WARRANT AGREEMENT
BETWEEN
EDUCATIONAL VIDEO CONFERENCING, INC.
AND
PETER J. SOLOMON COMPANY LIMITED
DATED AS OF APRIL 18, 2000
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WARRANT AGREEMENT, dated as of April 18, 2000 (the "Effective Date"),
between EDUCATIONAL VIDEO CONFERENCING, INC., a Delaware corporation (the
"Company"), and PETER J. SOLOMON COMPANY LIMITED, a Delaware corporation
("PJSC").
The Company has agreed to issue to PJSC warrants (the "Warrants") to
purchase an aggregate of 25,000 shares (the "Warrant Shares") of the Company's
common stock, par value $.0001 per share (the "Common Stock"), in connection
with the execution and delivery of a letter agreement dated the date hereof
between the Company and PJSC regarding the engagement of PJSC as financial and
strategic advisor to the Company.
THEREFORE, in consideration of the mutual undertakings contained herein,
the Company and PJSC hereby agree as follows:
1. Issuance of Warrants. The Company shall issue, sell and deliver the
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Warrants to PJSC and/or its employees. The certificate evidencing the Warrants
(a "Warrant Certificate") shall be substantially in the form of Annex A attached
hereto and shall be dated April 18, 2000.
2. Registration. The Company shall maintain a register for the Warrants
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at its principal executive offices for the registration of the issuance and
transfer of Warrants. The Company shall be entitled to treat the registered
holder of any Warrant (the "Holder") as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Warrant on the part of any other person. The Warrants shall be
registered in the name of PJSC and/or its employees.
3. Transfer and Exchange of Warrants. Subject to compliance with
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applicable securities laws, any Warrant shall be transferable only upon
surrender thereof at the Company's principal executive offices duly endorsed by
its Holder or by such Holder's duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any registration of transfer, the Company shall deliver a new
Warrant or Warrants to the persons entitled thereto. In addition, a Warrant
Certificate may be exchanged, at the option of the Holder thereof, for another
Warrant Certificate or Warrant Certificates of different denominations, of like
tenor and representing in the aggregate the right to purchase a like number of
Warrant Shares upon surrender at the Company's principal executive offices.
4. Exercise of Warrants.
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4.1 Exercise Price and Term. Each Warrant shall entitle the Holder thereof
to purchase from the Company one Warrant Share at a purchase price per share of
$16.09 (the "Exercise Price"), as such purchase price and number of Warrant
Shares may be adjusted from time to time pursuant to the provisions of Section 8
hereof, payable in full at the time of exercise of such Warrant. The Warrants
may be exercised, in whole or in part, at any time or from time to time during
the seven-year period commencing on April 18, 2000 and ending at 5:00 p.m., New
York City time, on April 18, 2007 (the "Expiration Date"). After the Expiration
Date, any unexercised Warrants shall be void and all rights of the Holders with
respect thereto shall cease.
4.2 Payment of Exercise Price. At the election of any Holder, the aggregate
Exercise Price for any Warrants being exercised may be paid: (a) in cash in the
amount of the aggregate Exercise Price then in effect for the number of Warrants
being exercised, (b) by surrender to the
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Company of shares of Common Stock having an aggregate Fair Market Value (as
defined below) on the date of exercise equal to the aggregate Exercise Price
then in effect for the number of Warrants being exercised, (c) by surrender to
the Company of Warrants covering a number of Warrant Shares having an aggregate
Fair Market Value, net of the applicable aggregate Exercise Price therefor,
equal to the aggregate Exercise Price then in effect for the number of Warrants
being exercised, or (d) by a combination of the aforementioned methods of
payment. For purposes of this Agreement, the "Fair Market Value" per share of
Common Stock on a given date shall be: (i) if the Common Stock is listed on a
national securities exchange or included on the Nasdaq National or Small Cap
Market, the closing price per share of Common Stock on such date (or, if there
was no trading on such date, on the next preceding day on which there was
trading); (ii) if the Common Stock is not listed on a national securities
exchange or included on the Nasdaq National or Small Cap Market , the average of
the closing bid and asked quotations per share of Common Stock as reported by
Nasdaq (or the National Quotation Bureau Incorporated or any similar
organization) on such date (or, if there were no quotations for the Common Stock
on such date, on the next preceding day on which there were quotations) as
provided by such organization; and (iii) if the Common Stock is not traded on a
national securities exchange or included on the Nasdaq National or Small Cap
Market and bid and asked quotations are not provided by Nasdaq (or the National
Quotation Bureau Incorporated or any similar organization), as determined by the
agreement of the parties in good faith or, in the absence of such agreement, as
determined pursuant to arbitration under the auspices of the American
Arbitration Association.
