Exhibit 4.3
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HOMETOWN AUTO RETAILERS, INC.
AND
PAULSON INVESTMENT COMPANY, INC.
___________
REPRESENTATIVE'S
WARRANT AGREEMENT
Warrants for Purchase of 200,000 Shares of Class A Common Stock
of Hometown Auto Retailers, Inc.
Dated as of July __, 1998
Warrants Void After
July _____, 2003
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REPRESENTATIVE'S WARRANT AGREEMENT, dated as of July __, 1998, between
HOMETOWN AUTO RETAILERS, INC., a Delaware corporation (the "Company"), and
PAULSON INVESTMENT COMPANY, INC. (the "Representative").
W I T N E S S E T H:
WHEREAS, the Representative has agreed pursuant to the Underwriting
Agreement (the "Underwriting Agreement") dated as of the date hereof between the
Company and the several Underwriters listed therein to act as the Representative
in connection with the Company's proposed public offering of up to 2,000,000
shares of Class A common stock, par value $.001 per share (the "Common Stock"),
plus 300,000 shares covered by an over-allotment option (the "Over-Allotment
Option") at a public offering price between $9.00 and $11.00 per share of Common
Stock (the "Public Offering"); and
WHEREAS, pursuant to the Underwriting Agreement, the Company proposes to
issue to the Representative warrants (the "Warrants") entitling the holders
thereof to purchase up to an aggregate of 200,000 shares of Common Stock, at a
price of $____ per Warrant; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representative in consideration for, and as
part of the Representative's compensation in connection with, the Representative
acting as the Representative pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of an aggregate of $10.00, and other good and
valuable consideration, the receipt and sufficiency which is hereby
acknowledged, the parties hereto agree as follows:
THE REPRESENTATIVE (OR ITS DESIGNEES) IS HEREBY GRANTED THE RIGHT TO
PURCHASE, AT ANY TIME FROM JULY ____, 1999, UNTIL 5:00 P.M., PACIFIC TIME, ON
JULY _____, 2003, UP TO AN AGGREGATE OF 200,000 SHARES OF COMMON STOCK AT AN
INITIAL EXERCISE PRICE (SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 3 HEREOF)
OF $________ PER SHARE OF COMMON STOCK [120% OF THE PUBLIC OFFERING PRICE]
SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.
The Warrants issued pursuant hereto are subject to the following terms and
conditions:
1. DEFINITIONS OF CERTAIN TERMS. Except as may be otherwise clearly
required by the context, the following terms have the following meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Closing Date" means the date on which the Offering is closed.
(c)"Commission" means the Securities and Exchange Commission.
(d) "Common Stock" means the common stock, par value $0.001 per share, of
the Company.
(e) "Company" means Hometown Auto Retailers, Inc., a Delaware corporation.
(f) "Company's Expenses" means any and all expenses payable by the Company
or the Warrantholder in connection with the offering described in the
Registration Statement, as defined below, except the Warrantholder's Expenses.
(g) "Effective Date" means the date on which the Registration Statement is
declared effective by the Commission.
(h) "Exercise Price" means the price at which the Warrantholder may
purchase one Share (or other Securities obtainable in lieu of one Share) upon
exercise of a Warrant as determined from time to time pursuant to the provisions
hereof. The initial Exercise Price is $__ per Share.
(i) "Offering" means the public offering of Shares made pursuant to the
Registration Statement.
(j) "Participating Underwriter" means any underwriter participating in the
sale of the Shares pursuant to the Registration Statement, as defined below.
(k) "Registration Statement" means the Company's registration statement
(File No. 333-52763), as amended as of the Closing Date.
(l) "Rules and Regulations" means the rules and regulations of the
Commission adopted under the Act.
(m) "Securities" means the securities obtained or obtainable upon exercise
of the Warrant(s) or securities obtained or obtainable upon exercise, exchange,
or conversion of such securities.
(n) "Share" means, as appropriate, either (i) a share of Common Stock
which is one of the shares of Common Stock offered to the public through the
prospectus included in the Registration Statement or (ii) an identical share of
Common Stock for which a Warrant is initially exercisable.
