THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED, ASSIGNED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (A) SUCH REGISTRATION OR (B) IF ANY
SUCH OFFER, SALE, PLEDGE, TRANSFER, ASSIGNMENT OR OTHER DISPOSITION IS MADE
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
LAWS, IN EITHER SUCH CASE, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN
SECTIONS 5 AND 11 OF THIS WARRANT.
EFFECTIVE AT 5:00 P.M. ON FEBRUARY 25, 1998
VOID AFTER 5:00 P.M. ON FEBRUARY 26, 2003
USA DETERGENTS, INC.
COMMON STOCK PURCHASE WARRANT
USA DETERGENTS, INC., a Delaware corporation (the "Company"),
hereby certifies that, for value received, PNC BANK, NATIONAL ASSOCIATION (the
"Bank"), or its registered assigns (the Bank and such registered assigns at the
time being the registered holder hereof being hereinafter referred to as
"Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company at any time or from time to time commencing at 5:00 p.m. (New York
City time), February 25, 1998, and continuing to and expiring at 5:00 p.m. (New
York City time) February 26, 2003, up to 4.99% of the number of shares of
Common Stock issued and outstanding on the date hereof (the exact percentage
and number of which shall be determined in accordance with the following
Subsections (i) - (iv), inclusive, as may be adjusted pursuant to Section 1.1,
the "Warrant Number") at a price per share of Common Stock that is equal to
ninety percent (90%) of the Market Price per share of the Common Stock at the
date hereof (the "Warrant Price," and the shares of the Common Stock that
become deliverable to Holder upon the exercise of this Warrant (and which are
not subject to cancellation or relinquishment as provided below) are
hereinafter referred to as the "Warrant Shares").
(i) Unless reduced as provided in Subsections (ii) through (iv),
inclusive, below, the Warrant Number shall be the number of shares
constituting 4.99% of the number of shares of Common Stock issued and
outstanding at the date hereof.
(ii) If, and only if, on or prior to February 15, 1998 (the "First
Calculation Date"), a portion of the PNC Debt has been indefeasibly repaid
such that the outstanding principal amount of the PNC Debt is less than
$20,000,000, the Warrant Number shall automatically and without the need
for further action by the parties hereto be reduced to the number of
shares constituting 3.00% of the number of shares of Common Stock issued
and outstanding at the date hereof.
(iii) If, and only if, on or prior to May 15, 1998 (the "Second
Calculation Date"), a portion of the PNC Debt has been indefeasibly repaid
such that the outstanding principal amount of the PNC Debt is less than
$10,000,000, the Warrant Number shall automatically and without the need
for further action by the parties hereto be reduced to the number of
shares constituting 1.50% of the number of shares of Common Stock issued
and outstanding at the date hereof.
(iv) Anything in this Warrant to the contrary notwithstanding, if but
only if, on or prior June 1, 1998 (the "Third Calculation Date"), the PNC
Debt is indefeasibly repaid in full, the Warrant Number shall
automatically and without the need for further action by the parties
hereto be reduced to the number of shares constituting 1.00% of the number
of shares of Common Stock issued and outstanding on the date the PNC Debt
is indefeasibly paid in full (the "Repayment Date").
If the PNC Debt is indefeasibly paid in full on or prior to the Third
Calculation Date, Holder shall relinquish or cancel, without consideration
being paid by the Company to Holder, all of the Common Stock that was acquired
by Holder pursuant to a prior exercise of Holder's rights under this Warrant
and all of the Warrant Shares still exercisable hereunder, if any, expressly
excluding the number of shares which, together with the Warrant Shares still
exercisable hereunder, if any, constitute, in the aggregate, 1.00% of the
number of shares of Common Stock issued and outstanding at the Repayment Date.
Such relinquishment or cancellation of the Common Stock or Warrant Shares, if
applicable, shall be made pursuant to a written instrument that is reasonably
satisfactory in form and substance to Holder and the Company and an endorsement
or assignment, without recourse to or representation or warranty by Holder
(except for the representations and warranties that the Holder is the owner and
holder of the applicable Common Stock or Warrant Shares, free and clear of all
liens, claims, charges, mortgages, security interests and other encumbrances),
of all stock certificates theretofore delivered by the Company or its transfer
agent to Holder that are in excess of 1.00% of the number of shares of the
Common Stock issued and outstanding at the Repayment Date.
Certain capitalized terms used in this Warrant, if not otherwise defined,
shall have the meanings set forth in Section 15 or elsewhere in this Warrant.
Section 1. EXERCISE OF WARRANT.
1.1 Exercise.
2
(a) This Warrant may be exercised by Holder, in whole or in part, at any
time and from time to time after the First Calculation Date by surrender (in
person or by notice as provided in Article 12 hereof) of this Warrant at the
principal offices of the Company located at 0000 Xxxxxx Xxxxxx, Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000, together with:
(i) (A) the form of subscription following the signature page of this
Warrant executed by Holder, and (B) payment, by certified or official bank
check payable to the order of the Company or by wire transfer to the
Company's account, in the amount obtained by multiplying the number of
shares of Common Stock for which this Warrant is then being exercised by
the Warrant Price then in effect; provided, however, if the Bank or any
Person affiliated with the Bank is the Holder at the time of any exercise
under this Section 1.1(a)(i), in lieu of paying by certified or official
bank check or wire transfer as provided in Section 1.1(a)(i)(B), the Bank
may at its option execute and deliver to the Company a certificate of
reduction (the "Certificate of Reduction") in the form following the
signature page of this Warrant, which Certificate of Reduction shall
reduce the amount of the PNC Debt by the amount obtained by multiplying
the number of shares of Common Stock for which this Warrant is then being
exercised by the Warrant Price then in effect, and in each instance where
the Bank so executes and delivers a Certificate of Reduction and the
Holder hereof exercises its right to effect payment pursuant to the
Certificate of Reduction in lieu of paying by certified or official bank
check or wire transfer as provided in Section 1.1(a)(i)(B) the same shall
be as legal, valid, binding and enforceable against the Company as if the
Company had received the certified or official bank check or wire transfer
referred to in Section 1.1(a)(i)(B); or
(ii) the form of cashless exercise election (a "Cashless Exercise")
following the signature page of this Warrant executed by Holder. Such
presentation and surrender constituting a Cashless Exercise shall be
deemed a waiver of Holder's obligation to pay all ----------------- or any
portion of the Warrant Price in the manner contemplated by Subsection
1.1(a)(i) hereof or otherwise. In the event of a Cashless Exercise, Holder
shall exchange this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares being exercised by
a fraction, the numerator of which shall be the difference between the
Market Price and the Warrant Price per share of Common Stock, and the
denominator of which shall be the Market Price per share of Common Stock.
(b) If this Warrant is not exercised in full, the Company, at its sole
cost expense, shall forthwith issue and deliver to or upon the order of Holder,
a new Warrant of like tenor in the name of Holder or as Holder may request,
calling in the aggregate on the face thereof for the number of shares of Common
Stock equal (without giving effect to any adjustment therein) to (i) the number
of such shares called for on the face of this Warrant minus (ii) the number of
such shares for which this Warrant shall have been exercised without giving
effect to any adjustment in number as a result of changes in the Warrant Price
called for above.
3
(c) If the Warrant Price is adjusted pursuant to Section 8 of
this Warrant, the number of Warrants to which Holder is entitled shall be
adjusted by multiplying the number of Warrants to which Holder is entitled
immediately prior to such adjustment by a fraction, the numerator of which is
the Warrant Price prior to such adjustment and the denominator of which is the
Warrant Price after such adjustment.
