EXHIBIT 4.4
REPRESENTATIVES WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE RESOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT,
OR AN OPINION OF COUNSEL SATISFACTION TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT.
ROEX, INC.
COMMON STOCK PURCHASE WARRANT
ROEX, INC., a California corporation, (the "Company"), hereby certifies
that, for value received, RH Investment Corporation or its registered assigns
(the "Holder"), is entitled, on the terms and subject to the conditions set
forth herein, to purchase from the Company at any time commencing __________,
2000 and before 5:00 p.m., Denver, Colorado time, on __________, 2005
____________ fully paid and nonassessable shares of Common Stock (as hereinafter
defined) at a purchase price of $7.80 per share. The number of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided in
this Warrant.
As used herein the following terms, unless the context otherwise
requires, have the indicated meanings:
"Company" means Roex, Inc. and any person (corporate or otherwise) that
shall succeed to or assume the obligations of Roex, Inc. hereunder in accordance
with the terms hereof.
"Common Stock" means the Company's Common Stock, no par value per
share, as authorized on the date hereof, and any other securities into which or
for which the Common Stock may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means __________, 2005.
"Holder" or "Holders" means the holder or holders of the Registerable
Securities, including the holder or holders of Warrants to purchase Registerable
Securities not then issued.
"Issue Date" means the __________, 2000 date of the original issuance
of this Warrant.
"Majority Holders" means the holder or holders of Warrants and
Registerable Securities theretofore issued upon exercise or conversion of
Warrants, who own or have the right to acquire upon exercise or conversion of
Warrants a majority of the Registerable Securities that would be outstanding if
all of the outstanding Warrants were exercised in full on the date as of which
the determination is being made.
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"Nasdaq" means the NASDAQ SmallCap Market.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
Holder at any time shall be entitled to receive, or shall have received, on the
exercise of this Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities as a result of the provisions of
Section 4.
"Prospectus" means the prospectus included in the Registration
Statement as of the date it becomes effective under the Securities Act ("SEC
Effective Date"), including financial statements and all documents incorporated
by reference therein. In the case of references to the Prospectus as of a date
subsequent to the SEC Effective Date, Prospectus means as supplemented as of
such subsequent date.
"Purchase Price" means $7.80 per share.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement or statements in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement by the United States Securities and
Exchange Commission (the "SEC").
"Registerable Securities" means the shares of Common Stock issued or
issuable upon exercise or conversion of the Warrant and Other Securities issued
or issuable as a result of the provisions of Sections 4 or 5 hereof. References
herein to amounts or percentages of Registerable Securities as of or on any
particular date shall be deemed to refer to amounts or percentages after giving
effect to any applicable events contemplated by the preceding sentence. As to
any particular Registerable Securities, such securities shall cease to be
Registerable Securities when they have been sold pursuant to an effective
registration statement or in compliance with Rule 144 or are eligible to be sold
pursuant to subsection (k) of Rule 144.
"Registration Period" means the period from the Issue Date to the
earliest of (i) the date which is four years after the final Closing Date of the
offering, (ii) the date on which the Holder may sell all of Holder's
Registerable Securities without registration under the Securities Act pursuant
to subsection (k) of Rule 144, without restriction on the manner of sale or the
volume of securities which may be sold in any period and without the requirement
for the giving of any notice to, or the mailing of any filing with the SEC and
(iii) the date on which the Holder no longer owns any Registerable Securities.
"Registration Statement" means a registration statement of the Company
under the Securities Act on such form for which the Company then qualifies and
which permits the secondary resale thereunder of Registerable Securities
required by, the provisions hereof to be included therein. The term
"Registration Statement" shall also include any amendment thereto and all
exhibits and financial statements and schedules and documents incorporated by
reference in such Registration Statement as of the SEC Effective Date. In the
case of references to the Registration Statement as of a date subsequent to the
SEC Effective Date, Registration Statement means as amended or supplemented as
of such subsequent date.
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"Rule 144" means Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit a holder
of securities of the Company to sell such Company securities to the public
without registration under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the United States Securities and Exchange Commission.
"SEC Effective Date" means the date the Registration Statement is
declared effective by the SEC.
"SEC Filing Date" means the date the Registration Statement is first
filed with the SEC pursuant to Section 20 hereof.
"Trading Day" means a day on which the principal securities market for
the Common Stock is open for general trading of securities.
"Warrants" means this Warrant and any other warrants derived from this
Warrant originally issued by the Company to RH Investment Corporation on the
Issue Date.
1. EXERCISE OF WARRANT.
1.1 EXERCISE. This Warrant may be exercised by the Holder, in
full or in part, at any time, or from time to time, commencing on the Issue Date
to and including the Expiration Date by surrender of this Warrant and the
subscription form annexed hereto (completed and signed by the Holder) to the
principal office of the Company or the Company's transfer agent and registrar
for the Common Stock, and by making payment by certified or official bank check
payable to the order of the Company, in the amount obtained by multiplying (a)
the number of shares of Common Stock designated by the Holder in the
subscription form by (b) the Purchase Price then in effect. The Holder shall
provide a copy of the subscription form to the Company at the time of exercise
and the Company will confirm the exercise instructions given therein by notice
to the Company's transfer agent within one Trading Day after receiving such
subscription form. On any partial exercise the Company will promptly issue and
deliver to or upon the order of the Holder hereof a new Warrant or Warrants of
like tenor, in the name of the Holder hereof or as the Holder (upon payment by
the Holder of any applicable transfer taxes) may request, providing in the
aggregate on the face or faces thereof for the purchase of the number of shares
of Common Stock for which such Warrant or Warrants may still be exercised.
