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Exhibit 10.20
WARRANT
to Purchase Common Shares of
EMCORE CORPORATION
Warrant No. 1
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TABLE OF CONTENTS
SECTION PAGE
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1. DEFINITIONS..................................................................................................3
2. EXERCISE OF WARRANT..........................................................................................6
2.1. Manner of Exercise..................................................................................6
2.2. Payment of Taxes....................................................................................7
2.3. Fractional Shares...................................................................................8
2.4. Continued Validity..................................................................................8
3. TRANSFER, DIVISION AND COMBINATION...........................................................................8
3.1. Transfer............................................................................................8
3.2. Division and Combination............................................................................8
3.3. Expenses............................................................................................8
3.4. Maintenance of Books................................................................................9
4. ADJUSTMENTS..................................................................................................9
4.1. Share Dividends, Subdivisions and Combinations......................................................9
4.2 Certain Other Distributions and Adjustments.........................................................9
4.3. Issuance of Additional Common Shares, Warrants or Other Rights.....................................10
4.4. Organic Change.....................................................................................10
4.5. Other Provisions Applicable to Adjustments Under This Section......................................11
4.6. Other Action Affecting Common Shares...............................................................11
5. NOTICES TO WARRANT HOLDERS..................................................................................12
5.1. Notice of Certain Events...........................................................................12
5.2. Notice of Adjustments..............................................................................12
6. NO IMPAIRMENT...............................................................................................12
7. RESERVATION AND AUTHORIZATION OF COMMON SHARES; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY..............................................................13
8. TAXING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS..........................................................13
9. RESTRICTIONS ON TRANSFERABILITY.............................................................................13
9.1. Restrictive Legend.................................................................................14
9.2. Notice of Proposed Transfers; Requests for Registration............................................14
9.3. Required Registration..............................................................................14
9.4. Incidental Registration............................................................................15
9.5. Registration Procedures............................................................................16
9.6. Expenses...........................................................................................17
9.7. Indemnification and Contribution...................................................................17
9.8. Termination of Restrictions........................................................................20
9.9. Listing on Securities Exchange.....................................................................20
9.10. Certain Limitations on Registration Rights.........................................................20
9.11. Market Stand-Off Agreement.........................................................................21
10. SUPPLYING INFORMATION.......................................................................................21
11. LOSS OR MUTILATION..........................................................................................21
12. OFFICE OF THE COMPANY.......................................................................................22
13. INTENTIONALLY OMITTED.......................................................................................22
14. LIMITATION OF LIABILITY.....................................................................................22
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15. MISCELLANEOUS...............................................................................................22
15.1. Nonwaiver and Expenses.............................................................................22
15.2. Notice Generally...................................................................................22
15.3. Remedies...........................................................................................23
15.4. Successors and Assigns.............................................................................23
15.5. Amendment..........................................................................................23
15.6. Severability.......................................................................................23
15.7. Headings...........................................................................................24
15.8. Governing Law......................................................................................24
SIGNATURES
EXHIBITS
Exhibit A - Subscription Form
Exhibit B - Assignment Form
SCHEDULE
Schedule 1 - Permitted Issuances
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO ANY STATE
SECURITIES LAWS AND REGULATIONS AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH
ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT.
Warrant No. 1
WARRANT
To Purchase Common Shares of
EMCORE CORPORATION
THIS IS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, or
registered assigns, is entitled, at any time during the Exercise Period (as
hereinafter defined), to purchase from EMCORE CORPORATION, a New Jersey
corporation (the "Company"), the number of Common Shares (as hereinafter defined
and subject to adjustment as provided herein) described herein, in whole or in
part, including fractional parts, at a purchase price of $22.875 per share
(subject to adjustment as provided herein) all on the terms and conditions and
pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
Terms used in this Warrant have the respective meanings set
forth below:
"Appraised Value" shall mean, in respect of any Common Share
on any date herein specified, the fair saleable value of such Common Share
(determined without giving affect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Share or (iii) to the fact that the
Company may have no class of equity registered under the Exchange Act) as of the
most recent determination thereof for all other purposes, hereof, based on the
equity value of the Company, as determined by an investment banking or valuation
firm selected in accordance with the following sentences, divided by the number
of Common Shares outstanding on a Fully Diluted Basis as determined in
accordance with GAAP (assuming the payment of the exercise prices for such
shares). The determination of the Appraised Value per Common Share shall be made
by an investment banking or valuation firm of nationally recognized standing
selected by the Company and acceptable to the Majority Holders. If the
investment banking or valuation firm selected by Company is not acceptable to
the Majority Holders and the Company and the Majority Holders cannot agree on a
mutually acceptable investment banking or valuation firm, then the Majority
Holders and the Company shall each choose one such investment banking or
valuation firm and the respective chosen firms shall agree on another investment
banking or valuation firm which shall make the determination. The Company shall
retain, at its sole cost, such investment banking or valuation firm as may be
necessary for the determination of Appraised Value required by the terms of this
Warrant.
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"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Closing Date" shall have the meaning ascribed to such term in
Section 4.1 of the Transaction Agreement, dated May 20, 1999, between the
Company and General Electric Company.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act, the Exchange
Act and other federal securities laws.
