Exhibit No. 2
Form S-3
Headway Corporate Resources, Inc.
WARRANT TO PURCHASE
50,000 SHARES
HEADWAY CORPORATE RESOURCES, INC.
(a Delaware corporation)
WARRANT FOR THE PURCHASE OF
Common Stock, $0.0001 Par Value Per Share
THIS WARRANT IS EXERCISEABLE ON OR AFTER MAY 16, 1998
AND WILL BE VOID (UNLESS EXTENDED) AT 12:00 MIDNIGHT ON MAY 15, 2001
This certifies that, for value received, JW CHARLES
FINANCIAL SERVICES, INC., or registered assigns, is entitled, at
any time on or after May 16, 1998, and prior to 12:00 midnight
Eastern Standard Time on May 15, 2001, to purchase from Headway
Corporate Resources, Inc., a Delaware corporation (the "Company")
the number of shares shown above (the "Warrant Shares") of common
stock, par value $0.0001, of the Company (the "Common Stock") by
surrendering this warrant with the purchase form attached hereto,
duly executed, at the principal office of the Company in New
York, New York, and by paying in full and in lawful money of the
United States of America by certified or cashiers' check or other
certified funds, the purchase price of the Warrant Shares as to
which this warrant is exercised, on all the terms and conditions
hereinafter set forth. In the event the holder is prevented from
exercising prior to May 15, 2001, the registration rights set
forth in Section 8 hereof for any portion of the Warrant Shares
pursuant to subparagraph 8(b)(II) or the last sentence of
paragraph 8(d), then the date on which this warrant will expire
with respect to such Warrant Shares shall be automatically
extended, without any action by the Company or holder, to the
date which is 30 days following the date on which such Warrant
Shares are registered (as defined in subparagraph 8(a)(I)).
Hereinafter the term "Expiration Date" refers to the later of May
15, 2001, or the date specified in the preceding sentence.
1. The purchase price at which the Warrant Shares are
purchasable (hereinafter referred to as the "Warrant Price") is
$5.25 per share.
2. On the exercise of all or any portion of this warrant
in the manner provided above, the person exercising the same
shall be deemed to have become a holder of record of Common Stock
(or of the other securities or properties to which he or it is
entitled on such exercise) for all purposes, and certificates for
the securities so purchased shall be delivered to the purchaser
within a reasonable time, but in no event longer than ten days
after the warrants shall have been exercised as set forth above.
If this warrant shall be exercised in respect to only a part of
the Warrant Shares covered hereby, the holder shall be entitled
to receive a similar warrant of like tenor and date
E-13
covering the number of Warrant Shares with respect to which this
warrant shall not have been exercised.
3. This warrant is exchangeable, on the surrender hereof
by the holder at the office of the Company, for new warrants of
like tenor and date representing in the aggregate the right to
subscribe for and purchase the number of Warrant Shares which may
be subscribed for and purchased hereunder.
4. The Company covenants and agrees that the Warrant
Shares which may be issued on the exercise of the rights
represented by this warrant will, on issuance, be fully paid and
nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof. The Company further covenants and
agrees that during the period within which the rights represented
by this warrant may be exercised, the Company will have
authorized and reserved a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by
this warrant.
5. The Warrant Price and number of Warrant Shares
purchasable pursuant to this warrant shall be subject to
adjustment from time to time as follows:
(a) If the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend in shares or shall subdivide the outstanding shares of
Common Stock into a greater number of shares, the number of
Warrant Shares purchasable hereunder shall be proportionately
increased and the Warrant Price then in effect shall be
proportionately decreased, so that the holder of the warrant
thereafter surrendered for exercise shall be entitled to receive,
after the occurrence of any of the events described, the number
of Warrant Shares to which the holder would have been entitled
had such warrant been exercised immediately prior to the
occurrence of such event. Any such adjustment is effective on
the business day following the record date for the event
requiring the adjustment.
(b) If the Company shall combine the outstanding shares of
Common Stock into a smaller number of shares, or issue by
reclassification any of its shares, the number of Warrant Shares
and the Warrant Price then in effect shall be proportionately
adjusted so that the holder of the warrant thereafter surrendered
for exercise shall be entitled to receive after the occurrence of
any of the events described the number of Warrant Shares to which
the holder would have been entitled had the warrant been
exercised immediately prior to the occurrence of such event.
Such adjustment shall become effective immediately after the
opening of business on the day following the date on which such
combination or reclassification, as the case may be, becomes
effective.
(c) If any capital reorganization or reclassification of
the Company's Common Stock, or consolidation or merger of the
Company with another corporation or the sale of all or
substantially all of its assets to another corporation shall be
effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities, or assets with respect to
or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger, or sale,
lawful adequate provisions shall be made whereby the holder of
E-14
this warrant shall thereafter have the right to acquire and
receive on exercise hereof such shares of stock, securities, or
assets as would have been issuable or payable (as part of the
reorganization, reclassification, consolidation, merger, or sale)
with respect to or in exchange for such number of outstanding
shares of the Company's Common Stock as would have been received
on exercise of this warrant immediately before such
reorganization, reclassification, consolidation, merger, or sale.