1.2 CASHLESS EXERCISE. Notwithstanding anything to the
contrary contained in Section 1.1, the Holder may elect to exercise this Warrant
in whole or in part by receiving shares of Common Stock equal to the net
issuance value (as determined below) of this Warrant, or any part hereof upon
surrender of this Warrant to the principal office of the Company or the
Company's transfer agent and registrar for the Common Stock together with the
subscription form annexed hereto (completed and signed by the Holder), in which
event the Company shall issue to the Holder a number of shares of Common Stock
equal to X in the following formula:
X = Y (A-B)
-----------
A
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1.2 CASHLESS EXERCISE (continued)
Where:
Y = the number of shares of Common Stock as to
which this Warrant is to be exercised.
A = the current fair market value of one share
of Common Stock calculated as of the last
Trading Day immediately preceding the
exercise of this Warrant.
B = the Purchase Price.
As used herein, current fair market value of Common Stock as of a specified date
shall mean with respect to each share of Common Stock the closing sale price of
the Common Stock on the principal securities market on which the Common Stock
may at the time be listed or, if there have been no sales on any such exchange
on such day, the average of the reported closing bid and asked prices on the
principal securities market at the end of such day, or, if on such day the
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the Nasdaq System as of 2:00 p.m., Los Angeles, California,
time, or, if on such day the Common Stock is not quoted in the Nasdaq System,
the average of the highest bid and lowest asked price on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of five consecutive Trading Days consisting of the day as of which
the current fair market value of a share of Common Stock is being determined (or
if such day is not a Trading Day, the Trading Day next preceding such day) and
the four consecutive Trading Days prior to such day. If on the date for which
current fair market value is to be determined the Common Stock is not listed on
any securities exchange or quoted in the Nasdaq System or the over-the-counter
market, the current fair market value of Common Stock shall be the highest price
per share which the Company could then obtain from a willing buyer (not a
current employee or director) for shares of Common Stock sold by the Company
from authorized but unissued shares, as determined in good faith by the Board of
Directors of the Company, unless prior to such date the Company has become
subject to a merger, acquisition or other consolidation transaction pursuant to
which the Company is not the surviving party, in which case the current fair
market value of the Common Stock shall be deemed to be the value received or
agreed to be paid by the holders of the Company's Common Stock for each share
thereof pursuant to such transaction.
2. DELIVERY UPON EXERCISE. As soon as practicable after the exercise of
this Warrant, and in any event within three (3) Trading Days thereafter, the
Company at its expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the Holder, or as
the Holder (upon payment by the Holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock (or Other Securities) to which the Holder
shall be entitled on such exercise, in such denominations as may be requested by
the Holder plus, in lieu of any fractional share to which the Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
current fair market value (as determined in accordance with subsection 1.2) of
one full share, together with any other stock or other securities and property
(including cash where applicable) to which the Holder is entitled upon such
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2. DELIVERY UPON EXERCISE.(Continued)
exercise pursuant to Section 1 or otherwise. Upon exercise of this Warrant as
provided herein, the Company's obligation to issue and deliver the certificates
for Common Stock shall be absolute and unconditional, irrespective of the
absence of any action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof the recovery of any judgment against any
person or any action to enforce the same, any failure or delay in the
enforcement of any other obligation of the Company to the Holder, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other person of any obligation to the Company, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with such exercise. If the
Company fails to issue and deliver the certificates for the Common Stock to the
Holder pursuant to the first sentence of this paragraph as and when required to
do so, in addition to any other liabilities the Company may have hereunder and
under applicable law, the Company shall pay or reimburse the Holder on demand
for all out-of-pocket expenses including, without limitation, reasonable fees
and expenses of legal counsel incurred by the Holder as a result of such
failure.
3. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY ETC.;
RECLASSIFICATION ETC. In case at any time, or from time to time, after the Issue
Date, all the holders of Common Stock (or Other Securities) shall have received,
or (on or after the record date fixed for the determination of stockholders
eligible to receive) shall have become entitled to receive, without payment
therefor:
3.1 other or additional stock or other securities or
property (other than cash) by way of dividend, or
3.2 any cash (excluding cash dividends payable solely out
of earnings or earned surplus of the Company), or
3.3 other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in Section 5), then and in each such case the Holder, on the exercise hereof
as provided in Section 1, shall be entitled to receive the amount of stock and
other securities and property (including cash in the cases referred to in
subsections 3.2 and 3.3 of this Section 3) which the Holder would hold on the
date of such exercise if on the date thereof the Holder had been the holder of
record of the number of shares of Common Stock called for on the face of this
Warrant and had thereafter, during the period from the date hereof to and
including the date of such exercise, retained such shares and all such other or
additional stock and other securities and property (including cash in the case
referred to in subsections 3.2 and 3.3 of this Section 3) receivable by the
Holder as aforesaid during such period, giving effect to all adjustments called
for during such period by Section 4. Notwithstanding anything in this Section 3
to the contrary, no adjustments pursuant to this Section 3 shall actually be
made until the cumulative effect of the adjustments called for by this Section 3
since the date of the last adjustment actually made would change the amount of
stock or other securities and property which the Holder would hold by more than
1%.
