Exhibit 10.52
STOCK PURCHASE WARRANT
NEITHER THIS WARRANT NOR THE WARRANT SHARES AS DEFINED HEREIN HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE WARRANT
SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR ANY EXEMPTION FROM SUCH REGISTRATION.
Right to Purchase 200,000 Shares of Common Stock
Dated as of December 15, 2000
IBIS Technology Corporation, a Massachusetts corporation (the
"COMPANY"), grants International Business Machines Corporation, a New York
corporation ("IBM" and each of its successors and assigns, a "HOLDER"), a
warrant (this "WARRANT") to purchase the Warrant Shares at the Purchase Price.
Capitalized terms not otherwise defined have the definitions set forth in
APPENDIX A.
1. EXERCISE AND EXPIRATION OF WARRANT.
(a) This Warrant is immediately exercisable and will expire upon the
fifth anniversary of the date hereof. "EXERCISE PERIOD" shall mean the period of
time between the date hereof and the expiration of this Warrant in accordance
with the terms hereof.
(b) This Warrant may be exercised during the Exercise Period by the
Holder, in whole or in part, by delivering this Warrant to the Company with (i)
payment of the Purchase Price in U.S. dollars, or (ii) by delivery to the
Company of a written notice of an election to effect a cashless exercise for
Warrant Shares pursuant to this Section 1(b) ("CASHLESS EXERCISE"). To effect a
Cashless Exercise, the Holder will surrender this Warrant for that number of
shares of Common Stock determined by multiplying the number of Warrant Shares to
which it would otherwise be entitled by a fraction, the numerator of which shall
be the difference between (i) the then current Market Price of a share of the
Common Stock on the date of exercise and (ii) the Purchase Price, and the
denominator of which shall be the then current Market Price per share of Common
Stock. In the event that this Warrant is not exercised in full immediately prior
to the end of the Exercise Period and at such time the then current Market Price
of a share of the Common Stock is greater than the Purchase Price, this Warrant
shall be deemed automatically exercised as to the remaining Warrant Shares at
such time by Cashless Exercise without the delivery of any written notice from
the Holder.
(c) Upon exercise of this Warrant, the Company will issue to the Holder
(i) a certificate or certificates for the number of full Warrant Shares to which
the Holder shall be entitled upon such exercise plus the cash value of any
fractional share to which the Holder would otherwise be entitled, and (ii) in
case such exercise is in part only, a new warrant or warrants representing the
remaining Warrant Shares.
(d) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been received by the Company in accordance with Section 1(b).
2. REPRESENTATIONS.
(a) By the Holder. The Holder represents and warrants to the Company as
follows:
(i) It is an "accredited investor" within the meaning of Rule 501 of
the Securities Act. This Warrant is acquired for the Holder's own account for
investment purposes and not with a view to any offering or distribution within
the meaning of the Securities Act and any applicable state securities laws. The
Holder has no present intention of selling or otherwise disposing of the Warrant
or the Warrant Shares in violation of such laws; and
(ii) The Holder has sufficient knowledge and expertise in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Company. The Holder understands that this investment involves
a high degree of risk and could result in a substantial or complete loss of its
investment. The Holder is capable of bearing the economic risks of such
investment.
The Holder acknowledges that the Company has indicated that the Warrant and the
Warrant Shares have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements
thereof, and that the Warrant Shares will bear a legend stating that such
securities have not been registered under the Securities Act and may not be sold
or transferred in the absence of such registration or an exemption from such
registration.
(b) By the Company. The Company represents and warrants that:
(i) It (A) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its organization, (B) has
all requisite power and authority to conduct its business as now conducted and
as presently contemplated and to consummate the transactions contemplated hereby
and (C) is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified would not have a material adverse
effect on the Company.
(ii) It has outstanding as of the date hereof but before
giving effect to this Warrant, 9,122,333 shares of Common Stock, calculated on a
fully diluted basis, giving effect to the conversion of all options, warrants,
rights and other securities convertible into, or exchangeable for, Common Stock.
(iii) The execution, delivery and performance by the Company
of this Warrant (A) has been duly authorized by all necessary corporate action,
(B) does not and will not contravene the Company's charter or bylaws or any
other organizational document and (C) does not and will not contravene any
applicable law or any contractual restriction binding on or otherwise affecting
the Company or any of its properties or result in a default under any agreement
or instrument to which the Company is a party or by which the Company or its
properties may be subject.