In any such case, appropriate provision shall be made with
respect to the rights and interests of the holder of this warrant
to the end that the provisions hereof shall thereafter be
applicable in relation to any shares of stock, securities, or
assets thereafter deliverable on the exercise of this warrant.
In the event of a merger or consolidation of the Company with or
into another corporation or the sale of all or substantially all
of its assets, as a result of which a number of shares of Common
Stock of the surviving or purchasing corporation greater or less
than the number of shares of Common Stock of the Company
outstanding immediately prior to such merger, consolidation, or
purchase are issuable to holders of Common Stock of the Company,
then the Warrant Price in effect immediately prior to such
merger, consolidation, or purchase shall be adjusted in the same
manner as through there was a subdivision or combination of the
outstanding shares of Common Stock of the Company. The Company
will not effect any such consolidation, merger, or sale unless,
prior to the consummation thereof, the successor corporation
resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument mailed
or delivered to the holder hereof at its last address appearing
on the books of the Company, the obligation to deliver to such
holder such shares of stock, securities, or assets as, in
accordance with the foregoing provisions, such holder may be
entitled to acquire on exercise of this warrant.
(d) No fraction of a share shall be issued on exercise,
but, in lieu thereof, the Company, notwithstanding any other
provision hereof, may pay therefor in cash at the fair value of
any such fractional share at the time of exercise.
6. This warrant and the shares issuable on exercise of
this warrant are restricted securities within the meaning of Rule
144 promulgated under the Securities Act of 1933, as amended, and
as long as they remain so restricted, all certificates therefor
shall contain a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (the "Securities Act"), AND ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD
OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT.
7. Subject to the restrictions set forth in paragraph 6
above, this warrant is transferable in whole or in part at the
offices of the Company. On such transfer, every holder hereof
agrees that the Company may deem and treat the registered holder
of this warrant, or registered holders as the
E-15
case may be, as the true and lawful owner thereof for all
purposes, and the Company shall not be affected by any notice to
the contrary.
8. The Company agrees to register or qualify the Warrant
Shares (but not the warrants) for resale in accordance with the
terms of Exhibit A attached hereto, all of which are incorporated
herein by this reference as though fully set forth under this
Section 8. By the acceptance of this warrant, every holder
hereof agrees to be bound by the terms and conditions set forth
in Exhibit A.
9. As used herein, the term "Common Stock" shall mean and
include the Company's Common Stock authorized on the date of the
original issue of this warrant, and shall also include any
capital stock of any class of the Company thereafter authorized
that shall not be limited to a fixed sum or percentage in respect
of the rights of the holders thereof to participate in dividends
and in the distribution of assets on the voluntary or involuntary
liquidation, dissolution, or winding up of the Company; provided,
that the Warrant Shares purchasable pursuant to this warrant
shall include only shares of the class designated in the
Company's articles of incorporation as Common Stock on the date
of the original issue of this warrant or, in the case of any
reorganization, reclassification, consolidation, merger, or sale
of assets of the character referred to in paragraph 5(c) hereof,
the stocks, securities, or assets provided for in such paragraph.
10. This agreement shall be construed under and be governed
by the laws of the state of New York.
11. Any notices required or permitted hereunder shall be
sufficiently given if delivered by hand or sent by registered or
certified mail, postage prepaid, addressed as follows:
If to JW Charles Financial Services, Inc.:
JW Charles Financial Services, Inc.
980 N. Federal Highway, Suite 310
Boca Raton, FL 33432
Attn: Joel Marks, Vice Chairman
If to the Company, to:
Headway Corporate Resources, Inc.
850 Third Avenue, 11th Floor
New York, New York 10022
Attn: Barry S. Roseman, President
or such other address as shall be furnished in writing by any
party to the other, and any such notice or communication shall be
deemed to have been given as of the date so delivered or three
days after being so deposited in the mails.
E-16
DATED this 30th day of January, 1998.
HEADWAY CORPORATE RESOURCES, INC.
ATTEST:
/s/ /s/ Barry S. Roseman, President
Secretary
E-17
Form of Purchase
(to be signed only upon exercise of warrant)
TO: HEADWAY CORPORATE RESOURCES INC.
The undersigned, the owner of the attached warrant, hereby
irrevocable elects to exercise the purchase rights represented by
the warrant for, and to purchase thereunder, ________________
shares of common stock of Headway Corporate Resources, Inc., and
herewith makes payment of
$_______________________________ therefor, and requests that the
certificate(s) for such shares be delivered to
_________________________________________________________________,
at_______________________________________________________________,
and if such shall not be all of the shares purchasable hereunder,
that a new warrant of like tenor for the balance of the shares
purchasable under the attached warrant be delivered to the
undersigned.
DATED this ______ day of_____________________, ___________.
______________________________
Signature
E-18
Exhibit A
Registration Rights
(a) Definitions. For purposes of Section 8 of this
warrant:
(I) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
registration statement or similar document with the Securities
and Exchange Commission (the "SEC") in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and
the declaration or ordering of effectiveness of such registration
statement or document.