4.3 Exercise Procedure. Warrants may be exercised by their surrender at the
Company's principal executive offices, with the Election to Purchase form
attached thereto duly completed and executed, accompanied by payment of the
aggregate Exercise Price for the Warrant Shares to be purchased upon such
exercise. Payment for the Warrant Shares shall be made (a) if payment is to be
made in cash, by a certified or bank cashier's check payable to the order of the
Company or by wire transfer to an account designated by the Company, (b) if
payment is to be made through a surrender of shares of Common Stock, by
surrender of certificates duly endorsed for transfer (with all transfer taxes
paid or provided for), and (c) if payment is to be made by a surrender of
Warrants, by surrender of certificates representing such Warrants. Promptly
after the exercise of any Warrants, upon compliance with Section 5 hereof, the
Company shall issue a certificate or certificates, for the number of full
Warrant Shares to which the Holder thereof is entitled, registered in accordance
with the instructions set forth in the Election to Purchase, together with cash
as provided in Section 10 of this Warrant Agreement payable in respect of
fractional shares and (if applicable) a new Warrant Certificate or Certificates
representing all remaining unexercised Warrants. All Warrant Shares shall be
duly authorized, validly issued, fully paid, non-assessable and free of
preemptive rights, and free from all liens and charges other than those created
by the Holder. Upon compliance with Section 5 hereof, and applicable securities
laws, certificates representing such Warrant Shares and remaining unexercised
Warrants shall be issued by the Company in such names and denominations, and
shall be delivered to such persons, as are specified by written instructions of
the Holder.
4.4 Record Holder. Each person in whose name any such certificate for
Warrant Shares is issued shall for all purposes be deemed to have become the
holder of record of the Warrant Shares represented thereby on the date upon
which such Warrants were surrendered for
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exercise, accompanied by payment of the aggregate Exercise Price as aforesaid,
irrespective of the date of issuance or delivery of such certificate for Warrant
Shares; provided, however, that if, at the date of the surrender of such
Warrants and payment of the aggregate Exercise Price, the transfer books for the
Common Stock or any other class of stock purchasable upon the exercise of such
Warrants shall be closed, the certificates for the Warrant Shares or for shares
of such other class of stock in respect of which such Warrants are then
exercisable shall be issuable as of the date on which such books shall next be
opened (whether before or after the Expiration Date) and, until such date, the
Company shall be under no duty to deliver any certificate for such Warrant
Shares or for shares of such other class of stock; and, provided, further, that
the transfer books of record, unless otherwise required by law, shall not be
closed at any one time for a period longer than 20 days.
5. Payment of Taxes. The Company shall promptly pay all documentary stamp
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taxes attributable to the issuance of Warrants or the issuance of Warrant Shares
upon the exercise of any Warrants, except that any transfer taxes payable in
connection with the issuance of Warrants or Warrant Shares in any name other
than that of the Holder of the Warrants surrendered shall be paid by such Holder
and, if any such tax would otherwise be payable by the Company, no such issuance
or delivery shall be made unless and until the person requesting such issuance
has paid to the Company the amount of any such tax or it is established to the
reasonable satisfaction of the Company that any such tax has been paid.
6. Replacement Warrants. In case any Warrant Certificate shall be
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mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate or in lieu of and substitution for the lost, stolen or destroyed
Warrant Certificate, a new Warrant Certificate of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such Warrant
Certificate, together with an appropriate agreement regarding indemnification of
the Company relating to the issuance of a replacement Warrant Certificate.
7. Reservation of Warrant Shares. The Company shall at all times reserve
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and keep available for issuance the number of its authorize but unissue shares
of Common Stock or other stock sufficient to permit the exercise in full of the
Warrants and any transfer agent for the Common Stock or othe stock issuable upon
the exercise of Warrants shall be directed at all times to reserve such number
as shall be sufficient for such purpose. The Company will keep a copy of this
Warrant Agreement on file with each such transfer agent and will supply such
transfer agent with duly executed stock certificates for such purpose and will
provide or otherwise make available any cash that may be payable as provided in
Section 10 hereof. All Warrants surrendered upon the exercise thereof shall be
canceled. After the Expiration Date, no shares shall be subject to reservation
in respect of any unexercised Warrants.
8. Adjustments.
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8.1 Adjustment of Exercise Price.
8.1.1 Initial Exercise Price. The Exercise Price, which initially will
be as provided in Section 4.1, shall be adjusted and readjusted from time to
time as provided in this
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Section 8.1 and, as so adjusted or readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by this Section 8.1.
8.1.2 Issuance of Additional Shares of Common Stock. In case the
Company, at any time after the date hereof, shall issue additional shares of
Common Stock for no consideration in connection with a dividend, stock split or
other distribution on the Common Stock (including, without limitation, any
distribution of Common Stock by way of spin-off, reclassification or corporate
rearrangement), then, and in each such case, the Exercise Price shall be reduced
concurrently with such issuance to a price (calculated to the nearest cent)
determined by multiplying such Exercise Price by a fraction of which:
(a) the numerator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance, and
(b) the denominator shall be the number of shares of Common Stock
outstanding immediately after such issuance.