1.2 Delivery of Stock Certificates. Subject to the terms and conditions of
this Warrant, as soon as commercially reasonable and practicable after the
exercise of this Warrant by Holder, in full or in part, the Company will issue
or will cause its transfer agent to issue, as applicable, in the name of and
deliver to Holder, or to any assignee, nominee or designee as Holder may
direct, one or more certificates evidencing the Warrant Shares to which Holder
shall be entitled on such exercise, together with any other stock or other
securities and property (including cash, where applicable, or the new Warrant
upon a partial exercise as described in Section 1.1(b) above) to which Holder
is entitled upon such exercise.
1.3 Fractional Shares. This Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this Warrant, in full
or in part, would result in the issuance of any fractional share of Common
Stock, then in such event Holder shall be entitled to cash equal to the Market
Price of such fractional share.
1.4 Payment of Taxes. The Company shall pay all documentary stamp taxes,
if any, attributable to the issuance of Warrants and issuance of shares of
Common Stock or other securities upon the exercise of warrants; provided,
however, that subject to Sections 5 and 11 of this Warrant, the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issue of any certificates for the Warrant Shares in a name
other than that of the registered holder of a Warrant surrendered upon the
exercise of a Warrant, and the Company shall not be required to issue or
deliver such certificates unless and until the Persons requesting the issuance
thereof have paid to the Company the amount of such tax or shall have
established to the reasonable satisfaction of the Company that such tax has
been paid or that adequate provision for the payment of such tax has been made.
Section 2. CERTAIN OBLIGATIONS OF THE COMPANY.
2.1 Reservation of Stock. The Company will reserve and keep available out
of its authorized and unissued Common Stock or out of shares of its treasury
stock, solely for the purpose of issue upon exercise of the purchase rights
evidenced by this Warrant, a number of shares of Common Stock equal to the
number of shares of Common Stock issuable hereunder. Without limiting the
obligations of the Company that are set forth in the foregoing sentence, the
Company will from time to time, in accordance with applicable laws, take such
action as is necessary or desirable to increase the authorized amount of its
Common Stock if at any time the number of shares of Common Stock authorized but
remaining unissued and unreserved for other purposes shall be insufficient to
permit the full exercise of this Warrant.
4
2.2 No Valuation or Impairment. The Company will not, by amendment or
restatement of its certificate of incorporation, including, without limitation,
amendment of the par value of its Common Stock, or through reorganization,
consolidation, merger, dissolution, issuance of capital stock or sale of
treasury stock (otherwise than upon exercise of this Warrant) or sale of
assets, by effecting any subdivision of or stock split or stock dividend with
respect to its Common Stock, or by any other voluntary act or deed, avoid or
seek to avoid the material observance or performance of any of the covenants,
stipulations or conditions in this Warrant to be observed or performed by the
Company. Nothing herein should be inferred to restrict the Company from
completing any of such transactions if Holder of this Warrant is provided with
and not deprived of the material benefits that are intended to be provided to
Holder by this Warrant upon terms and conditions and pursuant to procedures not
more onerous than those contained in this Warrant.
2.3 Maintenance of Office. The Company will maintain an office where
presentations and demands to or upon the Company in respect of this Warrant may
be made. The Company will give not less than 10 days' prior written notice in
writing to Holder, in the manner contemplated by Section 12 of this Warrant, of
each change in the location of such office.
Section 3. REORGANIZATION, ETC.
If any reorganization or reclassification of the capital stock of the
Company, or consolidation or merger of the Company with another corporation
which after the transaction will be required to file reports with the
Securities and Exchange Commission (the "SEC") pursuant to Section 13 or 15 of
the Exchange Act (a "Public Corporation"), or sale of all or substantially all
of the Company's assets to another Public Corporation shall be effected, then,
as a condition of such reorganization, reclassification, consolidation, merger
or sale, lawful and adequate provision shall be made whereby Holder shall
thereafter have the right to purchase and receive, upon the terms and
conditions and pursuant to the procedures herein specified and in lieu of the
shares of Common Stock immediately theretofore purchasable and receivable upon
exercise of this Warrant, such securities or property as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock equal to the number of shares of Common Stock immediately
theretofore purchasable and receivable upon exercise of this Warrant had such
reorganization, reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provision shall be made with respect to
the rights and interests of Holder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Warrant Price
and of the number of shares purchasable upon the exercise of this Warrant)
shall thereafter be applicable, as nearly as may be, in relation to any
securities or property thereafter deliverable upon the exercise hereof. The
Company shall not effect any such reorganization, reclassification,
consolidation, merger or sale unless, prior to or contemporaneously with the
consummation thereof, the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and delivered to Holder,
which written instrument shall be in form and substance reasonably satisfactory
to Holder, the obligation to deliver to Holder such securities or property as,
in accordance with the foregoing provisions, Holder may be entitled to purchase
or receive upon Holder's proper exercise of the terms and provisions of this
Warrant.
5
Section 4. NOTICES OF RECORD DATE.
In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right;
or
(b) any capital reorganization of the Company, any reclassification
of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or any consolidation or
merger of the Company with or into any other Person; or
(c) any voluntary or involuntary dissolution, liquidation, or
winding-up of the Company,
then, and in each event, the Company will give to Holder a written notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character
of such dividend, distribution or right, and (ii) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation, or winding-up is to take place, and the time, if any is to be
fixed, as of which the holders of record of Common Stock for securities or
other property deliverable on such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of
Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable on such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be given prior to the date specified in such
notice on which any such action is to be taken, and in no event later than the
earlier of (i) 10 business days prior to the date on which such action is taken
and (ii) the time when notice of such event is given to holders of record of
the Company's issued and outstanding capital stock.
Section 5. REGISTRATION RIGHTS.
5.1 Warrant Holder Exercise; Payment of Costs and Expenses.
(a) If Holder exercises this Warrant pursuant to Section 1.1(a) hereof, in
whole or in part (provided that on the date of any such partial exercise that
is not a Cashless Exercise the Market Price of the Common Shares being acquired
by Holder pursuant to such partial exercise that is not a Cashless Exercise is
not less than $100,000 and in the event of a Cashless Exercise, in whole or in
part, the Market Price of the Common Shares being acquired by Holder pursuant
to such Cashless Exercise is not less than $100,000) (any such whole or partial
exercise being hereinafter referred to as a "Warrant Holder Exercise"), the
Company shall,
6
without any notice or demand, use its reasonable good faith
efforts to effectuate a registration on Form S-3 of the Registrable Securities
of Warrant Holder that are issuable upon such Warrant Holder Exercise (any
registration that is required to be made pursuant to this Section 5.1a is
hereinafter referred to as an "Warrant Holder Exercise Registration"), all in
accordance with Section 5.3(a)(ii) hereof.
(b) Notwithstanding Section 5.1(a), if, within 10 Business Days after any
Warrant Holder Exercise, the Company shall furnish to Holder an affidavit
signed by an executive officer of the Company (including, among others, the
president, the chief executive officer, a vice president in charge of a
principal business unit and any other officer of the Company who performs a
policymaking function) stating that, in the good faith business judgment of the
board of directors of the Company, it would be seriously detrimental to the
Company and its shareholders for a Registration Statement to be filed and it
is, therefore, essential to defer the filing of such Registration Statement,
the Company shall have the right to defer taking action with respect to such
filing for a period of not more than 90 days from the date of such Warrant
Holder Exercise (the " Qualified Company Extension Right"); provided, however,
the Company may not use the Qualified Company Extension Right more than once in
any 12 month period (which 12 month period shall commence on the date of the
applicable Warrant Holder Exercise and terminate at midnight on the day
preceding the first anniversary of such Warrant Holder Exercise).
