NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE
NOR THE SHARES OF COMMON STOCK OR ANY OTHER SECURITIES
ISSUABLE UPON EXERCISE OF SUCH WARRANTS HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH WARRANTS
HAVE BEEN ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY
OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS ARE
REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH WARRANTS
AND/OR SUCH SHARES OR OTHER SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS
OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH
WARRANTS AND SUCH SHARES OR OTHER SECURITIES TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH
STATE SECURITIES LAWS.
VOID AFTER 5:00 P.M. ON JULY 24, 2008
Walker Financial Corporation
Warrant Certificate
25,000 Common Stock Purchase Warrants
Garden City, New York
Warrant Certificate No. 2003A-01 July 25, 2003
THIS IS TO CERTIFY THAT, for value received, Dr. David Cohen
("Warrantholder") is the registered owner of the number of Common Stock Purchase
Warrants (each, a "Warrant") set forth above, each Warrant entitling the owner
thereof to purchase from Walker Financial Corporation, a Delaware corporation
(the "Company"), one duly authorized, validly issued, fully paid and
non-assessable share (each, a "Warrant Share") of the common stock, par value
$.10 per share ("Common Stock"), of the Company, at a purchase price of $0.28
per Warrant Share (the "Purchase Price"), at any time on or after July 25, 2003
(the "Commencement Date") and terminating at 5:00 p.m., New York City time, on
July 24, 2008 (the "Expiration Date"), all subject to the terms and conditions
contained in this Warrant Certificate. The number of Warrants evidenced by this
Warrant Certificate (and the number and kind of securities which may be
purchased upon exercise hereof) set forth above, and the Purchase Price per
share set forth above, are as of the date hereof. As provided herein, the
Purchase Price and the number of shares of Common Stock or other securities
which may be purchased upon the exercise of the Warrants evidenced by this
Warrant Certificate are, upon the happening of certain events, subject to
modification and adjustment.
This Warrant Certificate, together with any warrant certificate(s) issued
in replacement or substitution hereof (as provided for in this Warrant
Certificate) evidencing all or part of the Warrants evidenced hereby, are
sometimes collectively referred to herein as the "Warrant Certificates."
The rights of the registered holder of this Warrant Certificate shall be
subject to the following further terms and conditions:
1. Exercise of Warrants.
(a) The Warrants may be exercised, in whole or in part, at any time and
from time to time, during the period commencing on the Commencement Date and
terminating at the Expiration Time by surrendering this Warrant Certificate,
with the purchase form provided for herein duly executed by the Warrantholder or
by the Warrantholder's duly authorized attorney-in-fact, at the principal office
of the Company, presently located at 370 Old Country Road, Garden City, New York
11530, or at such other office or agency in the United States as the Company may
designate by notice in writing to the Warrantholder (in either event, the
"Company Offices"), accompanied by payment in full, either in the form of cash,
bank cashier's check or certified check payable to the order of the Company, of
the Purchase Price payable in respect of the Warrants being exercised. If fewer
than all of the Warrants are exercised, the Company shall, upon each exercise
prior to the Expiration Time, execute and deliver to the Warrantholder a new
Warrant Certificate (dated as of the date hereof) evidencing the balance of the
Warrants that remain exercisable.
(b) On the day immediately following the date of a valid exercise of any
Warrants, the Warrantholder exercising same shall be deemed to have become the
holder of record for all purposes of the Warrant Shares to which such valid
exercise relates.
(c) As soon as practicable, but not in excess of ten days, after the
exercise of all or part of the Warrants evidenced by this Warrant Certificate,
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
Warrantholder a certificate or certificates evidencing the number of duly
authorized, validly issued, fully paid and non-assessable Warrant Shares to
which the Warrantholder shall be entitled upon such exercise.
(d) No certificates for fractional Warrant Shares shall be issued upon the
exercise of any of the Warrants but, in lieu thereof, the Company shall, upon
exercise of all the Warrants, round up any fractional Warrant Share to the
nearest whole share of Common Stock.
2. Issuance of Common Stock; Reservation of Shares. The Company covenants
and agrees that:
(a) all Warrant Shares which may be issued upon the exercise of all or part
of the Warrants will, upon issuance in accordance with the terms hereof, be
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges with respect to the issue thereof;
(b) at all times prior to the Expiration Time, the Company shall keep
reserved for issuance a sufficient number of authorized shares of Common Stock
to permit the exercise in full of the Warrants evidenced by this Warrant
Certificate; and
2
(c) if any shares of Common Stock to be reserved for the purpose of the
issuance of Warrant Shares upon the exercise of Warrants require registration
with, or approval of, any governmental authority under any federal or state law
before such shares may be validly issued or delivered upon exercise, then the
Company will promptly use its best efforts to effect such registration or obtain
such approval, as the case may be.
3. Adjustments of Purchase Price, Number and Character of Warrant Shares,
and Number of Warrants. The Purchase Price the number and kind of securities
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time upon the happening of the events enumerated in this Section 3.
