Exhibit 4.3
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") NOR IS SUCH REGISTRATION CONTEMPLATED. SUCH SECURITIES MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME
WHATSOEVER UNLESS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, EXCEPT UPON DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER
EVIDENCE AS MAY BE SATISFACTORY TO IT AND TO ITS COUNSEL TO THE EFFECT THAT ANY
SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE ACT, OR APPLICABLE STATE
SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
Warrant to Purchase
Shares of Common Stock
As Herein Described
WARRANT TO PURCHASE COMMON STOCK OF
SOUTHHAMPTON ENTERPRISES CORP.
This is to certify that, for value received, LaSalle Business Credit, Inc.,
or registered assigns (in each case, the "Holder"), is entitled to purchase,
subject to the provisions of this Warrant (the "Warrant"), from Southhampton
Enterprises Corp., a British Columbia, Canada corporation (the "Company"),
having its principal place of business at 9211 Diplomacy Row, Dallas, Texas, at
any time during the period from the date hereof (the "Commencement Date") to
5:00 P.M., Chicago, Illinois time, until June 1, 2002 (the "Expiration Date"),
at which time this Warrant shall expire and become void, ______________ shares
(which consists of three percent (3%) of that number of shares of Common Stock
which will be outstanding immediately after closing of the "Other Securities
Transactions," as represented on Schedule 1 attached hereto) ("Warrant Shares")
of the Company's Common Stock, no par value (the "Common Stock"). This Warrant
shall be exercisable at the Exercise Price, as hereinafter defined. The number
of shares of Common Stock to be received upon exercise of this Warrant shall be
adjusted from time to time as set forth below. The term "Exercise Price" means
initially the lower of (i) One Dollar ($1.00) per share and (ii) the lowest
price established by any of the following financing(s) that occurs within twelve
(12) months from the date hereof: (A) the price per share of common equity
established by the first round of common equity financing after the date hereof
or (B) the conversion price to Common Stock or exercise price for Common Stock
established by the first round of preferred stock,
Convertible Securities or options or rights to purchase Common Stock after the
date hereof. In the absence of any such financing within the above time period,
the initial exercise price shall be One Dollar ($1.00) per share. The Exercise
Price per share shall be subject to adjustment as provided in this Warrant. The
term Convertible Securities means evidence of indebtedness, shares of stock or
other securities which are at any time directly or indirectly convertible into
or exchangeable for Common Stock. This Warrant also is subject to the following
terms and conditions:
1. Exercise Of Warrant And Payment Of Exercise Price.
(a) Exercise Of Warrant. This Warrant may be exercised in accordance
with the terms hereof at any time from and after the date hereof and before the
Expiration Date, but if such date is a day on which federal or state chartered
banking institutions located in the State of Illinois are authorized to close,
then on the next succeeding day which shall not be such a day. Exercise shall be
by presentation and surrender to the Company at its principal office, or at the
office of any transfer agent designated by the Company, of (i) this Warrant,
(ii) the attached exercise form properly executed, and either (iii) cash,
certified or cashiers check or wire transfer for the Exercise Price for the
number of Warrant Shares specified in the exercise form, or (iv) if the exercise
is to be a cashless exercise pursuant to Section 1.(b), written notice of the
number of shares of Common Stock with respect to which this Warrant is being
surrendered in payment of the aggregate exercise price for the Common Stock to
be delivered to Holder. If this Warrant is exercised in part only, the Company
or its transfer agent shall, upon surrender of the Warrant, execute and deliver
a new Warrant evidencing the rights of the Holder to purchase the remaining
number of Warrant Shares purchasable hereunder. Upon receipt by the Company of
this Warrant in proper form for exercise, accompanied by payment as aforesaid,
the Holder shall be deemed to be the holder of record of the Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such Warrant
Shares shall not then be actually delivered by the Holder.
(b) Payment Of Warrant Exercise Price.