(c) All costs and expenses of each Warrant Holder Exercise Registration,
including, among other costs and expenses, underwriting discounts and
commissions, all registration, filing and qualification fees, printers and
accounting fees, fees and disbursements of counsel for Company, the reasonable
fees and disbursements of one law firm for Holder and all other usual and
customary costs and expenses generally associated with registration of
securities shall be borne by the Company, except underwriting discounts and
commissions attributable solely to Holder in connection with the Registrable
Securities of Warrant Holder.
7
5.2 Company Initiated Registration; Payment of Costs and Expenses of
Registration.
(a) If the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than Holder) any of
its Common Stock, Additional Shares of Common Stock or other securities under
the Securities Act in connection with the public offering of such securities
solely for cash (other than a registration relating either to the sale of
securities to participants in a Company stock option, stock purchase or similar
plan or to an SEC Rule 145 transaction, or a registration on any form which
does not include substantially the same information as would be required to be
included in a Registration Statement covering the sale of the Registrable
Securities of Warrant Holder), the Company shall, at such time, give Holder not
less than 20 days prior written notice of such registration (the "Company
Registration Notice"). Unless Holder sends the Company a written notice to the
effect it does not want all of the Registrable Securities of Warrant Holder to
be registered in such registration, which written request shall be made within
15 days after Holder's receipt of the Company Registration Notice, the Company
shall, subject to the provisions of Section 5.5, include in such contemplated
registration all of the Registrable Securities of Warrant Holder (any
registration that is contemplated to be made pursuant to this Section 5.2(a) is
hereinafter referred to as a "Company Initiated Registration"). Holder may, at
its option, send to the Company within 15 days after Holder's receipt of the
Company Registration Notice a notice to the effect that Holder wants some
portion or none of the Registrable Securities of Warrant Holder included in
such Company Initiated Registration (such a notice being a "Holder Response
Notice"); provided, however, in the absence of Holder giving to the Company a
Holder Response Notice, the Company shall include all of the Registrable
Securities of Warrant Holder in such Company Initiated Registration.
(b) Any Company Initiated Registration that is approved by the board of
directors of the Company may be withdrawn with the approval of such withdrawal
by the board of directors of the Company. The Company shall give Holder written
notice promptly after the approval of or withdrawal of approval of a Company
Initiated Registration by the board of directors of the Company.
(c) All costs and expenses of each Company Initiated Registration and
Warrant Holder Exercise Registration, including, among other costs and
expenses, underwriting discounts and commissions, all registration, filing and
qualification fees, printers and accounting fees, fees and disbursements of
counsel for Company, the reasonable fees and disbursements of one law firm for
Holder and all other usual and customary costs and expenses generally
associated with registration of securities shall be borne by the Company,
except underwriting discounts and commissions attributable solely to Holder in
connection with the Registrable Securities of Warrant Holder.
5.3 Obligations of the Company. To effect the registration of
the Registrable Securities of Warrant Holder contemplated hereby, the Company
shall, as expeditiously as reasonably possible after the initiation of each
Company Initiated Registration or at such one or more times it is required to
effectuate a Warrant Holder Exercise Registration:
8
(a) (i) If a Company Initiated Registration, prepare and file with
the SEC a Registration Statement and use its best efforts to cause such
Registration Statement to become effective, and keep such Registration
Statement effective for up to 120 days or until the distribution
contemplated in the Registration Statement has been completed; provided,
however, that (A) such 120-day period shall be extended for a period of
time equal to the period Holder refrains from selling any securities
included in such registration at the request of an underwriter of Common
Stock, Additional Shares of Common Stock or other securities of the
Company; and (B) in the case of any registration of Registrable Securities
of Warrant Holder on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the Registration Statement effective until all such
Registrable Securities of Warrant Holder are sold, but in no event greater
than 180 days, provided that Rule 405, or any successor rule under the
Securities Act, permits an offering on a continuous or delayed basis, and
provided, further, that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in
lieu of filing a post-effective amendment which (1) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (2)
reflects facts or events representing a material or fundamental change in
the information set forth in the Registration Statement, the incorporation
by reference of information required to be included in (1) and (2) above
to in periodic reports filed pursuant to Section 13 or 15(d) of the
Exchange Act in the Registration Statement.
(ii) If a Warrant Holder Exercise Registration, prepare and file with
the SEC a Registration Statement on Form S-3 within 120 days of each
Warrant Holder Exercise Registration, use its reasonable good faith
efforts to cause such Registration Statement on Form S-3 to become
effective within 180 days of each Warrant Holder Exercise Registration
(the "Warrant Holder Exercise Initial Effective Date"), and keep such
Registration Statement effective for the lesser of (A) 180 days and (B)
until the distribution contemplated by the Registration Statement on Form
S-3 is completed but in no event beyond the date upon which the shares
included therein cease to be Registrable Securities of Warrant Holder as
provided in Section 15.11 of this Warrant, provided, however, that (1) the
period referred to above shall be extended for a period of time equal to
the period Holder refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock, Additional
Shares of Common Stock or other securities of the Company; and (2) in the
case of any registration of Registrable Securities of Warrant Holder on
Form S-3 which are intended to be offered on a continuous or delayed
basis, the period referred to above shall be extended, if necessary, to
keep the Registration Statement effective until all such Registrable
Securities of Warrant Holder are sold, but in no event greater than 180
days, provided that Rule 405, or any successor rule under the Securities
Act, permits an offering on a continuous or delayed basis, provided,
further, that applicable rules under the Securities Act governing the
obligation to file a post-
9
effective amendment permit, in lieu of filing a post-effective amendment
which (i) includes any prospectus required by Section 10(a)(3) of the
Securities Act or (ii) reflects facts or events representing a material or
fundamental change in the information set forth in the Registration
Statement, the incorporation by reference of information required to be
included in (i) and (ii) above to in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the Registration Statement; and
provided, further, that, notwithstanding the foregoing, if the Company
shall furnish to Holder an affidavit signed by an executive officer of the
Company (including, among others, the president, the chief executive
officer, a vice president in charge of a principal business unit and any
other officer of the Company who performs a policymaking function) stating
that, in the good faith business judgment of the board of directors of the
Company, it would be seriously detrimental to the Company and its
shareholders for the Warrant Holder Registration to be filed and the
Registration Statement relating thereto to be declared effective on the
Warrant Holder Initial Effective Date or for shares to be sold under the
Warrant Holder Registration and it is, therefore, essential to defer the
filing and intended declaration of effectiveness thereof or the sale of
shares thereunder, the Company shall have the right to defer taking action
with respect to such filing or the Warrant Holder Registration for a
period of not more than 90 days from the date of such Warrant Holder
Initial Effective Date (the "Qualified Warrant Exercise Extension Right");
provided, however, the Company may not use the Qualified Warrant Exercise
Extension Right more than once in any 12 month period (which 12 month
period shall commence on the date of the applicable Warrant Holder Initial
Effective Date and terminate at midnight on the day preceding the first
anniversary of such Warrant Holder Initial Effective Date).
(b) Prepare and file with the SEC such amendments and supplements to each
such Registration Statement and the prospectus used in connection with each
such Registration Statement as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by each such Registration Statement.
(c) Concurrently with production thereof, furnish to Holder copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such additional copies and other
documents, instruments, records and papers as Holder may reasonably request in
order to facilitate the disposition of all Registrable Securities of Warrant
Holder.
(d) Use its good faith and commercially reasonable efforts to register and
qualify the securities covered by such Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by Holder, provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business,
subject itself to taxation, or, except as required under the Securities Act,
file a general consent to service of process in any such jurisdictions.
10
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the one or more underwriters of such offering. If Holder
participates in such underwriting Holder shall also enter into and perform its
obligations under such an agreement.