(a) Stock Dividends, Subdivisions and Combinations. In case the Company
shall at any time on or before the Expiration Time:
(i) pay a dividend in shares of Common Stock or make a distribution in
shares of Common Stock or such other stock to holders of all its outstanding
shares of Common Stock;
(ii) subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares;
(iii) combine the outstanding shares of Common Stock into a smaller number
of shares of Common Stock; or
(iv) issue by reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
corporation);
then the number and kind of Warrant Shares purchasable upon
exercise of each Warrant outstanding immediately prior thereto
shall be adjusted so that the Warrantholder shall be entitled
to receive the kind and number of shares of Common Stock or
other securities of the Company which the Warrantholder would
have owned or have been entitled to receive after the
happening of any of the events described above had such
Warrant been exercised in full immediately prior to the
earlier of the happening of such event or any record date in
respect thereto. In the event of any adjustment of the number
of Warrant Shares purchasable upon the exercise of each then
outstanding Warrants pursuant to this Paragraph 3(a), the
Purchase Price shall be adjusted to be the amount resulting
from dividing the number of shares of Common Stock (including
fractional shares of Common Stock) covered by such Warrant
immediately after such adjustment into the total amount
payable upon exercise of such Warrant in full immediately
prior to such adjustment. An adjustment made pursuant to this
Paragraph 3(a) shall become effective immediately after the
effective date of such event retroactive to the record date
for any such event. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) Extraordinary Dividends. In case the Company shall at any time on or
before the Expiration Time fix a record date for the issuance of rights,
options, or warrants to all holders of its outstanding shares of Common Stock,
entitling them (for a period expiring within 45 days after such record date) to
3
subscribe for or purchase shares of Common Stock (or securities exchangeable for
or convertible into shares of Common Stock) at a price per share of Common Stock
(or having an exchange or conversion price per share of Common Stock, with
respect to a security exchangeable for or convertible into shares of Common
Stock) which is lower than the current Market Price per share of Common Stock
(as defined in Paragraph 3(d) below) on such record date, then the Purchase
Price shall be adjusted by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, of which (i) the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so to be offered (or the aggregate initial exchange or
conversion price of the exchangeable or convertible securities so to be offered)
would purchase at such current Market Price and (ii) the denominator shall be
the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock to be offered for subscription or
purchase (or into which the exchangeable or convertible securities so to be
offered are initially exchangeable or convertible). Such adjustment shall become
effective at the close of business on such record date; however, to the extent
that shares of Common Stock (or securities exchangeable for or convertible into
shares of Common Stock) are not delivered after the expiration of such rights,
options, or warrants, the Purchase Price shall be readjusted (but only with
respect to Warrants exercised after such expiration) to the Purchase Price which
would then be in effect had the adjustments made upon the issuance of such
rights, options, or warrants been made upon the basis of delivery of only the
number of shares of Common Stock (or securities exchangeable for or convertible
into shares of Common Stock) actually issued. In case any subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company and shall be described in a statement
mailed to the Warrantholder. Shares of Common Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation.
(c) Extraordinary Distributions. In case the Company shall, at any time
after the Commencement Date, distribute to all holders of its shares of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the surviving corporation) evidences of its
indebtedness or assets (excluding cash dividends and distributions payable out
of consolidated net income or earned surplus in accordance with Delaware law and
dividends or distributions payable in shares of stock described in Paragraph
3(a) above) or rights, options, or warrants or exchangeable or convertible
securities containing the right to subscribe for or purchase shares of Common
Stock (or securities exchangeable for or convertible into shares of Common
Stock), then the Purchase Price shall be adjusted by multiplying the Purchase
Price in effect immediately prior to the record date for such distribution by a
fraction, of which (i) the numerator shall be the current Market Price per share
of Common Stock (as defined in Paragraph 3(d)) on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive, and described in a notice to
the Warrantholders) of the portion of the evidences of indebtedness or assets so
to be distributed or of such rights, options or warrants applicable to one share
of Common Stock and (ii) the denominator shall be such current Market Price per
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of distribution
retroactive to the record date for such transaction.
4
(d) Current Market Price Defined. For the purpose of any computation under
Paragraphs 3(b) and/or 3(c), the current Market Price per share of Common Stock
at any date shall be deemed to be the average daily Closing Price of the shares
of Common Stock for twenty consecutive trading days ending within fifteen days
before the date in question. The term "Closing Price" of the shares of Common
Stock for a day or days shall mean (i) if the shares of Common Stock are listed
or admitted for trading on a national securities exchange, the last reported
sales price regular way, or, in case no such reported sale takes place on such
day or days, the average of the reported closing bid and asked prices regular
way, in either case on the principal national securities exchange on which the
shares of the Common Stock are listed or admitted for trading, or (ii) if the
shares of Common Stock are not listed or admitted for trading on a national
securities exchange, (A) the last transaction price for the Common Stock on The
Nasdaq Stock Market ("Nasdaq") or, in the case no such reported transaction
takes place on such day or days, the average of the reported closing bid and
asked prices thereof quoted on Nasdaq, or (B) if the shares of Common Stock are
not quoted on Nasdaq, the average of the closing bid and asked prices of the
Common Stock as quoted on the Over-The-Counter Bulletin Board maintained by the
National Association of Securities Dealers, Inc. (the "Bulletin Board"), or (C)
if the shares of Common Stock are not quoted on Nasdaq nor on the Bulletin
Board, the average of the closing bid and asked prices of the common stock in
the over-the-counter market, as reported by The Pink Sheets, LLC, or an
equivalent generally accepted reporting service, or (iii) if on any such day or
days the shares of Common Stock are not quoted by any such organization, the
fair market value of the shares of Common Stock on such day or days, as
determined in good faith by the Board of Directors of the Company, shall be
used.
