EXHIBIT 4.5
____________________________________________________________
WARRANT AGREEMENT
BETWEEN
PARAGON TRADE BRANDS, INC.
AND
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
Dated as of January 28, 2000
____________________________________________________________
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DISTRIBUTION OF WARRANT CERTIFICATES.......................................... 1
1.1 Appointment of Warrant Agent.................................................. 1
1.2 Form of Warrant Certificates.................................................. 2
1.3 Execution of Warrant Certificates............................................. 2
1.4 Issuance and Distribution of Warrant Certificates............................. 2
ARTICLE 2 WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS............................... 3
2.1 Exercise Price................................................................ 3
2.2 Exercisability of Warrants.................................................... 3
2.3 Procedure for Exercise of Warrants............................................ 3
2.4 Issuance of Warrant Shares.................................................... 3
2.5 Certificates for Unexercised Warrants......................................... 4
2.6 Reservation of Shares......................................................... 4
2.7 Disposition of Proceeds....................................................... 4
ARTICLE 3 CALL OF WARRANTS.............................................................. 4
3.1 Call Price.................................................................... 4
3.2 Notice of Call................................................................ 5
3.3 Payment of Call Price......................................................... 5
3.4 Qualified Change of Control................................................... 6
3.5 Fair Market Value............................................................. 6
3.6 Wellspring Defined............................................................ 7
ARTICLE 4 ADJUSTMENTS AND NOTICE PROVISIONS............................................. 7
4.1 Adjustment of Exercise Price.................................................. 7
4.2 Current Market Price.......................................................... 8
4.3 No Adjustments to Exercise Price.............................................. 8
4.4 Deferral of Adjustments to Exercise Price..................................... 8
4.5 Adjustment to Number of Shares................................................ 9
4.6 Reorganizations............................................................... 9
4.7 Reclassifications............................................................. 10
4.8 Verification of Computations.................................................. 10
4.9 Notice of Certain Actions..................................................... 11
4.10 Notice of Adjustments......................................................... 12
4.11 Warrant Certificate Amendments................................................ 12
4.12 Fractional Shares............................................................. 12
ARTICLE 5 OTHER PROVISIONS RELATING TO RIGHTS OF REGISTERED HOLDERS
OF WARRANT CERTIFICATES....................................................... 12
5.1 Rights of Warrant Holders..................................................... 12
5.2 Lost, Stolen, Mutilated or Destroyed Warrant Certificates..................... 13
ARTICLE 6 SPLIT UP, COMBINATION, EXCHANGE, TRANSFER AND CANCELLATION OF WARRANT
CERTIFICATES.................................................................. 13
6.1 Split Up, Combination, Exchange and Transfer of Warrant Certificates.......... 13
6.2 Cancellation of Warrant Certificates.......................................... 14
6.3 Agreement of Warrant Certificate Holders...................................... 14
ARTICLE 7 PROVISIONS CONCERNING THE WARRANT AGENT AND OTHER MATTERS..................... 14
7.1 Payment of Taxes and Charges.................................................. 14
7.2 Resignation or Removal of Warrant Agent....................................... 15
7.3 Notice of Appointment......................................................... 15
7.4 Merger of Warrant Agent....................................................... 16
7.5 Company Responsibilities...................................................... 16
7.6 Certification for the Benefit of Warrant Agent................................ 16
7.7 Books and Records............................................................. 16
7.8 Liability of Warrant Agent.................................................... 17
7.9 Use of Attorneys, Agents and Employees........................................ 17
7.10 Indemnification............................................................... 17
7.11 Acceptance of Agency.......................................................... 18
7.12 Changes to Agreement.......................................................... 18
7.13 Assignment.................................................................... 18
7.14 Successor to Company.......................................................... 18
7.15 Notices....................................................................... 18
7.16 Defects in Notice............................................................. 19
7.17 Governing Law................................................................. 19