(o) "Warrant Certificate" means the certificate evidencing the Warrant(s),
a form of which is annexed hereto as Exhibit A.
(p) "Warrantholder" means the record holder of the Warrant(s) or
Securities. The initial Warrantholder is the Representative.
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(q) "Warrantholder's Expenses" means the sum of: (i) the aggregate amount
of cash payments (other than for expense allowances) made to an underwriter,
underwriting syndicate, or agent in connection with a public offering described
in Section 9 hereof multiplied by a fraction the numerator of which is the
aggregate sales price of the Securities sold by such underwriter, underwriting
syndicate, or agent in such offering and the denominator of which is the
aggregate sales price of all of the Securities sold by such underwriter,
underwriting syndicate, or agent in such offering and (ii) all out-of-pocket
expenses of the Warrantholder, except for the fees and disbursements of one firm
retained as legal counsel for the Warrantholder that will be paid by the
Company.
(r) "Warrant(s)" means the warrant(s) evidenced by the Warrant
Certificate, any similar certificate issued in connection with the Offering, or
any certificate obtained upon transfer or partial exercise of the Warrant(s)
evidenced by any such certificate.
2. EXERCISE OF WARRANT(S).
(a) All or any part of the Warrant may be exercised during a four-year
period commencing on the first anniversary of the Effective Date and ending at 5
p.m. Pacific Time on the fifth anniversary of the Effective Date (the "Exercise
Period") by surrendering the Warrant Certificate, together with appropriate
instructions, duly executed by the Warrantholder or by its duly authorized
attorney, at the office of the Company at 831 Straits Turnpike, Watertown,
Connecticut 06795, or at such other office or agency as the Company may
designate. Upon receipt of notice of exercise, the Company shall immediately
instruct its transfer agent to prepare certificates for the Securities to be
received by the Warrantholder upon completion of the Warrant exercise. When
such certificates are prepared, the Company shall notify the Warrantholder and
deliver such certificates to the Warrantholder (or as otherwise designated by
the Warrantholder's written instructions) immediately upon payment in full by
the Warrantholder, in lawful money of the United States, of the Exercise Price
payable with respect to the Securities being purchased. If the Warrantholder
shall represent and warrant that all applicable registration and prospectus
delivery requirements for their sale have been complied with upon sale of the
Securities received upon exercise of the Warrant(s), such certificates shall not
bear a legend with respect to the Act.
If fewer than all the Securities purchasable under the Warrant(s) are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to the Warrant Certificate, evidencing that portion of the Warrant
not exercised. The Securities to be obtained on exercise of the Warrant(s) will
be deemed to have been issued, and any person exercising the Warrants will be
deemed to have become a holder of record of those Securities as of the date of
the payment of the Exercise Price.
(b) In addition to the method of payment set forth in paragraph (a) of
this Section 2 and in lieu of any cash payment required thereunder, the
Warrantholder shall have the right at any time and from time to time to exercise
the Warrant(s) in full or in part by surrendering the
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Warrant Certificate in the manner specified herein in exchange for the number of
shares of Common Stock equal to the quotient derived from DIVIDING the NUMERATOR
(which shall be an amount equal to the DIFFERENCE BETWEEN: (I) the number of
shares of Common Stock or other Securities as to which the Warrant is being
exercised MULTIPLIED by the per share Market Price, AND (II) the number of
shares of Common Stock or other Securities as to which the Warrant is being
exercised MULTIPLIED by the Exercise Price) BY the DENOMINATOR which shall be
the per share Market Price of the Common Stock. Solely for the purposes of this
paragraph, Market Price shall be calculated either: (i) on the date on which the
form of election attached hereto is deemed to have been sent to the Company
pursuant to Section 10 hereof (the "Notice Date") or (ii) as the average of the
Market Prices for each of the five trading days preceding the Notice Date,
whichever of (i) or (ii) is greater.