8.1.3 Dividends and Distributions. In case the Company, at any time
after the date hereof, shall pay or make a dividend or other distribution on the
Common Stock (including, without limitation, any distribution of stock (other
than Common Stock) or other securities, including securities that are
convertible into or exchangeable or exercisable for Common Stock, property or
options by way of dividend, spin-off, reclassification or corporate
rearrangement) then, and in each such case, the Exercise Price in effect
immediately prior to the close of business on the record date fixed for the
determination of the holders of the Common Stock entitled to receive such
dividend or other distribution shall be reduced, effective as of the close of
business on such record date, to a price (calculated to the nearest cent)
determined by multiplying such Exercise Price by a fraction of which:
(a) the numerator shall be the Exercise Price in effect immediately
prior to the close of business on such record date minus the value of such
dividend or other distribution (as determined in good faith by the Board of
Directors of the Company) applicable to one share of Common Stock, and
(b) the denominator shall be such Exercise Price in effect immediately
prior to the close of business on such record date;
provided, however, that no such reduction shall be made pursuant to this Section
8.1.3 for a dividend payable in shares of Common Stock (which is subject to
Section 8.1.2) or payable in cash or other property and declared out of the
earned surplus (i.e., retained earnings) of the Company (excluding any portion
thereof resulting from a revaluation of property) or which is declared but is
then not paid or made. For purposes of the foregoing, a dividend or distribution
payable other than in cash shall be considered payable out of earned surplus
only to the extent that such earned surplus is charged an amount equal to the
fair value of such dividend or distribution at the time of payment as determined
in good faith by the Board of Directors of the Company. If a dividend or
distribution covered under this Section 8.1.3 is declared prior to the
Expiration Date but not paid by such date, the Expiration Date shall be extended
until the payment thereof.
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8.1.4 Adjustments for Combinations, etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Exercise Price in
effect immediately prior to such combination or consolidation shall be
proportionately increased concurrently with the effectiveness of such
combination or consolidation.
8.1.5 Minimum Adjustment of Exercise Price. If the amount of any
adjustment of the Exercise Price required pursuant to this Section 8.1 would be
less than $.01, such amount shall be carried forward, and an adjustment with
respect thereto shall be made at the time of and together with any subsequent
adjustment that, together with such amount and any other amount or amounts so
carried forward, shall aggregate at least $.01.
8.1.6 Minimum Exercise Price. Notwithstanding anything to the contrary
set forth herein, no adjustment provided for in this Section 8.1 shall reduce
the Exercise Price below the par or stated value of the Common Stock and the
Company shall have no obligation to change such value to permit a further
reduction of the Exercise Price; provided, however, that, except in the event of
any transactions of the type contemplated under Section 8.1.4 hereof, the
Company agrees not to change the par or stated value of the Common Stock.
8.2 Adjustment of Number of Warrant Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of Section 8.1, the number of Warrant
Shares that the Holder of a Warrant shall be entitled to receive upon exercise
thereof shall be adjusted to equal that number of Warrant Shares determined by
multiplying the number of Warrant Shares issuable upon exercise of such Warrant
immediately prior to such adjustment of the Exercise Price by a fraction of
which:
(a) the numerator shall be the Exercise Price in effect immediately
prior to such adjustment of the Exercise Price, and
(b) the denominator shall be the Exercise Price in effect immediately
following such adjustment of the Exercise Price.
8.3 Notice, Evidence of Adjustments. Whenever the Exercise Price is
adjusted as herein provided, the Company shall promptly cause a notice setting
forth the adjusted Exercise Price and adjusted number of Warrant Shares,
issuable upon exercise of each Warrant to be mailed to the Holders, at their
last addresses appearing in the Warrant register, and shall cause a copy thereof
to be mailed to each transfer agent for the Common Stock. The Company shall
retain a firm of independent public accountants of recognized standing selected
by the Board of Directors (who may be the regular accountants employed by the
Company) to make any computation required by this Section 8, and a certificate
signed by such firm shall accompany said notice and shall be conclusive evidence
of the correctness of such adjustments, absent manifest error.
9. Consolidation, Merger, Sale of Assets, Reorganization, etc.
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9.1 General Provisions. In case the Company at any time after the Effective
Date
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(a) shall consolidate with or merge into any other person and not be the
continuing or surviving person of such consolidation or merger, or (b) shall
permit any other person to consolidate with or merge into the Company and the
Company shall be the continuing or surviving person but, in connection with such
consolidation or merger, the Common Stock or other securities then issuable upon
exercise of the Warrants shall be changed into or exchanged for cash, stock or
other securities or property, or (c) shall transfer, directly or indirectly, all
or substantially all its properties and assets to any other person, or (d) shall
effect a capital reorganization or reclassification of the Common Stock or other
securities then issuable upon exercise of the Warrants (other than a capital
reorganization or reclassification resulting in an adjustment of the Exercise
Price as provided in Section 8.1), then, and in the case of each such
transaction, the Company shall make proper provision such that, upon the terms
and in the manner provided in this Warrant Agreement, the Holder of each
Warrant, upon the exercise thereof at any time after the consummation of such
transaction, shall be entitled to receive, at the Exercise Price then in effect,
in lieu of the Common Stock or other securities issuable upon such exercise
immediately prior to such transaction, the amount of cash, stock or other
securities or property to which such Holder would have been entitled if such
Warrant had been exercised in full immediately prior to such transaction,
subject to adjustments subsequent to such transaction as nearly equivalent as
possible to the adjustments provided for in Section 8 and this Section 9.