"Common Share" shall mean (except where the context otherwise
indicates) a Common Share, no par value, of the Company as constituted on the
date hereof, and any capital stock into which such Common Share may thereafter
be changed, and shall also include (i) capital stock of the Company of any other
class (regardless of how denominated) issued to the holders of Common Shares
upon any reclassification thereof which is also not preferred as to dividends or
assets over any other class of capital stock of the Company and which is not
subject to redemption and (ii) capital stock of any successor or acquiring
corporation received by or distributed to the holders of Common Shares of the
Company in the circumstances contemplated by Section 4.4.
"Current Market Price" shall mean, in respect of any Common
Share on any date herein specified (a) if there shall then be a public market
for the Common Shares, the average of the daily market prices for 20 consecutive
Business Days commencing 30 days before such date, or (b) if there shall then be
no public market for the Common Shares, the Appraised Value per Common Share as
at such date. The daily market price for each such Business Day shall be (i) the
last sale price on such day on the principal stock exchange or NASDAQ-NMS on
which such Common Shares are then listed or admitted to trading, or (ii) if no
sale takes place on such day on any such exchange or NASDAQ-NMS, the average of
the last reported closing bid and asked prices on such day as officially quoted
on any such exchange or NASDAQ-NMS, or (iii) if the Common Shares are not then
listed or admitted to trading on any stock exchange or NASDAQ-NMS, the average
of the last reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by the NASDAQ or the National Quotation
Bureau, Inc., or (iv) if neither such corporation at the time is engaged in the
business of reporting such prices, as furnished by any similar firm then engaged
in such business, or (v) if there is no such firm, as furnished by any member of
the NASD selected mutually by the Majority Holders and the Company or, if they
cannot agree upon such selection, as selected by two such members of the NASD,
one of which shall be selected by the Majority Holders and one of which shall be
selected by the Company.
"Current Warrant Price" shall mean, in respect of any Common
Share at any date herein specified, the price at which such Common Share may be
purchased pursuant to this Warrant on such date.
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"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean May 26, 2006.
"Fully Diluted Basis" means, with respect to any determination
or calculation, that such determination or calculation is performed on a fully
diluted basis (assuming the issuance of all Common Shares issuable under any
then outstanding options, warrants or convertible securities of any kind)
determined in accordance with GAAP for purposes of determining book value or net
income per share.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"GE" shall mean General Electric Company, a New York
corporation.
"Holder" shall mean the Person in whose name the Warrant set
forth herein is registered on the books of the Company maintained for such
purpose.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of Common Shares then
purchasable upon exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation System.
"NASDAQ-NMS" shall mean the NASDAQ National Market System.
"Organic Change" shall have the meaning set forth in Section
4.4.
"Permitted Issuances" shall mean issuances (a) pursuant to
existing obligations, including, without limitation, under agreements with
existing lenders, outstanding options, rights, warrants or other securities
convertible into or exchangeable for Common Shares, or pursuant to any existing
employee benefit plan, (b) pursuant to any joint venture or other strategic
alliance, with the prior written consent of Holder, (c) covered by Section 4.1,
and (d) pursuant to a registration statement under the Securities Act.
"Person" shall mean any individual, sole proprietorship,
partnership limited liability the Company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city,
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municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Registration Statement" shall have the meaning set forth in
Section 9.4.
"Restricted Common Shares" shall mean Common Shares that are,
or upon their issuance on the exercise of this Warrant would be, evidenced by a
certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability the Company, association or other business
entity in respect of which that Person owns securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors, partnership committee, board of managers or trustees or other
managerial body thereof, whether directly or indirectly through one or more of
the other Subsidiaries of such Person or a combination thereof. Unless otherwise
specified, "Subsidiary" means a Subsidiary of the Company and "Subsidiaries"
means all Subsidiaries of the Company.
"Transfer" shall mean any disposition of any Warrant or
Warrant Share or of any interest in either thereof that would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, this Warrant.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of Common Shares for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number
of Common Shares being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Shares" shall mean the Common Shares issued or
issuable to the holders of Warrants upon exercise of the Warrants.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. From and after the date hereof and until 5:00 P.M., New
York time, on the Expiration Date (the "Exercise Period"), Holder may exercise
this Warrant, on any Business Day, for all or any part of 282,010 Common Shares.
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In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 294 Elizabeth Avenue,
Somerset, New Jersey 08873, or at the office or agency designated by the Company
pursuant to Section 12: (i) a written notice of Holder's election to exercise
this Warrant, which notice shall specify the number of Common Shares to be
purchased, (ii) payment of the Warrant Price and (iii) this Warrant. Such notice
shall be substantially in the form of the subscription form appearing at the end
of this Warrant as Exhibit A, duly executed by Holder or its agent or attorney.