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4. EXERCISE UPON REORGANIZATION, CONSOLIDATION, MERGER ETC. In case at
any time or from time to time after the Issue Date, the Company shall (a) effect
a reorganization, (b) consolidate with or merge into any other person, or (c)
transfer all or substantially all of its properties or assets to any other
person under any plan or arrangement contemplating the dissolution of the
Company, then, in each such case, as a condition of such reorganization,
consolidation, merger, sale or conveyance the Company shall cause lawful and
adequate provisions to be made whereby the Holder hereof shall thereafter have
the right to receive upon exercise of this Warrant, in addition to or in lieu of
(as the case may be) the shares of Common Stock of the Company immediately
issuable upon such exercise, such securities or other property receivable upon
such reorganization, consolidation, merger, sale or conveyance as though the
Holder had exercised the Warrant and was the owner of the shares of Common Stock
issuable hereunder immediately prior to any such events at a price equal to the
product of (x) the number of shares issuable upon exercise of the Warrant and
(y) the Purchase Price applicable immediately prior to the record date for such
reorganization, consolidation, merger, sale or conveyance as though Holder had
exercised the Warrant. The provisions of this Section shall apply to successive
reorganizations, consolidations, mergers, sales or conveyances.
5. ADJUSTMENT FOR EXTRAORDINARY EVENTS. In the event that after the
Issue Date the Company shall (i) issue additional shares of Common Stock as a
dividend or other distribution on outstanding Common Stock, (ii) subdivide or
reclassify its outstanding shares of Common Stock, or (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then, in each event, the Purchase Price shall, simultaneously with the
happening of such event, be adjusted by multiplying the Purchase Price in effect
immediately prior to such event by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
event, and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event. and the product so obtained
shall thereafter be the Purchase Price then in effect. The Purchase Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described in this Section 5. The Holder shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive that number of shares of Common Stock determined by multiplying the
number of shares of Common Stock which would be issuable on such exercise
immediately prior to such issuance by a fraction of which (i) the numerator is
the Purchase Price in effect immediately prior to such issuance and (ii) the
denominator is the Purchase Price in effect on the date of such exercise.
6. ADJUSTMENT FOR CERTAIN STOCK ISSUANCES.
6.1 In case at any time the Company shall issue shares of its
Common Stock or debt or equity securities convertible into or exercisable or
exchangeable for shares of Common Stock (collectively, the "Newly Issued
Shares"), other than for a consideration per share less than a price equal to
the Purchase Price (i) an issuance pro rata to all holders of its outstanding
Common Stock, (ii) issuances pursuant to options, warrants and convertible
securities outstanding on the Issue Date and (iii) issuances pursuant to
employee stock option plans (other than in connection with any corporate
financing or acquisition transaction), at a price below the Purchase Price in
effect at the time of such issuance, then, following such issuance of Newly
Issued Shares, the number of shares of Common Stock which the Holder shall be
entitled to receive upon exercise of this Warrant shall be increased and the
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6. ADJUSTMENT FOR CERTAIN STOCK ISSUANCES.(Continued)
Purchase Price shall be decreased to the respective amounts determined pursuant
to this Section 6. The number of shares of Common Stock purchasable upon the
exercise of this Warrant following any such adjustment shall be determined by
multiplying the number of shares purchasable upon exercise of this Warrant
immediately prior to such adjustment by a fraction, the numerator of which shall
be the sum of (a) the number of shares of Common Stock outstanding or authorized
to be outstanding immediately prior to the issuance of the Newly Issued Shares
(calculated on a fully-diluted basis assuming the exercise or conversion of all
options, warrants, purchase rights or convertible securities which are
exercisable at the time of the issuance of the Newly Issued Shares), plus (b)
the number of Newly Issued Shares, and the denominator of which shall be the sum
of (a) the number of shares of Common Stock outstanding immediately prior to the
issuance of the Newly Issued Shares (calculated on a fully-diluted basis
assuming the conversion of all options, warrants, purchase rights or convertible
securities which are exercisable at the time of the issuance of the Newly Issued
Shares), plus (b) the number of shares of Common Stock which the aggregate
consideration, if any, received by the Company for the number of Newly Issued
Shares would purchase at a price equal to the Purchase Price in effect at the
time of such issuance. Upon any adjustment under this Section 6, the number of
shares of Common Stock purchasable upon exercise of this Warrant in full
immediately after such adjustment shall be rounded to the nearest
one-one-hundredth of a share of Common Stock subject, however, to Section 2 of
this Warrant relating to fractional shares of Common Stock. Such adjustment of
the number of shares purchasable provided for in this Section 6 may be expressed
in the following formula:
X = W x [O+N]
----------------
[O+(C/P)]
Where:
C = aggregate consideration received by the Company
for the Newly Issued Shares.