9.2 Assumption of Obligations. Notwithstanding anything contained in this
Warrant Agreement to the contrary, the Company shall not effect any of the
transactions described in Section 9.1(a), (b), (c) or (d) unless, prior to the
consummation thereof, the person (other than the Company) that may be required
to deliver any cash, stock or other securities or property upon exercise of any
Warrant as provided herein shall assume, by written instrument delivered to the
Holders of the Warrants, (a) the obligations of the Company under this Warrant
Agreement and the Warrants (and if the Company shall survive the consummation of
any such transaction, such assumption shall not release the Company from any
continuing obligations of the Company under this Warrant Agreement and the
Warrants) and (b) the obligation to deliver to such Holder such cash, stock or
other securities or other property as such Holder may be entitled to receive in
accordance with the provisions of this Section 9; provided, however, that this
Section 9.2 shall not be applicable to any transaction described in Section 9.1
if all such cash, stock, property or other consideration receivable upon
consummation of such transaction is delivered to the Company at such time. Such
person shall similarly deliver to the Company an opinion of counsel to the
effect that this Warrant Agreement and the Warrants shall continue in full force
and effect after any such transaction and that the terms hereof (including,
without limitation all of the provisions of Section 8 and this Section 9.2) and
thereof shall be applicable to the cash, stock or other securities or property
that such person may be required to deliver upon any exercise of the Warrants.
9.3 No Dilution or Impairment. The Company shall not, by amendment of its
certificate of incorporation or by-laws or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue, sale, grant or
assumption of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant Agreement or
the Warrants, but will at all times, whether or not requested to do so, in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holders against dilution or other impairment. Without limiting the generality of
the foregoing, the Company agrees that it shall
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take all such reasonable action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of stock upon the exercise of all Warrants from time to time outstanding.
10. Fractional Interests. The Company shall not be required to issue
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fractions of shares of Common Stock upon the exercise of any Warrants. If more
than one Warrant shall be presented for exercise at the same time by the same
Holder, the number of Warrant Shares that shall be issuable upon the exercise
thereof shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a share
of Common Stock would, except for the provisions of this Section 10, be issuable
on the exercise of any Warrant, the Company shall purchase such fraction for an
amount in cash equal to the same fraction of the Fair Market Value of one share
of Common Stock on the date of exercise.
11. Restrictions on Dispositions. PJSC acknowledges that the Warrants and
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the Warrant Shares have not been registered under the Act and accordingly that
the Warrants and the Warrant Shares may not be transferred except pursuant to
(i) an effective registration statement under the Act or (ii) any available
exemption from registration under the Act permitting such disposition of
securities and upon delivery to the Company of an opinion of counsel, reasonably
satisfactory to counsel for the Company, that such exemption from registration
is available. PJSC agrees that the certificates representing the Warrants and
Warrant Shares shall bear an appropriate restrictive legend to such effect.
12. Registration Rights.
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12.1 Piggyback Registration. If, at any time within the period commencing
April 18, 2000 and ending at 5:00 p.m., New York City time, on April 18, 2007,
the Company proposes to register any voting equity securities under the Act in a
primary registration on behalf of the Company and/or in a secondary registration
on behalf of holders of such securities (exclusive of any filing pursuant to the
Registration Rights Agreement dated February 3, 2000 between the Company and The
Shaar Fund Ltd.), and the registration form to be used may be used for
registration of the Warrant Shares, the Company shall give prompt written notice
(which, in the case of a registration pursuant to the exercise of demand
registration rights shall be within 10 business days after the Company's receipt
of notice of such exercise and, in any event, shall be at least 30 days prior to
the date of such filing) to the Holders of Warrants and/or Warrant Shares of its
intention to effect registration and shall offer to include in such registration
such number of Warrant Shares with respect to which the Company has received
written requests for inclusion therein within 10 business days after receipt of
such, notice from, the Company upon generally the same terms and conditions as
the person or persons for whom such registration is being effected has agreed
to. This Section 12.1 is not applicable to any registration statement to be
filed by the Company on Forms S-4 or S-8 or any successor forms. The Company
shall not be obligated to cause to be effective any registration statement as to
which it has given notice to the Holders of Warrants and/or Warrant Shares and
shall have discretion to withdraw any such registration without liability to
Holders of Warrants and/or Warrant Shares.
Notwithstanding the foregoing, if the managing underwriter of the offering
shall determine in good faith and advise the Company in writing that the
inclusion of the Warrant
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Shares and other securities being offered in such registration would materially
and adversely affect the marketability of the offering, then the Company and the
managing underwriter may reduce the number of Warrant Shares to be registered on
a pro rata basis proportionate to the reduction of all other holders of
securities participating in such registration pursuant to the exercise of
piggyback registration rights. In such event, the Company may reduce the number
of Warrant Shares to be registered to zero as long as no other securities are
registered in such registration statement pursuant to an exercise of piggyback
registration rights.