Upon receipt thereof, the Company shall, as promptly as practicable, and in any
event within five Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full Common Shares issuable upon such
exercise, together with cash in lieu of any fraction of a share, as hereinafter
provided. The share certificate or certificates so delivered shall be, to the
extent possible, in such denomination or denominations as such Holder shall
request in the notice and shall be registered in the name of Holder or, subject
to Section 9, such other name as shall be designated in the notice. This Warrant
shall be deemed to have been exercised and such certificate or certificates
shall be deemed to have been issued, and Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the notice, together with the
cash or check or other payment as provided below and this Warrant, is received
by the Company as described above and all taxes required to be paid by Holder,
if any, pursuant to Section 2.2 prior to the issuance of such shares have been
paid. If this Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Common Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or, at the
request of Holder, appropriate notation may be made on this Warrant and the same
returned to Holder.
Payment of the Warrant Price shall be made at the Option of
Holder by (i) certified or official bank check, and/or (ii) by Holder's
surrender to the Company of that number of Warrant Shares (or the right to
receive such number of shares) or Common Shares having an aggregate Current
Market Price equal to or greater than the Current Warrant Price for all shares
then being purchased (including those being surrendered), or (iii) any
combination thereof, duly endorsed by or accompanied by appropriate instruments
of transfer duly executed by Holder or by Holder's attorney duly authorized in
writing.
2.2. PAYMENT OF TAXES. All Common Shares issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Common Shares issuable upon
exercise of this Warrant in any name other than that of Holder, and in such case
the Company shall not be required to issue or deliver any share certificate
until such tax or other charge has been paid or it has been established to the
reasonable satisfaction of the Company that no such tax or other charge is due.
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2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional Common Share upon exercise of any Warrant. If any fraction of
a share would, but for this Section, be issuable upon exercise of this Warrant,
in lieu of such fractional share, the Company may, at its option, pay a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per Common Share on the date of exercise.
2.4. CONTINUED VALIDITY. A holder of Common Shares issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10 and
15 of this Warrant. The Company will, at the time of each exercise of this
Warrant, in whole or in part, upon the request of the holder of the Common
Shares issued upon such exercise hereof, acknowledge in writing, in form
reasonably satisfactory to such holder, its continuing obligation to afford to
such holder all such rights; PROVIDED, HOWEVER, that if such holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9 hereof,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred to in
Section 2.1 or the office or agency designated by the Company pursuant to
Section 12, together with a written assignment of this Warrant substantially in
the form of Exhibit B hereto duly executed by Holder or its agent or attorney
and funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall,
subject to Section 9, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned in compliance with
Section 9, may be exercised by a new Holder for the purchase of Common Shares
without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer that may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at
its own expense (other than transfer taxes) the new Warrant or Warrants under
this Section 3.
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3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at
its aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.
4. ADJUSTMENTS
The number of Common Shares for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give each Holder notice of any event described
below in accordance with Section 5.2.
4.1. SHARE DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In case
the Company shall at any time or from time to time after the Closing Date:
(a) pay a dividend, or make a distribution, on the outstanding
Common Shares in Common Shares,
(b) subdivide the outstanding Common Shares,
(c) combine the outstanding Common Shares into a smaller
number of Common Shares, or
(d) issue by reclassification of the Common Shares any shares
of capital stock of the Company
then the Current Warrant Price in effect immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that Holder,
who thereafter exercises this Warrant, shall be entitled to receive the number
of Common Shares or other securities of the Company which Holder would have
owned or have been entitled to receive after the happening of any of the events
described above, had the Warrant been exercised immediately prior to the
happening of such event or the record date therefor, whichever is earlier. An
adjustment made pursuant to this Section 4.1 shall become effective (x) in the
case of any such dividend or distribution, immediately after the close of
business on the record date for the determination of holders of Common Shares
entitled to receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification or combination, at the close of business on the
day upon which such corporate action becomes effective. No adjustment shall be
made pursuant to this Section 4.1 in connection with any transaction to which
Section 4.4 applies.
4.2 CERTAIN OTHER DISTRIBUTIONS AND ADJUSTMENTS. In case the
Company shall at any time or from time to time after the Closing Date declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of stock or other securities or property or rights
or warrants to subscribe for securities of the Company or any of its
subsidiaries by way of dividend or spinoff), on its Common Shares, other than
dividends or distributions of Common Shares which are referred to in Section 4.1
above and cash dividends paid out of retained earnings, then the Current Warrant
Price shall be adjusted so that it shall equal the price determined by
multiplying (A) the applicable Current Warrant Price on the day
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immediately prior to the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution by (B) a fraction, the
numerator of which shall be the Current Market Price per Common Share on the day
immediately prior to such record date less the amount of such dividend or
distribution per Common Share, and the denominator of which shall be such
Current Market Price per Common Share on the day immediately prior to such
record date. No adjustment shall be made pursuant to this Section 4.2) in
connection with any transaction to which Section 4.4 applies.
4.3. ISSUANCE OF ADDITIONAL COMMON SHARES, WARRANTS OR OTHER
RIGHTS.