Payment of the Exercise Price may be made by any of the
following, or a combination thereof, at the election of Holder:
(i) cash, certified check or cashiers check or wire transfer; or
(ii) surrender of this Warrant at the principal office of the
Company together with notice of election, in which event the Company shall issue
Holder a number of shares of Common Stock computed using the following formula:
X = Y(A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder (not
to exceed the number of shares set forth on the cover page of this
Warrant, as adjusted pursuant to the provisions of Section 4 of this
Warrant);
Y = the number of shares of Common Stock for which this Warrant is
being exercised;
A = the Fair Market Value of one share of Common Stock (for purposes
of this Section 1.(b), the "Fair Market Value" shall be defined in
accordance with Section 4.4 hereof;
B = the Exercise Price (as adjusted to the date of such calculation).
It is intended that the Common Stock issuable upon exercise of this Warrant in a
cashless exercise transaction, if any, shall be deemed to have been acquired at
the time this Warrant was issued, for purposes of Rule 144(d)(3)(ii).
2. Reservation Of Shares And Expenses. The Company shall, at all times
until the expiration of this Warrant, reserve for issuance and delivery upon
exercise of this Warrant the number of Warrant Shares which shall be required
for issuance and delivery upon exercise of this Warrant. The Company covenants
that the shares of Common Stock issuable on exercise of the Warrant shall be
duly and validly issued and fully paid and non-assessable and free of liens,
charges and all taxes with respect to the issue thereof. The Company shall pay
all expenses, taxes (other than income or similar taxes imposed on Holder) and
other charges payable in connection with the preparation, issue and delivery of
stock certificates pursuant to this Warrant.
3. No Rights As Stockholders. This Warrant shall not entitle the Holder to
any rights as a stockholder of the Company, either at law or in equity. The
rights of the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.
4. Adjustments.
4.1. Subdivision Or Combination Of Shares. If the Company is
recapitalized through the subdivision or combination of its outstanding shares
of Common Stock into a larger or smaller number of shares, the number of Warrant
Shares shall be increased or reduced, as of the record date for such
recapitalization, in the same proportion as the increase or decrease in the
outstanding shares of Common Stock, and the Exercise Price shall be adjusted so
that the aggregate amount payable for the purchase of all of the Warrant Shares
issuable hereunder immediately after the record date for such recapitalization
shall equal the aggregate amount so payable immediately before such record date.
4.2. Dividends In Common Stock Or Securities Convertible Into Common
Stock. If the Company declares a dividend or distribution on Common Stock
payable in Common Stock or securities convertible into Common Stock, the number
of shares of Common Stock for which this Warrant may be exercised shall be
increased, as of the record date for determining which holders of Common Stock
shall be entitled to receive such dividend, in proportion to the increase in the
number of outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into Common Stock) of Common Stock
as a result of such dividend or distribution, and the Exercise Price shall be
adjusted so that the aggregate amount payable for the purchase of all the
Warrant Shares issuable hereunder immediately after the record date for such
dividend or distribution shall equal the aggregate amount so payable immediately
before such record date.
4.3. Distributions Of Other Securities Or Property. If the Company
distributes to holders of its Common Stock, other than as part of its
dissolution or liquidation or the winding up of its affairs, any of its
securities (other than Common Stock or securities convertible into Common
Stock), property or any evidence of indebtedness, then in each case, the number
of Warrant Shares thereafter purchasable upon exercise of this Warrant shall be
determined by multiplying the number of Warrant Shares theretofore purchasable
by a fraction, of which the numerator shall be the Fair Market Value price per
share of Common Stock (as determined pursuant to Section 4.4) on the record date
mentioned below in this Section 4.3, and of which the denominator shall be the
Fair Market Value price per share of Common Stock on such record date, less the
then fair value (as determined by the Board of Directors of the Company in good
faith) of the portion of the shares of the Company's capital stock, property or
evidence of indebtedness distributable with respect to each share of Common
Stock. Such adjustment shall be made whenever any such distribution is made, and
shall become effective retroactively as of the record date for the determination
of stockholders entitled to receive such distribution.