12.2 Registration Procedures. If and whenever the Company is required by
the provisions of this Section 12 to use its reasonable best efforts to effect
the registration of any Warrant Shares under the Act, the Company will, as
expeditiously as possible:
(a) use its reasonable best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in Section 12.3(a) and comply with the provisions of the
Act with respect to the disposition of all Warrant Shares covered by such
registration statement in accordance with the Holders' intended method of
disposition set forth in such registration statement for such period;
(c) furnish to each seller of Warrant Shares and to each underwriter
such number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or other disposition of the
Warrant Shares covered by such registration statement;
(d) use its reasonable best efforts to register or qualify the Warrant
Shares covered by such registration statement under such securities or blue sky
laws of such jurisdictions as each seller shall request, and do any and all
other acts and things which may be necessary under such securities or blue sky
laws to enable such seller to consummate the public sale or other disposition in
such jurisdictions of the securities to be sold by such seller, except that the
Company shall not for any such purpose be required to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not qualified or to file
any general consent to service of process;
(e) use its reasonable best efforts to list the Warrant Shares covered
by such registration statement with any securities exchange or automated
quotation system on which the Common Stock of the Company is then listed;
(f) immediately notify each seller of Warrant Shares and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Act, of the happening of
any event of which the Company has knowledge as result of which the prospectus
contained in such registration statement, as then in effect, included an untrue
statement of a material fact or omits to state a material fact required to be
stated therein
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or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) enter into such agreements (including an underwriting agreement,
if applicable) and take all such other actions reasonably necessary in
connection therewith in order to expedite and facilitate the disposition of the
Warrant Shares to be registered;
(h) whether or not the offering is underwritten and at the request of
any seller of Warrant Shares, furnish: (i) such representations and warranties
to such seller and the underwriters, if any, as are customary in primary
underwritten offerings, (ii) an opinion of counsel representing the Company for
the purposes of such registration, addressed to the underwriters, if any, and to
such seller of Warrant Shares, dated the effective date of such registration
statement and in form and substance as is customarily given to underwriters in
an underwritten public offering and to such other effect as reasonably may be
requested by counsel for the underwriters or by such seller of Warrant Shares or
its counsel and (iii) a letter dated such effective date from the independent
public accountants retained by the Company, addressed to the underwriters, if
any, and to such seller of Warrant Shares, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, and such letter shall additionally cover such
other financial matters (including information as to the period ending no more
than five business days prior to the date of such letter) with respect to such
registration as such underwriters reasonably may request;
(i) make available upon reasonable notice for inspection by each
seller of Warrant Shares, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant or other
agent retained by such seller of Warrant Shares or underwriter, all financial
and other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement; and
(j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securityholders, as soon as reasonably practicable, but not later than 18 months
after the effective date of the registration statement, an earnings statement
covering the period of at least 12 months beginning with the first full month
after the effective date of such registration statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the Act.
For purposes of Section 12.3(a) and (b), the period of distribution of
Warrant Shares in a firm commitment underwritten public offering shall be deemed
to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Warrant Shares in
any other registration shall be deemed to extend until the earlier of the sale
of all Warrant Shares covered thereby and 120 days after the effective date
thereof.
In connection with each registration hereunder the sellers of Warrant
Shares will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary and shall be requested by the Company in order to comply with federal
and applicable state securities laws.
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In connection with each registration pursuant to this Section 12
covering an underwritten public offering, the Company and each seller of Warrant
Shares agree to enter into a written agreement with the managing underwriter
(unless the Holder is the managing underwriter) in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature.
Each Holder severally agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 12.3 (f),
such Holder will immediately discontinue disposition of Warrant Shares pursuant
to the registration statement until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 12.3 (f) hereof, and,
if so directed by the Company, such Holder will deliver to the Company all
copies, other than permanent file copies then in such Holder's possession, of
the most recent prospectus covering such Warrant Shares at the time of receipt
of such notice. If the Company shall give such notice, the Company shall extend
the period during which the registration statement shall be maintained effective
by the number of days during the period from and including the date of the
giving of notice pursuant to Section 12.3 (f) to the date when the Company shall
make available to such Holder a prospectus supplemented or amended to conform
with the requirements of Section 12.3 (f).
12.3 Expenses. All expenses incurred by the Company in complying with
Sections 12.1 and 12.2, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs of insurance and
reasonable fees and disbursements of counsel for the sellers of Warrant Shares,
but excluding any Selling Expenses, are herein referred to as "Registration
Expenses." "Selling Expenses," as used herein, mean all underwriting discounts
and selling commissions applicable to the sale of Warrant Shares.
The Company will pay or cause to be paid all Registration Expenses of
the participating sellers of Warrant Shares in connection with each registration
statement under Section 12.1. All Selling Expenses in connection with each
registration statement under Section 12.1 shall be borne by the participating
sellers of Warrant Shares in proportion to the number of Warrant Shares sold by
each, or by such participating sellers of Warrant Shares other than the Company
(except to the extent the Company shall be a seller of Common Stock) as they may
agree.