(a) If at any time the Company shall issue Common Shares (or
rights, warrants or other securities convertible into or exchangeable for Common
Shares) after the Closing Date, other than Permitted Issuances, for
consideration in an amount per Common Share (or having an exercise, conversion
or exchange price per share) less than an amount equal to 25% below the Current
Market Price, then (i) the number of Common Shares subject to purchase upon
exercise of this Warrant shall be adjusted to equal the product obtained by
multiplying the number of Common Shares subject to purchase upon exercise of
this Warrant immediately prior to such issue or sale by a fraction (A) the
numerator of which shall be the number of Common Shares outstanding immediately
after such issue or sale, and (B) the denominator of which shall be the number
of Common Shares outstanding immediately prior to such issue or sale plus the
number of Common Shares which the aggregate offering price of the total number
of such additional Common Shares would purchase at the then Current Market
Price; and (ii) the Current Warrant Price as to the number of Common Shares
subject to purchase upon exercise of this Warrant prior to such adjustment shall
be adjusted by multiplying such Current Warrant Price by a fraction (X) the
numerator of which shall be the number of Common Shares subject to purchase upon
exercise of this Warrant immediately prior to such issue or sale; and (Y) the
denominator of which shall be the number of Common Shares subject to purchase
upon exercise of this Warrant immediately after such issue or sale.
(b) An adjustment made pursuant to Section 4.3(a) shall be
made on the next Business Day following the date on which any such issuance is
made and shall be effective retroactively immediately after the close of
business on such date. For purposes of Section 4.3(a), the aggregate
consideration received by the Company in connection with the issuance of Common
Shares or of rights, warrants or other securities exchangeable or convertible
into Common Shares shall be deemed to be equal to the sum of the aggregate
offering price of all such Common Shares and such rights, warrants, or other
exchangeable or convertible securities plus the aggregate amount, if any,
receivable upon exchange or conversion of any such exchangeable or convertible
securities into Common Shares.
4.4. ORGANIC CHANGE. In case of any reorganization of capital,
reclassification of capital stock (other than a reclassification of capital
subject to Section 4.1), consolidation or merger with or into another
corporation, or sale, transfer or disposition of all or substantially all the
property, assets or business of the Company to another corporation (any one or
more of such events being an "Organic Change"), this Warrant shall thereafter be
exercisable into, in lieu of the Common Shares issuable upon exercise of this
Warrant prior to consummation of such Organic Change, the kind and amount of
shares of stock and other securities and property
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receivable (including cash) upon the consummation of such Organic Change by a
holder of that number of Common Shares subject to purchase upon exercise of this
Warrant immediately prior to such Organic Change (including, on a pro rata
basis, the cash, securities or property received by holders of Common Shares in
any tender or exchange offer that is a step in such Organic Change). In case
securities or property other than Common Shares shall be issuable or deliverable
upon exercise as aforesaid, then all references in this Section 4.4 shall be
deemed to apply, so far as appropriate and nearly as may be, to such other
securities or property.
4.5. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION. The following provisions shall be applicable to the making of
adjustments of the number of Common Shares for which this Warrant is exercisable
and the Current Warrant Price provided for in this Section 4:
(a) For purposes of this Section 4, the number of Common
Shares at any time outstanding shall not include any Common Shares then owned or
held by or for the account of the Company or any of its subsidiaries.
(b) If the Company shall take a record of the holders of its
Common Shares for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of Common Shares
issuable upon exercise of this Warrant granted by this Section 4 or in the
Current Warrant Price then in effect shall be required by reason of the taking
of such record.
(c) Anything in this Section 4 to the contrary
notwithstanding, the Company shall not be required to give effect to any
adjustment in the Current Warrant Price unless and until the net effect of one
or more adjustments (each of which shall be carried forward), determined as
above provided, shall have resulted in a change of the Current Warrant Price by
at least 1%, and when the cumulative net effect of more than one adjustment so
determined shall be to change the Current Warrant Price by at least one cent,
such change in Current Warrant Price shall thereupon be given effect.
(d) If any option or warrant expires or is cancelled without
having been exercised, then, for the purposes of the adjustments set forth
above, such option or warrant shall have been deemed not to have been issued and
the Current Warrant Price shall be adjusted accordingly. No holder of Common
Shares which were previously issued upon exercise of this Warrant shall have any
obligation to redeem or cancel any such Common Shares as a result of the
operation of this Section 4.5(d).
4.6. OTHER ACTION AFFECTING COMMON SHARES. In case at any time
or from time to time the Company shall take any action in respect of its Common
Shares, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of Holders, the
number of Common Shares or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
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5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF CERTAIN EVENTS. In case at any time or from
time to time the Company shall pay any stock dividend or make any other non-cash
distribution to the holders of its Common Shares, or shall offer for
subscription pro rata to the holders of its Common Shares any additional shares
of stock of any class or any other right, or there shall be any capital
reorganization or reclassification of the Common Shares of the Company or
consolidation or merger of the Company with or into another corporation, or any
sale or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, or there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company, then, in any
one or more of said cases, the Company shall give at least 20 days' prior
written notice to Holder at the address of each as shown on the books of the
Company as of the date on which (i) the books of the Company shall close or a
record shall be taken for such stock dividend, distribution or subscription
rights or (ii) such non-bankruptcy reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Organic Change to which Section 4.4 applies the Company shall give at least 20
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Shares of record shall participate in such
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Shares for securities or other property deliverable upon such
non-bankruptcy reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or winding up, as the
case may be. Failure to give such notice shall not invalidate any action so
taken.