(II) The term "Registrable Securities" means (i) the Warrant
Shares; and (ii) any securities issued or issuable as a dividend
or other distribution with respect to, or in exchange for or in
replacement of, such Warrant Shares.
(III) The number of shares of "Registrable Securities
then outstanding" shall be the number of shares of Common Stock
outstanding, plus the number of shares of Common Stock issuable
pursuant to a declared dividend or other distribution with
respect thereto, or the number of shares of Common Stock issuable
in exchange for or in replacement of outstanding Common Stock,
which on issuance would be, Registrable Securities.
(IV) The term "Shelf Prospectus" shall mean the prospectus
included in the Shelf Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto,
including any supplement relating to the terms of the offering of
any portion of the Registrable Securities covered by the Shelf
Registration Statement, and in each case including all material
incorporated by reference therein.
(V) The term "Shelf Registration" shall mean a registration
required to be effected pursuant to paragraph (d) of this Section
8.
(VI) The term "Shelf Registration Statement" shall mean a
registration statement of the Company (and any other entity
required to be a registrant with respect to such registration
statement pursuant to the requirements of the Securities Act)
that covers all of the Registrable Securities to be offered on a
delayed or continuous basis pursuant to Rule 415 under the
Securities Act, or any similar rule that may be adopted by the
SEC, and all amendments (including post-effective amendments) to
such registration statement, and all exhibits thereto and
materials incorporated by reference therein.
(VII) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any
assignee thereof in accordance with paragraph (j) of this Section
8.
(VIII) The term "Required Holders" shall mean the Holders
whose rights represent at least two-thirds of the voting power of
the Registrable Securities plus all Warrant Shares issuable on
exercise of the warrant which would, on issuance, be Registrable
Securities.
E-19
(IX) Effective Date means the date hereof.
(X) The term "Expiration Date" means the date specified
below which first occurs:
(A) the date on which all Registrable Securities are
issued and registered pursuant to paragraphs (b) or (d) of this
Section 8 and sold by the Holders; or
(B) May 15, 2001; provided, that if the holder is
prevented from exercising prior to May 15, 2001, the registration
rights conferred by this Section 8 for any portion of the
Registrable Securities pursuant to subparagraph 8(b)(II) or the
last sentence of paragraph 8(d), then such date shall be
automatically extended to the date which is 30 days following the
date on which such Registrable Securities are registered.
(b) Registration of Securities by the Company.
(I) If at any time or from time to time the Company shall
propose to file on its behalf or on behalf of any of its security
holders a registration statement under the Securities Act on Form
S-1, S-2 or S-3 (or on any other form for the general
registration of securities) with respect to any class of
securities (other than a Shelf Registration Statement filed
pursuant to paragraph (d) and the Company's registration
statement on Form S-3, File No. 333-08615, or any amending or
superseding registration statement thereto), the Company shall in
each such case:
(A) promptly give written notice to each Holder at
least thirty (30) days before the anticipated filing date,
indicating the proposed offering price and describing the plan of
distribution;
(B) include in such registration (and any related
qualification under blue sky or other state securities laws or
other compliance) and, at the request of any Holder, in any
underwriting involved therein, all the Registrable Securities
specified by any Holder or Holders of Registrable Securities (the
"Specified Registrable Securities") in a written request (the
"Registration Request") made within twenty (20) days after
receipt of such written notice from the Company, specifying the
number or amount of Specified Registrable Securities; and
(C) use its best efforts to cause the managing
underwriter(s) of such proposed underwritten offering to permit
the Specified Registrable Securities to be included in the
Registration Statement for such offering on the same terms and
conditions as any similar securities of the Company included
therein.
(II) Notwithstanding the foregoing, if the managing
underwriter(s) of such offering advise(s) the Holders of
Specified Registrable Securities in writing that marketing
considerations or other factors require a limitation on the
securities (other than the securities the Company intends to sell
and securities to be sold by security holders with a preference
in registration arising under registration rights granted prior
to the date hereof and registration rights contemplated by the
commitment letter dated January 27, 1998, between the Company and
GarMark Partners, L.P.), to be included in any Registration
Statement filed under this paragraph
E-20
(b) to a certain number of shares up to the whole thereof (the
"Available Securities"), then the Company shall in such case be
obligated to such Holders only with respect to such number of
Available Securities, if any. The limitation on the number of
Specified Registrable Securities will be imposed pro rata (based
upon the ratio of the number of shares of Specified Registrable
Securities which the managing underwriter(s) propose to include
at the anticipated initial public offering price to the number of
Specified Registrable Securities owned by each Holder) among all
Holders of Specified Registrable Securities. In the event at the
time of the registration under this paragraph (b) there is
outstanding any class or series of preferred stock of the Company
which is outstanding as of the date of this warrant or issued
subsequent to the date of this warrant pursuant to the commitment
letter dated January 27, 1998, between the Company and GarMark
Partners, L.P. (collectively the "Preferred Stock") with rights
to convert to Common Stock and register for sale such Common
Stock, then: (A) the Company will be under no obligation to
register any of the Registrable Securities if the holders of the
Preferred Stock have not elected to register any of the Common
Stock issuable on conversion of the Preferred Stock; and (B) any
limitation on the securities to be registered under this
paragraph (b)(II) shall be applied first to reduce the number of
Specified Registrable Securities included in the registration to
zero before there is any reduction in the securities of holders
of the Preferred Stock to be included in the registration.