4.4. Fair Market Value. Fair market value of the Common Stock ("Fair
Market Value") shall be determined as follows:
(a) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such an exchange, or is
listed on the Nasdaq National Market or Small Cap Market, the current Fair
Market Value shall be the last reported sales price of the Common Stock on such
exchange or Nasdaq on the last business day prior to the date of exercise of
this Warrant or if no such sale is made on such day, the closing bid price for
such day on such exchange or Nasdaq; or
(b) if the Common Stock is not so listed or admitted to unlisted
trading privileges or quoted on Nasdaq, the current Fair Market Value shall be
the last bid price reported on the last business day prior to the date of the
exercise of this
Warrant (i) by Nasdaq, or (ii) if reports are unavailable under clause (i)
above, by the National Quotation Bureau Incorporated; or
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid prices are not so reported, the current Fair Market
Value shall be determined in good faith as promptly as reasonably practicable by
the mutual agreement of the Board of Directors and the Holder. If such parties
are unable to reach agreement within 20 days after the need for such
determination arises, the Board of Directors shall appoint a nationally
recognized investment banking firm acceptable to the Holder (the "Appointed
Firm") to make such determination. The parties shall use their best efforts to
cause the Appointed Firm to resolve all disagreements as soon as practicable,
but in any event within 45 days after the submission of the disputes to such
Appointed Firm. The resolution of such disagreements and the determination of
Fair Market Value by the Appointed Firm shall be final and binding on the
Company and the Holder. The Appointed Firm will determine the allocation of its
fees and expenses in connection with its determination of Fair Market Value
based upon the percentage which the portion of the contested amount not awarded
to each party bears to the amount actually contested by such party. For example,
if the Board of Directors claims that the Fair Market Value is $1,000 less than
the amount claimed by the Holder, and if the Appointed Firm ultimately resolves
the dispute by awarding the Holder $300 of the $1,000 contested, then the fees
and expenses of the Appointed Firm will be allocated 70% (i.e.: 700/1000) to the
Holder and 30% (i.e.: 300/1000) to the Company.
4.5. Rights Offering. If the Company offers rights or warrants to
persons which entitle them to subscribe to or purchase Common Stock or
securities convertible into Common Stock then:
(a) If the price per share (together with the value of the
consideration, if any, paid for such rights or warrants) is lower on the record
date referred to below than the then Fair Market Value price per share of Common
Stock, the number of Warrant Shares thereafter purchasable upon the exercise of
the Warrant shall be determined by multiplying the number of Warrant Shares
immediately theretofore purchasable upon exercise of the Warrant by a fraction,
of which the numerator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the denominator shall be the number
of shares of Common Stock outstanding on such record date plus the number of
shares which the aggregate offering price of the total number of shares of
Common Stock so offered would purchase at the then Fair Market Value price per
share of Common Stock. Such adjustment shall be made whenever such rights or
warrants are issued, and shall become effective retroactively as of the record
date for the determination of stockholders entitled to receive such rights or
warrants.
(b) If, however, the price per share (together with the value of
the consideration, if any, paid for such rights or warrants) is not lower on
such record date than the then Fair Market Value price per share of Common
Stock, the Company shall give written notice of any such proposed offering to
the Holder at least fifteen days prior to the proposed record date in order to
permit the Holder to exercise this Warrant on or before such record date. There
shall be no adjustment in the number of shares of Common Stock for which this
Warrant may be exercised, or in the Exercise Price, by virtue of any such
distribution pursuant to this Section 4.5.(b).