As used herein, the term "Market Price" at any date shall be deemed to be,
when referring to the Common Stock, the last reported sale price, or, in case no
such reported sale takes place on such day, the average of the last reported
sale prices for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Common Stock is
listed or admitted to trading or by the NASDAQ National Market ("NNM"), or, if
the Common Stock is not listed or admitted to trading on any national securities
exchange or quoted by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the average closing bid price as furnished by the
National Association of Securities Dealers, Inc. ("NASD") through NASDAQ or
similar organization if NASDAQ is no longer reporting such information, or if
the Common Stock is not quoted on NASDAQ, as determined in good faith (using
customary valuation methods) by resolution of the members of the Board of
Directors of the Company, based on the best information available to it.
3. ADJUSTMENTS IN CERTAIN EVENTS. The number, class, and price of
Securities for which the Warrant Certificate may be exercised are subject to
adjustment from time to time upon the happening of certain events as follows:
(a) If the outstanding shares of the Company's Common Stock are divided
into a greater number of shares or a dividend in stock is paid on the Common
Stock, the number of shares of Common Stock for which the Warrant(s) is (are)
then exercisable will be proportionately increased and the Exercise Price will
be proportionately reduced; and, conversely, if the outstanding shares of Common
Stock are combined into a smaller number of shares of Common Stock, the number
of shares of Common Stock for which the Warrant(s) is (are) then exercisable
will be proportionately reduced and the Exercise Price will be proportionately
increased. The increases and reductions provided for in this paragraph (a) of
Section 3 will be made with the intent and, as nearly as practicable, the effect
that neither the percentage of the total equity of the Company obtainable on
exercise of the Warrant(s) nor the price payable for such percentage upon such
exercise will be affected by any event described in this paragraph (a) of
Section 3.
(b) In case of any change in the Common Stock through merger,
consolidation, reclassification, reorganization, partial or complete
liquidation, purchase of substantially all the assets of the Company, or other
change in the capital structure of the Company, then, as a
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condition of such change, lawful and adequate provision will be made so that the
holder of the Warrant Certificate will have the right thereafter to receive upon
the exercise of the Warrant(s) the kind and amount of shares of stock or other
securities or property which it would have been entitled if, immediately prior
to such event, it had held the number of shares of Common Stock obtainable upon
the exercise of the Warrant(s). In any such case, appropriate adjustment will
be made in the application of the provisions set forth herein with respect to
the rights and interest thereafter of the Warrantholder, to the end that the
provisions set forth herein will thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the exercise of the Warrant(s). The Company will
not permit any change in its capital structure to occur unless the issuer of the
shares of stock or other securities to be received by the holder of the Warrant
Certificate, if not the Company, agrees to be bound by and comply with the
provisions of the Warrant Certificate.
(c) When any adjustment is required to be made in the number of shares of
Common Stock or other securities, or property purchasable upon exercise of the
Warrant(s), the Company will promptly determine the new number of such shares or
other securities or property purchasable upon exercise of the Warrant(s) and (i)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the new number of such shares or other securities or
property purchasable upon exercise of the Warrant(s) and (ii) cause a copy of
such statement to be mailed to the Warrantholder within thirty (30) days after
the date of the event giving rise to the adjustment.
(d) No fractional shares of Common Stock or other securities will be
issued in connection with the exercise of the Warrant(s), but the Company will
pay, in lieu of fractional shares, a cash payment therefor on the basis of the
Market Price as that term is defined in paragraph (b) of Section 2.
(e) If preferred securities of the Company or securities of any subsidiary
of the Company are distributed pro rata to holders of any or all of the
Company's securities, such number of securities will be distributed to the
Warrantholder or its assignee upon exercise of its rights hereunder as such
Warrantholder or assignee would have been entitled to if the Warrant Certificate
had been exercised prior to such distribution. The provisions with respect to
adjustment of the Common Stock provided in this Section 3 will also apply to the
preferred securities and securities of any subsidiary to which the Warrantholder
or his assignee is entitled under this paragraph (e) of Section 3.