(iv) This Warrant is a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, moratorium and
other laws affecting the rights of creditors generally and general principles of
equity.
(v) Assuming the accuracy of the representations made by the
Holder in Section 3(a) hereof, no authorization, consent, approval, license,
exemption or other action by, and no registration, qualification, designation,
declaration or filing with, any governmental authority is or will be necessary
in connection with the execution and delivery by the Company of this Warrant,
the issuance by the Company of the Warrant Shares, the consummation of the
transactions contemplated hereby, the performance of or compliance with the
terms and conditions hereof, or to ensure the legality, validity, and
enforceability hereof.
(vi) The Company has reserved solely for issuance and delivery
upon the exercise of this Warrant, such number of shares of Common Stock to
provide for the exercise in full of this Warrant.
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(vii) Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has directly or indirectly made any offers
or sales of any security or solicited any offers to buy any security under
circumstances that would require registration, or the filing of a prospectus
qualifying the distribution, of this Warrant being issued hereby under the
Securities Act or cause the issuance of this Warrant to be integrated with any
prior offering of securities of the Company for purposes of the Securities Act.
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all taxes, liens, claims and encumbrances.
(b) Authorization and Reservation of Shares. During the Exercise
Period, the Company shall have duly authorized a sufficient number of shares of
Common Stock, free from preemptive rights and from any other restrictions
imposed by the Company without the consent of the Holder, to provide for the
exercise in full of this Warrant. The Company shall at all times during the
Exercise Period reserve and keep available out of such authorized but unissued
shares of Common Stock such number of shares to provide for the exercise in full
of this Warrant.
(c) Listing. The Company shall promptly, upon exercise by the Holder of
its Registration Rights, use its best efforts to secure the listing of the
shares of Common Stock registered pursuant to such exercise upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed or become listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all shares of Common
Stock from time to time issuable upon the exercise of this Warrant.
(d) Certain Actions Prohibited. The Company will not, by amendment of
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the Holder of this
Warrant in order to protect the exercise privilege of the Holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the date of issuance
of any Warrant Shares, take such actions as the Company shall reasonably
determine are necessary to qualify the Warrant Shares for, or obtain exemption
for the Warrant Shares for, sale to the Holder of this Warrant upon the exercise
hereof under applicable securities or "blue sky" laws of the states of the
United States, and shall provide written evidence of any such action so taken to
the Holder of this Warrant prior to such date; provided, however, that the
Company shall not be required to qualify as a foreign corporation or file a
general consent to service of process in any such jurisdiction.
(g) Rule 144 Reports. As long as the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall take all actions reasonably necessary to enable the Holder to sell the
Registrable Securities without registration under the Securities Act within the
limitations of the exemptions provided by Rule 144 under the Securities Act, as
such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC, including filing on a timely basis all
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reports required to be filed by the Exchange Act. Upon the request of the
Holder, the Company shall deliver to the Holder a written statement as to
whether it has complied with such requirements.
4. ANTIDILUTION ADJUSTMENTS. The Purchase Price and the number of
Warrant Shares may be adjusted from time to time as set forth in APPENDIX B.
5. REGISTRATION RIGHTS. The Warrant shall have the Registration Rights
set forth in APPENDIX C.
6. TREATMENT OF WARRANT IN THE EVENT OF AN ACQUISITION TRANSACTION. (a)
If the Company undertakes an Acquisition Transaction then the Company shall, at
the Holder's election, either (i) cause the Company Acquiror to assume this
Warrant and cause provision to be made so that the Holder shall thereafter be
entitled to receive, upon exercise of this Warrant, the Warrant Shares,
whereupon the Company shall be released from this Warrant, or (ii) cause the
Company Acquiror to pay the Warrant Value to the Holder upon consummation of the
Acquisition Transaction. If the Company undertakes an Acquisition Transaction
and does not cause the Company Acquiror to pay the Warrant Value to the Holder
pursuant to the foregoing clause (ii), this Warrant shall remain outstanding in
accordance with its terms, all references to the "Company" shall apply to the
Company Acquiror, all references to the "Warrant Shares" shall apply to the
common stock of the Company Acquiror, and appropriate modifications to the other
terms of this Warrant, including without limitation the amount of Warrant Shares
and the Purchase Price, shall be made to take into account the Warrant Value as
of the date of the Acquisition Transaction.