12.4 No Conflicts. The Company will not enter into any agreement granting
registration rights to any person or entity on terms which conflict with the
provisions of this Section 12.
12.5 Indemnification and Contribution. (a) In the event of a registration
of any Warrant Shares under the Act pursuant to this Section 12, the Company
will indemnify and hold harmless, to the fullest extent permitted by law, each
Holder selling Warrant Shares thereunder, each underwriter thereunder, and each
other person, if any, who controls such selling Holder of Warrant Shares or
underwriter within the meaning of the Act or the Securities Exchange Act of
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1934, as amended (the "Exchange Act"), against any losses, claims, damages,
liabilities and expenses, joint for several, to which such selling Holder,
underwriter or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such Warrant Shares were registered under the Act pursuant to Section 12, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, 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, and will pay or
reimburse each such selling Holder, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company (i) will not be liable
in any such case if and to the extent that (A) any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such selling Holder, any such underwriter or any such
controlling person, as the case may be, in writing specifically for use in such
registration statement, prospectus, amendment or supplement or (B) in respect to
such statement, alleged statement omission or alleged omission with respect to
which such loss, claim, damage or liability directly relates, the final
prospectus for such registration statement corrected in all material respects
such statement alleged statement, omission or alleged omission and a copy of
such final prospectus was not sent or given by or on behalf of such Holder (or
otherwise delivered in accordance with applicable law or regulation) at or prior
to the confirmation of the sale of Warrant Shares of such Holder and (ii) will
not be liable for amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, such consent not to be unreasonably withheld or delayed.
(b) In the event of a registration of any Warrant Shares under the Act
pursuant to this Section 12, each Holder selling Warrant Shares thereunder,
severally and not jointly, will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Act, each
officer of the Company who signs the registration statement, each director of
the Company, each underwriter and each person who controls any underwriter
within the meaning of the Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the Act or otherwise,
but only to the extent that such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, made in reliance upon and in conformity with
information pertaining to such selling Holder, as such, furnished in writing to
the Company by such selling Holder specifically for use in such registration
statement under which such Warrant Shares was registered under the Act pursuant
to this Section 12, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, and will pay or reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage liability or action or
(ii) any statement, alleged statement, omission or alleged omission made by the
Company with respect to which such loss, claim, damage or liability directly
relates, if the final prospectus for such
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registration statement corrected inall material respects such statement, alleged
statement, omission or alleged omission and a copy of such final prospectus was
not sent or given by or on behalf of such Holder (or otherwise delivered in
accordance with applicable law or regulation) at or prior to the confirmation of
the sale of Warrant Shares of such Holder, provided, however, that (A) the
liability of each selling Holder hereunder shall be limited to the proportion of
any such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the Warrant Shares sold by such
selling Holder under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any event to exceed
the net proceeds received by such selling Holder from the sale of Warrant Shares
covered by such registration statement and (B) no selling Holder shall be liable
for amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of such selling
Holder, such consent not to be unreasonably withheld or delayed.
(c) Promptly after receipt by an indemnified party hereunder of
written notice of any claim or the commencement of any action or proceeding,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party,
except to the extent the indemnifying party is materially prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and the indemnified party shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 12.6(c) for any legal or
other professional expenses subsequently incurred by such indemnified party in
connection with the defense thereof. No indemnifying party, in the defense of
any such claim or litigation against an indemnified party, shall consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation, unless such indemnified party shall otherwise consent in writing. An
indemnifying party who elects to assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim (in addition
to any local counsel), unless any indemnified party reasonably concludes that
there may be legal defenses available to such indemnified party with respect to
such claim which are different from or additional to those available to any
other of such indemnified parties or that a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the reasonable fees and expenses of such additional counsel or counsels.
(d) In order to provide for just and equitable contribution in any
case in which either (i) any Holder exercising registration rights under this
Section 12, or any controlling person of any such Holder, makes a claim for
indemnification pursuant to this Section 12.6, but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and following the expiration of time to appeal or the denial of the last right
of
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appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 12.6 provides for indemnification in
such case or (ii) contribution under the Act may be required on the part of any
such Holder or any such controlling person in circumstances for which
indemnification is provided under this Section 12.6, then, and in each such
case, the Company and such Holder shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion as is appropriate to reflect both the relative
benefit received by such Holder and the relative fault of the Company and such
Holder; provided, however, that, in any such case, (A) no Holder will be
required to contribute any amount in excess of the public offering price of all
such Warrant Shares offered by it pursuant to such registration statement and
(B) no person or entity guilty of fraudulent misrepresentation (within, the
meaning of Section 11(f) of the Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent misrepresentation. For
purposes of the preceding sentence, the relative benefit received by the Holder
of Warrant Shares shall be deemed to be in the same proportion as the public
offering price of its Warrant Shares offered by the registration statement bears
to the public offering price of all securities offered by such registration
statement; and the relative fault of the Company and such Holder shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission of a material fact relates to
information supplied by the Company or by the Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
12.7 Securities Law Compliance. The Company covenants that it will timely
file all reports required to be filed by it under the Act and the Exchange Act.