N = number of Newly Issued Shares.
O = number of shares of Common Stock
outstanding or authorized to be outstanding
(on a fully diluted basis, as described
above) immediately prior to the issuance of
the Newly Issued Shares.
P = Purchase Price in effect immediately prior
to the time of the issuance of the Newly
Issued Shares.
W = number of shares of Common Stock issuable
upon exercise of this Warrant prior to the
issuance of the Newly Issued Shares.
X = number of shares of Common Stock issuable
upon exercise of this Warrant after the
issuance of the Newly Issued Shares.
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Upon the issuance of such Newly Issued Shares, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
Purchase Price in effect immediately prior to such event by a fraction, the
numerator of which shall be the number of shares of Common Stock issuable upon
exercise of this Warrant prior to the issuance of the Newly Issued Shares and
the denominator of which shall be the number of shares of Common Stock issuable
upon the exercise of this Warrant after the issuance of the Newly Issued Shares
as provided in this Section 6, and the product so obtained shall thereafter be
the Purchase Price then in effect. The number of shares of Common Stock issuable
upon exercise of this Warrant and the Purchase Price, as each is so adjusted,
shall be readjusted in the same manner upon the happening of any successive
issuances of Newly Issued Shares described in this Section 6.
7. FURTHER ASSURANCES. The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock, free from all taxes, liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.
8. NOTICES OF RECORD DATE, ETC. In the event of:
8.1 any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend on, or any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
8.2 any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to or
consolidation or merger of the Company with or into any other person (other than
a wholly-owned subsidiary of the Company), or
8.3 any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then and in each such event the Company will mail or
cause to be mailed to the Holder, at least ten days prior to such record date, a
notice specifying (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date on which any
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall also state that the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act, or a favorable vote of stockholders if
either is required. Such notice shall be mailed at least ten days prior to the
date specified in such notice on which any such action is to be taken or the
record date, whichever is earlier.
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9. RESERVATION OF STOCK ISSUABLE ON EXERCISE. The Company will at all
times reserve and keep available out of its authorized but unissued shares of
capital stock solely for issuance and delivery on the exercise of this Warrant,
a sufficient number of shares of Common Stock (or Other Securities) to effect
the full exercise of this Warrant and the exercise, conversion or exchange of
any other warrant or security of the Company exercisable for, convertible into,
exchangeable for or otherwise entitling the holder to acquire shares of Common
Stock (or Other Securities), and if at any time the number of authorized but
unissued shares of Common Stock (or Other Securities) shall not be sufficient to
effect such exercise, conversion or exchange, the Company shall take such action
as may be necessary to increase its authorized but unissued shares of Common
Stock (or Other Securities) to such number as shall be sufficient for such
purposes.
10. TRANSFER OF WARRANT. This Warrant shall inure to the benefit of the
successors to and assigns of the Holder. This Warrant and all rights hereunder,
in whole or in part, are Registerable at the principal office of the Company or
the office of the Company's transfer agent and registrar by the Holder hereof in
person or by his duly authorized attorney, upon surrender of this Warrant
properly endorsed.
11. REGISTER OF WARRANTS. The Company shall maintain, at the principal
office of the Company (or such other office or agency as it may designate by
notice to the Holder hereof), a register in which the Company shall record the
name and address of the person in whose name this Warrant has been issued, as
well as the name and address of each successor and prior owner of such Warrant.
The Company shall be entitled to treat the person in whose name this Warrant is
so registered as the sole and absolute owner of this Warrant for all purposes.
12. EXCHANGE OF WARRANT. This Warrant is exchangeable, upon the
surrender hereof by the Holder hereof at the principal office of the Company or
the office of the Company's transfer agent and registrar, for one or more new
Warrants of like tenor representing in the aggregate the right to subscribe for
and purchase the number of shares of Common Stock which may be subscribed for
and purchased hereunder, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by said
Holder hereof at the time of such surrender.
13. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
14. WARRANT AGENT. U.S. Stock Transfer Corporation, 1745 Gardena
Avenue, Glendale, California, 91204, has been appointed the Company's Transfer
Agent and Registrar and the Company's exercise agent for purposes of issuing
shares of Common Stock (or Other Securities) on the exercise of this Warrant
pursuant to Section 1. The Company may, by notice to the Holder, appoint an
agent having an office in the United States of America for the purpose of
exchanging this Warrant pursuant to Section 12 and replacing this Warrant
pursuant to Section 13, or either of the foregoing, and thereafter any such
exchange or replacement, as the case may be, shall be made at such office by
such agent.
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15. REMEDIES. The Company stipulates that the remedies at law of the
Holder in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
16. RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall not
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the Holder hereof to purchase Common Stock, and no mere enumeration
herein of the rights or privileges of the Holder hereof, shall give rise to any
liability of the Holder for the Purchase Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
17. NOTICES. ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to be sufficiently
given when delivered personally (by hand, by courier or by facsimile, with
answer back confirmation) and shall be effective upon receipt, addressed: (i) if
to the Company, at 2081 Business Center Drive, Suite 185, Irvine, California
92612, Attention: Chief Financial Officer, facsimile number (949) 476-8682, and
(ii) if to the Holder, at 15760 Ventura Boulevard, Suite 1732, Encino,
California 91436, Attention: Managing Director, facsimile number (818) 386-6429,
or at such other address or facsimile number as a party shall have provided to
the other party by written notice given in accordance with these provisions.