5.2. NOTICE OF ADJUSTMENTS. Upon any adjustment of the Current
Warrant Price then in effect and any increase or decrease in the number of
Common Shares subject to purchase upon exercise of this Warrant, then, and in
each such case, the Company shall promptly deliver to Holder, a certificate
signed by the President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company setting
forth in reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the Current Warrant Price
then in effect following such adjustment and the increased or decreased number
of shares subject to purchase upon exercise of this Warrant granted by Section
4, and shall set forth in reasonable detail the method of calculation of each
and a brief statement of the facts requiring such adjustment.
6. NO IMPAIRMENT
The Company shall not by any action, including, without
limitation, amending its certificate of incorporation 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 of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Common Shares upon the exercise of this Warrant, including
taking such action as is necessary for the Current Warrant Price to be not less
than the par value of the Common Shares issuable
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upon exercise of this Warrant, and (b) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON SHARES; REGISTRATION WITH OR APPROVAL
OF ANY GOVERNMENTAL AUTHORITY
From and after the date hereof, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued Common Shares as will be sufficient to permit the
exercise in full of all outstanding Warrants. All Common Shares that shall be so
issuable, when issued upon exercise of any Warrant and payment therefor in
accordance with the terms of such Warrant, shall be duly and validly issued and
fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action that would result in an adjustment in
the number of Common Shares for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any Common Shares required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
law (otherwise than as provided in Section 9) before such shares may be so
issued, the Company will in good faith and as expeditiously as possible and at
its expense endeavor to cause such shares to be duly registered or such approval
to be obtained or filing made.
8. TAXING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Shares with respect to which any provision
of Section 4 refers to the taking of a record of such holders, the Company will
in each such case take such record as of the close of business on a Business
Day. The Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of any
Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Shares shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Share. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
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9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Section 9, each certificate for Warrant Shares initially issued upon the
exercise of this Warrant, and each certificate for Warrant Shares issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
pursuant to any State securities laws and regulations
and may not be transferred in violation of such Act
or the rules and regulations thereunder."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This warrant and the securities represented hereby have not
been registered under the Securities Act of 1933, as amended,
or pursuant to any State securities laws and regulations and
may not be transferred in violation of such Act, the rules and
regulations thereunder or the provisions of this Warrant."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION.
Prior to any Transfer of any Warrant or any Restricted Common Share, the holder
of such Warrant or Restricted Common Share shall give written notice (a
"Transfer Notice") to the Company of such Transfer. Any such Transfer must
comply with applicable securities laws and, at the request of the Company,
Holder shall deliver to company an opinion of counsel to Holder that is
reasonably acceptable to the Company as to such compliance. Each certificate, if
any, evidencing such Restricted Common Share issued upon such Transfer shall
bear the restrictive legend set forth in Section 9.1(a), and each Warrant issued
upon such Transfer shall bear the restrictive legend set forth in Section
9.1(b), unless in the opinion of counsel to such holder that is reasonably
acceptable to the Company such legend is not required in order to ensure
compliance with the Securities Act.
The holders of Warrants and Warrant Shares shall have the
right to request registration of such Warrant Shares pursuant to Sections 9.3
and 9.4.
9.3. REQUIRED REGISTRATION. After receipt of a written request
from the holders of Warrants and/or Warrant Shares representing at least either
(x) an aggregate of 50% of the total of (i) all Warrant Shares then subject to
purchase upon exercise of all Warrants and (ii) all Warrant Shares then
outstanding and that are Restricted Common Shares, or (y) such Warrant Shares
having a minimum anticipated aggregate offering price of at least $5,000,000,
requesting that the Company effect the registration of Warrant Shares issuable
upon the exercise of such holder's Warrants or of any of such holder's Warrant
Shares under the Securities Act and specifying the intended method or methods of
disposition thereof, the Company shall promptly notify all holders of Warrants
and Warrant Shares in writing of the receipt of such request and each such
holder, in lieu of exercising its rights under Section 9.4, may elect (by
written notice
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sent to the Company within 10 Business Days from the date of such holder's
receipt of the aforementioned the Company's notice) to have its Warrant Shares
included in such registration thereof pursuant to this Section 9.3. Thereupon
the Company shall, as expeditiously as is possible, use its reasonable best
efforts to effect the registration under the Securities Act of all Warrant
Shares that the Company has been so requested to register by such holders for
sale, all to the extent required to permit the disposition (in accordance with
the intended method or methods thereof, as aforesaid) of the Warrant Shares so
registered; PROVIDED, HOWEVER, that the Company shall not be required to effect
more than one registration of any Warrant Shares pursuant to this Section 9.3
which registration shall not be underwritten; and provided further, however,
that the right of the holders of the Warrant Shares to request that the Company
effect a registration of any Warrant Shares pursuant to this Section 9.3 shall
terminate when the Warrant Shares may be sold pursuant to Rule 144 under the
Securities Act during any six-month period. A holder may only request a
registration of Warrant Shares that it has a present intention to sell and it
shall so state in its request for registration.