(e) Capital Reorganizations and Other Reclassifications. In case of any
capital reorganization of the Company, or of any reclassification of the shares
of Common Stock (other than a reclassification, subdivision or combination of
shares of Common Stock referred to in Paragraph 3(a)), or in case of the
consolidation of the Company with, or the merger of the Company with, or merger
of the Company into, any other corporation (other than a reclassification of the
shares of Common Stock referred to in Paragraph 3(a) or a consolidation or
merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger, or sale, be exercisable, upon
the terms and conditions specified in this Warrant Certificate, for the kind,
amount and number of shares or other securities, assets, or cash to which a
holder of the number of shares of Common Stock purchasable (at the time of such
capital reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale) upon exercise of such Warrant would have been
entitled to receive upon such capital reorganization, reclassification of shares
of Common Stock, consolidation, merger, or sale; and in any such case, if
necessary, the provisions set forth in this Section 3 with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted so
as to be applicable, as nearly equivalent as possible, to any shares or other
securities, assets, or cash thereafter deliverable on the exercise of the
Warrants. The Company shall not effect any such consolidation, merger, or sale,
unless prior to or simultaneously with the consummation thereof the successor
corporation or entity (if other than the Company) resulting from such
consolidation or merger or the corporation or entity purchasing such assets or
other appropriate corporation or entity shall assume, by written instrument, the
obligation to deliver to the Warrantholder such shares, securities, assets, or
cash as, in accordance with the foregoing provisions, such holders may be
5
entitled to purchase and the other obligations hereunder. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
shares of Common Stock for purposes of this Paragraph 3(e).
(f) Issuance of Additional Securities.
(i) If the Company shall, at any time or from time to time after the
Commencement Date, issue (x) shares of Common Stock, (y) rights, options,
warrants or other securities entitling the holder thereof to subscribe for,
purchase, convert to, exchange for or otherwise acquire Common Stock or (z)
rights, options, warrants or other securities entitling the holder thereof to
subscribe for, purchase, convert to, exchange for or otherwise acquire such
convertible or exchangeable securities (in each case other than Excluded
Securities (as defined in Paragraph 3(g)) and other than issuances that result
in an adjustment under Paragraphs 3(a), 3(b), 3(c) or 3(e) hereof), without
consideration or for a consideration per share of Common Stock less than the
Purchase Price in effect immediately prior to the issuance of such Common Stock
or such rights, options, warrants or other securities, the Purchase Price in
effect immediately prior to each such issuance shall forthwith be adjusted to a
price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of:
(I) the total number of shares of Common Stock outstanding immediately
prior to such issuance (including any shares of Common Stock deemed to have been
issued pursuant to subclauses (B)(I) and (B)(II) of Subparagraph 8(f)(ii)) (it
also being understood that the shares of Common Stock issuable upon exercise of
the Warrants immediately prior to such issuance shall be deemed to be
outstanding for all purposes of the computation required in this subclause (A))
multiplied by the Purchase Price in effect immediately prior to such issuance,
plus
(II) the consideration received by the Company upon such issuance, by
(B) the total number of shares of Common Stock outstanding (including any
shares of Common Stock deemed to have been issued pursuant to subclauses (B)(I)
and (B)(II) of Subparagraph 8(f)(ii)) (it also being understood that the shares
of Common Stock issuable upon exercise of the Warrants immediately prior to such
issuance shall be deemed to be outstanding for all purposes of the computation
required in this clause (B)) immediately after the issuance of such Common
Stock.
(ii) For the purposes of any adjustment of the Purchase Price pursuant to
this Paragraph 3(f), the following provisions shall be applicable:
6
(A) In the case of the issuance of Common Stock for a consideration in
whole or in part other than cash, the consideration other than cash shall be
deemed to be the fair market value thereof as determined in good faith by the
Board of Directors of the Company, irrespective of any accounting treatment.
(B) In the case of (x) the issuance of rights, options or warrants
entitling the holder thereof to subscribe for, purchase or otherwise acquire
Common Stock, (y) securities convertible into or exchangeable for Common Stock
or (z) rights, options, warrants or other securities convertible into or
exchangeable for such convertible or exchangeable securities:
(I) the aggregate maximum number of shares of Common Stock deliverable upon
exercise of such rights, options or warrants entitling the holder thereof to
subscribe for, purchase or otherwise acquire Common Stock shall be deemed to
have been issued at the time such rights, options or warrants were issued and
for a consideration equal to the consideration (determined in the manner
provided in clause (ii)(A) above), if any, received by the Company upon the
issuance of such rights, options or warrants plus the minimum purchase price
provided in such rights, options or warrants for the Common Stock covered
thereby;
(II) the aggregate maximum number of shares of Common Stock deliverable
upon conversion of or in exchange for any such convertible or exchangeable
securities or upon the exercise of rights, options or warrants to subscribe for,
purchase or otherwise acquire such convertible or exchangeable securities and
subsequent conversion or exchange thereof shall be deemed to have been issued at
the time such rights, options, warrants or securities were issued and for a
consideration equal to the consideration received by the Company for any such
rights, options, warrants and securities (excluding any cash received on account
of accrued interest or accrued dividends), plus the consideration, if any, to be
received by the Company upon the conversion or exchange of such securities or
the exercise of any related rights, options or warrants (the consideration in
each case to be determined in the manner provided in subclause (I) above);
(III) on any change in the number of shares of Common Stock deliverable
upon exercise of any such rights, options or warrants or conversions of or
exchanges for such convertible or exchangeable securities or any change in the
consideration to be received by the Company upon the exercise of any such
rights, options or warrants or conversions of or exchanges for such convertible
or exchangeable securities, other than a change resulting from the anti-dilution
provisions thereof, the Purchase Price shall forthwith be readjusted to such
Purchase Price as would have obtained had the adjustment made upon the issuance
of such rights, options, warrants or securities not converted prior to such
change been made upon the basis of such change; and
7
(IV) on the expiration of any such rights, options or warrants, the
termination of any such rights to convert or exchange or the expiration of any
rights, options or warrants related to such convertible or exchangeable
securities, the Purchase Price shall forthwith be readjusted to such Purchase
Price as would have obtained had the adjustment made upon the issuance of such
rights, options, warrants or securities or rights, options or warrants related
to such securities been made upon the basis of the issuance of only the number
of shares of Common Stock actually issued upon exercise of such rights, options
or warrants, upon the conversion or exchange of such securities or upon the
exercise of the rights, options or warrants related to such securities and
subsequent conversion or exchange thereof.