(f) Notwithstanding anything herein to the contrary, there will be no
adjustment made hereunder on account of the sale of the Common Stock or other
Securities purchasable upon exercise of the Warrant(s).
4. FORM OF WARRANT AFTER ADJUSTMENTS. The form of the Warrant
Certificates need not be changed because of any adjustments in the Exercise
Price or number of Shares, and warrant certificates theretofore or thereafter
issued may continue to express the same Exercise Price and number of Shares as
are stated in the respective Warrant Certificates as
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initially issued.
5. RESERVATION OF SHARES. The Company agrees that the number of shares
of Common Stock or other Securities sufficient to provide for the exercise of
the Warrant(s) upon the basis set forth above will at all times during the term
of the Warrant(s) be reserved for exercise.
6. VALIDITY OF SECURITIES. All Securities delivered pursuant the
exercise of the Warrant(s) will be duly and validly issued in accordance with
their terms, and the Company will pay all documentary and transfer taxes, if
any, in respect of the original issuance thereof upon exercise of the
Warrant(s).
7. RESTRICTION ON TRANSFER OF WARRANTS. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof; that the Warrants may not be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, for a period of one (1) year from
the date hereof, except to officers, directors, or partners of the
Representative and members of the selling group.
8. REGISTRATION OF SECURITIES ISSUABLE ON EXERCISE OF WARRANT(S).
(a) The Company shall register the Securities with the Commission pursuant
to the Act so as to allow the unrestricted sale of the Securities to the public
from time to time during a five year period commencing on the first anniversary
of the Effective Date and ending at 5:00 p.m. Pacific Time on the fifth
anniversary of the Effective Date (the "Registration Period"). The Company
shall also file such applications and other documents necessary to permit the
sale of the Securities to the public during the Registration Period in those
states in which the Shares were qualified for sale in the Offering or such other
states as to which the Company and the Warrantholder agree. In order to comply
with the provisions of this Section 8(a), the Company shall not be required to
file more than one registration statement (excluding post-effective amendments
thereto). No registration right of any kind, "piggyback" or otherwise, is
required to be in effect longer than five years from the Closing Date.
Furthermore, the Company shall not be obligated to so register the Securities to
the extent that the Securities cease to be "restricted securities" within the
meaning of the Act and may be sold or otherwise disposed of and are freely
transferable by each holder thereof without registration under any applicable
securities law and are freely transferable by the transferees thereof without
any such registration.
(b) The Company shall pay all of the Company's Expenses and each
Warrantholder will pay its pro rata share of the Warrantholder's Expenses
relating to the registration, offer, and sale of the Securities.
(c) Except as specifically provided herein, the manner and conduct of the
registration, including the contents of the registration statement, will be
entirely in the control and at the discretion of the Company. The Company shall
file such post-effective amendments and
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supplements as may be necessary to maintain the currency of the registration
statement during the period of its use. In addition, if the Warrantholder
participating in the registration is advised by counsel that the registration
statement, in its opinion, is deficient in any material respect, the Company
shall use its best efforts to cause the registration statement to be amended to
eliminate the concerns raised.
(d) The Company shall furnish to the Warrantholder the number of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as the Warrantholder may
reasonably request in order to facilitate the disposition of Securities owned by
it.
(e) The Company shall, at the request of Warrantholder: (i) furnish an
opinion of the counsel representing the Company for the purposes of the
registration pursuant to this Section 9, addressed to the Warrantholder and any
Participating Underwriter, (ii) furnish an appropriate letter from the
independent public accountants of the Company, addressed to the Warrantholder
and any Participating Underwriter, and (iii) make representations and warranties
to the Warrantholder and any Participating Underwriter. A request pursuant to
this subsection (e) may be made on three occasions. The documents required to
be delivered pursuant to this subsection (e) will be dated within 30 days of the
request and will be, in form and substance equivalent to similar documents
furnished to the underwriters in connection with the Offering, with such changes
as may be appropriate in light of changed circumstances.