So long as the Company is subject to the periodic reporting requirements of the
Exchange Act, the Company covenants to make publicly available such information
as may be necessary to permit the sale of Warrant Shares without registration
under the Act pursuant to the exemption provided by Rule 144 under the Act, as
such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder of Warrants
or Warrant Shares at any time, if applicable the Company will deliver to such
Holder or such Holder's prospective transferee such information as may be
necessary to permit the sale of Warrants or Warrant Shares pursuant to Rule 144A
under the Act, as such rule may be amended from time to time. Upon request of
any Holder of Warrants or Warrant Shares, the Company will deliver to such
Holder a written statement as to whether it has complied with such information
requirements.
13. Notices to Holders.
------------------
13.1 Nothing contained in this Warrant Agreement or in any of the Warrants
shall be construed as conferring upon the Holders thereof as such the right to
vote or to receive dividends or to consent or to receive notice as stockholders
in respect of the meetings of stockholders or the election of directors of the
Company or any other matter or any other rights whatsoever as stockholders of
the Company.
13.2 In the event the Company intends to:
(a) make any distribution on or with respect to its Common Stock (or
other securities that may then be issuable in lieu thereof upon the exercise of
Warrants), including
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without limitation any dividend or distribution from earned surplus, any
dividend or distribution of stock, assets or evidences of indebtedness, or any
similar distribution,
(b) issue subscription rights or warrants to holders of its Common
Stock,
(c) consolidate or merge with or into another entity,
(d) liquidate, dissolve or sell or otherwise dispose of substantially
all its assets, or
(e) take any other action that would result in an adjustment to the
Exercise Price or an adjustment to the number of Warrant Shares that the Holder
of a Warrant shall be entitled to receive upon exercise thereof, then the
Company shall cause a notice of its intention to take such action to be sent by
first-class mail, postage prepaid, at least 20 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 distribution or issuance or to vote upon such
proposed consolidation, merger, liquidation, sale or conveyance to each Holder
at its address appearing on the Warrant register, but failure to mail or to
receive such notice or any defect therein or in the mailing thereof shall not
affect the validity of any action taken in connection with such distribution,
issuance, consolidation, merger, liquidation, sale or conveyance.
14. Notices. Any notice or demand required by this Warrant Agreement
-------
to be given or made by any Holder to or on the Company shall be sufficiently
given or made if sent by registered or certified mail, postage prepaid, or by
facsimile transmission address as follows:
Educational Video Conferencing, Inc.
35 East Grassy Sprain Road
Suite 200
Yonkers, New York 10710
Telephone: 914.787.3500
Facsimile: 914.395.3498
Attention: Dr. Arol I. Buntzman
Any notice or demand required by this Warrant Agreement to be given or made by
the Company to or on the Holder of any Warrant shall be sufficiently given or
made, whether or not such Holder receives the notice, if sent by first-class
mail, postage prepaid, addressed to such Holder at his last address as shown on
the books of the Company.
15. Governing Law. The validity. interpretation and performance of this
---------------------------
Warrant Agreement, of each Warrant issued hereunder and of the respective terms
and provisions thereof shall be governed by the laws of the State of New York
without giving effect to principles of conflicts of law.
16. Counterparts. This Warrant Agreement may be executed in two
------------
counterparts, each of which when so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Warrant Agreement as of
the date first set forth above.
EDUCATIONAL VIDEO CONFERENCING, INC.
By: /s/ Dr. Arol I. Buntzman
---------------------------------
Dr. Arol I. Buntzman
Chairman and Chief Executive Officer
PETER J. SOLOMON COMPANY LIMITED
By: /s/ Marc Cooper
----------------------------------
Marc Cooper
Managing Director
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ANNEX A
THE WARRANTS REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE
THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"); AND, NONE OF SUCH SECURITIES MAY BE OFFERED, OR SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, OR (ii) AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO
THE DISPOSITION OF SECURITIES AND UPON DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH EXEMPTION
FROM REGISTRATION UNDER THE ACT IS AVAILABLE. IN ADDITION, THE WARRANTS
REPRESENTED HEREBY MAY NOT BE TRANSFERRED OR EXERCISED EXCEPT IN ACCORDANCE WITH
THE PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF APRIL 18, 2000 BETWEEN
EDUCATIONAL VIDEO CONFERENCING, INC. AND PETER J. SOLOMON COMPANY LIMITED.
No. 1 25,000 Warrants
Void After 5:00 p.m. New York City Time
On April 18, 2007
Educational Video Conferencing, Inc.