4.6. Adjustment Of Exercise Price Upon Issuance Of Additional Shares
Of Common Stock. At the option of the Holder, the Exercise Price may be adjusted
to a price per share equal to the lesser of (a) the offering price, net of
underwriting discounts and expenses, of shares of Common Stock (as adjusted for
any stock dividends, combinations or splits with respect to such shares) issued
in connection with any public offering of the Company's Common Stock to the
general public, or (b) the price of shares of Common Stock (as adjusted for any
stock dividends, combinations or splits with respect to such shares) issued by
the Company in connection with a private placement in which the aggregate
proceeds of the placement exceed $1,000,000. The terms of this Section 4.6 shall
terminate upon the earlier of (i) the exercise of the Warrant, or (ii) the
closing of an underwritten offering of any of its securities to the general
public the aggregate proceeds of which (after deduction for underwriter's
discounts and expenses related to the issuance) exceed $10,000,000.
4.7. Merger, Sale Of Assets. If at any time while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be: (a) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein); (b) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise; or (c) a sale or transfer of the Company's properties and assets as,
or substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the holder of this warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 4. The foregoing provisions of this Section 4.7 shall similarly
apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at
the time receivable upon the exercise of this Warrant. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
4.8. Reclassification. If the Company, at any time while this Warrant,
or any portion thereof, remains outstanding and unexpired, shall change any of
the securities as to which purchase rights under this Warrant exist, by
reclassification of securities or otherwise, into the same or a different number
of securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Exercise Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4.
4.9. Liquidation, Etc. If the Company shall, at any time before the
expiration of this Warrant, dissolve, liquidate or wind up its affairs, or
otherwise declare a dividend, or make a distribution to the holders of its
Common Stock generally, whether in cash, property or assets of any kind,
including any dividend payable in stock or securities of any other issuer owned
by the Company (excluding regularly payable cash dividends declared from time to
time by the Company's Board of Directors or any dividend or distribution
referred to in Section 4.2 or Section 4.3), the Exercise Price shall be reduced,
without any further action by the parties hereto, by the Per Share Value (as
hereinafter defined) of the dividend. For purposes of this Section 4.9, the "Per
Share Value" of a cash dividend or other distribution shall be the dollar amount
of the distribution on each share of Common Stock and the "Per Share Value" of
any dividend or distribution other than cash shall be equal to the fair market
value of such non-cash distribution on each share of Common Stock as determined
in good faith by the Board of Directors of the Company.
4.10. Adjustment of Exercise Price. Whenever the number of Warrant
Shares purchasable upon the exercise of the Warrant is adjusted, the Exercise
Price with respect to the Warrant Shares shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable upon the exercise of
the Warrant immediately prior to such adjustment,
and of which the denominator shall be the number of Warrant Shares so
purchasable immediately thereafter.
4.11. Notice Of Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of the Warrant or the Exercise Price of the
Warrant Shares is adjusted as provided herein, the Company shall mail to the
Holder a notice of such adjustment or adjustments, prepared and signed by the
Chief Financial Officer or Secretary of the Company, which sets forth the number
of Warrant Shares purchasable upon the exercise of the Warrant and the Exercise
Price of such Warrant Shares after such adjustment, a brief statement of the
facts requiring such adjustment, and the computation by which such adjustment
was made.
5. Notices To Holder. So long as this Warrant shall be outstanding: (a) if
the Company shall pay any dividends or make any distribution upon the Common
Stock otherwise than in cash; or (b) if the Company shall offer generally to the
holders of Common Stock the right to subscribe to or purchase any shares of any
class of Common Stock or securities convertible into Common Stock or any similar
rights; or (c) if there shall be any capital reorganization of the Company in
which the Company is not the surviving entity, recapitalization of the capital
stock of the Company, consolidation or merger of the Company with or into
another corporation, sale, lease or other transfer of all or substantially all
of the property and assets of the Company, or voluntary or involuntary
dissolution, liquidation or winding up of the Company, then in such event, the
Company shall cause to be mailed to the Holder, at least twenty days prior to
the relevant date described below (or such shorter period as is reasonably
possible if twenty days is not reasonably possible), a notice containing a
description of the proposed action and stating the date or expected date on
which a record of the Company's stockholders is to be taken for the purpose of
any such dividend, distribution of rights, or such reclassification,
reorganization, consolidation, merger, conveyance, lease or transfer,
dissolution, liquidation or winding up is to take place, the effect of the
action, to the extent such effect may be known on the date of such notice, on
the Exercise Price and the kind and amount of shares of stock or other
securities or property deliverable on the exercise of the Warrant, and the date
or expected date, if any is to be fixed, as of which the holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such event. All such notices shall
be deemed to have been received (i) in the case of personal delivery, on the
date of such delivery, and (ii) in the case of mailing, on the third business
day following the date of such mailing.