18. SECURITIES LAW RESTRICTIONS. By acceptance of this Warrant, the
Holder represents to the Company that this Warrant is being acquired for the
Holder's own account and for the purpose of investment and not with a view to,
or for sale in connection with, the distribution thereof, nor with any present
intention of distributing or selling this Warrant or the Common Stock issuable
upon exercise of this Warrant. Neither this Warrant nor the shares of Common
Stock issuable upon the exercise or conversion of this Warrant have been
registered under the Securities Act or under the securities laws of any state.
Neither this Warrant, nor the shares of Common Stock issuable upon the exercise
or conversion of this Warrant, may be sold, transferred, hypothecated, assigned,
offered for sale or otherwise disposed of unless registered pursuant to the
Securities Act and applicable state securities laws or unless in the opinion of
counsel who is reasonably satisfactory to the Company an exemption from such
registration is available. Certificates representing securities issued upon
exercise or conversion of this Warrant shall bear a legend as provided in
Section 19 hereof.
19. LEGEND. Unless theretofore registered for resale under the
Securities Act, each certificate for shares issued upon exercise of this Warrant
shall bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). The securities have been acquired for investment and
may not be resold, transferred or assigned in the absence of
an effective registration statement for the securities under
the Act, or an opinion of counsel satisfactory to the issuer
that registration is not required under the Act.
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20. REGISTRATION RIGHTS. Nothing contained herein shall be construed as
requiring the exercise of this Warrant prior to the initial filing of any
registration statement provided herein or the effectiveness thereof.
20.2 DEMAND REGISTRATION. At any time on or before __________,
2005, a Majority of the Holders shall have the right to request registration
under the Securities Act for all or any portion of the Registerable Securities
upon the terms and conditions set forth in this subsection 20.1. Promptly after
receipt of a request for registration pursuant to this subsection 20.1 the
Company shall notify all other Holders in writing of such request for
registration. Upon receipt of such notice from the Company (the "Company
Notice"), each such holder may give the Company a written request to register
all or some of such holder's Registerable Securities in the Registration
Statement described in the Company Notice, provided that such written request is
given within 10 days after the date on which the Company Notice is given (with
such request stating (i) the amount of Registerable Securities to be included
and (ii) any other information reasonably requested by the Company to properly
effect the registration of such Registerable Securities). The Company shall as
soon as practicable after the date on which the Company Notice is given, file
with the SEC and use its best efforts to cause to become effective a
Registration Statement which shall cover the Registerable Securities specified
in the Demand Notice and in any written request from any other holder received
by the Company within 10 days of the date on which the Company Notice is given.
No right to registration of Registerable Securities under this subsection 20.1
shall be construed to limit any registration required under subsection 20.2
hereof. The obligations of the Company under this subsection 20.1 shall expire
after the Company has afforded the Holder the opportunity to exercise
registration rights under this subsection 20.1 for two registrations.
20.2 PIGGY-BACK REGISTRATION. If at any time the Company shall
determine to prepare and file with the SEC a Registration Statement relating to
an offering for its own account or the account of others under the Securities
Act of any securities of the Company, other than on Form S-4 or Form S-8 or
their then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans, the
Company shall send to the Holder and each other holder who is entitled to
registration rights under this subsection 20.2 written notice of such
determination and if, within 10 days after receipt of such notice, Holder shall
so request in writing, the Company shall include in such Registration Statement
all or any part of the Registerable Securities the Holder requests to be
registered, except that if, in connection with any underwritten public offering
for the account of the Company, the managing underwriter(s) thereof shall impose
a limitation on the number of shares of Common Stock (or Other Securities) which
may be included in the Registration Statement because, in such underwriter(s)'
judgement, such limitation is necessary to effect an orderly public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registerable Securities
with respect to which Holder has requested inclusion. Any exclusion of
Registerable Securities shall be made pro rata among all holders who have
requested that Registerable Securities be included, in proportion to the number
of Registerable Securities specified in their respective requests; provided,
however, that the Company shall not exclude any Registerable Securities unless
the Company has first excluded all outstanding securities the holders of which
are not entitled by right to inclusion of securities in such Registration
Statement; and provided further, however, that, after giving effect to the
11
20.2 PIGGY-BACK REGISTRATION.(Continued) immediately preceding
proviso, any exclusion of Registerable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
Registration Statement, based on the number of securities for which registration
is requested except to the extent such pro rata exclusion of such other
securities is prohibited under any written agreement entered into by the Company
with the holder of such other securities prior to the Issue Date of this
Certificate, in which case such other securities shall be excluded, if at all,
in accordance with the terms of such agreement. No right to registration of
Registerable Securities under this subsection 20.2 shall be construed to limit
any registration required under subsection 20.1 hereof. The obligations of the
Company under this subsection 20.2 may be waived by a Majority of the Holders
and such obligations of the Company shall expire after the Company has afforded
the opportunity to the holders to exercise registration rights under this
subsection 20.2 for two registrations; provided, however, that any Holder who
shall have had any Registerable Securities excluded from any Registration
Statement in accordance with this subsection 20.2 shall be entitled to include
in an additional Registration Statement filed by the Company the Registerable
Securities so excluded.