9.4. INCIDENTAL REGISTRATION. If the Company at any time
commencing one year after the date hereof proposes to file on its behalf and/or
on behalf of any of its security holders (the "demanding security holders") a
registration statement under the Securities Act (a "Registration Statement") on
any form (other than a Registration Statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of the Company
pursuant to any employee benefit plan, respectively) for the general
registration of securities to be sold for cash with respect to its Common Shares
or any other class of equity security (as defined in Section 3(a)(11) of the
Exchange Act) of the Company, it will give written notice to all holders of
Warrants or Warrant Shares that are Restricted Common Shares at least 15 days
before the initial filing with the Commission of such Registration Statement,
which notice shall set forth the intended method of disposition of the
securities proposed to be registered by the Company. The notice shall offer to
include in such filing the aggregate number of Warrant Shares, and the number of
Common Shares for which this Warrant is exercisable, as such holders may
request. Holders shall be entitled to an unlimited number of registrations
pursuant to this Section 9.4.
Each holder of any such Warrants or any such Warrant Shares
desiring to have Warrant Shares that are Restricted Common Shares registered
under this Section 9.4 shall advise the Company in writing within 10 days after
the date of receipt of such offer from the Company, setting forth the number of
such Warrant Shares for which registration is requested. The Company shall
thereupon include in such filing the number of Warrant Shares for which
registration is so requested, subject to the next sentence, and shall use its
reasonable best efforts to effect registration under the Securities Act of such
shares if such offering proceeds. If the managing underwriter of a proposed
public offering shall advise the Company in writing that, in its opinion, the
distribution of the Warrant Shares requested to be included in the registration
concurrently with the securities being registered by the Company or such
demanding security holder would materially and adversely affect the distribution
of such securities by the Company or such demanding security holder, then all
selling security holders, other than the Company (including any demanding
security holder who initially requested such registration), shall reduce the
amount of securities each intended to distribute through such offering on a pro
rata basis.
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Except as otherwise provided in Section 9.6, all expenses of such registration
shall be borne by the Company.
9.5. REGISTRATION PROCEDURES. If the Company is required by
the provisions of this Section 9 to use its reasonable best efforts to effect
the registration of any of its securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such securities and use its reasonable best
efforts to cause such Registration Statement to become and remain
effective for a period of time required for the disposition of such
securities by the holders thereof, but not to exceed 120 days;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities
covered by such Registration Statement until the earlier of such time
as all of such securities have been disposed of in a public offering or
the expiration of 120 days;
(c) upon request, furnish to each selling security holder such
number of copies of such Registration Statement, each amendment and
supplement thereto, the prospectus included in such Registration
Statement (including each preliminary prospectus and each prospectus
filed under Rule 424 of the Securities Act) and such other documents as
each such selling security holder may reasonably request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions within the United States as each
holder of such securities shall request (PROVIDED, HOWEVER, that the
Company shall not be obligated to qualify as a foreign corporation to
do business under the laws of any jurisdiction in which it is not then
qualified or to file any general consent to service or process), and do
such other reasonable acts and things as may be required of it to
enable such holder to consummate the disposition in such jurisdiction
of the securities covered by such Registration Statement;
(e) furnish, at the request of any holder requesting
registration of Warrant Shares pursuant to Section 9.3, on the date
that such Warrant Shares are delivered to the underwriters for sale
pursuant to such registration or, if such Warrant Shares are not being
sold through underwriters, on the date that the Registration Statement
with respect to such Warrant Shares becomes effective, (1) an opinion,
dated such date, of the independent counsel representing the Company
for the purposes of such registration, addressed to the underwriters,
if any, in customary form and covering matters of the type customarily
covered in such legal opinions; and (2) a comfort letter dated such
date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and, if such accountants refuse
to deliver such letter to such holder, then to the Company in a
customary form and covering matters of the type customarily
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covered by such comfort letters as the underwriters or such holders
shall reasonably request;
(f) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of such securities); and
(g) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
but not later than 18 months after the effective date of the
Registration Statement, an earnings statement covering a period of at
least 12 months beginning after the effective date of such Registration
Statement, which earnings statements shall satisfy the provisions of
Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Section 9 in respect of the
securities that are to be registered at the request of any holder of Warrants or
Warrant Shares that such holder shall furnish to the Company such information
regarding the securities held by such holder and the intended method of
disposition thereof as the Company shall reasonably request and as shall be
required in connection with the action taken by the Company. Such Holder shall
also enter into reasonably acceptable customary custody and other agreements in
connection with any registration statements if requested by the Company.