6. Transfer Or Loss of Warrant.
6.1. Transfer. This Warrant may be transferred, exercised, exchanged
or assigned ("transferred"), in whole or in part, subject to the provisions of
this Section 6.1. The Holder shall have the right to transfer all or a part of
this Warrant and
all or part of the Warrant Shares. The Company shall register on its books any
transfer of the Warrant, upon surrender of same to the Company with a written
instrument of transfer duly executed by the registered Holder or by a duly
authorized attorney. Upon any such registration of a transfer, new Warrant(s)
shall be issued to the transferee(s) and the surrendered Warrant shall be
canceled by the Company. A Warrant may also be exchanged, at the option of the
Holder, for one or more new Warrants representing the aggregate number of
Warrant Shares evidenced by the Warrant surrendered. This Warrant and the
Warrant Shares or any other securities ("Other Securities") received upon
exercise of this Warrant or the conversion of the Warrant Shares shall be
subject to restrictions on transferability unless registered under the
Securities Act, or unless an exemption from registration is available. Until
this Warrant and the Warrant Shares are so registered, this Warrant and any
certificate for Warrant Shares issued or issuable upon exercise of this Warrant
shall contain a legend on the face thereof, in form and substance satisfactory
to counsel for the Company, stating that this warrant or the Warrant Shares may
not be sold, transferred or otherwise disposed of unless, in the opinion of
counsel satisfactory to the Company, which may be counsel to the Company, that
the Warrant or the Warrant Shares may be transferred without such registration.
This Warrant and the Warrant Shares may also be subject to restrictions on
transferability under applicable state securities or blue sky laws. Until the
Warrant and the Warrant Shares are registered under the Securities Act, the
Holder shall reimburse the Company for its expenses, including attorneys' fees,
incurred in connection with any transfer or assignment, in whole or in part, of
this Warrant or any Warrant Shares.
6.2. Compliance With Laws. Until this Warrant or the Warrant Shares
are registered under the Securities Act, the Company may require, as a condition
of transfer of this Warrant or the Warrant Shares that the transferee (who may
be the Holder in the case of an exchange) represent that the securities being
transferred are being acquired for investment purposes and for the transferee's
own account and not with a view to or for sale in connection with any
distribution of the security. The Company may also require that the transferee
provide written information adequate to establish that the transferee is an
"accredited investor" within the meaning of Regulation D issued under the
Securities Act, or otherwise meets all qualifications necessary to comply with
exemptions to the Securities Act, all as determined by counsel to the Company.
6.3. Loss Of Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to it of loss, theft, destruction or mutilation of this
Warrant and, in the case of loss, theft or destruction, of reasonable
satisfactory indemnification, or, in the case of mutilation, upon surrender of
this Warrant, the Company will execute and deliver, or instruct its transfer
agent to execute and deliver, a new warrant of like tenor and date, any such
lost, stolen or destroyed Warrant thereupon shall become void.