20.3 OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registerable Securities, the Company shall:
20.3.1 prepare promptly and file with the SEC the Registration Statement
provided in Section 20.1 with respect to the Registerable Securities and
thereafter to use its best efforts to cause such Registration Statement relating
to the Registerable Securities to become effective as soon as possible after
such filing, and keep the Registration Statement effective at all times during
the Registration Period; submit to the SEC, within three Business Days after the
Company learns that no review of the Registration Statement will be made by the
staff of the SEC or the staff of the SEC has no further comments on the
Registration Statement, as the case may be, a request for acceleration of the
effectiveness of the Registration Statement to a time and date not later then 48
hours after the submission of such request; notify the Holder of the
effectiveness of the Registration Statement on the date the Registration
Statement is declared effective; and, the Company represents and warrants to,
and covenants and agrees with the Holder that the Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein, at the time it is first filed with the SEC, at the time it is ordered
effective by the SEC and al all time during which it is required to be effective
hereunder) and each such amendment and supplement at the time it is filed with
the SEC and all times during which it is available for use in connection with
the offer and sale of Registerable Securities shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
20.3.2 prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and during the Registration Period, comply with
the provisions of the Securities Act with respect to the disposition of all
Registerable Securities of the Company covered by the Registration Statement
until such time as all of such Registerable Securities have been disposed of in
accordance with the intended methods of disposition by the Holder or Holders
thereof as set forth in the Registration Statement;
12
20.3.3 furnish to each Holder whose Registerable
Securities are included in the Registration Statement and its legal counsel, (i)
promptly after the same is prepared and publicly distributed, filed with the SEC
or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, each letter written by or on behalf of the Company to the
SEC or the staff of the SEC and each item of correspondence from the SEC or the
staff of the SEC relating to such Registration Statement (other than any portion
of any thereof which contains information for which the Company has sought
confidential treatment) and (ii) such number of copies of a prospectus,
including a preliminary prospectus and all amendments and supplements thereto
and such other documents, as such Holder reasonably may request in order to
facilitate the disposition of the Registerable Securities owned by such Holder;
20.3.4 use reasonable efforts to (i) register and
qualify the Registerable Securities covered by the Registration Statement under
such securities or blue sky laws of such jurisdictions as the Holders who hold a
majority of the Registerable Securities being offered reasonably request, (ii)
prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times until the end of the Registration Period, (iii) take such other actions as
may be necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period and (iv) take all other actions
reasonably necessary or advisable to qualify the Registerable Securities for
sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto (I) to qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subsection 20.3.4, (II) to subject itself to general taxation in
any such jurisdiction, (III) to file a general consent to service of process in
any such jurisdiction, or (IV) to make any change in its Articles of
Incorporation or Bylaws which the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its stockholders;
20.3.5 in the event that the Registerable Securities
are being offered in an underwritten offering, enter into and perform its
obligations under an underwriting agreement in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering;
20.3.6 as promptly as practicable after becoming
aware of such event or circumstance, notify each Holder of any event or
circumstance of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and use
its best efforts promptly to prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, file such
supplement or amendment with the SEC at such time as shall permit the Holder to
sell Registerable Securities pursuant to the Registration Statement as promptly
as practicable, and deliver a number of copies of such supplement or amendment
to each Holder as such Holder may reasonably request;
13
20.3.7 as promptly as practicable after becoming
aware of such event, notify each Holder who holds Registerable Securities being
sold (or, in the event of an underwritten offering the managing underwriters) of
the issuance by the SEC of any stop order or other suspension of effectiveness
of the Registration Statement at the earliest possible time;
20.3.8 permit one legal counsel designated as
selling stockholders' counsel by the Holder(s) holding a majority of the
Registerable Securities being sold to review and comment on the Registration
Statement and all amendments and supplements thereto a reasonable period of time
prior to their filing with the SEC;
20.3.9 make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration Statement;
20.3.10 at the request of the Holder(s) who hold a
majority of the Registerable Securities being sold, furnish on the date that
Registerable Securities are delivered to an underwriter, if any, for sale in
connection with the Registration Statement (i) a letter, dated such date, from
the Company's independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and the Investors;
20.3.11 make available for inspection by Holder, any
underwriter participating in any distribution or disposition pursuant to the
Registration Statement, and any attorney, accountant or other agent retained by
Holder or underwriter (collectively, the "Inspectors"), all pertinent financial
and other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to enable Holder
to exercise Holder's due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided, however,
that each Inspector shall hold in confidence and shall not make any disclosure
(except to a Holder) of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction or (iii)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto;
14
20.3.12 use its best efforts (i) to cause all the
Registerable Securities covered by the Registration Statement to be listed on
the NASDAQ or such other principal securities market on which securities of the
same class or series issued by the Company are then listed or traded or (ii) if
securities of the same class or series as the Registerable Securities are not
then listed on the NASDAQ or any such other securities market, to cause all of
the Registerable Securities covered by the Registration Statement to be listed
on the NASDAQ, New York Stock Exchange or the American Stock Exchange;
20.3.13 provide a transfer agent and registrar, which
may be a single entity, for the Registerable Securities not later than the
effective date of the Registration Statement;
20.3.14 cooperate with the Holder and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registerable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or the Holder may
reasonably request and registered in such names as the managing underwriter or
underwriters, if any, or the Holder may request;
20.3.15 take all other reasonable actions necessary
to expedite and facilitate disposition by the Holder of the Registerable
Securities pursuant to the Registration Statement.