(f) Notify Holder in writing at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening
of any act, omission, event or circumstance as a result of which the prospectus
included in each such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing.
(g) Furnish to Holder, on each date any Registrable Securities of Warrant
Holder are delivered to the underwriters for sale in connection with a
registration pursuant to this Section 5, if such securities are being sold
through one or more underwriters, or, if such securities are not being sold
through one or more underwriters, on the date that the Registration Statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
Holder, and (ii) a letter, dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to
Holder.
(h) Cause all Registrable Securities of Warrant Holder registered pursuant
to Section 5.1 or Section 5.2 to be listed on each securities exchange or
automated quotation system on which similar securities issued by the Company
are then listed.
(i) Subject to the provisions of this Warrant, including, without
limitation, Subsections 5.3(a), (d) and (e) such further acts or steps which
are (i) reasonably requested by Holder so as to effectuate the registration of
the Registrable Securities of Warrant Holder or (ii) required to carry out the
intention and facilitate the consummation of the transactions contemplated by
this Section 5.
5.4 Furnish Information. Holder shall furnish to the Company such
information regarding itself, the Registrable Securities of Warrant Holder held
by it, and the method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities of Warrant Holder.
5.5 Underwriting Requirements. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 5.2 to include any of the Registrable Securities of
Warrant Holder in such underwriting unless Holder accepts the terms of the
underwriting as agreed upon between or among the Company and the one or more
underwriters selected by it (or by other persons entitled to select the one or
more underwriters), and then only in such quantity as will not, in the opinion
of such
11
one or more underwriters, be reasonably likely to jeopardize the
success of the offering by the Company. If the total amount of securities,
including the Registrable Securities of Warrant Holder, requested by
shareholders to be included in such offering exceeds the amount of securities
to be sold other than by the Company that the underwriters reasonably believe
to be compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of securities, including
Registrable Securities of Warrant Holder, which the underwriters determine are
not reasonably likely to jeopardize the success of the offering (the securities
so included to be apportioned pro rata among the selling shareholders other
than the Company according to the total amount of securities entitled to be
included therein owned by each selling shareholder other than the Company or in
such proportions as shall mutually be agreed to by or among such selling
shareholders other than the Company).
5.6 Delay of Registration. Holder shall not have any right to obtain or
seek an injunction restraining or otherwise delaying any registration
contemplated by this Article 5 as the result of any controversy that might
arise with respect to the interpretation or implementation of this Article 5.
5.7 Indemnification. In the event any Registrable Securities of Warrant
Holder are included in a Registration Statement:
(a) To the extent permitted by law, the Company will
indemnify, pay, protect, advance monies and hold harmless Holder, any
"underwriter" (as defined in the Securities Act) for such Holder and each
person, if any, who "controls" (is "controlled" by or under "common control"
with) Holder or such underwriter within the meaning of the Securities Act or
the Exchange Act from against any losses, claims, damages or liabilities (joint
or several) to which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
law (each such item referred to in clauses (i), (ii) and (iii) being referred
to as a "Violation "); and the Company will pay as incurred to Holder,
underwriter or controlling person, 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 indemnity
agreement contained in this Subsection 5.7(a) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld, conditioned or delayed), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation which occurs
in reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by Holder or any such underwriter
or controlling person and
12
provided, further, that the Company will not be liable to any underwriter, or
Holder, or any directors, officers, employees or agents of such underwriter or
Holder or any person controlling such underwriter or Holder or who "controls"
(is " controlled" by or under "common control" with) such underwriter or Holder
with respect to any loss, claim, liability, expense, charge or damage arising
our based on an untrue statement or alleged untrue statement or omission or
alleged omission to state a material fact in any preliminary prospectus which
is corrected in any prospectus (or the prospectus, as supplemented or amended)
if the person asserting such loss, claim, liability, charge or damage purchased
Common Stock from such underwriter or Holder but was not sent or given a copy
of the prospectus (or the prospectus, as supplemented or amended) at or prior
to the written confirmation of the sale of such Common Stock to such Person.
(b) To the extent permitted by law, Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the Registration Statement, each person, if any, who controls (or is
controlled by or under common control with) the Company within the meaning of
the Securities Act, any underwriter, and any controlling person of any such
underwriter against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by Holder expressly for use in connection with
such registration; and Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this Subsection 5.7(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Subsection 5.7(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of Holder (which consent
shall not be unreasonably conditioned, withheld or delayed); and provided,
further, that in no event shall any indemnity under this Subsection 5.7(b)
exceed the net proceeds from the offering of Registrable Securities of Warrant
Holder that are actually received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 5.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this
Section 5.7, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain one law firm of its
choice, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under
13
this Section 5.7, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 5.7.
(d) obligations of the Company to Holder under this Subsection 5.7
shall survive the completion of any offering of Registrable Securities of
Warrant Holder in a Registration Statement under this Section 5, and otherwise.
5.9 Reports Under Exchange Act. With a view to making available to Holder
the benefits of Rule 144 promulgated under the Securities Act and any other
rule or regulation of the SEC that may at any time permit Holder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after the date
hereof;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to Holder, so long as Holder owns any right, title and
interest in, to or under this Warrant, forthwith upon request (i) a
written statement by the Company that it has then complied with the
reporting requirements of SEC Rule 144, the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may
be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a
copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing Holder of any rule
or regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
5.10 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities of Warrant Holder pursuant to this Section 5
may be assigned, conveyed, designated, nominated, transferred and otherwise set
over by Holder to any one or more transferees, nominees, designees or assignees
who are selected by Holder, in its sole discretion. Holder will give the
Company written notice if it makes any assignment, conveyance, designation,
nomination or transfer contemplated by this Subsection 5.10.
5.11 "Market Stand-Off" Agreement. So long as the Registrable Securities
of Warrant Holder that are held by Holder are included within a Registration
Statement that is being filed with the SEC, Holder agrees that it shall not,
during such period or duration as may be specified by the Company and any
underwriter of Company (to the extent requested by the Company and such
underwriter), sell or otherwise transfer or dispose of (other than to donees
14
who agree to be similarly bound) any Common Stock that is acquired by Holder
pursuant to an exercise of this Warrant; provided, however, that:
(a) such agreement shall be applicable only to a
Registration Statement of the Company which covers Common Stock (or other
securities) to be sold on behalf of the Company to the public in an
underwritten offering;
(b) all officers and directors of the Company and all
other persons owning securities included in such Registration Statement
enter into similar and not less restrictive agreements; and
(c) such market stand-off time shall not exceed 180 days.
Notwithstanding the foregoing, the obligations described in this Section
5.11 shall not apply to a registration relating solely to employee benefit
plans on Form S-8 or Form S-1 or a similar form which may be promulgated by the
SEC in the future, or a registration relating solely to an SEC Rule 145
transaction on Form S-15 or S-14 or a similar form which may be promulgated by
the SEC in the future.
Section 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Holder of this Warrant that
as of the date of this Warrant:
6.1 Organization and Capitalization of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock $0.01 par value. As of October
31, 1997, there were 13,795,029 shares of Common Stock issued and outstanding,
and no shares of the Company's capital stock are held in its treasury. The
Company has authorized the issuance of 1,000,000 shares of Preferred Stock,
$0.01 par value. As of the date hereof, no shares of Preferred Stock are issued
and outstanding. There are no preemptive rights in effect with respect to the
issuance of any shares of the Common Stock. All the outstanding shares of the
Company's capital stock have been validly issued without violation of any
preemptive or similar rights and are fully paid and non-assessable. To the best
knowledge of the Company, the issued and outstanding shares of Common Stock has
not, in any material respect, changed between October 31, 1997, and the date
hereof.