7. Registration Rights. The Company shall be obligated to the Holder of the
Warrants and the Warrant Shares as follows:
(a) Whenever, during the five-year period beginning on June 1, 1997
and ending on June 1, 2002, the Company proposes to file with the Securities and
Exchange Commission a Registration Statement (other than on Form S-8 or as to
securities issued pursuant to an employee benefit plan or a transaction subject
to Rule 145 promulgated under the Act), it shall, at least 30 days prior to each
such filing, give written notice of such proposed Filing (a "Filing Notice") to
the Holder and each holder of Warrant Shares at their respective addresses as
they appear on the records of the Company, pursuant to which the Company shall
offer to include in such Filing any or all of the Warrant Shares purchasable
under the Warrant and any Warrant Shares theretofore issued on exercise of any
portion of the Warrant. The Holder and holders of Warrant Shares shall have
until the 10th day after receipt of such notice to send to the Company a written
request or requests (a "Registration Request") that shall specify the number of
Warrant Shares which the Holder or holder of Warrant Shares desires to have
included in such filing (the aggregate amounts of which specified in all such
Registration Requests of the Holder and the holders of Warrant Shares shall be
referred to hereinafter as the "Registrable Securities") and the manner of
disposition for such Registrable Securities proposed by the Holder or holders of
Warrant Shares. The Company shall include in such filing, for registration under
the Securities Act of 1933 (the "1933 Act") and disposition in accordance with
the method of disposition set forth in such Registration Requests, the aggregate
number of Registrable Securities which the Holder or holders of Warrant Shares
requested be included in such filing. In the event that the managing underwriter
for said offering advises the Company and the holders of the Registrable
Securities in writing that the inclusion of such securities in the offering
would be detrimental to the offering of any shares or other securities to be
sold and issued by the Company pursuant to such Registration Statement, the
Company will include in such Registration Statement the number of Registrable
Securities which in the opinion of such managing underwriter can be included in
such Registration Statement, together with the shares of all other shareholders
who exercise similar registration rights to have their shares sold pursuant to
such Registration Statement, on a pro rata basis among all holders of such
Registrable Securities and other shares according to the ratio that the number
of Registrable Securities owned by the Holder hereof and any such other holder
bears to the total number of Registrable Securities and other shares owned by
all such holders.
(b) In addition to any Registration Statement pursuant to subsection
(a) above, (i) during the five-year period beginning on June 1, 1997 and ending
on June 1, 2002, and (ii) at any time after the earlier of (1) the date which is
120 days after the date on which the Company completes a firm-commitment
underwritten initial public offering of its common stock pursuant to a
Registration Statement, or (2) twenty-four months from the date
hereof, the Company will, as promptly as practicable (but in any event within 60
days), after written request (the "Request") by Holder, or by a person or
persons holding (or having the right to acquire by virtue of holding the
Warrant) at least 50% of the shares of Common Stock which have been (or may be)
issued upon exercise of the Warrant, prepare and file at the Company's own
expense a Registration Statement with the Securities and Exchange Commission and
appropriate Blue Sky authorities sufficient to permit the public offering of the
Shares and will use its best efforts at its own expense through its officers,
directors, auditors and counsel, in all matters necessary or advisable, to cause
such Registration Statement to become effective as promptly as practicable and
to maintain such effectiveness so as to permit resale of the Shares covered by
the Request until the earlier of the time that all such Shares have been sold or
the expiration of ninety (90) days from the effective date of the Registration
Statement; provided, however, that the Company shall only be obligated to file
and have declared effective one such Registration Statement under this Section
7.2(b). Notwithstanding the foregoing, if a Registration Statement is filed
pursuant to this Section 7.2(b) but is not declared effective within 120 days of
the date of the filing thereof or, despite being declared effective within such
period of time, is not kept effective throughout the minimum period, then, it
shall not be deemed to be a Registration Statement meeting the requirements
hereunder and shall not satisfy or discharge the Company's obligations under
this Section 7.2(b).