(b) "COMPANY ACQUIROR" means the person or Group (i) to whom the
Company's assets are transferred as described in clause (i) of the definition of
Acquisition Transaction or (ii) that beneficially owns 50% or more of the voting
power or voting stock of the Company as described in clause (ii) of such
definition. "WARRANT VALUE" shall mean the value of this Warrant calculated as
if the Holder had exercised this Warrant at such time pursuant to Section 1(b)
hereof.
7. TRANSFER, EXCHANGE, REPLACEMENT, UNDERWRITER'S LOCKUP
(a) Transferability of Warrant. The Holder covenants not to transfer
this Warrant or the Warrant Shares except in compliance with this Section 7(a).
This Warrant, the Warrant Shares and the rights granted to the Holder hereof are
freely transferable, in whole or in part, upon surrender of this Warrant,
together with an assignment form, at the office or agency of the Company
referred to in Section 8 below, PROVIDED, HOWEVER, that (i) the Holder shall not
effect any transfer of the Warrant or the Warrant Shares except pursuant to a
transaction either registered, or exempt from registration, under the Securities
Act (ii) prior to transfer of the Warrant or the Warrant Shares in reliance upon
an exemption from such registration, the Holder shall provide to the Company an
opinion letter from counsel to the Holder (which counsel may include in-house
counsel), reasonably satisfactory to the Company, opining that such transfer
does not require registration under the Securities Act and (iii) without the
prior written consent of the Company, the Holder shall not effect any transfer
of the Warrant or the Warrant Shares to any Prohibited Transferee pursuant to a
private placement under the Securities Act, PROVIDED, HOWEVER, that for purposes
of clarification, the parties agree that the restriction on transfer set forth
in clause (iii) of this Section 7(a) shall in no way limit the Holder's ability
to transfer the Warrant Shares pursuant to Rule 144 of the Securities Act. Any
transfer of the Warrant, the Warrant Shares or the rights granted to the Holder
hereof in violation of this Section 7(a) shall be null and void. The transferee,
by acceptance of this Warrant, acknowledges that it takes such warrant subject
to the terms and conditions hereof. Until due presentment for registration of
transfer on the books of the Company, the Company may treat the registered
Holder hereof as the owner hereof for all purposes, and the Company shall not be
affected by any notice to the contrary.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder hereof at the office or
agency of the Company referred to in Section 8 below,
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for new warrants of like tenor of different denominations representing in the
aggregate the right to purchase the number of shares of Common Stock which may
be purchased hereunder, each of such new warrants to represent the right to
purchase such number of shares as shall be designated by the Holder hereof at
the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 8, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of warrants pursuant to this Section 7. The Company shall indemnify
and reimburse the Holder of this Warrant for all costs and expenses (including
legal fees) incurred by such Holder in connection with the enforcement of its
rights hereunder.
(e) Warrant Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Transferability of Warrant Shares. Notwithstanding anything to the
contrary contained herein, IBM shall not transfer or assign any Warrant Shares
for at least 35 days following the exercise of this Warrant pursuant to the
terms hereof; PROVIDED, FURTHER, that this restriction shall not prevent IBM
from exercising any of the Registration Rights set forth in APPENDIX C hereof,
and may be waived in writing by the Company.
8. NOTICES. Any notices required or permitted to be given under the
terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
IF TO THE COMPANY: IF TO IBM:
IBIS TECHNOLOGY CORPORATION INTERNATIONAL BUSINESS MACHINES CORPORATION
32A CHERRY HILL DRIVE ATTENTION: LEE A. DAYTON
DANVERS, MA 01923 VICE PRESIDENT, CORPORATE DEVELOPMENT & REAL
ATTENTION: DEBRA L. NELSON ESTATE
IBM CORPORATE DEVELOPMENT
TEL: (978) 777-4247 NEW ORCHARD ROAD
FAX: (978) 777-6570 ARMONK, NY 10504
WITH COPY TO (WHICH SHALL NOT CONSTITUTE NOTICE): TEL: (914) 499-7800
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C. FAX: (914) 499-7803
ATTENTION: ANDREW J. MERKEN, ESQ.