(iii) For the purposes of this Paragraph 3(f), "Excluded Securities" shall
mean shares of Common Stock:
(A) issued to employees or directors of, or consultants to, the Company,
pursuant to any option, warrant, agreement, plan or arrangement approved by the
Board of Directors of the Company (or committee of the Board of Directors of the
Company), but only to the extent that the maximum aggregate number of shares of
Common Stock so issued or issuable pursuant to all such options, warrants,
agreements, plans and arrangements does not exceed (x) 500,000 shares of Common
Stock in the aggregate in any fiscal year of the Company or (y) 2,500,000 shares
of Common Stock in the aggregate (in each case subject to adjustment to reflect
stock splits, stock dividends, stock combinations, recapitalizations and like
occurrences),
(B) issued upon the exercise of the warrants and options exercisable for
Common Stock outstanding as of the Commencement Date,
(C) issuable upon exercise of warrants issued to the Warrantholder or
Strasbourger Pearson Tulcin Wolff Incorporated ("Strasbourger Pearson") in
connection with the transactions contemplated by that certain Loan Agreement,
dated as of July 24, 2003, between the Company and Dr. David Cohen.
(D) issuable upon conversion of any convertible indebtedness or upon
exercise of warrants issued in connection with any debt financing of the
Company, whether pursuant to a registration statement made effective under the
Securities Act of 1933, as amended (the "Securities Act"), or pursuant to a
transaction exempt from registration pursuant to Regulation D promulgated under
the Securities Act, in either case, resulting in aggregate gross proceeds to the
Company, before deduction for expenses or commissions of any kind, of
$500,000.00 or more;
(E) issuable in connection with any acquisition by the Company of the
equity securities or assets of a bona fide third party, provided that the per
share acquisition price (including, but not limited to, goodwill and other
intangibles), as determined in good faith by the Board of Directors of the
Company, irrespective of any accounting treatment, equals or exceeds the per
share current Market Price on the effective date of such acquisition, and
8
(F) issued in connection with any equity or debt financing in which
Strasbourger Pearson shall be entitled, directly or indirectly, to a fee or
commission of any kind.
(g) Minimum Adjustment. Except as hereinafter provided, no adjustment of
the Purchase Price hereunder shall be made if such adjustment results in a
change of the Purchase Price then in effect of less than two cents ($.02) per
share. Any adjustment of less than two cents ($.02) per share of any Purchase
Price shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with adjustment or adjustments so
carried forward, amounts to two cents ($.02) per share or more. However, upon
exercise of this Warrant Certificate, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Purchase Price up
to and including the effective date upon which this Warrant Certificate is
exercised.
(h) Notice of Adjustments. Whenever the Purchase Price shall be adjusted
pursuant to this Section 3, the Company shall promptly deliver a certificate
signed by the President or a Vice President and by the Chief Financial Officer,
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Company, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), by first class mail
postage prepaid to each Warrantholder.
(i) Adjustments to Other Securities. In the event that at any time, as a
result of an adjustment made pursuant to this Section 3, the Warrantholder shall
become entitled to purchase any shares or securities of the Company other than
the shares of Common Stock, thereafter the number of such other shares or
securities so purchasable upon exercise of each Warrant and the purchase price
for such shares or securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as possible to the provisions with
respect to the shares of Common Stock contained in Paragraphs 3(a), 3(b), 3(c),
3(e) and 3(f).
(j) Deferral of Issuance of Additional Shares in Certain Circumstances. In
any case in which this Section 3 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event issuing to the
Warrantholder exercised after such record date the shares of Common Stock, if
any, issuable upon such exercise over and above the Warrant Shares, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver as soon as
practicable to such holder a due bill or other appropriate instrument provided
by the Company evidencing such holder's right to receive such additional shares
of Common Stock upon the occurrence of the event requiring such adjustment.
4. Definition of Common Stock. The Common Stock issuable upon exercise of
the Warrants shall be the Common Stock as constituted on the date hereof except
as otherwise provided in Section 3.
9
5. Replacement of Securities. If this Warrant Certificate shall be lost,
stolen, mutilated or destroyed, the Company shall, on such terms as to indemnity
or otherwise as the Company may in its discretion reasonably impose, issue a new
certificate of like tenor or date 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. Any such new certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall be at
any time enforceable by anyone.
6. Registration. This Warrant Certificate, as well as all other warrant
certificates representing Warrants shall be numbered and shall be registered in
a register (the "Warrant Register") maintained at the Company Offices as they
are issued. The Warrant Register shall list the name, address and Social
Security or other Federal Identification Number, if any, of all Warrantholders.
The Company shall be entitled to treat the Warrantholder as set forth in the
Warrant Register as the owner in fact of the Warrants as set forth therein for
all purposes and shall not be bound to recognize any equitable or other claim to
or interest in such Warrants on the part of any other person, and shall not be
liable for any registration of transfer of Warrants that are registered or to be
registered in the name of a fiduciary or the nominee of a fiduciary unless made
with the actual knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration of transfer, or with such knowledge of
such facts that its participation therein amounts to bad faith.