20.3.16 With a view to making available to the
Holders the benefits of Rule 144, the Company agrees to: (i) make and keep
public information available, as those terms are understood and defined in Rule
144; (ii) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and (iii)
furnish to each Holder so long as such Holder owns Registerable Securities,
promptly upon request, (I) a written statement by the Company that it has
complied with the reporting requirements of Rule 144 and the Exchange Act, (II)
a copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company and (III) such other
information as may be reasonably requested to permit the Holders to sell such
securities pursuant to Rule 144 without registration.
20.4 OBLIGATIONS OF THE HOLDER. In connection with the
registration of the Registerable Securities, the Holder shall have the following
obligations:
20.4.1 it shall be a condition precedent to the
obligations of the Company to complete the registration pursuant hereto
with respect to the Holder's Registerable Securities that the Holder shall
furnish to the Company such information regarding Holder, the Registerable
Securities held by Holder and the intended method of disposition of the
Registerable Securities held by Holder as shall be reasonably required to effect
the registration of such Registerable Securities and shall execute such
documents in connection with such registration as the Company may reasonably
request. At least five days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify the Holder of the information
the Company requires from the Holder (the "Requested Information") if any of
15
20.4.1(Continued) Holder's Registerable Securities
are eligible for inclusion in the Registration Statement. If at least two
Business Days prior to the filing date the Company has not received the
Requested Information from the Holder (at such time Holder becoming a
"Non-Responsive Holder"), then the Company may file the Registration Statement
without including Registerable Securities of Non-Responsive Holder but shall not
be relieved of its obligation to file a Registration Statement with the SEC
relating to the Registerable Securities of Non-Responsive Holder promptly after
Non-Responsive Holder provides the Requested Information;
20.4.2 by Holder's acceptance of the Registerable
Securities, Holder agrees to cooperate with the Company as reasonably requested
by the Company in connection with the preparation and filing of the Registration
Statement hereunder, unless Holder has notified the Company in writing of such
Holder's election to exclude all of Holder's Registerable Securities from the
Registration Statement;
20.4.3 in the event Holder(s) holding a majority
of the Registerable Securities being registered determine to engage the services
of an underwriter, each Holder agrees to enter into and perform such Holder's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registerable Securities, unless such Holder has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registerable Securities from the Registration Statement;
20.4.4 Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
subsections 20.3.6 or 20.3.7, Holder will immediately discontinue disposition of
Registerable Securities pursuant to the Registration Statement covering such
Registerable Securities until Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by subsections 20.3.6 or 20.3.7 and, if so
directed by the Company, Holder shall deliver to the Company (at the expense of
the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession of the prospectus covering
such Registerable Securities current at the time of receipt of such notice;
20.4.5 Holder may not participate in any
underwritten registration hereunder unless Holder (i) agrees to sell Holder's
Registerable Securities on the basis provided in any underwriting arrangements
approved by the Holders entitled hereunder to approve such arrangements, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions and other fees and expenses of
investment bankers and any manager or managers of such underwriting and legal
expenses to the underwriters applicable with respect to its Registerable
Securities, in each case to the extent not payable by the Company pursuant to
the terms of this Agreement; and
20.4.6 Holder agrees to take all reasonable actions
necessary to comply with the prospectus delivery requirements of the Securities
Act applicable to its sales of Registerable Securities.
16
20.5 EXPENSES OF REGISTRATION. All costs and expenses, other
than underwriting or brokerage discounts, commissions and other fees related to
the distribution of the Registerable Securities, incurred in connection with
registrations, filings or qualifications pursuant to subsections 20.1, 20.2 and
20.3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees and the fees and disbursements
of counsel for the Company shall be borne by the Company, provided, however,
that the Holder(s) shall bear the fees and out-of-pocket expenses of the one
legal counsel selected by the Holder(s) pursuant to subsection 20.4.8 hereof and
all reasonable costs and expenses incurred in connection with the second demand
registration permitted by subsection 20.2, including all registration, listing
and qualification fees, printers and accounting fees and the fees and
disbursements of the Company counsel, shall be borne by the Holder(s) of the
Registerable Securities covered by such registration.