6.2 Authority. The Company has full corporate power and authority to
execute and deliver this Warrant and to perform all of its obligations
hereunder, and the execution, delivery and performance hereof have been duly
authorized by all necessary corporate action on its part. This Warrant has
been duly executed on behalf of the Company and constitutes the legal, valid
and binding obligation of the Company enforceable in accordance with its terms.
15
6.3 No Legal Bar. Neither the execution, delivery or performance of this
Warrant will (a) conflict with or result in a violation of the certificate of
incorporation or by-laws of the Company, (b) conflict with or result in a
violation of any law, statute, regulation, order or decree applicable to the
Company or any affiliate of the Company, (c) require any consent or
authorization or filing with, or other act by or in respect of, any
governmental authority, or (d) result in a breach of, constitute a default
under or constitute an event creating rights of acceleration, termination or
cancellation under any mortgage, lease, contract, franchise, instrument or
other agreement to which the Company is a party or by which it is bound, other
than applicable restrictions contained in any of such documents relating to
indebtedness of the Company.
Section 7. VARIOUS COVENANTS OF THE COMPANY.
7.1 No Impairment or Amendment. The Company shall not by any action
including, without limitation, amending its certificate of incorporation, any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times 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 to protect the
rights of the holder hereof against impairment. Without limiting the generality
of the foregoing, the Company will (a) not increase the par value of any shares
of Common Stock issuable upon the exercise of this Warrant above the amount
payable therefor upon such exercise; (b) take all such action as may be
necessary or appropriate in order that the Company may validly issue fully paid
and non-assessable shares of Common Stock upon the exercise of this Warrant;
(c) obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant if and at such times such
authorizations, exemptions or consents from such public regulatory bodies are
required to be obtained, provided, however, the foregoing shall not be
construed to enlarge or expand upon the registration rights granted to Holder
pursuant to Section 5 of this Warrant; (d) not undertake any reverse stock
split, combination, reorganization or other reclassification of the capital
stock which would have the effect of making this Warrant exercisable for a
number of shares of Common Stock that would be less than four and ninety-nine
hundredths of a percent (4.99%) of the outstanding shares of Common Stock as of
the date of this Warrant; and (e) upon the request of Holder, at any time
during the period this Warrant is outstanding, acknowledge in writing, in form
satisfactory to Holder, the continued validity of this Warrant and the
Company's obligations hereunder.
7.2 Listing on Securities Exchange. If the Company shall list any shares
of Common Stock on any securities exchange it will, at its expense, list
thereon, maintain and increase when necessary such listing of, all Warrant
Stock so long as any shares of Common Stock shall be so listed. The Company
will also so list on each securities exchange, and will maintain such listing
of, any other securities which the holder of this Warrant shall be entitled to
receive upon the exercise thereof if at the time any securities of the same
class shall be listed on such securities exchange by the Company.
16
7.3 Availability of Information. The Company will cooperate with Holder of
Warrant Stock in supplying such information as may be necessary for Holder to
complete and file any information reporting forms presently or hereafter
required by the Securities and Exchange Commission as a condition to the
availability of an exemption from the Securities Act for the sale of this
Warrant or such Warrant Stock.
Section 8. ADJUSTMENT OF WARRANT PRICE
8.1. Issuance of Additional Shares of Common Stock. If the Company at any
time or from time to time after the date hereof shall issue or sell Additional
Shares of Common Stock (including the Additional Shares of Common Stock that
would be deemed to be issued pursuant to Section 8.2 or 8.3 of this Warrant)
without consideration or for consideration per share less than the Market Price
in effect immediately prior to the date of such issue or sale, then, and in
each such case, subject to Section 8.6 of this Warrant, the Warrant Price shall
be reduced, concurrently with such issue or sale, to a price determined by
multiplying such Warrant Price by a fraction, (a) the numerator of which shall
be (i) the number of shares of Common Stock outstanding immediately prior to
such issue or sale plus (ii) the number of shares of Common Stock which the
aggregate consideration received by the Company for the total number of
Additional Shares of Common Stock so issue or sold would purchase at such
Market Price, and (b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale.
8.2. Adjustment for Stock Dividends. If the Company shall pay any dividend
or make any other distribution on the class of capital stock of the Company in
shares of Common Stock, the Warrant Price in effect at the close of business on
the date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Warrant
Price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of such number of
shares and the total number of shares of Common Stock constituting such
dividend or other distribution, such reduction to become effective immediately
prior to the opening of business on the day following the date fixed for such
determination. For purposes of this Section 8.2, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company.
8.3. Adjustments for Issuance of Rights or Warrants. If the Company shall
issue rights or warrants generally to holders of its Common Stock or any other
class of capital stock convertible into Common Stock, entitling them to
subscribe for or purchase shares of Common Stock at a price per share less than
the Market Price per share of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or warrants, the
Warrant Price in effect at the close of business on the date fixed for such
determination shall be reduced by multiplying such Warrant Price by a fraction,
the numerator of which shall be (a) the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination,
plus (b) the number of shares of Common Stock that the aggregate of the
offering price of the total number of shares of Common Stock so offered for
subscription or purchase would purchase at the Market Price, and the
denominator of which shall be the number
17
of shares of Common Stock so offered for subscription or purchase, such
reduction to become effective immediately prior to the opening of business on
the date following the date fixed for such determination. For the purpose of
this Section 8.3, the issuance of rights or warrants to subscribe for or
purchase securities convertible into Common Stock shall be deemed to be the
issuance of rights or warrants to purchase the number of shares of Common Stock
into which such securities are convertible at an aggregate offering price equal
to the aggregate of the offering price of such securities plus the minimum
aggregate amount (if any) payable upon conversion of such securities into
Common Stock. For purposes of this Section 8.2 , the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company.
8.4. Adjustment for Stock Subdivisions and Combinations. If the
outstanding shares of Common Stock are subdivided into a greater number of
shares of Common Stock, the Warrant Price in effect at the close of business on
the day upon which such subdivision becomes effective shall be proportionately
reduced and, conversely, if the outstanding shares of Common Stock are combined
into a smaller number of shares of Common Stock, the Warrant Price in effect at
the opening of business on the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as
the case may be, to become effective immediately prior to the opening of
business on the day following the day upon which such subdivision or
combination becomes effective.
8.5 Computation of Adjusted Warrant Price. Whenever the Warrant Price is
adjusted as provided in this Section 8, (a) the Company shall compute the
adjusted Warrant Price to the nearest one-hundredth of one cent in accordance
with this Section 8 and shall prepare a certificate, signed by the Chief
Financial Officer or Treasurer of the Company, setting forth the adjusted
Warrant Price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed at the
office of the Company that is maintained in accordance with Section 3.3 of this
Warrant, and (b) a written notice stating that the Warrant Price had been
adjusted and setting forth the adjusted Warrant Price shall, as soon as
practicable, be given to Holder; provided, however, the failure of the Company
to file the notice contemplated by Section 8.5(a) or give the notice
contemplated by Section 8.5(b) shall not deprive Holder of any benefit accruing
to it on account of the transactions contemplated thereby.
8.6. Minimum Adjustment; Limitation. No adjustment in the Warrant Price
shall be required under this Section 8 unless such adjustment would require an
increase or decrease of at least one percent (1%) in such price; provided,
however, any adjustments that by reason of this Section 8.6 are not required to
be made shall be carried forward and taken into account and given effect in
connection with any subsequent adjustment. All calculations made under this
Section 8 shall be made to the nearest one-hundredth of one cent or to the
nearest one-hundredth of a share of Common Stock, as the case may be.