7. Transfer. NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE
NOR THE SHARES OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF
SUCH WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SUCH WARRANTS HAVE BEEN ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY OTHER
SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS ARE REQUIRED TO BE ACQUIRED,
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY
NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES OR OTHER
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH
WARRANTS AND SUCH SHARES OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.
8. Exchange of Warrant Certificates. This Warrant Certificate may be
exchanged for another certificate or certificates entitling the Warrantholder
thereof to purchase a like aggregate number of Warrant Shares as this Warrant
Certificate entitles such Warrantholder to purchase. A Warrantholder desiring to
so exchange this Warrant Certificate shall make such request in writing
delivered to the Company, and shall surrender this Warrant Certificate
therewith. Thereupon, the Company shall execute and deliver to the person
entitled thereto a new certificate or certificates, as the case may be, as so
requested.
10
9. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered in person, against written
receipt therefor, or two days after being sent, by registered or certified mail,
postage prepaid, return receipt requested, and, if to the Warrantholder, at such
address as is shown on the Warrant Register or as may otherwise may have been
furnished to the Company in writing in accordance with this Section 9 by the
Warrantholder and, if to the Company, at the Company Offices or such other
address as the Company shall give notice thereof to the Warrantholder in
accordance with this Section 9.
10. Registration Rights.
(a) Defined Terms. As used in this Section 10, terms defined elsewhere
herein shall have their assigned meanings and each of the following terms shall
have the following meanings (such definitions to be applicable to both the
plural and singular of the terms defined):
(i) Registerable Securities. The term "Registerable Securities" shall mean
any of the Warrant Shares issuable upon exercise of any of the Warrants or any
shares of Common Stock or other securities received in connection with any stock
split, stock dividend, merger, reorganization, recapitalization,
reclassification or other distribution payable or issuable upon shares of Common
Stock. For the purposes of this Section 10, securities will cease to be
Registerable Securities when (A) a registration statement under the Securities
Act covering such Registerable Securities has been declared effective and (1)
such Registerable Securities have been disposed of pursuant to such effective
registration statement or (2) such registration statement has remained effective
for 270 consecutive days, (B) such Registerable Securities are distributed to
the public pursuant to the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act, including, without limitation,
Rules 144 and 144A promulgated under the Securities Act or (C) such Registerable
Securities have been otherwise transferred and the Company, in accordance with
applicable law and regulations, has delivered new certificates or other
evidences of ownership for such securities which are not subject to any stop
transfer order or other restriction on transfer.
(ii) Rightsholders. The term "Rightsholders" shall include the
Warrantholder, all successors and assigns of the Warrantholders and all
transferees of Registerable Securities where such transfer affirmatively
includes the transfer and assignment of the rights of the
transferor-Warrantholder under this Warrant Certificate with respect to the
transferred Registerable Securities and such transferee agrees in writing to
assume all of the transferor-Warrantholder's agreements, obligations and
liabilities under this Section 10 with respect to the transferred Registerable
Securities.
(iii) Interpretations of Terms. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Section 10 shall refer
to this Section 10 as a whole and not to any particular provision of this
Section 10, and subsection, paragraph, clause, schedule and exhibit references
are to this Section 10 unless otherwise specified.
11
(b) Piggy-Back Registration.
(i) If, at any time on or after the Commencement Date and on or prior to
two years from the Expiration Time, the Company proposes to file a registration
statement under the Securities Act with respect to an offering by the Company or
any other party of any class of equity security similar to any Registerable
Securities (other than a registration statement on Form S-4 or S-8 or any
successor form or a registration statement filed solely in connection with an
exchange offer, a business combination transaction or an offering of securities
solely to the existing stockholders or employees of the Company), then the
Company, on each such occasion, shall give written notice (each, a "Company
Piggy-Back Notice") of such proposed filing to all of the Rightsholders owning
Registerable Securities at least fifteen days before the anticipated filing date
of such registration statement, and such Company Piggy-Back Notice also shall be
required to offer to such Rightsholders the opportunity to register such
aggregate number of Registerable Securities as each such Rightsholder may
request. Each such Rightsholder shall have the right, exercisable for the five
days immediately following the giving of a Company Piggy-Back Notice, to
request, by written notice (each, a "Holder Notice") to the Company, the
inclusion of all or any portion of the Registerable Securities of such
Rightsholders in such registration statement. The Company shall use reasonable
efforts to cause the managing underwriter(s) of a proposed underwritten offering
to permit the inclusion of the Registerable Securities which were the subject of
all Holder Notices in such underwritten offering on the same terms and
conditions as any similar securities of the Company included therein.
Notwithstanding anything to the contrary contained in this Subparagraph
10(b)(i), if the managing underwriter(s) of such underwritten offering or any
proposed underwritten offering delivers a written opinion to the Rightsholders
of Registerable Securities which were the subject of all Holder Notices that the
total amount and kind of securities which they, the Company and any other person
intend to include in such offering is such as to materially and adversely affect
the success of such offering, then the amount of securities to be offered for
the accounts of such Rightsholders and persons other than the Company shall be
eliminated or reduced pro rata (based on the amount of securities owned by such
Rightsholders and other persons which carry registration rights) to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter(s) in the
managing underwriter's written opinion.
(ii) Number of Piggy-Back Registrations; Expenses. The obligations of the
Company under this Paragraph 10(b) shall be unlimited with respect to each
Rightsholder. Subject to the provisions of Paragraph 10(d) hereof, the Company
will pay all Registration Expenses in connection with any registration of
Registerable Securities effected pursuant to this Paragraph 10(b), but the
Company shall not be responsible for the payment of any underwriter's discount,
commission or selling concession in connection therewith.