(c) The Company shall not be required to file a Registration Statement
pursuant to Section 7.2(b) if, in the opinion of counsel for the Holder and
holders of Warrant Shares and counsel for the Company (or, should they not
agree, in the opinion of another counsel experienced in securities law matters
acceptable to counsel for such holders and the Company), the proposed public
offering or other disposition as to which such Registration Statement is
requested is exempt from registration and no longer subject to the volume and
manner of sales restrictions of Rule 144 under federal securities law, and also
exempt from qualification under applicable state securities laws and such
offering or other disposition would result in all purchasers or transferees of
such Shares proposed to be sold by any holders of the Warrants or Warrant Shares
obtaining Warrant Shares which are no longer "restricted securities" as defined
in Rule 144 under, and may be sold publicly pursuant to Section 4(1) of, the
Act.
(d) In consideration for the Company agreeing to its obligations under
this Section 7, the holder of Registrable Securities agrees in connection with
any registration of the Company's securities that, upon the request of the
Company or the underwriters managing any underwritten -offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of or otherwise dispose of any Registrable Securities (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time (not to exceed
180 days)
from the effective date of such registration as the Company or the underwriters
may specify.
(e) If a registration pursuant to a Request under Section 7(b)
involves an underwritten offering, the managing or lead underwriter or
underwriters thereof shall be selected by the holders of at least a majority (by
number of shares) of the Common Stock which have been (or may be) issued upon
exercise of the Warrant as to which registration has been requested and shall be
acceptable to the Company, which shall not unreasonably withhold its acceptance
of any such underwriters.
(f) If requested by the underwriters for any underwritten offering by
holders of Registrable Securities pursuant to a registration requested under
Section 7(b), the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be satisfactory in substance
and form to the Company, each such holder and the underwriters, and to contain
such representations and warranties by the Company and such other terms as are
generally prevailing in agreements of this type, including, without limitations,
indemnities to the effect and to the extent provided in Section 8 hereof.
8. Indemnification.
(a) The Company will, and does hereby undertake to, indemnify and hold
harmless each Holder, each of such Holder's officers, directors, partners and
agents, and each person controlling such Holder, with respect to any
registration, qualification, or compliance effected pursuant to Section 7, and
each underwriter, if any, and each person who controls any underwriter, of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, damages, and liabilities (or actions in respect thereto) to which they
may become subject under the 1933 Act, the Securities Exchange Act of 1934, as
amended, (the "1934 Act"), or other federal or state law arising out of or based
on (i) any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other similar document
(including any related Registration Statement, notification, or the like)
incident to any such registration, qualification, or compliance, or based on 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, or
(ii) any violation or alleged violation by the Company of any federal, state or
common law rule or regulation applicable to the Company in connection with any
such registration, qualification, or compliance, and will reimburse, as
incurred, each Holder, each underwriter, and each director, officer, partner,
agent and controlling person, for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability, or action; provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense, arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by an
instrument duly executed by any of the Holders or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by or issuable to
such Holder are included in such registration, qualification, or compliance,
severally and not jointly, indemnify the Company, each of its directors, and
each officer who signs a Registration Statement in connection therewith, and
each person controlling the Company, each underwriter, if any, and, each person
who controls any underwriter, of the Company's securities covered by such a
Registration Statement, against all claims, losses, damages, and liabilities (or
actions in respect thereof arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such Registration
Statement, prospectus, offering circular, or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse,
as incurred, the Company, and each such underwriter or other person, for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability, or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) was made in such
Registration Statement, prospectus, offering circular, or other document, in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the liability of each such
Holder hereunder shall be limited to the net proceeds received by such Holder
from the sale of securities under such Registration Statement. In no event will
any Holder be required to enter into any agreement or undertaking in connection
with any registration under this Section 8 providing for any indemnification or
contribution obligations on the part of such Holder greater than such Holder's
obligations under this Section 8.