ONE FINANCIAL CENTER WITH COPY TO (WHICH SHALL NOT CONSTITUTE NOTICE):
BOSTON, MA 02111 INTERNATIONAL BUSINESS MACHINES CORPORATION
ATTENTION: MAUREEN SLADEK, OFFICE OF THE
TEL: (617) 542-6000 ASSISTANT SECRETARY
FAX: (617) 542-2241 NEW ORCHARD ROAD
ARMONK, NEW YORK 10504
TEL: (914) 499-6490
FAX: (914) 499-6085
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If to any other Holder, at such address as such Holder shall have provided in
writing to the Company, or at such other address as any Holder furnishes by
notice given in accordance with this Section 9.
9. GOVERNING LAW; JURISDICTION AND VENUE. This Warrant shall be
governed by the laws of the Commonwealth of Massachusetts without regard to
conflicts or choice of law rules or principles. Each of the Company and the
Holder submits to the non-exclusive jurisdiction and venue of the federal or
state courts of New York and Massachusetts to resolve all issues that may arise
out of or relate to this Warrant.
10. MISCELLANEOUS.
(a) Amendments. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and all Holders
hereof.
(b) U.S. Dollars. All references in this Warrant to "DOLLARS" or "$"
shall mean the U.S. dollar.
(c) Fractional Shares. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the fair market value per share of
Common Stock, as determined in good faith by the Board.
(d) Descriptive Headings. The descriptive headings of the several
sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(e) Business Day. For purposes of this Warrant, the term "BUSINESS DAY"
means any day, other than a Saturday or Sunday or a day on which banking
institutions in New York, New York or the city and state provided in Section 9
hereof for notices to the Company, are authorized or obligated by law,
regulation or executive order to close.
(f) Counterparts. This agreement may be executed in counterparts, and
any such executed counterpart shall be, and shall be deemed to be, an original
instrument.
(g) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(h) Successors and Assigns. This Agreement shall be binding on, and
shall inure to the benefit of, the parties hereto and their respective permitted
successors and assigns, including all Holders.
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(i) Survival. The representations, warranties and covenants made by the
parties hereto shall survive the execution and delivery of this Agreement until
(A) in the case of representations and warranties, three (3) years after the
date hereof and (B) in the case of covenants, until such time as the Holder no
longer holds either of the Warrant or any Warrant Shares.
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IN WITNESS WHEREOF, the undersigned have executed this Warrant as of
the date first written above.
IBIS Technology Corporation
By: /s/ Martin J. Reid
---------------------------------------
Martin J. Reid
President
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: /s/ Lee A. Dayton
---------------------------------------
Lee A. Dayton
Vice President, Corporate
Development & Real Estate
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APPENDIX A -- DEFINITIONS
"ACQUISITION TRANSACTION" shall mean (i) the sale, lease or other
transfer, in one or a series of transactions, of all or substantially all of the
Company's assets to any person or Group or (ii) the consummation of any
transaction or series of transactions the result of which is that any person or
Group beneficially owns, directly or indirectly, 50% or more of the voting power
or the voting stock of the Company.
"BOARD" shall mean the Board of Directors of the Company.
"CASHLESS EXERCISE" shall have the meaning specified in Section 1(b) of
the Warrant.
"COMPANY" shall have the meaning specified in the initial paragraph of
the Warrant.
"COMPANY ACQUIROR" shall have the meaning specified in Section 6(b) of
the Warrant.
"COMMON STOCK" shall mean the common shares of the Company.
"DEMAND REGISTRATION RIGHT" shall mean a right of the Holder under
APPENDIX C(b).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXERCISE PERIOD" shall have the meaning specified in Section 1(a) of
the Warrant.
"GROUP" shall have the meaning specified in Section 13(d)(3) of the
Exchange Act.
"IBM" shall have the meaning specified in the initial paragraph of the
Warrant.
"HOLDER" shall have the meaning specified in the initial paragraph of
the Warrant.