(iii) Withdrawal or Suspension of Registration Statement. Notwithstanding
anything contained to the contrary in this Paragraph 10(b), the Company shall
have the absolute right, whether before or after the giving of a Company
Piggy-Back Notice or Holder Notice, to determine not to file a registration
statement to which the Rightsholders shall have the right to include their
12
Registerable Securities therein pursuant to this Paragraph 10(b), to withdraw
such registration statement or to delay or suspend pursuing the effectiveness of
such registration statement. In the event of such a determination after the
giving of a Company Piggy-Back Notice, the Company shall give notice of such
determination to all Rightsholders and, thereupon, (A) in the case of a
determination not to register or to withdraw such registration statement, the
Company shall be relieved of its obligation under this Paragraph 10(b) to
register any of the Registerable Securities in connection with such registration
and (B) in the case of a determination to delay the registration, the Company
shall be permitted to delay or suspend the registration of Registerable
Securities pursuant to this Paragraph 10(b) for the same period as the delay in
the registration of such other securities. No registration effected under this
Paragraph 10(b) shall relieve the Company of its obligation to effect any
registration upon demand otherwise granted to a Rightsholder under any other
agreement with the Company.
(c) Registration Procedures.
(i) Obligations of the Company. The Company will, in connection with any
registration pursuant to Paragraph 10(b) hereof, as expeditiously as possible:
(A) prepare and file with the Commission a registration statement under the
Securities Act on any appropriate form chosen by the Company, in the Company's
sole discretion, which shall be available for the sale of all Registerable
Securities in accordance with the intended method(s) of distribution thereof set
forth in all applicable Holder Notices, and use the Company's commercially
reasonable best efforts to cause such registration statement to become effective
as soon thereafter as reasonably practicable; provided, that, at least five
business days before filing with the Commission of such registration statement,
the Company shall furnish to each Rightsholder whose Registerable Securities are
included therein draft copies of such registration statement, including all
exhibits thereto and documents incorporated by reference therein, and, upon the
reasonable request of any such Rightsholder, shall continue to provide drafts of
such registration statement until filed, and, after such filing, the Company
shall, as diligently as practicable, provide to each such Rightsholders such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus), all exhibits thereto and documents incorporated by
reference therein and such other documents as such Rightsholder may reasonably
request in order to facilitate the disposition of the Registerable Securities
owned by such Rightsholder and included in such registration statement;
provided, further, the Company shall modify or amend the registration statement
as it relates to such Rightsholder as reasonably requested by such Rightsholder
on a timely basis, and shall reasonably consider other changes to the
registration statement (but not including any exhibit or document incorporated
therein by reference) reasonably requested by such Rightsholder on a timely
basis, in light of the requirements of the Securities Act and any other
13
applicable laws and regulations; and provided, further, that the obligation of
the Company to effect such registration and/or cause such registration statement
to become effective, may be postponed for (1) such period of time when the
financial statements of the Company required to be included in such registration
statement are not available (due solely to the fact that such financial
statements have not been prepared in the regular course of business of the
Company) or (2) any other bona fide corporate purpose, but then only for a
period not to exceed 90 days;
(B) prepare and file with the Commission such amendments and post-effective
amendments to a registration statement as may be necessary to keep such
registration statement effective for up to nine months; and cause the related
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed to the extent required pursuant to Rule 424 promulgated
under the Securities Act, during such nine-month period; and otherwise comply
with the provisions of the Securities Act with respect to the disposition of all
Registerable Securities covered by such registration statement during the
applicable period in accordance with the intended method(s) of disposition of
such Registerable Securities set forth in such registration statement,
prospectus or supplement to such prospectus;
(C) notify the Rightsholders whose Registerable Securities are included in
such registration statement and the managing underwriter(s), if any, of an
underwritten offering of any of the Registerable Securities included in such
registration statement, and confirm such advice in writing, (1) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (2) of any request by the
Commission for amendments or supplements to a registration statement or related
prospectus or for additional information, (3) of the issuance by the Commission
of any stop order suspending the effectiveness of a registration statement or
the initiation of any proceedings for that purpose, (4) if at any time the
representations and warranties of the Company contemplated by subclause (J)(1)
of Subparagraph 10(c)(i) hereof cease to be true and correct, (5) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of any of the Registerable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose and (6) of
the happening of any event which makes any statement made in the registration
statement, the prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes in the registration statement
or prospectus so that such registration statement, prospectus or document
incorporated by reference will not contain any untrue statement of material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(D) make reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement at the earliest
possible moment and to prevent the entry of such an order;
14
(E) use reasonable efforts to register or qualify the Registerable
Securities included in such registration statement under such other securities
or blue sky laws of such jurisdictions as any Rightsholder whose Registerable
Securities are included in such registration statement reasonably requests in
writing and do any and all other acts and things which may be necessary or
advisable to enable such Rightsholder to consummate the disposition in such
jurisdictions of such Registerable Securities; provided, that the Company will
not be required to (1) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this clause (E), (2)
subject itself to taxation in any such jurisdiction or (3) take any action which
would subject it to general service of process in any such jurisdiction;
(F) make available for inspection by each Rightsholder whose Registerable
Securities are included in such registration, any underwriter(s) participating
in any disposition pursuant to such registration statement, and any
representative, agent or employee of or attorney or accountant retained by any
such Rightsholder or underwriter(s) (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility (or establish a due