(III) Notwithstanding any other provision of this
Section 8 to the contrary, neither the delivery of the notice by
the Company nor of the Registration Request by any Holder shall
in any way obligate the Company to file a Registration Statement
and, notwithstanding such filing, the Company may, at any time
prior to the effective date thereof, in its sole discretion,
determine not to offer the securities to which the Registration
Statement relates without liability to any of the Holders, other
than to pay Registration Expenses in connection with such
Registration Statement. No registration of Registrable Securities
effected under this paragraph (b) shall relieve the Company of
its obligation to effect the registration of Registrable
Securities pursuant to paragraph (d).
(c) If and when the Company shall be required by the
provisions of paragraph (b) of this Section 8 to effect the
registration of Registrable Securities under the Securities Act,
the Company will use its best efforts to effect such registration
to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and
pursuant thereto it will, as expeditiously as possible:
(I) before filing a Registration Statement or Prospectus or
any amendments or supplements thereto, furnish to the Holders of
the Registrable Securities covered by such Registration Statement
and the underwriter(s), if any, copies of all such documents
proposed to be filed, which documents will be made available, on
a timely basis, for review by such Holders and underwriters;
(II) prepare and file with the SEC such amendments and post-
effective amendments to any Registration Statement, and such
supplements to the Prospectus, as may be reasonably requested by
any Holder of Registrable Securities or the managing
underwriter(s), if any, or as may be required by the Securities
Act, the Exchange Act or by the rules, regulations or
E-21
instructions applicable to the registration form utilized by the
Company or as may otherwise be necessary to keep such
Registration Statement effective for the applicable period; and
cause the Prospectus as so supplemented to be filed pursuant to
Rule 424 (or any successor rule) under the Securities Act; and
comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth
in such Registration Statement or Prospectus;
(III) promptly notify the selling Holders of Registrable
Securities and the managing underwriter(s), if any, and if
requested by any such Person, confirm such advice in writing:
(A) of the filing of the Prospectus or any supplement
to the Prospectus and of the effectiveness of the Registration
Statement and/or any post-effective amendment,
(B) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or
for additional information,
(C) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose,
(D) of the Company's becoming aware at any time that
the representations and warranties of the Company made to the
Holders selling Registrable Securities and, in connection with
any underwritten offering, to the underwriters, have ceased to be
true and correct,
(E) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the
initiation or threat of any proceeding for such purpose, and
(F) of the existence of any fact which, to the
knowledge of the Company, results in the Registration Statement,
the Prospectus or any document incorporated therein by reference
containing an untrue statement of material fact or omitting to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(IV) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration
Statement or any qualification referred to in paragraph
(c)(III)(E) at the earliest possible moment;
(V) if reasonably requested by the managing underwriter(s)
or the Required Holders of Registrable Securities being sold in
connection with an underwritten offering, immediately incorporate
in a supplement to the Prospectus or post-effective amendment to
the Registration Statement such information as the managing
underwriter(s) or the Required Holders of the Registrable
Securities being sold reasonably request to have included therein
relating to the plan of distribution with respect to such
Registrable Securities, including, without limitation,
information with respect to the amount of Registrable Securities
being sold to such underwriters, the purchase price being paid
therefor by such underwriters and any other terms of the
E-22
underwritten (or best-efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all
required filings of such supplement to the Prospectus or post-
effective amendment to the Registration Statement as soon as
notified of the matters to be incorporated in such supplement to
the Prospectus or post-effective amendment to the Registration
Statement;
(VI) at the request of any selling Holder of Registrable
Securities, furnish to such selling Holder of Registrable
Securities and each managing underwriter, if any, without charge,
at least one signed copy of the Registration Statement and any
post-effective amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference
and all exhibits (including those incorporated by reference);
(VII) deliver to each selling Holder of Registrable
Securities and the managing underwriter(s), if any, without
charge, as many copies of the Registration Statement, each
Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto (in each case including all
exhibits), as such Persons may reasonably request, together with
all documents incorporated by reference in such Registration
Statement or Prospectus, and such other documents as such selling
Holder may reasonably request in order to facilitate the
disposition of its Registrable Securities covered by such
Registration Statement; the Company consents to the use of each
Prospectus and any supplement thereto by each of the selling
Holders of Registrable Securities and the managing
underwriter(s), if any, in connection with the offering and sale
of the Registrable Securities covered by each Prospectus or any
supplement thereto;
(VIII) prior to any public offering of Registrable
Securities, register or qualify or reasonably cooperate with the
selling Holders of Registrable Securities, the managing
underwriter(s), if any, and their respective counsel in
connection with the registration or qualification of such
Registrable Securities, for offer and sale under the securities
or blue sky laws of such jurisdictions as any selling Holder or
managing underwriter(s) reasonably request(s) and do any and all
other reasonable acts or things to enable the disposition in such