9. INDEMNIFICATION IN CONNECTION WITH REGISTRATION.
(a) In connection with its registration obligations, the Company shall
indemnify and hold harmless the selling Warrantholder, any person who controls
the selling Warrantholder within the meaning of the Act, and any Participating
Underwriter against any losses, claims, damages, or liabilities, joint or
several, to which the Warrantholder, controlling person, or Participating
Underwriter may be subject under the Act or otherwise; and it shall reimburse
each Warrantholder, each controlling person, and each Participating Underwriter
for any legal or other expenses reasonably incurred by the Warrantholder,
controlling person, or Participating Underwriter in connection with
investigating or defending any such loss, claim, damage, liability, or action,
insofar as such losses, claims, damages, or liabilities, joint or several (or
actions in respect thereof), arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained, on the effective
date thereof, in any such registration statement or any preliminary prospectus
or final prospectus, or any amendment or supplement thereto, or arise out of or
are based upon 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; provided, however, that the Company will not be liable in any case
to the extent that any loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement, preliminary prospectus,
final prospectus, or any amendment or supplement thereto, in reliance upon and
in conformity with written information furnished by the Warrantholder or any
person controlling the Warrantholder or any Participating Underwriter for use in
the preparation thereof. The indemnity agreement contained in this subparagraph
(a) will not apply to amounts paid to any
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claimant in settlement of any suit or claim unless such payment is first
approved by the Company, such approval not to be unreasonably withheld or
delayed.
(b) The selling Warrantholder, as a condition of the Company's
registration obligation, shall indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed any registration statement
or other filing or any amendment or supplement thereto, and any person who
controls the Company within the meaning of the Act, against any losses, claims,
damages, or liabilities to which the Company or any such director, officer, or
controlling person may become subject under the Act or otherwise, and shall
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, or controlling person in connection with investigating
or defending any such loss, claim, damage, liability, or action, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in said registration statement, any preliminary or final
prospectus, or other filing, or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in said
registration statement, preliminary or final prospectus, or other filing, or
amendment or supplement, in reliance upon and in conformity with written
information furnished by the Warrantholder or any person controlling the
Warrantholder or any Participating Underwriter for use in the preparation
thereof; provided, however, that the indemnity agreement contained in this
subparagraph (b) shall not apply to amounts paid to any claimant in settlement
of any suit or claim unless such payment is first approved by the Warrantholder,
such approval not to be unreasonably withheld or delayed. In no event, however,
shall the selling Warrantholder's indemnification obligations exceed the value
of the Securities sold on behalf of such selling Warrantholder in connection
with such registration statement, preliminary or final prospectus, or other
filing.
(c) Promptly after receipt by an indemnified party under subparagraphs (a)
or (b) above of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
notify the indemnifying party of the commencement thereof, but the omission to
notify the indemnifying party will not relieve it from any liability that it may
have to any indemnified party otherwise than under subparagraphs (a) and (b).
(d) If any such action is brought against any indemnified party and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified parry; and after
notice from the indemnifying party to such indemnified party of its election to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
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10. RESTRICTIONS ON TRANSFER. The Warrant Certificate and the
Warrant(s) may not be sold, transferred, assigned or hypothecated except to
underwriters of the Offering or to individuals who are either a partner or an
officer or a director of such an underwriter or by will or by operation of law.
The Warrant(s) may only be exercised by one of the aforesaid persons or by a
successor entity or legal representative. The Warrant(s) may be divided or
combined, upon request to the Company by the Warrantholder, into a certificate
or certificates evidencing the same aggregate number of Warrants.
11. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Shares in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any Warrant Certificate, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Warrant Certificate, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
12. NO RIGHTS AS A STOCKHOLDER. Except as otherwise provided herein, the
Warrantholder will not, by virtue of ownership of the Warrant(s), be entitled
to any rights of a stockholder of the Company but will, upon written request to
the Company, be entitled to receive such quarterly or annual reports as the
Company distributes to its stockholders. If, however, at any time prior to the
expiration of the Warrants and their exercise, any of the following events shall
occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings or
capital surplus (in accordance with applicable law), as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at
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least thirty (30) days prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the stockholders entitled to
such dividend, distribution, convertible or exchangeable securities or
subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give
such notice or any defect therein shall not affect the validity of any action
taken in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable securities, or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
13. NOTICE. All notices, requests, consents and other communications
required or permitted to be given hereunder will be in writing and may be served
personally or by mail; and if served will be addressed as follows:
If to the Company:
831 Straits Turnpike
Watertown, CT 06795
Attn: Joseph Shaker
President and Chief Executive Officer
and
Morse Zelnick Rose & Lander LLP
450 Park Avenue
New York, NY 10022
If to the Warrantholder:
at the address furnished
by the Warrantholder to the
Company for the purpose of
notice.
Any notice so given by mail will be deemed effectively given 48 hours after
mailing when deposited in the United States mail, registered or certified mail,
return receipt requested, postage prepaid and addressed as specified above. Any
party may by written notice to the other specify a different address for notice
purposes.
14. SUPPLEMENTS AND AMENDMENTS. The Company and the Representative may
from time to time supplement or amend this Agreement in a writing signed by both
parties without the approval of any Holders of Warrant Certificates (other than
the Representative) in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other
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provisions in regard to matters or questions arising hereunder which the Company
and the Representative may deem necessary or desirable and which the Company and
the Representative deem shall not adversely affect the interests of the Holders
of Warrant Certificates.
15. SUCCESSORS. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the
Representative, the Holders and their respective successors and assigns
hereunder.
16. TERMINATION. This Agreement shall terminate at the close of business
on July _____, 2003. Notwithstanding the foregoing, the indemnification
provisions of Section 10 shall survive such termination until the close of
business on July ___, 2008.
17. APPLICABLE LAW. This Warrant Agreement and the Warrant(s) issuable
pursuant to the provisions hereof will be governed by and construed in
accordance with the laws of the State of Oregon, without reference to conflict
of laws principles thereunder. All disputes relating to this Warrant Agreement
and/or the Warrant(s) issuable hereunder shall be tried before the courts of
Oregon located in Multnomah County, Oregon to the exclusion of all other courts
that might have jurisdiction.
18. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification or
amendment is sought
19. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable by a court or competent jurisdiction, such invalidity
or unenforceability shall not affect any other provision of this Agreement.
20. CAPTIONS. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Representative and any other registered Holder(s) of the Warrant Certificates or
Shares any legal or equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole benefit of the Company and the
Representative and any other registered Holders of Warrant Certificates or
Warrant Securities.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an original,
and such counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Representative's
Warrant Agreement to be duly executed, all as of the day and year first above
written.
HOMETOWN AUTO RETAILERS, INC.
By:
-------------------------------
Joseph Shaker
President and Chief Executive Officer
[Corporate Seal]
Attest:
- -------------------------------
Name:
Title:
Agreed and Accepted as of July _____,1998
PAULSON INVESTMENT COMPANY, INC.
By:
-----------------------------
Name:
Title:
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON RECEIPT BY THE ISSUER
OF AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., PACIFIC TIME, ________, 2003
NO. RW _______________ WARRANTS TO PURCHASE
______________________
SHARES OF COMMON STOCK
WARRANT CERTIFICATE
HOMETOWN AUTO RETAILERS INC.
(a Delaware corporation)
This WARRANT CERTIFICATE certifies that ___________________________ or its
registered assigns, is the registered holder of a Warrant to purchase, at any
time from July ___, 1999 until 5:00 p.m., Pacific time, on July _____, 2003
("Expiration Date"), up to 200,000 fully-paid and non-assessable shares of
common stock, $0.001 par value (the "Common Stock"), of HOMETOWN AUTO RETAILERS,
INC., a Delaware corporation (the "Company"), at the exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $____________ per share
of Common Stock upon surrender of this Warrant Certificate and payment of the
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Exercise Price in cash or in warrants as provided in paragraphs (a) and (b), as
the case may be, of Section 2 of the Warrant Agreement (defined below) at an
office or agency of the Company, but subject to the conditions set forth herein
and in the Warrant Agreement dated as of July ____, 1998 between the Company and
Paulson Investment Company, Inc. (the "Warrant Agreement"). Payment of the
Exercise Price, where payment is made in cash pursuant to paragraph (a) of
Section 2 of the Warrant Agreement, shall be made by certified or official bank
check in New York Clearing House funds payable to the order of the Company or,
where payment is made in Warrant(s) pursuant to paragraph (b) of Section 2 of
the Warrant Agreement, by surrender of this Warrant Certificate, as provided in
the Warrant Agreement.