diligence defense), and cause the officers, directors and employees of the
Company to supply all information reasonably requested by any such Inspector in
connection with such registration statement; provided, that records which the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors, unless (1)
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (2) the disclosure of such Records is
required by any applicable law or regulation or any governmental regulatory body
with jurisdiction over such Rightsholder or underwriter; provided, further, that
such Rightsholder or underwriter(s) agree that such Rightsholder or
underwriter(s) will, upon learning the disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(G) cooperate with the Rightsholder whose Registerable Securities are
included in such registration statement and the managing underwriter(s), if any,
to facilitate the timely preparation and delivery of certificates representing
Registerable Securities to be sold thereunder, not bearing any restrictive
legends, and enable such Registerable Securities to be in such denominations and
registered in such names as such Rightsholder or any managing underwriter(s) may
reasonably request at least two business days prior to any sale of Registerable
Securities;
(H) comply with all applicable rules and regulations of the Commission and
promptly make generally available to its security holders an earnings statement
covering a period of twelve months commencing, (1) in an underwritten offering,
at the end of any fiscal quarter in which Registerable Securities are sold to
15
underwriter(s), or (2) in a non-underwritten offering, with the first month of
the Company's first fiscal quarter beginning after the effective date of such
registration statement, which earnings statement in each case shall satisfy the
provisions of Section 11(a) of the Securities Act;
(I) provide a CUSIP number for all Registerable Securities not later than
the effective date of the registration statement relating to the first public
offering of Registerable Securities of the Company pursuant hereto;
(J) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions reasonably
requested by the Rightsholders holding a majority of the Registerable Securities
included in such registration statement or the managing underwriter(s) in order
to expedite and facilitate the disposition of such Registerable Securities and
in such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, (1) make such
representations and warranties, if any, to the holders of such Registerable
Securities and any underwriter(s) with respect to the registration statement,
prospectus and documents incorporated by reference, if any, in form, substance
and scope as are customarily made by issuers to underwriter(s) in underwritten
offerings and confirm the same if and when requested, (2) obtain opinions of
counsel to the Company and updates thereof addressed to each such Rightsholder
and the underwriter(s), if any, with respect to the registration statement,
prospectus and documents incorporated by reference, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Rightsholders and
underwriter(s), (3) obtain a "cold comfort" letter and updates thereof from the
Company's independent certified public accountants addressed to such
Rightsholders and to the underwriter(s), if any, which letters shall be in
customary form and cover matters of the type customarily covered in "cold
comfort" letters by accountants in connection with underwritten offerings, and
(4) deliver such documents and certificates as may be reasonably requested by
the Rightsholders holding a majority of such Registerable Securities and
managing underwriter(s), if any, to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company; each such action required by this clause (J) shall be done
at each closing under such underwriting or similar agreement or as and to the
extent required thereunder; and
(K) if requested by the holders of a majority of the Registerable
Securities included in such registration statement, use its best efforts to
cause all Registerable Securities which are included in such registration
statement to be listed, subject to notice of issuance, by the date of the first
sale of such Registerable Securities pursuant to such registration statement, on
each securities exchange, if any, on which securities similar to the Registered
Securities are listed.
(ii) Obligations of Rightsholders. In connection with any registration of
Registerable Securities of a Rightsholder pursuant to Paragraph 10(b) hereof:
16
(A) The Company may require that each Rightsholder whose Registerable
Securities are included in such registration statement furnish to the Company
such information regarding the distribution of such Registerable Securities and
such Rightsholder as the Company may from time to time reasonably request in
writing; and
(B) Each Rightsholder, upon receipt of any notice from the Company of the
happening of any event of the kind described in subclauses (2), (3), (5) and (6)
of clause 10(c)(i)(C), shall forthwith discontinue disposition of Registerable
Securities pursuant to the registration statement covering such Registerable
Securities until such Rightsholder's receipt of the copies of the supplemented
or amended prospectus contemplated by subclause (1) of clause 10(c)(i)(C), or
until such Rightsholder is advised in writing (the "Advice") by the Company that
the use of the applicable prospectus may be resumed, and until such Rightsholder
has received copies of any additional or supplemental filings which are
incorporated by reference in or to be attached to or included with such
prospectus, and, if so directed by the Company, such Rightsholder will deliver
to the Company (at the expense of the Company) all copies, other than permanent
file copies then in the possession of such Rightsholder, of the current
prospectus covering such Registerable Securities at the time of receipt of such
notice; the Company shall have the right to demand that such Rightsholder or
other holder verify its agreement to the provisions of this clause (B) in any
Holder Notice of the Rightsholder or in a separate document executed by the
Rightsholder.
(d) Registration Expenses. All expenses incident to the performance of or
compliance with this Agreement by the Company, including, without imitation, all
registration and filing fees of the Commission, National Association of
Securities Dealers, Inc. and other agencies, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registerable
Securities), rating agency fees, printing expenses, messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the fees and expenses incurred in connection with the listing, if any, of the
Registerable Securities on any securities exchange and fees and disbursements of
counsel for the Company and the Company's independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incidental to such performance), Securities Act or other
liability insurance (if the Company elects to obtain such insurance), the fees
and expenses of any special experts retained by the Company in connection with
such registration and the fees and expenses of any other person retained by the
Company (but not including any underwriting discounts or commissions
attributable to the sale of Registerable Securities or other out-of-pocket
expenses of the Rightsholders, or the agents who act on their behalf, unless
reimbursement is specifically approved by the Company) will be borne by the
Company. All such expenses are herein referred to as "Registration Expenses."
17
(e) Indemnification: Contribution.