jurisdictions of the Registrable Securities covered by the
Registration Statement (acts which are unreasonable include, but
are not limited to, a requirement that the Company file any
general consent to service of process, qualify as a foreign
corporation to do business under the laws of any state, or amend
its charter documents);
(IX) cooperate with the selling Holders of Registrable
Securities and the managing underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any legends
restricting the transfer thereof; and enable such Registrable
Securities to be in such denominations and registered in such
names as the selling Holders or the managing underwriters may
request at a reasonable time prior to any sale of Registrable
Securities;
(X) use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such United States, state and
local governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
E-23
(XI) if any fact contemplated by paragraph (c)(III)(B) or
(c)(III)(F) above shall exist, promptly notify each Holder on
whose behalf Registrable Securities have been registered and
promptly prepare and furnish to such Holders a supplement or post-
effective amendment to the Registration Statement or the related
Prospectus or any document incorporated therein by reference and
promptly file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities,
neither the Registration Statement nor the Prospectus will
contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(XII) if requested by the Required Holders of the
Registrable Securities or by the managing underwriter(s), if any,
cause all Registrable Securities covered by the Registration
Statement to be (A) listed on each securities exchange on which
securities of the same class are then listed or (B) admitted for
trading in any inter-dealer quotation system on which securities
of the same class are then traded;
(XIII) not later than the effective date of the
applicable Registration Statement, provide a CUSIP number for all
Registrable Securities covered by the Registration Statement and
provide the applicable transfer agent with printed certificates
for such Registrable Securities which are in a form eligible for
deposit with Depository Trust Company;
(XIV) enter into agreements (including underwriting
agreements) and take all other reasonable actions in order to
expedite or facilitate the disposition of such Registrable
Securities;
(XV) upon execution and delivery of such confidentiality
agreements as the Company may reasonably request, make available
to the Holders of the Registrable Securities being sold, any
underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained
by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with the
registration, at such time or times as the Person requesting such
information shall reasonably determine;
(XVI) otherwise use its best efforts to comply with the
Securities Act, the Exchange Act, all applicable rules and
regulations of the SEC and all applicable state blue sky and
other securities laws, rules and regulations, and make generally
available to its security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act,
as soon as practicable, but in no event later than ninety (90)
days after the end of the 12 calendar month period commencing
after the effective date of the Registration Statement;
(XVII) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified
independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
E-24
(XVIII) prior to the filing of any document which is being
prepared for incorporation by reference into the Registration
Statement or the Prospectus, upon receipt of such confidentiality
agreements as the Company may reasonably request, provide copies
of such document to counsel to the selling Holders of Registrable
Securities, and to the managing underwriter(s), if any, and make
the Company's representatives available for discussion of such
document.
(d) Shelf Registration. The Company shall cause to be
filed on one occasion only, on the written demand by the Required
Holders of the Registrable Securities made prior to the
Expiration Date, the Shelf Registration Statement providing for
the sale by the Holders of all of the Registrable Securities in
accordance with the terms hereof, and the Company will use its
best efforts to cause such Shelf Registration Statement to be
declared effective by the SEC as soon as possible. The Company
agrees to use its best efforts to keep the Shelf Registration
Statement with respect to the Registrable Securities continuously
effective until the latter of: (i) the date 180 days following
the date on which the Shelf Registration Statement is effective,
and (ii) the Expiration Date. The Company further agrees to
amend the Shelf Registration Statement if and as required by the
rules, regulations or instructions applicable to the registration
form used by the Company for such Shelf Registration Statement or
by the Securities Act or any rules and regulations thereunder.
The best effort obligation of the Company hereunder shall not in
any way limit or restrict the ability of the Company to
voluntarily take any action it deems to be in the interest of the
Company and its shareholders that would result in selling Holders
not being able to sell Registrable Securities covered by the
Shelf Registration Statement until the Company has filed a post-
effective amendment to the Shelf Registration Statement and the
SEC has declared it effective. Each registration effected
pursuant to this paragraph (d) shall be effected by the filing of
a Shelf Registration Statement on Form S-1, Form S-2, Form S-3,
or Form S-8, unless the use of a different form has been agreed
upon in writing by the Company and Required Holders. In the
event at the time of the registration under this paragraph (d)
there is outstanding any class or series of preferred stock of
the Company which is outstanding as of the date of this warrant
or issued subsequent to the date of this warrant pursuant to the
commitment letter dated January 27, 1998, between the Company and
GarMark Partners, L.P. (collectively the "Preferred Stock") with
rights to convert to Common Stock and register for sale such
Common Stock, then the Company will be under no obligation to
register any of the Registrable Securities pursuant to the demand
of the Holders, if the holders of the Preferred Stock have not
elected to register under the Shelf Registration Statement any of
the Common Stock issuable on conversion of the Preferred Stock.