"MARKET PRICE" shall mean the following: (i) the average of the closing
sale prices for the shares of Common Stock as reported on the principal trading
market for the Common Stock for the five (5) consecutive trading days
immediately preceding such date, or if no sale price is so reported for such
period, the last bid price for such period, or (ii) if the foregoing does not
apply, the last sale price of such security in the over-the-counter market on
the pink sheets or bulletin board for such security on the last trading day
immediately preceding such date, or if no sale price is so reported for such
security, the average of the last bid and ask price for such security on the
last trading day immediately preceding such date, or (iii) if market value
cannot be calculated as of such date on any of the foregoing bases, the Market
Price shall be the average fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to the
Holder, with the costs of the appraisal to be borne by the Company, PROVIDED,
HOWEVER, that for purposes of Section 6, in the event of a Stock Acquisition,
Market Price shall mean the price per share consideration paid in the Stock
Acquisition.
"PERSON" or "PERSON" shall mean any natural person, corporation,
business trust, association, company, partnership, joint venture, government,
agency, political subdivision and other entity.
"PIGGYBACK REGISTRATION RIGHT" shall mean a right of the Holder under
APPENDIX C(a).
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"PROHIBITED TRANSFEREE" shall mean any of the following entities: (i)
SOITEC SA, presently headquartered in Bernin, France, (ii) Silicon Genesis
Corporation, presently headquartered in Campbell, California, (iii) Canon Inc.,
presently headquartered in Tokyo, Japan, (iv) Komatsu Ltd., presently
headquartered in Tokyo, Japan, (v) Nippon Steel Corporation, presently
headquartered in Tokyo, Japan and (vi) Hitachi, Ltd., presently headquartered in
Tokyo, Japan.
"PURCHASE PRICE" shall mean $22.30 per share.
"REGISTRABLE SECURITIES" shall mean the Warrant Shares issued or
issuable with respect to the Warrant.
"REGISTRATION EXPENSES" shall mean all expenses incident to the
Company's performance of or compliance with the registration provisions of
APPENDIX C herein, including without limitation (i) all fees and expenses of
compliance with federal securities and state securities laws; (ii) all U.S.
Securities and Exchange Commission and state securities laws filing fees; (iii)
all printing expenses; (iv) all fees and disbursements of counsel for the
Company; and (v) all fees and disbursements of accountants of the Company, but
excluding (i) underwriter's discounts relating to securities sold by the Selling
Holder; (ii) filings made with the NASD and counsel fees in connection
therewith; and (iii) fees and disbursements of counsel for the Selling Holder.
"REGISTRATION RIGHTS" shall mean the Piggyback Registration Rights and
the Demand Registration Right set forth in APPENDIX C.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING HOLDER" shall have the meaning specified in APPENDIX C(d)(ii)
of the warrant.
"STOCK ACQUISITION" shall mean an Acquisition Transaction described in
clause (i) of the definition of Acquisition Transaction.
"WARRANT" shall have the meaning specified in the initial paragraph of
the Warrant.
"WARRANT SHARES" shall mean 200,000 shares of Common Stock, as may be
adjusted from time to time pursuant to APPENDIX B.
"WARRANT VALUE" shall have the meaning specified in Section 6(b) of the
Warrant.
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APPENDIX B -- ANTIDILUTION PROVISIONS
(a) Recapitalizations. If outstanding shares of the Company's Common
Stock shall be subdivided into a greater number of shares or a dividend in
Common Stock shall be paid in respect of Common Stock, the Purchase Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased.
(b) Mergers; Transfer of Assets. Subject to Section 6, if there shall
occur any capital reorganization or reclassification of the Company's Common
Stock (other than a subdivision or combination as provided for in (a) above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, then, as
part of any such reorganization, reclassification, consolidation, merger or
sale, as the case may be, lawful provision shall be made so that the Holder of
this Warrant shall have the right thereafter to receive upon the exercise hereof
the kind and amount of shares of stock or other securities or property which
such Holder would have been entitled to receive if, immediately prior to any
such reorganization, reclassification, consolidation, merger or sale, as the
case may be, such Holder had held the number of shares of Common Stock which
were then purchasable upon the exercise of this Warrant. In any such case,
appropriate adjustment (as reasonably determined in good faith by the Board)
shall be made in the application of the provisions set forth herein with respect
to the rights and interests thereafter of the Holder of this Warrant, such that
the provisions set forth in this APPENDIX B (including provisions with respect
to adjustment of the Purchase Price) shall thereafter be applicable, as nearly
as is reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Warrant.