9.6. EXPENSES. All expenses incurred in complying with Section
9, including, without limitation, all registration and filing fees (including
all expenses incident to filing with the NASD), printing expenses, fees and
disbursements of counsel for the Company, the reasonable fees and expenses of
one counsel for the selling security holders (selected by those holding a
majority of the shares being registered), expenses of any special audits
incident to or required by any such registration and expenses of complying with
the securities or blue sky laws of any jurisdictions pursuant to Section 9.5(d),
shall be paid by the Company, except that
(a) all such expenses in connection with any amendment or
supplement to the Registration Statement or prospectus filed more than
180 days after the effective date of such Registration Statement
because any holder of Warrant Shares has not effected the disposition
of the securities requested to be registered shall be paid by such
holder; and
(b) the Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of counsel
for any underwriter in respect of the securities sold by such holder of
Warrant Shares.
9.7. INDEMNIFICATION AND CONTRIBUTION. (a) In the event of any
registration of any Warrant Share under the Securities Act pursuant to this
Section 9, the Company shall indemnify and hold harmless the holder of such
Warrant Share, such holder's directors and officers, and each other Person
(including each underwriter) who participated in the offering of such Warrant
Share and each other person, if any, who controls such holder or such
participating Person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such holder
or any such director or officer or participating Person or controlling Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or
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liabilities (or actions in respect thereof) arise out of or are based upon (i)
any alleged untrue statement of any material fact contained, on the effective
date thereof, in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse such holder or such director, officer or participating Person or
controlling Person for any legal or any other expenses reasonably incurred by
such holder or such director, officer or participating Person or controlling
Person in connection with investigating or defending any such loss, claim,
damage, liability or action; PROVIDED, HOWEVER, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any alleged untrue statement or alleged
omission made in such Registration Statement, preliminary prospectus, prospectus
or amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such holder specifically
for use therein or (in the case of any registration pursuant to Section 9.3) so
furnished for such purposes by or on behalf of any underwriter. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such holder or such director, officer or participating Person or
controlling Person, and shall survive the transfer of such securities by such
holder.
(b) Each holder of any Warrant Share, by acceptance thereof,
agrees to indemnify and hold harmless the Company, its directors and officers
and each other Person, if any, who controls the Company within the meaning of
the Securities Act against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or any such Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information in writing provided
to the Company by or on behalf of such holder of such Warrant Share specifically
for use in the following documents and contained, on the effective date thereof,
in any Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto, but
in an amount not to exceed the net proceeds received by such holder in the
offering.
(c) Promptly after receipt by an indemnified party under
Sections 9(a) or (b) above of notice of the assertion of any claim, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability that it may have under this Section 9 except to the extent that it has
been prejudiced in any material respect by such failure or from any liability
that it may have otherwise). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably
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satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them that are different from or
additional to those available to one or all of the indemnifying parties (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 parties with
respect to such different defenses), in any of which events such fees and
expenses shall be borne by the indemnifying parties. The indemnifying party
under Sections 9(a) or (b) above shall only be liable for the legal expenses of
one counsel for all indemnified parties in each jurisdiction in which any claim
or action is brought; PROVIDED, HOWEVER, that the indemnifying party shall be
liable for separate counsel for any indemnified party in a jurisdiction, if
counsel to the indemnified parties shall have reasonably concluded that there
may be defenses available to such indemnified party that are different from or
additional to those available to one or more of the other indemnified parties
and that separate counsel for such indemnified party is prudent under the
circumstances. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent; PROVIDED, HOWEVER, that such written
consent was not unreasonably withheld.
(d) If the indemnification provided for in this Section 9 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the 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 or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. The liability of any holder of Warrant Shares
hereunder shall not exceed the net proceeds received by it in the offering.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9.7(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
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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.
9.8. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of Section 9, the restrictions imposed by this Section upon
the transferability of the Warrants, the Warrant Shares and the Restricted
Common Shares and the legend requirements of Section 9.1 shall terminate as to
any particular Warrant or Warrant Share or Restricted Common Share (i) when and
so long as such security shall have been effectively registered under the
Securities Act and disposed of pursuant thereto or (ii) when the Company shall
have received an opinion of counsel reasonably satisfactory to it that such
securities may be transferred without registration thereof under the Securities
Act. Whenever the restrictions imposed by Section 9 shall terminate as to this
Warrant, as hereinabove provided, Holder hereof shall be entitled to receive
from the Company, at the expense of the Company, a new Warrant without the
restrictive legend set forth in Section 9.1(b). Whenever the restrictions
imposed by this Section shall terminate as to any Restricted Common Share, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate representing such Common
Share not bearing the restrictive legend set forth in Section 9.1(a).
9.9. LISTING ON SECURITIES EXCHANGE. If the Company shall list
any Common Shares on any securities exchange, it will, at its expense, list
thereon, maintain and, when necessary, increase such listing of, all Common
Shares issued or, to the extent permissible under the applicable securities
exchange rules, issuable upon the exercise of this Warrant so long as any Common
Shares shall be so listed during any such Exercise Period.