Notwithstanding the foregoing provisions of this Section 8, in no event shall
the Warrant Price be reduced below the minimum amount for which the Common
Stock may lawfully be issued pursuant to applicable law; provided, however,
upon the occurrence of any event that would, but for the foregoing, give rise
to an adjustment of the Warrant Price pursuant to this Section 8, solely for
the purposes of determining the number of Warrants pursuant to Section 1 above,
the Warrant Price shall be taken
18
into consideration and given effect as if adjusted to the full extent provided
for in this Section 8, without regard to the limitation set forth herein.
Section 9. REPLACEMENT OF WARRANTS.
Upon (a) surrender of this Warrant in mutilated form or receipt of
evidence satisfactory to the Company of the loss, theft or destruction of this
Warrant and (b) in the case of any loss, theft or destruction of this Warrant,
receipt of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company, then, in the absence of actual notice to the Company
that this Warrant has been acquired by a bona fide purchaser, the Company, at
its expense, shall execute and deliver, in lieu of this Warrant, a new Warrant
identical in form to this Warrant.
Section 10. REMEDIES.
The Company stipulates that the remedies at law of Holder in the event of
any breach or threatened breach by the Company of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or
by injunctive relief or a declaratory judgment against a breach of any of the
terms hereof or otherwise.
Section 11. TRANSFER.
This Warrant and the shares of Common Stock issuable hereunder shall not
be sold, transferred, pledged, or hypothecated (other than to an affiliate of
the Bank, as defined in Rule 405 under the Securities Act) unless the proposed
disposition is (a) the subject of a currently effective Registration Statement
under the Securities Act or (b) the Company has received an opinion of counsel,
in form and substance reasonably satisfactory to the Company, to the effect
that such registration is not required in connection with such disposition. In
the case of such a sale, transfer, pledge or hypothecation (except by the
aforesaid affiliate of the Bank), or in the event of the exercise hereof if the
Warrant Stock so acquired is not registered under the Securities Act, the
Company may require a written statement that this Warrant or Warrant Stock, as
the case may be, are being acquired for investment and not with a view to the
distribution thereof, and any certificate representing Warrant Stock issued
pursuant to such exercise shall bear a legend in substantially the form set
forth on the face hereof. Subject to the first two sentence of this Section,
this Warrant and all rights hereunder are transferable, in whole or in part,
but to no more than three transferees in the aggregate (including the
transferor if it retains a part of this Warrant), at the office or agency of
the Company by the registered holder thereof in person or by a duly authorized
attorney, upon surrender of this Warrant together with an assignment hereof
properly endorsed. Until transfer hereof on the registration books of the
Company, the Company may treat the existing registered holder hereof as the
owner hereof for all purposes. Any transferee of this Warrant and any rights
hereunder, by acceptance thereof, agrees to assume all of the obligations of
Holder and to be bound by all of the terms and provisions of this Warrant. Any
such transferee may transfer all of this Warrant to any other transferee,
subject to the terms and conditions of this Warrant.
19
Section 12. NOTICES.
Where this Warrant provides for notice of any event, such notice shall be
given (unless otherwise herein expressly provided) in writing and either (i)
delivered personally or (ii) sent by certified or registered mail, postage
prepaid, return receipt requested, and shall be deemed given when so delivered
personally or so mailed. Notices shall be addressed, if to Holder, to the
address of Holder to PNC Recovery Corp., 000 Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 0000-0000, Attention: Xx. Xxxxxx X. XxXxxx, Senior Vice President
(with a copy concurrently to Pitney, Xxxxxx, Xxxx & Xxxxx, 000 Xxxxxx Xxxxx,
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000, Attention: Xxxxx X. Xxxxxxx, Esq.) or, if
to the Company, to 0000 Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000,
Attention: Treasurer (with a copy concurrently to Fulbright & Xxxxxxxx, L.L.P.,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Xxxxxxx X.
Xxxxxxxx, Esq.), or to such other address as a party shall have given notice of
as aforesaid.
Section 13. SURVIVAL.
The provisions of Section 5 shall survive the termination or expiration of
this Warrant if the Warrant has become exercisable prior to its termination and
shall continue to be effective with respect to any Warrant Stock issued. The
provisions of Section 2 shall survive the termination of this Warrant upon
exercise in full, but shall terminate in any event on the Expiration Date.
Section 14. MISCELLANEOUS.
14.1 This Warrant shall be binding upon the Company and Holder and their
respective legal representatives, successors and assigns.
14.2 If any provision of this Warrant shall be invalid, illegal, or
unenforceable, in whole or in part, the provision shall be enforced to the
extent, if any, that it may legally be enforced and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
14.3 This Warrant and any term hereof may be changed, waived, discharged
or terminated only by a statement in writing signed by Holder and the Company.
14.4 The headings and section names in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms
hereof. This Warrant shall take effect as an instrument under seal.
14.5 Except as otherwise contemplated in the immediately succeeding
sentence with respect to direct and actual damages, in the event that a claim
or adjudication is made that Holder has acted unreasonably or unreasonably
delayed acting in any case where by law or under this Warrant, it has an
obligation to act reasonably or without unreasonable delay, Holder shall not be
liable for any monetary damages, and the Company's remedies shall be limited to
injunctive
20
relief or declaratory judgment. To the fullest extent permitted or
not prohibited by law, neither Holder nor any party related to Holder
(including any of its present or future officers, directors, shareholders or
other Person or Holder's affiliates and subsidiaries) shall assert, and the
Company hereby waives, any claim it may have against Holder and such aforesaid
Persons on any theory of liability for special, indirect, consequential and
punitive damages (as opposed to direct and actual damages) in connection with,
or as a result of, this Warrant and the transactions contemplated hereby.
14.6 The failure of Holder to insist upon strict performance of any term
hereof shall not be deemed to be a waiver of any term of this Warrant. The
Company shall not be relieved of any of its obligations hereunder by reason of
(a) the failure of Holder to comply with any request of the Company that is not
expressly set forth in this Warrant, (b) the release, regardless of
consideration, of the whole or any part of any one or more of the PNC Loan
Documents or of any Person liable for the PNC Debt or any portion thereof, or
(c) any agreement or stipulation by Holder extending the time of payment or
otherwise modifying or supplementing this Warrant or any one or more of the
other Loan Documents. The Bank may resort for the payment of the PNC Debt to
any security held by the Bank in such order and manner as the Bank, in its sole
discretion, may elect, regardless of whether or not it or any subsequent Holder
exercises any rights under this Warrant. The Bank may take action to recover
the PNC Debt, or any portion thereof, or to enforce any covenant thereof
without prejudice to the rights of the Bank or any subsequent Holder under this
Warrant. The rights and remedies of the Bank under the PNC Loan Documents shall
be separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of the Bank shall be construed as an election
to proceed under any one provision herein to the exclusion of any other
provision. The Bank shall not be limited exclusively to the rights and remedies
stated in the PNC Loan Documents but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
14.7 Unless the context clearly indicates a contrary intent or unless
otherwise specifically provided herein, words used in this Warrant may be used
interchangeably in singular or plural form. Whenever the context may require,
the singular includes the plural, the plural includes the singular and the use
of any gender includes all genders.