The Warrant(s) may not be exercised after 5:00 p.m., Pacific time, on the
Expiration Date, at which time the Warrant(s) shall become null and void.
The Warrants evidenced by this Warrant Certificate have been issued
pursuant to the Representative's Warrant Agreement, dated as of July ____, 1998,
between Hometown Auto Retailers, Inc. and Paulson Investment Company, Inc. (the
"Warrant Agreement") which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations and duties
thereunder of the Company and the holder (the word "holder" meaning the
registered holder) of the Warrant(s).
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable upon exercise of the Warrant(s) may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the holder, issue
a new Warrant Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise of the
Warrant(s); provided, however, that the failure of the Company to issue such new
Warrant Certificate shall not in any way change, alter, or otherwise impair, the
rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing a like number of securities
for which this Warrant may be exercised shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the securities for which this Warrant
may be exercised, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing the remaining number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
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All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of July ___, 1998
HOMETOWN AUTO RETAILERS, INC.
By:
-------------------------------
Joseph Shaker
President and Chief Executive Officer
[Corporate Seal]
Attest:
- -----------------------------
Name:
Title:
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FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 2(a)
OF THE BELOW DESCRIBED WARRANT AGREEMENT
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ___________________ shares
of Common Stock and herewith tenders in payment for such securities a certified
or official bank check payable in New York Clearing House funds to the order of
Hometown Auto Retailers, Inc. in the amount of $________________, all in
accordance with the terms of Section 2(a) of the Representative's Warrant
Agreement, dated as of July ____, 1998, between Hometown Auto Retailers, Inc.
and Paulson Investment Company, Inc. The undersigned requests that a
certificate for such securities be registered in the name of
_____________________ whose address is __________________________ and that such
certificate be delivered to ______________ whose address is
________________________.
Dated: _______________________________
Signature:____________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate)
- --------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
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FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 2(b)
OF THE BELOW DESCRIBED WARRANT AGREEMENT
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________________ shares
of Common Stock and herewith tenders in payment for such securities such number
of the Warrant(s) as shall be determined in accordance with the terms of Section
2(b) of the Representative's Warrant Agreement, dated as of July ____, 1998,
between Hometown Auto Retailers, Inc. and Paulson Investment Company, Inc. The
undersigned requests that a certificate for such securities be registered in the
name of ____________________ whose address is _____________________and that such
certificate be delivered to _____________whose address is
________________________________________. The undersigned also requests that a
certificate for the remaining number of unexercised warrants be registered in
the name of ___________ whose address is _____________________________ and that
such certificate be delivered to ________________________ whose address is
______________________________________________.
Dated: _______________________________
Signature:____________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate)
- --------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Warrant Certificate or any part thereof, such
assignment to be subject to restrictions of the
Warrant Agreement referred to in the
Warrant Certificate.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns and transfers
unto _________________________________________
(Please print name and address of transferee)
[this Warrant Certificate] [________ warrants exercisable pursuant to this
Warrant Certificate], together with all right, title and interest therein. The
undersigned requests that a certificate for such securities be registered in the
name of _________________________whose address is
_________________________________ and that such certificate be delivered to
__________________ whose address is ________________________________________.
The undersigned also requests that a certificate for the remaining number of
unexercised warrants be registered in the name of ____________ whose address is
____________________________ and that such certificate be delivered to
________________________ whose address is
______________________________________________.
Dated: _______________________________
Signature:____________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate)
- --------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
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