(c) Adjustment in Number of Warrant Shares. When any adjustment is
required to be made in the Purchase Price, the number of Warrant Shares
purchasable upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal to the number of shares issuable upon
the exercise of this Warrant immediately prior to such adjustment, multiplied by
the Purchase Price in effect immediately prior to such adjustment, by (ii) the
Purchase Price in effect immediately after such adjustment.
(d) Certificate of Adjustment. When any adjustment is required to be
made pursuant to this APPENDIX B, the Company shall promptly mail to the Holder
a certificate setting forth the Purchase Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Such certificate
shall also set forth the kind and amount of stock or other securities or
property into which this Warrant shall be exercisable following such adjustment.
(e) Adjustments for Non-Stock Dividends and Distributions. In the event
that the Company shall issue or pay to holders of Common Stock a dividend or
other distribution payable other than in securities of the Company, then and in
each such event provision shall he made so that Holder shall receive upon
exercise of this Warrant, in addition to the Warrant Shares issued upon
exercise, the dividend or other distribution which Holder would have received if
it had been the holder of such Warrant Shares at the time of such dividend or
other distribution.
(f) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution (other
than dividends or distributions payable in cash out of
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retained earnings consistent with the Company's past practices with respect to
declaring dividends and making distributions) to the holders of the Common
Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially all of its assets to,
another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder (a) notice of the
date on which the books of the Company shall close or a record shall be taken
for determining the holders of Common Stock entitled to receive any such
dividend, distribution, or subscription rights or for determining the holders of
Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable estimate thereof by the Company)
when the same shall take place. Such notice shall also specify the date on which
the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least fifteen (15)
business days prior to the record date or the date on which the Company's books
are closed in respect thereto. Failure to give any such notice or any defect
therein shall not affect the validity of the proceedings referred to in clauses
(i), (ii), (iii) and (iv) above.
(g) Certain Events. If, at any time during the Exercise Period, any
event occurs of the type contemplated by the adjustment provisions of this
APPENDIX B but not expressly provided for by such provisions, the Company will
give notice of such event, and the Board will make an appropriate adjustment in
the Purchase Price and the number of shares of Common Stock acquirable upon
exercise of this Warrant so that the rights of the Holder shall be neither
enhanced nor diminished by such event.
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APPENDIX C -- REGISTRATION RIGHTS
(a) Piggyback Registration.
(i) Participation. If the Company elects to file a
registration statement under the Securities Act covering the offer and sale of
any Common Stock (or equity securities converted into Common Stock) in
connection with any public offering (other than a registration statement on Form
S-8 or Form S-4, or their successors, or any other form for a similar limited
purpose, or any registration statement covering only securities proposed to be
issued in exchange for securities or assets of another corporation), the Company
shall give written notice thereof to the Holder at least twenty business days
before filing. The Holder shall have a Piggyback Registration Right to
participate in such offering on a pro rata basis with the Company and any other
Holders upon the giving of notice to the Company within ten business days of
receipt by it of notice from the Company. If the Holder notifies the Company of
its intent to exercise such Piggyback Registration Right, subject to (a)(ii) and
(a)(iii) below, the Company shall include in such registration statement such
number of shares of Registrable Securities as requested by the Holder. Such
Registrable Securities shall be included in the underwriting for the public
offering on the same terms and conditions as the securities otherwise being sold
in such offering.
(ii) Underwriters' Cutback. If, in the opinion of the managing
underwriter of such offering the inclusion of some or all of the shares of
Registrable Securities and other Common Stock requested to be registered would
be inappropriate, then the number of shares of Registrable Securities and other
Common Stock to be included in the offering shall be reduced, with the
participation in such offering to be in the following order of priority: (1)
first, securities to be issued by the Company shall be included, and (2) second,
any other Common Stock required to be included pursuant to any demand
registration right granted to such other holder of Common Stock shall be
included, and (3) third Registrable Securities and any other Common Stock
requested to be included, on a pro rata basis, shall be included. For purposes
of clarification, the Holder agrees that if, in accordance with this clause
(ii), the underwriter is of the opinion that the inclusion of any of the
Registrable Securities would be inappropriate, then the Holder shall not
participate in the public offering.
