asserting such loss, claim, damage,
liability or expense who purchased such Registrable Security from such Holder.
The Company will also indemnify underwriters, selling brokers, dealer managers,
and similar securities industry professionals participating in the distribution
their officers and directors and each person who controls such Persons (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities, if
requested.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In
connection with any registration, each Holder will furnish to the Company in
writing such information and affidavits as the Company reasonably requests for
use in connection with any Registration Statement or Prospectus and agrees to
indemnify, to the same extent as the indemnification provided by the Company in
Section 7.05(a), the Company, its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act) and any other
selling Holder against all losses, claims, damages, liabilities and expenses
caused by any untrue statement of a material fact or any omission of a material
fact required to be stated in any Registration Statement or Prospectus or
preliminary prospectus or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is contained in or based upon any information or affidavit so furnished
in writing by such Holder to the Company specifically for inclusion in such
Registration Statement or Prospectus. In no event shall the liability of any
selling Holder of Registrable Securities hereunder be greater in amount than the
dollar amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers, and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any prospectus or Registration Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEDURE. Any party that proposes
to assert the right to be indemnified hereunder will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or parties
under this
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Section, notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served, No indemnification
provided for hereunder shall be available to any party who shall fail to give
notice as provided in this Section 7.05(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and the approval by the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent.
ARTICLE VIII
OTHER MATTERS
SECTION 8.01: EXPENSES OF TRANSFER. The Company will from time to time
promptly pay, subject to the provisions of Section 6.01 and paragraph (d) of
Section 2.02, all taxes and charges that may be imposed upon the Company in
respect to the issuance or
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delivery of Warrant Shares upon the exercise of this Warrant by the
Warrantholder.
SECTION 8.02: SUCCESSORS AND ASSIGNS. All the covenants and provisions
of this Warrant by or for the benefit of the Company shall bind and inure to the
benefit of its successors and assigns hereunder.
SECTION 8.03: AMENDMENTS AND WAIVERS. The provisions of this Warrant,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waiver or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of holders
of at least a majority of the outstanding Warrants. Holders shall be bound by
any consent authorized by this Section whether or not certificates representing
such Warrants have been marked to indicate such consent.
SECTION 8.04: COUNTERPARTS. This Warrant may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 8.05: GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8.06: SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
SECTION 8.07: INTEGRATION/ENTIRE AGREEMENT. This Warrant is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This Warrant
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
SECTION 8.08: NOTICES. Notice or demand pursuant to this Warrant to be
given or made by the Warrantholder to or on the Company shall be sufficiently
given or made if sent by first class mail, postage prepaid, to the Warrantholder
or the Holder of Registrable Securities at its last known address as it shall
appear on the books of the Company, and to the Company at c/o First South Africa
Management Corp., 2665 South Bayshore, Suite 702, Coconut Grove, Florida 33133,
or to such other address as may be duly given to such Holder.
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SECTION 8.09: HEADINGS. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Company under its corporate seal as of the 1st day of August, 1997.
FIRST SOUTH AFRICA CORP., LTD.
By:________________________________
Name: Clive Kabatznik
Title: President
(Corporate Seal)
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ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, _____________________________ hereby sells, assigns and
transfers unto ______________________________ the within Warrant Certificate,
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint ______________________ attorney, to transfer said Warrant
Certificate on the books of FIRST SOUTH AFRICA CORP., LTD. with respect to the
number of Warrants set forth below, with full power of substitution in the
premises:
Name(s) of
ASSIGNEE(S) ADDRESS NO. OF WARRANTS
And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants represented by said
Warrant Certificate.
The Assignor agrees on behalf of himself and his assignee that the requested
assignment shall be in accordance with Section 6.02 of the Warrant Agreement
pursuant to which the Warrant Certificate was issued.
Dated: ______________ ___, 19__.
___________________________________
Note: The above signature should
correspond exactly with the
name on the face of this
Warrant Certificate.
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EXERCISE FORM
(To be executed upon exercise of Warrant)
FIRST SOUTH AFRICA CORP., LTD.
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, _________ shares of Common Stock, as provided for therein, at an
aggregate exercise price of $_____, and tenders herewith payment of the purchase
price in full in the form of (i) a wire transfer, a certified or bank draft in
the amount of $_______, and/or (ii) _____ shares of Common Stock of FIRST SOUTH
AFRICA CORP., LTD. having a fair market value of $_____ and/or (iii) _____
shares as determined by the formula set forth in Section 2.02 of the Warrant
Certificate.
Please issue a certificate or certificates for such Common
Shares in the name of
Name__________________________
(Please Print)
__________________________
Address
__________________________
__________________________
Tax Identification No.
Signature_____________________
Note: The above signature
should correspond
exactly with the
name on the first
page of this Warrant
Dated: _______________ ___, 19__. Certificate.
And if said number of shares shall not be all the shares purchasable
under the within Warrant Certificate, a new Warrant Certificate is to be issued
in the name of the undersigned for the balance remaining of the number of whole
shares purchasable thereunder.
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