20.6 INDEMNIFICATION. In the event any Registerable Securities
are included in a Registration Statement under this Agreement:
20.6.1 To the extent permitted by law, the Company
will indemnify and hold harmless each Holder who holds such Registerable
Securities, the directors, if any, of such Holder, the officers, if any, of such
Holder, each person, if any, who controls any Holder within the meaning of the
Securities Act or the Exchange Act, any underwriter (as defined in the
Securities Act) for the Holders, the directors, if any, of such underwriter and
the officers, if any, of such underwriter, and each person, if any, who controls
any such underwriter within the meaning of the Securities Act or the Exchange
Act (each, an "Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) incurred (collectively, "Claims") to
which any of them may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations in the Registration
Statement, or any post-effective amendment thereof, or any prospectus included
therein: (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereof
or 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
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective date of
such Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject
to the restrictions set forth in subsection 20.6.4 with respect to the number of
legal counsel, the Company shall reimburse the Holders and the other Indemnified
Persons, promptly as such expenses are incurred and are due and payable, for any
legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
subsection 20.6.1: (I) shall not apply to a Claim arising out of or based upon a
17
20.6.1(Continued) Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by
any Indemnified Person or underwriter for such Indemnified Person expressly for
use in connection with the preparation of the Registration Statement, the
prospectus or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to subsection
20.3.3 hereof; (II) with respect to any preliminary prospectus shall not inure
to the benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, if such prospectus was timely made
available by the Company pursuant to subsection 20.3.3 hereof; and (III) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registerable Securities by the
Holders pursuant to Section 24.
20.6.2 In connection with any Registration Statement
in which a Holder is participating, each such Holder agrees to indemnify and
hold harmless, to the same extent and in the same manner set forth in subsection
20.6.1, the Company, each of its directors, each of its officers who signs the
Registration Statement, each person on, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any underwriter and any
other stockholder selling securities pursuant to the Registration Statement or
any of its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "Indemnified Party"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly for use in
connection with such Registration Statement; and such Holder will reimburse any
legal or other expenses reasonably incurred by any Indemnified Party, promptly
as such expenses are incurred and are due and payable, in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this subsection 20.6.2 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Holder, which consent shall not be unreasonably withheld;
provided, further, however, that the Holder shall be liable under this
subsection 20.6.2 for only that amount of a Claim as does not exceed the amount
by which the net proceeds to such Holder from the sale of Registerable
Securities pursuant to such Registration Statement exceeds the cost of such
Registerable Securities to such Holder. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registerable Securities
by the Holders pursuant to Section 10. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this subsection
20.6.2 with respect to any preliminary prospectus shall not inure to the benefit
of any Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.
20.6.3 The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution, to the same
extent as provided above, with respect to information so furnished in writing by
such persons expressly for inclusion in the Registration Statement.
18
20.6.4 Promptly after receipt by an Indemnified
Person or Indemnified Party under this Section 20.6 of notice of the
commencement of any action (including any governmental action), such Indemnified
Person or Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under Section 20.6, 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,
to assume control of the defense thereof with counsel selected by the
indemnifying party but reasonably acceptable to the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an Indemnified
Person or Indemnified Party shall have the right to retain its own counsel with
the fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In such event, the
Company shall pay for only one separate legal counsel for the Investors; such
legal counsel shall be selected by the Holders holding a majority in interest of
the Registerable Securities included in the Registration Statement to which the
Claim relates. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 20.6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by Section 20.6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
20.7 The agreements, representations and warranties of the
Company and the Holder set forth or provided in this Section 20 shall survive
any exercise of this Warrant and the delivery of and payment for the
Registerable Securities hereunder and shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company and the
Holder.
21. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the internal laws of the State of California. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
on its behalf by one of its officers thereunto duly authorized.
Dated: ____________________, 2000 ROEX, INC.
----------------------------------------
Rodney H. Burreson, President
19
FORM OF SUBSCRIPTION
RH INVESTMENT CORPORATION
(To be signed only on exercise of Warrant)
TO: RH Investment Corporation
15760 Ventura Boulevard, Suite 1732
Encino, California 91436
Attention: Managing Director
1. The undersigned Holder of the attached original, executed Warrant hereby
elects to exercise its purchase right under such Warrant with respect to
________ shares of Common Stock, as defined in the Warrant, of Roex, Inc., a
California corporation (the "Company").
2. The undersigned Holder (check one):
(a) elects to pay the aggregate purchase price for such
shares of Common Stock (the "Exercise Shares") (i) by
lawful money of the United States or the enclosed
certified or official bank check payable in United
States dollars to the order of the Company in the
amount of $__________, or (ii) by wire transfer of
United States funds to the account of the Company in
the amount of $__________, which transfer has been
made before or simultaneously with the delivery of
this Form of Subscription pursuant to the
instructions of the Company;
or
(b) elects to receive shares of Common Stock having a
value equal to the value of the Warrant calculated in
accordance with Section 1.2 of the Warrant.
3. Please issue a stock certificate or certificates representing the appropriate
number of shares of Common Stock in the name of the undersigned or in such other
name as is specified below:
Name: ________________________________________
Address: ________________________________________
________________________________________
Dated:_________________________ ________________________________________
(Signature must conform to name of
Holder as specified on the face of
the Warrant)
________________________________________
________________________________________
(Address)