(e) In connection with the obligations of the Company with
respect to the Shelf Registration Statement contemplated by
paragraph (d), the Company shall use its best efforts to effect
such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto it will, as
expeditiously as possible:
(I) before filing a Shelf Registration Statement or Shelf
Prospectus or any amendments or supplements thereto, furnish to
the Holders of the Registrable Securities covered by such Shelf
Registration Statement and the underwriter(s), if any, copies of
all such documents proposed to be filed, which documents will be
made available, on a timely basis, for review by
E-25
such Holders and underwriters; and the Company will not file any
Shelf Registration Statement or amendment thereto or any Shelf
Prospectus or any supplement thereto to which the Required
Holders of the Registrable Securities covered by such Shelf
Registration Statement or the managing underwriter(s), if any,
shall reasonably object;
(II) prepare and file with the SEC, within 90 days of the
demand, the Shelf Registration Statement, which Shelf
Registration Statement (a) shall be available for the sale of the
Registrable Securities in accordance with the intended method or
methods of distribution by the selling Holders thereof and (b)
shall comply as to form in all material respects with the
requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith;
(III) (A) prepare and file with the SEC such amendments
to such Shelf Registration Statement as may be reasonably
requested by any Holder of Registrable Securities or the managing
underwriter(s), if any, or as may be required by the Securities
Act, the Exchange Act or by the rules, regulations or
instructions applicable to the registration form utilized by the
Company or as may otherwise be necessary to keep such Shelf
Registration Statement effective for the applicable period; (B)
cause the Shelf Prospectus to be amended or supplemented as may
be reasonably requested by any Holder of Registrable Securities
or the managing underwriter(s), if any, or as may be required by
the Securities Act, the Exchange Act or by the rules, regulations
or instructions applicable to the registration form utilized by
the Company or as may otherwise be necessary to keep such Shelf
Registration Statement effective for the applicable period; (C)
cause the Shelf Prospectus as so amended or supplemented to be
filed pursuant to Rule 424 (or any successor rule) under the
Securities Act; (D) respond as promptly as practicable to any
comments received from the SEC with respect to the Shelf
Registration Statement or any amendment thereto; and (E) comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Shelf Registration
Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders
thereof;
(IV) promptly notify the selling Holders of Registrable
Securities and the managing underwriter(s), if any, and if
requested by any such Person, confirm such advice in writing:
(A) of the filing of the Shelf Prospectus or any
supplement to the Shelf Prospectus and of the effectiveness of
the Shelf Registration Statement and/or any post-effective
amendment,
(B) of any request by the SEC for amendments or
supplements to the Shelf Registration Statement or the Shelf
Prospectus or for additional information,
(C) of the issuance by the SEC of any stop order
suspending the effectiveness of the Shelf Registration Statement
or the initiation of any proceedings for that purpose,
E-26
(D) of the Company's becoming aware at any time that
the representations and warranties of the Company made to the
Holders selling Registrable Securities and, in connection with
any underwritten offering, to the underwriters, have ceased to be
true and correct,
(E) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the
initiation or threat of any proceeding for such purpose, and
(F) of the existence of any fact which, to the
knowledge of the Company, results in the Shelf Registration
Statement, the Shelf Prospectus or any document incorporated
therein by reference containing an untrue statement of material
fact or omitting to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(i) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Shelf
Registration Statement or any qualification referred to in
paragraph (e)(IV)(E) at the earliest possible moment;
(VI) if reasonably requested by the managing underwriter(s)
or the Required Holders of Registrable Securities being sold in
connection with an underwritten offering, immediately incorporate
in a supplement to the Shelf Prospectus or post-effective
amendment to the Shelf Registration Statement such information as
the managing underwriter(s) or the Required Holders of the
Registrable Securities being sold reasonably request to have
included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without
limitation, information with respect to the amount of Registrable
Securities being sold to such underwriters, the purchase price
being paid therefor by such underwriters and any other terms of
the underwritten (or best-efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all
required filings of such supplement to the Shelf Prospectus or
post-effective amendment to the Shelf Registration Statement as
soon as notified of the matters to be incorporated in such
supplement to the Shelf Prospectus or post-effective amendment to
the Shelf Registration Statement;
(VII) at the request of any selling Holder of
Registrable Securities, furnish to such selling Holder of
Registrable Securities and each managing underwriter, if any,
without charge, at least one signed copy of the Shelf
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including
those incorporated by reference);
(VIII) deliver to each Holder of Registrable Securities
and the managing underwriter(s), if any, without charge, as many
copies of the Shelf Registration Statement, each Shelf Prospectus
and any amendment or supplement thereto (in each case including
all exhibits), as such Persons may reasonably request, together
with all documents incorporated by reference in such Shelf
Registration Statement or Shelf Prospectus, and such other
documents as such selling Holder may reasonably request in order
to facilitate the disposition of its Registrable Securities; the
Company consents to the use of the Shelf Prospectus and any
amendment or supplement thereto by each such Holder of
Registrable Securities and the underwriter(s), if any, in
connection with
E-27
the offering and sale of the Registrable Securities covered by
the Shelf Prospectus or amendment or supplement thereto;
(IX) prior to the time the Shelf Registration Statement is