14.8 WITH RESPECT TO ANY ACTION, SUIT OR PROCEEDING RELATING TO THIS
WARRANT, THE COMPANY IRREVOCABLY (A) SUBMITS TO THE JURISDICTION OF THE COURTS
OF THE STATE OF NEW JERSEY; AND (B) WAIVES ANY OBJECTION WHICH THE COMPANY MAY
HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH
RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER THE
COMPANY. NOTHING IN THIS WARRANT SHALL PRECLUDE HOLDER FROM BRINGING AN ACTION,
SUIT OR PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF ANY
ACTION, SUIT OR
21
PROCEEDING IN ANY ONE OR MORE OTHER JURISDICTIONS PRECLUDE THE BRINGING OF AN
ACTION, SUIT OR PROCEEDING IN ANY OTHER JURISDICTION. THE COMPANY FURTHER
AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS
PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY ACTION, SUIT
OR PROCEEDING IN ANY SUCH COURT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
POSTAGE PREPAID, RETURN RECEIPT REQUESTED, DIRECTED TO THE COMPANY AT THE
ADDRESS SET FORTH IN SUBSECTION 1.1(A), AND SERVICE SO MADE SHALL BE COMPLETE
FIVE (5) DAYS AFTER BEING SO MAILED.
14.9 THIS WARRANT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
SUBSTANTIVE LAWS OF THE STATE OF NEW JERSEY (WITHOUT GIVING EFFECT TO THE SUCH
JURISDICTION'S PRINCIPLES OF CONFLICTS OF LAWS). TO EXPEDITE THE RESOLUTION OF
ANY DISPUTES WHICH MAY ARISE UNDER THIS WARRANT AND IN LIGHT OF THE COMPLEXITY
OF THE TRANSACTIONS CONTEMPLATED HEREBY, THE COMPANY HEREBY EXPRESSLY AND
UNCONDITIONALLY WAIVES THE RIGHT TO INJUNCTIVE RELIEF, SET-OFF, HAVING ANY
ACTION, SUIT OR PROCEEDING BROUGHT BY HOLDER CONSOLIDATED WITH ANY OTHER
SEPARATE ACTION, SUIT OR PROCEEDING (BUT THE FOREGOING SHALL NOT BE CONSTRUED
AS INTENDING TO PROHIBIT THE COMPANY FROM BRINGING ANY SUCH ACTION, SUIT OR
PROCEEDING), OR COUNTERCLAIM (SAVE ANY MANDATORY OR COMPULSORY COUNTERCLAIMS
UNDER APPLICABLE LAW), AS WELL AS THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT TO WHICH IT MAY BE A
PARTY OR A MATERIAL WITNESS, AND THE COMPANY ACKNOWLEDGES THAT THIS WAIVER OF
TRIAL BY JURY HAS BEEN SPECIFICALLY NEGOTIATED FOR AS A PART OF THIS WARRANT.
14.10 Anything in this Warrant or the other PNC Loan Documents to the
contrary notwithstanding, the Company expressly acknowledges that the
relationship between the Bank and the Company, is solely that of a debtor and
creditor and nothing shall be deemed or construed as creating any partnership,
joint venture, joint tenancy, tenancy in common, or similar relationship
between the Bank and the Company. The Company represents and warrants to the
Bank that it shall not make any assertion inconsistent with the acknowledgment
contained in the immediately preceding sentence in the event of any action,
suit, or proceeding, either at law or in equity, relating to this Warrant or
the other PNC Loan Documents, and that this sentence may be pleaded, and shall
be construed and deemed to be, a complete bar to and estoppel against any
assertion by the Company that is inconsistent with the immediately preceding
sentence.
14.11 The forms of Assignment, Subscription, Certificate of Reduction, and
form for the Cashless Exercise attached to this Warrant together with this
Warrant may, in addition to the procedures provided in Articles 1 and 12 of
this Warrant, be delivered by facsimile to the Company at any facsimile number
of the Company that is known to Holder and delivery of the
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Assignment, Subscription, Certificate of Reduction, this Warrant and form for
the Cashless Exercise by facsimile shall be tantamount to delivery as otherwise
provided for herein; provided, however, the foregoing shall not be deemed to
modify the notice provisions of Article 12 with respect to other notices that
may be given pursuant to this Warrant; and, provided, further, that prior to
issuance of the Warrant Shares or any subsequently issued Warrant the Company
may require Holder to deliver to it the original signature copies of the
Assignment, Subscription, Certificate of Reduction, this Warrant and form for
the Cashless Exercise, as applicable.
14.12 Time is of the essence as to all dates set forth in this Warrant,
including, among others, the First Calculation Date, the Second Calculation
Date and the Third Calculation Date.
Section 15. DEFINITIONS.
As used herein, the following terms, unless the context otherwise
requires, have the following respective meanings:
15.1 The term "Additional Shares of Common Stock" shall mean all shares of
Common Stock, including shares of treasury stock, issued or sold by the Company
after the date hereof, other than shares of Common Stock issued pursuant to the
exercise of Warrants, existing warrants to purchase Common Stock, stock options
granted to employees, directors, officers or consultants of the Company or any
of its subsidiaries, or warrants granted in the ordinary course of business or
warrants (or other convertible securities) or Common Stock granted, issued or
sold to persons, joint venturers, participating entities or other companies or
institutions with which the Company has a business relationship, or Common
Stock issued to the Company's former or present shareholders in connection with
the settlement of the sole class action proceeding pending against the Company
on the date of the execution and delivery of this Warrant..
15.2 The term "Common Stock" shall mean the duly authorized, validly
issued, fully-paid and non-assessable common stock of the Company, $0.01 par
value per share, all of which issued and outstanding shares of Common Stock are
free of preemptive rights.
15.3 The term "Exchange Act" means the Securities Exchange Act of 1933, or
any successor Federal statute, and the rules and regulations of the Securities
and Exchange Commission (or of any other Federal agency then administering the
Securities Act) hereunder, all as the same shall be in effect at the time.
15.4 The term "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
that is subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
15.5 The term "indefeasibly paid in full" shall mean, with respect to the
PNC Debt, that the Bank shall have received lawful funds of the United States
of America which at the time of payment is legal tender for the payment of
public and private debts and there is no law,
23
rule, regulation or other matter of like import then being imposed on the Bank
that would require the Bank to disgorge, repay or return to the Company or any
other Person, including any trustee or receiver of the Company, any payment
that has previously been received by the Bank.
15.6 The term "Market Price" shall mean the closing price for the day in
question. The closing price for such day shall be (a) the last reported sales
price or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, on the National Association of Securities Dealers
Automated Quotation National Market or Small Cap Market System, (b) if the
Common Stock is not listed or admitted to trading on any national securities
exchange or quoted on such National Market or Small Cap Market System, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm reasonably selected from
time to time by the Company for that purpose, or (c) if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted on
such National Market and the average price cannot be determined as contemplated
by clause (b), the fair market value as reasonably determined in good faith by
the Company's board of directors or in any manner reasonably prescribed by the
Company's board of directors. In the event that the Market Price is determined
by the method set forth in subsection "(c)" of the immediately foregoing
sentence and Holder objects to the result of such determination, then, at the
direction of Holder, the Company shall forthwith upon receipt of such notice
engage a consulting firm or investment banking firm jointly selected by Holder
and the Company to prepare an independent appraisal of the fair market value of
an outstanding share of Common Stock, which appraised fair market value shall
be the "Market Price" hereunder, the costs of which shall be borne in equal
proportion by the Company and Holder unless it is determined by the order or
judgment of a court of competent jurisdiction not subject to further appeal
that the Market Price was determined in a manner that is inconsistent with the
Company's requirements under the foregoing clause "c," in which event the costs
of which shall be borne solely by the Company. For the purposes of this Section
15.5, the term " Business Day" shall mean any day other than a Saturday,
Sunday, public holiday or its equivalent generally on which (a) commercial
banks in the State of New Jersey and (b) stock exchanges in the United States
of America in which the Common Stock is traded are open and authorized to do
business (or not required to be closed).