(i) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each Rightsholder, its
officers and directors and each person who controls such Rightsholder (within
the meaning of the Securities Act), if any, and any agent thereof against all
losses, claims, damages, liabilities and expenses incurred by such party
pursuant to any actual or threatened suit, action, proceeding or investigation
(including reasonable attorney's fees and expenses of investigation) arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in any registration statement, prospectus or preliminary prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, except insofar as the same arise out of or are based upon, any such
untrue statement or omission based upon information with respect to such
Rightsholder furnished in writing to the Company by such Rightsholder expressly
for use therein.
(ii) Indemnification by Rightsholder. In connection with any registration
statement in which a Rightsholder is participating, each such Rightsholder will
be required to furnish to the Company in writing such information with respect
to such Rightsholder as the Company reasonably requests for use in connection
with any such registration statement or prospectus, and each Rightsholder agrees
to the extent it is such a holder of Registerable Securities included in such
registration statement, and each other such holder of Registerable Securities
included in such Registration Statement will be required to agree, to indemnify,
to the full extent permitted by law, the Company, the directors and officers of
the Company and each person who controls the Company (within the meaning of the
Securities Act) and any agent thereof, against any losses, claims, damages,
liabilities and expenses (including reasonable attorney's fees and expenses of
investigation incurred by such party pursuant to any actual or threatened suit,
action, proceeding or investigation arising out of or based upon any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact necessary, to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they are made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is based upon information relating to such Rightsholder or other holder
furnished in writing to the Company expressly for use therein.
(iii) Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party under this Paragraph 10(e) of written notice of the
commencement of any action, proceeding, suit or investigation or threat thereof
made in writing for which such indemnified party may claim indemnification or
contribution pursuant to this Agreement, such indemnified party shall notify in
writing the indemnifying party of such commencement or threat; but the omission
so to notify the indemnifying party shall not relieve the indemnifying party
from any liability which the indemnifying party may have to any indemnified
party (A) hereunder, unless the indemnifying party is actually prejudiced
thereby, or (B) otherwise than under this Paragraph 10(e). In case any such
action, suit or proceeding shall be brought against any indemnified party, and
18
the indemnified party shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and the
indemnifying party shall assume the defense thereof, with counsel reasonably
satisfactory to the indemnified party, and the obligation to pay all expenses
relating thereto. The indemnified party shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (A) the indemnifying party has agreed to pay such
fees and expenses, (B) the indemnifying party shall have failed to assume the
defense of such action, suit or proceeding or to employ counsel reasonably
satisfactory to the indemnified party therein or to pay all expenses relating
thereto or (C) the named parties to any such action or proceeding (including any
impleaded parties) include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to the indemnified party which are
different from or additional to those available to the indemnifying party and
which may result in a conflict between the indemnifying party and such
indemnified party (in which case, if the indemnified party notifies the
indemnifying party in writing that the indemnified party elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of the indemnified party; it being understood, however,
that the indemnifying party shall not, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for the indemnified party, which firm
shall be designated in writing by the indemnified party).
(iv) Contribution. If the indemnification provided for in this Paragraph
10(e) from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (A) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other but also the relative fault of the
indemnifying party and indemnified party, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and the
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages. liabilities
and expenses referred to above shall be deemed to include, subject to the
limitation set forth in Subparagraph 10(e)(v), any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
19
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Subparagraph 10(e)(iv) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in clauses (A) and (B) of the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(v) Limitation. Anything to the contrary contained in this Paragraph 10(e)
or in Paragraph 10(f) notwithstanding, no holder of Registerable Securities
shall be liable for indemnification and contribution payments aggregating an
amount in excess of the maximum amount received by such holder in connection
with any sale of Registerable Securities as contemplated herein.
(f) Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(i) agrees to sell such holder's securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and to comply with Regulation M under the Exchange Act and
(ii) completes and executes all questionnaires, appropriate and limited powers
of attorney, escrow agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangement;
provided, that all such documents shall be consistent with the provisions of
Paragraph 10(d).
11. Miscellaneous.
This Warrant Certificate 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 certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Warrant Certificate are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
11. Expiration.
Unless as hereinafter provided, the right to exercise these Warrants shall
expire at the Expiration Date.
20
Dated: July 25, 2003
Walker Financial Corporation
By: /s/ Mitchell Segal
----------------------------------------------
Mitchell Segal, President
ATTEST:
/s/ Peter Walker
- -----------------------
Peter Walker, Secretary
21
EXERCISE FORM
Dated:_______________, ____
TO: Walker Financial Corporation
The undersigned hereby irrevocably elects to exercise the Warrants
evidenced by this Warrant Certificate, to the extent of purchasing
_________________ shares of Common Stock, and hereby makes payment of
_____________ in payment of the actual Purchase Price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
-----------------------------------------------------
(Please type or print in block letters)
Taxpayer
Identification
Number:
----------------------------------------------------------
Address:
-----------------------------------------------------
Signature:
---------------------------------------------------------
(Signature must conform in all respects to the name
of the Warrantholder as set forth on the face of
this Warrant Certificate.)
22
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________
(Please type or print in block letters) hereby sells, assigns and transfers
unto:
Name:
-----------------------------------------------------
(Please type or print in block letters)
Taxpayer
Identification
Number:
----------------------------------------------------------
Address:
-----------------------------------------------------
this Warrant Certificate and the Warrants represented by this
Warrant Certificate to the extent of ________________ Warrants
and does hereby irrevocably constitute and appoint
___________________________ Attorney-in-Fact, to transfer the
same on the books of the Company with full power of
substitution in the premises.
Dated:
--------------------------------------------
Signature:
-----------------------------------------------------
(Signature must conform in all respects to the name of
the Warrantholder as set forth on the face of
this Warrant Certificate.)