declared effective by the SEC, register or qualify the
Registrable Securities or reasonably cooperate with the selling
Holders, the underwriter(s), if any, and their respective counsel
in connection with the registration or qualification of such
Registrable Securities, for offer and sale under the securities
or blue sky laws of such jurisdictions as any selling Holder or
managing underwriter(s), if any, reasonably request(s), keep each
such registration or qualification effective during the period
such Shelf Registration Statement is required to be kept
effective, and do any and all other reasonable acts or things to
enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement (acts which are
unreasonable include, but are not limited to, a requirement that
the Company file any general consent to service of process,
qualify as a foreign corporation to do business under the laws of
any state, or amend its charter documents);
(X) cooperate with the selling Holders of Registrable
Securities and the managing underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any legends
restricting the transfer thereof; and enable such Registrable
Securities to be in such denominations and registered in such
names as the selling Holders or the managing underwriters, if
any, may request a reasonable time prior to any sale of
Registrable Securities;
(XI) use its best efforts to cause the Registrable
Securities covered by the Shelf Registration Statement to be
registered with or approved by such United States, state and
local governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(XII) if any fact contemplated by paragraph (iv)(B) or
(iv)(F) above shall exist, promptly notify each Holder on whose
behalf Registrable Securities have been registered and promptly
prepare and furnish to such Holders a supplement or post-
effective amendment to the Shelf Registration Statement or the
related Shelf Prospectus or any document incorporated therein by
reference and promptly file any other required document so that,
as thereafter delivered to the purchasers of the Registrable
Securities, neither the Shelf Registration Statement nor the
Shelf Prospectus will contain an untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(XIII) if requested by the Required Holders of the
Registrable Securities or by the managing underwriter(s), if any,
cause all Registrable Securities covered by the Shelf
Registration Statement to be (A) listed on each securities
exchange on which securities of the same class are then listed or
(B) admitted for trading in any inter-dealer quotation system on
which securities of the same class are then traded;
E-28
(XIV) not later than the effective date of the Shelf
Registration Statement, provide a CUSIP number for all
Registrable Securities covered by the Shelf Registration
Statement and provide the applicable transfer agent with printed
certificates for such Registrable Securities which are in a form
eligible for deposit with Depository Trust Company;
(XV) enter into agreements (including underwriting
agreements) and take all other reasonable actions in order to
expedite or facilitate the disposition of such Registrable
Securities;
(XVI) upon execution and delivery of such
confidentiality agreements as the Company may reasonably request,
make available to the Holders of the Registrable Securities being
sold, any underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and any attorney or
accountant retained by such Holders or underwriter, all financial
and other records, pertinent corporate documents and properties
of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any
such Holder, underwriter, attorney or accountant in connection
with the registration, at such time or times as the Person
requesting such information shall reasonably determine;
(XVII) otherwise use its best efforts to comply with the
Securities Act, the Exchange Act, all applicable rules and
regulations of the SEC and all applicable state blue sky and
other securities laws, rules and regulations, and make generally
available to its security holders, as soon as practicable, an
earnings statement satisfying the provisions of Section 11(a) of
the Securities Act;
(XVIII) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified
independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
(XIX) prior to the filing of any document which is being
prepared for incorporation by reference into the Registration
Statement or the Prospectus, upon receipt of such confidentiality
agreements as the Company may reasonably request, provide copies
of such document to counsel to the selling Holders of Registrable
Securities, and to the managing underwriter(s), if any, and make
the Company's representatives available for discussion of such
document.
(f) In connection with and as a condition to the Company's
obligations with respect to the Shelf Registration Statement
pursuant to paragraph 8(d), each Holder covenants and agrees
that: (I) upon receipt of any notice from the Company provided
by paragraph (e) of this Section 8 contemplating the filing of
any supplemented or amended Shelf Registration Statement, such
Holder shall not offer or sell any Registrable Securities
pursuant to the Shelf Registration Statement until such Holder
receives copies of the supplemented or amended Shelf Prospectus
and receives notice that any post-effective amendment has become
effective, and, if so directed by the Company, such Holder will
deliver to the Company (at the expense of the Company) all copies
in its possession, other than permanent file copies then in such
Holder's possession, of the Shelf Prospectus as amended or
supplemented at the time of receipt of such notice; (II) such
Holder and any of its officers, directors or affiliates, if any,
will comply with the provisions of
E-29
Regulation M under the Exchange Act as applicable to them in
connection with sales of Registrable Securities pursuant to the
Shelf Registration Statement; and (III) such Holder and any of
its officers, directors or affiliates, if any, will comply with
the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable
Securities pursuant to the Shelf Registration Statement.
(g) Expenses of Registration. The Company shall bear and
pay all expenses incurred in connection with any registration,
filing, or qualification of Registrable Securities for the
Holder, including, without limitation, all printers' bills and
accounting fees and the fees and disbursements of counsel for the
Company, but excluding underwriting discounts and commissions
relating to Registrable Securities and the fees for counsel to
the Holders.