(iii) Registrant Controls. The Company may decline to file a
Registration Statement after giving notice to any Holder, or withdraw a
Registration Statement after filing and after such notice, but prior to the
effectiveness thereof, provided that such registrant shall promptly notify each
Holder of Registrable Securities in writing of any such action and provided
further that such registrant shall bear all reasonable expenses incurred by such
Holder of Registrable Securities or otherwise in connection with such withdrawn
Registration Statement.
(iv) Underwriting Agreement. In connection with any
registration under this Section (a) involving an underwriting, the Company shall
not be required to include any Registrable Shares in such registration unless
the Holder accepts the terms of the underwriting as determined by the
underwriters selected by the Company (provided that such terms must be
consistent with this Agreement and provided, further, that any inability of the
Holder to agree with the underwriters shall not restrict the ability of the
Company to proceed with the registration).
(b) Demand Registration Rights.
(i) In General. Subject to clause (ii) of this Section (b),
the Holder may request on only one occasion by written notice to the Company
that the Company file a Registration Statement under the Securities Act covering
the Registrable Securities, PROVIDED, HOWEVER, that the Holder shall not
exercise such Demand Registration Right unless the reasonably anticipated
aggregate price to the public, net of underwriting discounts and commissions, is
in excess of $500,000.
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(ii) Effectiveness. Subject to the following sentences, the
Company shall be obligated to prepare, file and use its best efforts to cause a
Registration Statement to become effective in connection with each Demand
Registration requested pursuant to (b), and to remain effective for a period of
ninety days or until the sale of all securities registered thereunder. If (A)
the Company withdraws a Registration Statement filed pursuant to a Demand
Registration prior to the effectiveness thereof, or (B) the sale of securities
to which a Registration Statement filed pursuant to a Demand Registration
applies is not consummated other than by action of the Selling Holder, such
Registration Statement shall not be counted in determining the number of
registrations in which Holder's securities have been included or otherwise
adversely affect Holder's rights hereunder.
(iii) Piggyback Registrations on Demand Registration Rights.
The Company and other holders of Company Stock of the Company may include such
securities in registrations made pursuant to (b) only if the managing
underwriter concludes that such inclusion will not interfere with the successful
marketing of all the Registrable Securities requested to be included in such
registration.
(iv) Managing Underwriter. The managing underwriter or
underwriters of any underwritten public offering covered by a Demand
Registration shall be selected by the Holders of a majority of the shares of
Registrable Securities that participate in such registration, subject to the
approval of the Board, which approval shall not be unreasonably withheld.
(v) Company's Right to Defer. If the Company is requested to
effect a Demand Registration and the Company furnishes to the Holders of
Registrable Securities requesting such registration a copy of a resolution of
the Board certified by the Secretary of the Company stating that in the good
faith judgment of the Board it would be materially detrimental to the Company
and its stockholders for such registration statement to be filed on or before
the date such filing would otherwise be required hereunder, the Company shall
have the right to defer such filing for a period of not more than 90 days after
receipt of the request for such registration from the Holder or Holders of
Registrable Securities requesting such registration; provided that during such
time the company may not file a registration statement (other than a
registration statement on Form S-4 or Form S-8 or a registration statement
already approved by the Board) for securities to be issued and sold for its own
account or that of anyone than the Holder or Holders of Restricted Stock
requesting such registration.
(c) Intentionally Omitted.
(d) Indemnification.
(i) Indemnification by the Company. The Company agrees to
indemnify and hold harmless any Holder of Registrable Securities which has
included Registrable Securities in a registration statement, its officers,
directors and agents and each Person, if any, who controls such Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or final prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of, or are based
upon, any such untrue statement or omission based upon information furnished in
writing to the Company by the Holder of the Registrable Securities or on such
Holder's behalf expressly for use therein; provided, that with respect to any
untrue statement or omission made in any preliminary prospectus, the indemnity
agreement contained in this paragraph shall not apply to the extent that any
such loss, claim, damage, liability or expense results from the fact that a
current copy of the prospectus was not sent or given to the person asserting any
such loss, claim,
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damage, liability or expense at or prior to the written confirmation of the sale
of the Registrable Securities concerned if it is determined that it was the
responsibility of the Holder of such Registrable Securities to provide such
person with a current copy of the prospectus and such current copy of the
prospectus would have cured the defect giving rise to such loss, claim, damage,
liability or expense. The Company also agrees to indemnify any underwriters of
the Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Holder of such Registrable Securities provided in this
section (d).