15.7 The term "PNC Debt" shall mean those certain obligations of the
Company (including any commitments to lend by PNC Bank) to pay to PNC Bank,
National Association the sum of up to Forty Million ($40,000,000.00) Dollars as
evidenced by the Amended and Restated Secured Revolving Promissory Note in the
amount of $10,000,000.00, the Amended and Restated Secured Capital Expenditure
Note in the amount of $20,000,000.00 and the Amended and Restated Secured
Bridge Note in the amount of $10,000,000.00, all dated of even date and
executed contemporaneously herewith by the Company, as the same may be amended,
substituted, renewed or extended from time to time.
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15.8 The term "PNC Loan Documents" shall mean all documents, instruments,
records and papers evidencing, securing, guaranteeing, indemnifying,
documenting or otherwise relating to the PNC Debt.
15.9 The term "Person" shall mean an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization or any
government, governmental department or agency or political subdivision thereof.
15.10 The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act and the subsequent declaration or ordering
of the effectiveness of such Registration Statement.
15.11 The term "Registrable Securities of Warrant Holder" means the
Warrant Shares that may be or are acquired pursuant to any one or more
exercises of this Warrant including (a) the Common Stock issued or issuable
upon exercise of this Warrant, and (b) any other shares of Common Stock issued
in respect of such shares by way of a stock dividend, or stock split, or in
connection with a combination of shares, recapitalization, merger or
consolidation or reorganization, provided, however, that shares of Common Stock
shall only be treated as Registrable Stock if and so long as they (i) may not
be sold in a sale transaction in the public market pursuant to the provisions
of Rule 144, as amended, or any successor thereto, promulgated by the
Securities and Exchange Commission, (ii) have not been sold to or through a
broker or dealer or underwriter in a public distribution, or a public
securities transaction, or (iii) have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the Securities
Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect to such Common Stock are removed upon the
consummation of such sale and the seller and purchaser of such Common Stock
receive an opinion of counsel for the Company, which shall be in form and
content reasonably satisfactory to the seller and buyer and their respective
counsel, to the effect that such Common Stock in the hands of the purchaser is
freely transferable without restriction or registration under the Securities
Act in any public or private transaction.
15.12 The term "Registration Statement" means a Registration Statement
filed by the Company with the Securities and Exchange Commission for a public
offering and sale of securities of the Company (other than a Registration
Statement on Form X-0, Xxxx X-0, or successor forms, any Registration Statement
covering only securities proposed to be issued in exchange for securities or
assets of another corporation, any other form of Registration Statement not
available for registering the Registrable Stock or any Registration Statement
relating solely to employee Stock Option, stock purchase, benefit or similar
plans).
15.13 The term "Securities Act" means the Securities Act of 1933, or any
successor Federal statute, and the rules and regulations of the Securities and
Exchange Commission (or of any other Federal agency then administering the
Securities Act) hereunder, all as the same shall be in effect at the time.
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15.14 The term "Warrant Stock" shall mean any equity security issued upon
exercise of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer and its corporate seal to be impressed hereon and
attested by its Secretary or Assistant Secretary on February 25, 1998.
USA DETERGENTS, INC.,
A Delaware Corporation
By: /s/ Uri Evan
-------------------------------------
Name: Uri Evan
-------------------------------------
Title: Chairman of the Board and
Chief Executive Officer
-------------------------------------
(CORPORATE SEAL)
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[Execution Copy]
FORM
OF
SUBSCRIPTION
(To be signed only on exercise of Common Stock Purchase Warrant)
TO: USA DETERGENTS, INC.
The undersigned, the holder of the within Common Stock Purchase Warrant,
hereby irrevocably elects to exercise this Common Stock Purchase Warrant for,
and to purchase thereunder, ___________________ shares of Common Stock of USA
Detergents, Inc. (the "Company") and herewith makes payment of $___________
therefor, and requests that the certificates for such shares be issued in the
name of, and delivered to, _______________________, whose address is
_______________________________________________________________________.
........................................
(Signature must conform in all respects
to name of Holder as specified on the face
of the Warrant)
.........................................
(Address)
-----------
* Insert here the number of shares (all or part of the number of shares
called for in the Common Stock Purchase Warrant) as to which the Common
Stock Purchase Warrant is being exercised without making any adjustment
for any other stock or other securities or property or cash that, pursuant
to the adjustment provisions of the Common Stock Purchase Warrant, may be
deliverable on exercise.
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FORM
OF
ASSIGNMENT
(To be signed only on transfer of Common Stock Purchase Warrant)
TO: USA DETERGENTS, INC.
For value received, the undersigned hereby sells, assigns and
transfers unto _____________________________ of ___________________________ the
right represented by the within Common Stock Purchase Warrant to purchase
___________ shares of Common Stock of USA Detergents, Inc. (the "Company") to
which the within Common Stock Purchase Warrant relates, and appoints
_______________________, Attorney, to transfer such right on the books of USA
Detergents, Inc. with full power of substitution in the premises.
-------------------------------------------
(Signature must conform in all respects
to name of Holder as specified on the face
of the Warrant)
-------------------------------------------
(Address)
Signed in the presence of:
-------------------------------
[Execution Copy]
FORM
OF
CERTIFICATE OF REDUCTION
(To be signed only on exercise of Common Stock Purchase Warrant)
TO: USA DETERGENTS, INC.
The capitalized terms used in this Certificate of Reduction, if not
otherwise defined, shall have the meanings ascribed to them in that certain
Common Stock Purchase Warrant (the "Warrant"), dated January ___, 1998, from
USA DETERGENTS, INC. (the "Company"), to PNC BANK, NATIONAL ASSOCIATION (the
"Bank").
Reference is made to Section 1.1(a) of the Warrant, wherein
the Warrant Price for the shares of Common Stock that are deliverable by the
Company to Holder may be paid by virtue of this Certificate of Reduction in
lieu of a certified or official bank check or wire transfer.
The Bank hereby certifies to the Company that the PNC Debt is
hereby reduced by $ __________, which is the amount that is required to be paid
for the Warrant Price for the number of shares of Common Stock for which the
Warrant is now being exercised by Holder and which amount equals or exceeds the
presently outstanding amount of the PNC Debt.
IN WITNESS WHEREOF, this Certificate of Reduction has been
executed and delivered by the Bank on __________ ___, _______.
PNC BANK, NATIONAL ASSOCIATION
By: ________________________________
Name:
Title:
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[Execution Copy]
FORM
FOR
CASHLESS EXERCISE ELECTION
(To be signed only on exercise of Common Stock Purchase Warrant)
TO: USA DETERGENTS, INC.
The capitalized terms used in this Cashless Exercise Election, if not
otherwise defined, shall have the meanings ascribed to them in that certain
Common Stock Purchase Warrant (the "Warrant"), dated January ___, 1998, from
USA DETERGENTS, INC. (the "Company"), to PNC BANK, NATIONAL ASSOCIATION (the
"Bank").
Reference is made to Section 1.1(a)(ii) of the Warrant, wherein Holder is
entitled to effectuate a Cashless Election.
If the Holder of the Warrant is other than the Bank, the undersigned
represents and warrants to the Company that is the true and lawful owner and
holder of the Warrant.
Pursuant to Section 1.1(a)(ii) of the Warrant, Holder hereby elects to
enter into a Cashless Election and is exchanging the Warrant delivered herewith
to the Company for that number of shares of Common Stock to which the Holder is
entitled pursuant to Section 1.1(a)(ii). Holder hereby waives any obligation to
pay all or any portion of the Warrant Price.
IN WITNESS WHEREOF, this Cashless Exercise Election has been executed and
delivered by the Holder on __________ ___, _______.
-----------------------------
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