(h) Conditions to Registration. Each Holder's right to
have Registrable Securities included in any Registration
Statement or Shelf Registration Statement filed by the Company in
accordance with the provisions of this Section 8 shall be subject
to the following conditions:
(I) The Holders on whose behalf such Registrable Securities
are to be included shall be required to furnish the Company in a
timely manner with all information required by the applicable
rules and regulations of the SEC concerning the proposed method
of sale or other disposition of such securities, the identity of
and compensation to be paid to any proposed underwriters to be
employed in connection therewith, and such other information as
may be reasonably required by the Company properly to prepare and
file such Registration Statement or Shelf Registration Statement
in accordance with applicable provisions of the Securities Act;
(II) If any such Holder desires to sell and distribute
Registrable Securities over a period of time, or from time to
time, at then prevailing market prices, then any such Holder
shall execute and deliver to the Company such written
undertakings as the Company and its counsel may reasonably
require in order to assure full compliance with relevant
provisions of the Securities Act and the Exchange Act;
(III) In the case of any registration requested pursuant
to the provisions of paragraph (b), the offering price for any
Registrable Securities to be so registered shall be no less than
for any securities of the same class then to be registered for
sale for the account of the Company or other security holders,
unless such Registrable Securities are to be offered from time to
time based on the prevailing market price;
(IV) Upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (c)(XI)
or paragraph (e)(XII), such Holder will forthwith discontinue
disposition of Registrable Securities until such Holder's receipt
of the copies of the supplemented Prospectus contemplated by such
paragraph, or until it is advised in writing by the Company that
the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by the
Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such
notice;
E-30
(V) In the case of any underwritten offering on behalf of
the Holders of Registrable Securities, such Holders will enter
into such agreements (including underwriting agreements and lock-
up agreements) as the managing underwriters shall reasonably
request and as are customary in similar circumstances; and
(VI) In the case of any registration hereunder, the
Registrable Securities will be registered (subject to the
limitations set forth in paragraphs (b) and (d) of this Section 8
pertaining to the Preferred Stock and the Company's registration
statement on Form S-3, File No. 333-08615), on an equal basis
with registration of any other securities of selling holders who
hold a right to registration under any warrant or option issued
by the Company prior to or subsequent to the date of this
warrant, so that if under the terms of this Section 8 any
reduction in the number of securities registered is required,
such reduction shall be applied pro rata to all of the securities
subject to registration and not just to the Registrable
Securities of the Holders.
(i) Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 8:
(I) To the extent permitted by law, the Company will
indemnify and hold harmless the Holder, the officers, directors,
and agents of the Holder, any underwriter (as defined in the
Securities Act) for such Holder, and each person, if any, who
controls such Holder or underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934 ("Exchange
Act"), against any losses, claims, damages, liabilities, or
expenses (joint or several) to which they may become subject
under the Securities Act, the Exchange Act, or other federal and
state law, insofar as such losses, claims, damages, liabilities,
or expenses (or actions in respect thereof) arise out of or are
based on any of the following statements, omissions, or
violations (collectively, a "Violation"): (A) any untrue
statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (B) the 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 (C) any Violation or alleged Violation by the
Company of the Securities Act, the Exchange Act, any state
securities law, or any rule or regulation promulgated under the
Securities Act, the Exchange Act, or any state securities law;
and the Company will pay to the Holder, officer or director,
underwriter, or controlling person any legal or other expenses
reasonably incurred by them in connection with investigating or
defending such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this
paragraph i(I) shall not apply to amounts paid in settlement or
any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld) nor shall the Company
be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is
based on a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use
in connection with such registration by the Holder, officer,
director, underwriter, or controlling person.
(II) To the extent permitted by law, the Holder will
indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement,
each agent, each person, if any, who controls the Company within
the meaning of the Securities Act, any
E-31
underwriter, any other person selling securities in such
registration statement, directors, officers, or agents, and any
other controlling person of any such underwriter or other person,
against any losses, claims, damages, liabilities, or expenses
(joint or several) to which any of the foregoing persons may
become subject under the Securities Act, the Exchange Act, or
other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance
on, and in conformity with, written information furnished to the
Company by the Holder expressly for use in connection with such
registration; and the Holder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified
pursuant to this paragraph i(II) in connection with investigating
or defending such loss, claim, damage, liability, expense, or
action; provided, however, that the indemnity agreement contained
in this paragraph i(II) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided
further, that in no event shall any indemnity under this
paragraph i(II) exceed the gross proceeds from the offering
received by the Holder.
(III) Promptly after receipt by an indemnified party
under this paragraph (i) of notice of the commencement of any
action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against
any indemnifying party under this paragraph (i), deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed assume the
defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party (together
with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by
the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying 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. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this paragraph (i), but
the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to
any indemnifying party otherwise than under this paragraph (i).
(IV) The obligations of the Company and the selling Holder
under this paragraph (i) shall survive the completion of any
offering of Registrable Securities in a registration statement
under this warrant.
(j) Assignment of Registration Rights. The right to cause
the Company to register Registrable Securities pursuant to this
Section 8 may be assigned by the Holder to a transferee or
assignee of such Registrable Securities; provided, that the
Company is furnished within a reasonable time after such transfer
with written notice of the name and address of such transferee or
assignee and the Registrable Securities with respect to which
such registration rights are being assigned; provided further,
that no such assignment shall be effective if, immediately
following
E-32
such transfer, the transferee or assignee can resell such
securities without registration under the Securities Act.
(k) No Obligation to Sell. Neither the giving of any
notice nor the making of any request hereunder shall impose an
obligation on the Holder to sell any securities.
E-33