(ii) Indemnification by the Holder of Registrable Securities.
The Holder of Registrable Securities, to the extent it is selling Registrable
Securities ("SELLING HOLDER"), agrees to indemnify and hold harmless the
Company, its directors and officers and each Person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Company to the Selling Holder, but only with respect to, and to the extent that,
information furnished in writing by the Selling Holder or on the Selling
Holder's behalf expressly for use in any registration statement or final
prospectus relating to the Registrable Securities (or any amendment or
supplement thereto, or any preliminary prospectus) which contained an untrue
statement or alleged untrue statement of a material fact or omitted or allegedly
omitted to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading. Notwithstanding
anything to the contrary contained herein, the liability of the Holder hereunder
shall be limited to the proportion of any such loss, claim, damage, liability or
expense that is equal to the proportion that the public offering price of the
shares of Registrable Securities sold by the Holder bears to the total public
offering price of all securities sold in such offering. In case any action or
proceeding shall be brought against the Company or its directors or officers, or
any such controlling Person, in respect of which indemnity may be sought against
such Selling Holder, such Selling Holder shall have the rights and duties given
to the Company, and the Company or its directors or officers or such controlling
Person shall have the rights and duties given to such Selling Holder, by the
preceding subsection. The Selling Holder also agrees to indemnify and hold
harmless the underwriters on substantially the same basis of that of the
indemnification of the Company provided in the preceding subsection.
(e) Contribution. If the indemnification provided for in this APPENDIX
C is unavailable to the Company, the Selling Holder or the underwriters in
respect of any losses, claims, damages, liabilities, expenses or judgments
referred to herein, then each such indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities,
expenses and judgments (i) as between the Company and the Selling Holder on the
one hand and the underwriters on the other, in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling Holder
on the one hand and the underwriters on the other from the offering of the
Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the Selling Holder on
the one hand and of the underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or judgments, as well as any other relevant equitable
considerations and (ii) as between the Company on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Holder on the one
hand and the underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holder bear to the total underwriting discounts and commissions
received by the underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company on the one hand
and of each Selling Holder on the other shall be determined by reference to,
among
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other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the party's relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this section were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities, expenses or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this section, no underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities of such
Selling Holder were offered to the public exceeds the amount of any damages
which such Selling Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
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.
(f) Registration Expenses and Enforcement.
(i) Registrations Rights. The Company shall bear all
Registration Expenses incurred in connection with Registration Rights hereunder.
(ii) Expenses of Registrant. The Company shall pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, the fees and expenses incurred in connection with any
listing of the securities to be registered on a securities exchange, and the
fees and expenses of any person, including special experts, retained by the
Company.
(iii) Enforcement of Registration Rights. Notwithstanding
anything to the contrary contained herein, the Company hereby agrees that each
Holder of Registrable Securities shall be entitled to specific performance of
the registration rights hereunder, and that the Company shall pay any expenses,
including without limitation attorneys' fees, in connection with the enforcement
by any Holder of such specific performance.
(g) Assignment of Registration Rights. Subject to Section 6(a), any of
the rights of the Holders hereunder, including the right to have the Company
register Registrable Securities pursuant to this Agreement, may be assigned by
each Holder to any transferee of all or any portion of the Warrant or the
Registrable Securities if: (i) the Holder agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company after such assignment, (ii) the Company is furnished with written
notice of (A) the name and address of such transferee or assignee, and (B) the
securities with respect to which such registration rights are being transferred
or assigned, (iii) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and applicable state securities laws, and (iv) such transfer
shall have been made in accordance with the applicable requirements of the
Warrant. The transferee, by acceptance of the transfer of any registration
rights hereunder, acknowledges that it takes such rights subject to the terms
and conditions hereof. Upon any transfer of less
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than all of its Registrable Securities, the Holder retains registration rights
with respect to Registrable Securities held by it.
(h) Exercise of Registration Rights. Notwithstanding anything to the
contrary contained herein, the Holder agrees not to exercise any of its
registration rights set forth in this APPENDIX C at any time that it is able to
sell all of its Registrable Securities under Rule 144 of the Securities Act in a
single transaction without exceeding the volume limitations thereunder.
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