9.10. CERTAIN LIMITATIONS ON REGISTRATION RIGHTS.
Notwithstanding the other provisions of Section 9:
(i) the Company shall not be obligated to register the
Warrant Shares of any holder if, in the opinion of
counsel to the Company reasonably satisfactory to the
holder and its counsel (or, if the holder has engaged
an investment banking firm, to such investment
banking firm and its counsel), the sale or other
disposition of such holder's Warrant Shares, in the
manner proposed by such holder (or by such investment
banking firm), may be effected without registering
such Warrant Shares under the Securities Act; and
(ii) the Company shall not be obligated to register the
Warrant Shares of any holder pursuant to Section 9.3,
if the Company has had a registration statement,
under which such holder had a right to have its
Warrant Shares included pursuant to Sections 9.3 or
9.4, declared effective within one year prior to the
date of the request pursuant to Section 9.3;
PROVIDED, HOWEVER, that if any holder elected to have
shares of its Warrant Shares included under such
registration statement but some or all of such shares
were excluded pursuant to the penultimate sentence of
Section 9.4, then such one-year period shall be
reduced to the greater of six months or any lock-up
period agreed to by such holder with an underwriter.
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(iii) The Company shall have the right to delay the filing
or effectiveness of a registration statement required
pursuant to Section 9.3 hereof during one or more
periods aggregating not more than 90 days in any 12
month period in the event that (i) the Company would,
in accordance with the advice of its counsel, be
required to disclose in the prospectus information
not otherwise then required by law to be publicly
disclosed and (ii) in the judgment of the Company's
Board of Directors, there is a reasonable likelihood
that such disclosure, or any other action to be taken
in connection with the prospectus, would materially
and adversely affect any existing or prospective
material business situation, transaction or
negotiation or otherwise materially and adversely
affect the Company.
9.11. MARKET STAND-OFF AGREEMENT. Each Holder hereby agrees
that, during the period of duration specified by the Company and an underwriter
of common stock or other securities of the Company, following the effective date
of a registration statement of the Company filed under the Act, it shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except common stock included in such
registration; provided, however, that such market stand-off time period shall
not exceed 180 days and all officers and directors of the Company enter into
similar agreements.
In order to enforce the foregoing covenant, the Company may
impost stop-transfer instructions with respect to the Warrants and Warrant
Shares of each Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Shares in supplying such information as may be
reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Shares.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably satisfactory
to it (it being understood that the written agreement of GE shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant of like tenor
to such Holder; PROVIDED, in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company for
cancellation.
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12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the
Company shall maintain an office or agency (which may be the principal
executive offices of the Company) where the Warrants may be presented for
exercise, registration of transfer, division or combination as provided in
this Warrant.
13. [INTENTIONALLY OMITTED]
14. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase Common Shares, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Share or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
15. MISCELLANEOUS
15.1. NONWAIVER AND EXPENSES. No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
15.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid, or
by telecopy and confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Shares, at its last
known address appearing on the books of the Company maintained for such
purpose.
(b) If to the Company at
Emcore Corporation
294 Elizabeth Avenue
Somerset, New Jersey 08873
Attention: President
Telecopy Number: (732) 271-9686
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With a Copy to
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Steven M. Betensky, Esq.
Telecopy Number: (212) 354-8113
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three Business Days after the same shall have been deposited in
the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
Person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
15.3. REMEDIES. Each holder of a Warrant or a Warrant Share,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under Section 9 of this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of Section 9 of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate. In any action or proceeding brought to enforce any provision of this
Agreement or where any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys' fees in
addition to any other available remedy.
15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and, with
respect to Section 9 hereof, holders of Warrant Shares, and shall be enforceable
by any such Holder or holder of Warrant Shares.
15.5. AMENDMENT. This Warrant and all other Warrants may be
modified or amended or the provisions hereof waived with the written consent of
the Company and the Majority Holders; PROVIDED that no such Warrant may be
modified or amended to reduce the number of Common Shares for which such Warrant
is exercisable or to increase the price at which such Common Shares may be
purchased upon exercise of such Warrant (before giving effect to any adjustment
as provided therein) without the prior written consent of Holder thereof.
15.6. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be
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ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Warrant.
15.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
15.8. GOVERNING LAW. This Warrant shall be governed by the
laws of the State of New York, without regard to the provisions thereof relating
to conflict of laws.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and attested by its Secretary or an Assistant Secretary.
Dated: May 26, 1999
EMCORE CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
By:
--------------------------------
Name:
Title:
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Common Shares of EMCORE
CORPORATION and herewith makes payment therefor, all at the price and on the
terms and conditions specified in this Warrant and requests that certificates
for the Common Shares hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of and delivered to
______________________________ whose address is ____________________________
and, if such Common Shares shall not include all of the Common Shares issuable
as provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the Common Shares issuable hereunder be delivered to the
undersigned.
----------------------------------------------
(Name of Registered Owner)
----------------------------------------------
(Signature of Registered Owner)
----------------------------------------------
(Street Address)
----------------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
Common Shares set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF COMMON SHARES
---------------------------- --------------------
and does hereby irrevocably constitute and appoint ________________________
attorney-in-fact to register such transfer on the books of EMCORE CORPORATION
maintained for the purpose, with full power of substitution in the premises.
Dated: Print Name:
------------------------- -------------------------
Signature:
-------------------------
Witness:
-------------------------
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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SCHEDULE 1
[Permitted Issuances]
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