Warrant Certificate
THIS CERTIFIES THAT, for value received, PETER J. SOLOMON COMPANY LIMITED,
or registered assigns, is the Holder of the number of Warrants set forth above,
each Warrant entitling the owner thereof to purchase at any time after April 18,
2000 and prior to 5:00 p.m., New York City time, on April 18, 2007 (the
"Expiration Date"), one fully paid and non-assessable share of common stock, par
value $.0001 per share ("Common Stock"), of Educational Video Conferencing,
Inc., a Delaware corporation (the "Company"), at a purchase price per share (the
"Exercise Price") initially equal to $16.09, upon presentation and surrender of
this Warrant Certificate with the Form of Election to Purchase (attached hereto)
duly executed. The number of Warrants evidenced by this Warrant Certificate (and
the number of shares that may be purchased upon exercise hereof (the "Warrant
Shares") set forth above and the Exercise Price set forth above are the number
and Exercise Price as of the date of original issuance of this Warrant
Certificate, based on the Common Stock as constituted at such date. As provided
in the Warrant Agreement referred to below, the Exercise Price and the number or
kind of shares that may be purchased upon the exercise of the Warrants evidenced
by this Warrant Certificate are subject to modification and adjustment upon the
happening of certain events.
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of the Warrant Agreement dated as of
April 18, 2000 between the Company and Peter J. Solomon Company Limited, which
Warrant Agreement is hereby incorporated herein reference and made a part hereof
and to which reference is hereby made for a
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full description of the rights, limitations of rights, duties and immunities
hereunder of the Company and the Holders of the Warrant Certificates. A copy of
the Warrant Agreement is on file at the principal office of the Company.
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender at the principal office of the Company, may be exchanged for another
Warrant Certificate or Warrant Certificates of like tenor, evidencing Warrants
entitling the Holder to purchase a like aggregate number of shares of Common
Stock as the Warrants evidenced by the Warrant Certificate or Warrant
Certificates surrendered entitled such Holder to purchase. If this Warrant
Certificate shall be exercised in part, the Holder hereof shall be entitled to
receive upon surrender hereof another Warrant Certificate or Warrant
Certificates for the number of whole Warrants not exercised.
The Exercise Price may be paid in cash or by surrender of the appropriate
number of Warrants or shares of Common Stock in a cashless exercise or in a
combination thereof as provided in Section 4.2 of the Warrant Agreement.
No fractional shares of Common Stock will be issued upon the exercise of
any Warrant or Warrants evidenced hereby, but in lieu thereof a cash payment
will be made as provided in the Warrant Agreement.
No Holder of this Warrant Certificate, as such, shall be entitled to vote
or to receive dividends or to consent or to receive notice as a stockholder of
the meetings of stockholders for the election of directors of the Company or any
other matter or to any rights whatsoever as stockholder of the Company, until
the Warrant or Warrant evidenced by this Warrant Certificate shall have been
exercised and the Warrant Shares shall have been delivered as provided in the
Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Common Stock or other class of
stock issuable upon exercise of this Warrant Certificate are closed for any
purpose, the Company shall not be required to make delivery of certificates for
shares issuable upon such exercise until the date of the reopening of said
transfer books as provided in the Warrant Agreement.
IN WITNESS WHEREOF, Educational Video Conferencing, Inc. has caused the
signature (or facsimile signature) of its Chairman and Secretary to be printed
hereon.
EDUCATIONAL VIDEO CONFERENCING, INC.
By: /s/ Dr. Arol I. Buntzman
------------------------------------
Dr. Arol I. Buntzman
Chairman and Chief Executive Officer
Attest: Richard Goldenberg
------------------------------------
Secretary
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FORM OF ASSIGNMENT
(To be executed by the Holder if such Holder desires to transfer this Warrant
Certificate).
TO EDUCATIONAL VIDEO CONFERENCING, INC.
FOR VALUE RECEIVED, __________________________________________ hereby
sells, assigns and transfers unto ________________________ this Warrant
Certificate, together with all rights, title and interest therein, and does
hereby irrevocably constitute and appoint ______________________, to transfer
the within Warrant Certificate on the books of the within-named Company, with
full power of substitution.
DATED: __________________
Signature ____________________________
Signature Guaranteed:
NOTICE:
The signature on the foregoing assignment must correspond to the name as
written upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if Holder desires to exercise the Warrants evidenced by this
Warrant Certificate).
TO EDUCATIONAL VIDEO CONFERENCING, INC.
The undersigned hereby (1) irrevocably elects to exercise
___________________________________ Warrants represented by this Warrant
Certificate to purchase __________ shares of Common Stock issuable upon the
exercise of such Warrants, (2) makes payment in full of the aggregate Exercise
Price for such Warrants by enclosure of a bank cashier's check or money order
therefor or by surrendering Warrants or shares of Common Stock for application
to the aggregate Exercise Price, upon condition that new Warrants be issued for
the balance of the Warrants remaining, and (3) requests that certificates for
shares and Warrants be issued in the name of.
(Please insert social security or other
identifying number) _________________
(Please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security or other
identifying number) _________________
(Please print name and address)
DATED: _________________, 19/20___
Signature _________________________
Signature Guaranteed:
NOTICE:
The signature on the foregoing election to purchase must correspond to the name
as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
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