(c) Each party entitled to indemnification under this Section 8 (the
"Indemnified Party") shall give notice to the party required to provide such
indemnification (the "Indemnifying Party") of any claim as to which
indemnification may be sought promptly after such Indemnified Party has actual
knowledge thereof, and the Indemnifying Party shall assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be subject to approval by the Indemnified Party (whose approval shall not
be unreasonably withheld) and the Indemnified Party may participate in such
defense with its separate counsel at the Indemnifying Party's expense if
representation of such Indemnified Party would be inappropriate due to actual or
potential differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding; and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party
of its obligations under this Section 8, except to the extent that such failure
to give notice shall materially adversely affect the Indemnifying Party in the
defense of any such claim or any such litigation. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff therein, to such Indemnified Party, of a release from all
liability in respect to such claim or litigation.
(d) If any Holder includes Registrable Securities in any registration,
such Holder shall furnish to the Company such information regarding such Holder,
and the distribution proposed by such or Holder, as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification, or compliance referred to in Sections 7 and 8.
9. Contribution. In order to provide for just and equitable contribution
under the 1933 Act in any case in which: (a) the Holder or any holder of the
Warrant Shares or controlling person makes a claim for indemnification pursuant
to Section 8 hereof but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of Section 8 hereof provide for indemnification in such
case; or (b) contribution under the 1933 Act may be required on the part of the
Holder or any holder of the Warrant Shares or controlling person, then the
Company and the Holder or any such holder of the Warrant Shares or controlling
person shall contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Holder or holder of Warrant
Shares or controlling person on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and such holders of such securities and such
controlling persons agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method which does not take account of the equitable
considerations referred to in this Section 9. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
10. No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or otherwise, 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, take
all such action as may be necessary or appropriate in order to protect the
rights of the Holder against impairment.
11. Restrictive Legend. Unless and until otherwise permitted by this
Section 11, each certificate for Warrants issued under this Agreement, each
certificate for any Warrants issued to any transferee of any such certificate,
each certificate for any Warrant Stock issued upon exercise of any Warrant and
each certificate for any Warrant Stock issued to any transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") NOR IS SUCH REGISTRATION CONTEMPLATED. SUCH
SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
AT ANY TIME WHATSOEVER UNLESS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, EXCEPT
UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
IT AND TO ITS COUNSEL TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN
VIOLATION OF THE ACT, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER."
12. Notices. Notices and other communications to be given to the Holder
shall be deemed sufficiently given if delivered by hand, or three (3) business
days after mailing if mailed by registered or certified mail, postage prepaid,
addressed in the name and at the address of such Holder appearing on the records
of the Company. Notices or other communications to the Company shall be deemed
to have been sufficiently given if delivered by hand or three (3) business days
after mailing if mailed by registered or certified mail, postage prepaid, to the
Company at:
Southhampton Enterprises Corp.
9211 Diplomacy Row
Dallas, TX 75247
Attn.: President
Either party may change the address to which notices shall be given by notice
pursuant to this Section 12.
13. Governing Law. This warrant shall be governed by and construed in
accordance with the laws of the State of Maryland.
IN WITNESS WHEREOF, the Company has executed this Warrant as of May 7,
1997.
WITNESS/ATTEST: SOUTHHAMPTON ENTERPRISES CORP.,
A British Columbia,
Canada Corporation
/s/ illegible BY: /s/ L. Steven Haynes (SEAL)
L. Steven Haynes,
Chief Executive Officer
ANNEX A
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[FORM OF EXERCISE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____ shares of Common Stock
and herewith tenders payment for such shares of Common Stock in the amount of
$_______________ by bank check made payable to "Southhampton Enterprises Corp."
The undersigned requests that a certificate for such shares of Common Stock be
registered in the name of _______________________________________, whose address
is ____________________________________. If such number of shares of Common
Stock is less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of the shares of Common Stock be registered in the name of
____________________ _______________________, whose address is
________________________________________________________________________________
______________________________________________________________.
Dated:
Signature: _____________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant Certificate.)
________________________________
Insert Social Security or Taxpayer
I.D. No. of Holder)