7.18 Standing...................................................................... 19
7.19 Headings...................................................................... 20
7.20 Counterparts.................................................................. 20
7.21 Conflict of Interest.......................................................... 20
7.22 Availability of the Warrant Agreement......................................... 20
Exhibit A FORM OF WARRANT CERTIFICATE
Exhibit B CALL PRICE AND ADJUSTED VALUE CALCULATIONS
WARRANT AGREEMENT
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WARRANT AGREEMENT dated as of January 28, 2000, between PARAGON TRADE
BRANDS, INC., a Delaware corporation (including, on or after the effective date
of the Plan, as defined below, its successor, as reorganized pursuant to Chapter
11, Title 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company, as warrant agent (the "Warrant Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to a Second Amended Plan of Reorganization, dated as
of November 15, 1999, of the Company (the "Plan") and the order confirming the
Plan issued by the Bankruptcy Court for the Northern District of Georgia (the
"Bankruptcy Court") on January 13, 2000, the Company proposes to issue and
deliver its certificates (the "Warrant Certificates") evidencing an aggregate of
625,821 warrants (the "Warrants") to acquire up to an aggregate 625,821 shares
(subject to adjustment as provided herein) of its Common Stock, par value $.01
per share (the "Common Stock"); and
WHEREAS, the Company desires the Warrant Agent, and the Warrant Agent
agrees, to act on behalf of the Company in connection with the issuance,
transfer, exchange, replacement, redemption and surrender of the Warrant
Certificates; and
WHEREAS, the Company and the Warrant Agent desire to set forth in this
Warrant Agreement, among other things, the form and provisions of the Warrant
Certificates and the terms and conditions under which they may be issued,
transferred, exchanged, replaced, redeemed and surrendered in connection with
the exercise and redemption of the Warrants.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE 1
DISTRIBUTION OF WARRANT CERTIFICATES
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1.1 Appointment of Warrant Agent. The Company hereby appoints the
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Warrant Agent to act on behalf of the Company in accordance with the
instructions hereinafter set forth in this Warrant Agreement, and the Warrant
Agent hereby accepts such appointment.
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1.2 Form of Warrant Certificates. The Warrant Certificates for the
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Warrants shall be issued in temporary or fully registered form and, together
with the purchase and assignment forms to be printed on the reverse thereof,
shall be substantially in the form of Exhibit A attached hereto, and, in
addition, may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements stamped, printed,
lithographed or engraved thereon as the Company may deem appropriate; which do
not affect the duties or responsibilities of the Warrant Agent and as are not
inconsistent with the provisions of this Agreement or as, in any particular
case, may be required, in the opinion of counsel for the Company, to comply with
any law or with any rule or regulation of any regulatory authority or agency or
to conform to customary usage.
1.3 Execution of Warrant Certificates. The Warrant Certificates
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shall be executed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer or President or any Vice President, and by its Chief Financial
Officer or Treasurer or any Assistant Treasurer, or Secretary or any Assistant
Secretary, either manually or by facsimile signature printed thereon. The
Warrant Certificates shall be manually countersigned and dated the date of
countersignature by the Warrant Agent and shall not be valid for any purpose
unless so countersigned and dated. In case any authorized officer of the Company
who shall have signed any of the Warrant Certificates shall cease to be such
officer of the Company either before or after delivery thereof by the Company to
the Warrant Agent, the signature of such Person on such Warrant Certificates
shall, nevertheless, be valid and such Warrant Certificates may be countersigned
by the Warrant Agent and issued and delivered to those Persons entitled to
receive the Warrants represented thereby with the same force and effect as
though the person who signed such Warrant Certificates has not ceased to be such
officer of the Company. As used in this Warrant Agreement, the term "Person"
shall mean any individual, firm, corporation, partnership, limited liability
company, trust or other entity, and shall include any succession (by merger or
otherwise) to such entity.
1.4 Issuance and Distribution of Warrant Certificates. The Company
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shall deliver to the Warrant Agent an adequate supply of Warrant Certificates
for the Warrants executed on behalf of the Company as described in Section 1.3
hereof. Upon receipt of an order from the Company, the Warrant Agent shall,
within five business days, complete and countersign Warrant Certificates
representing the total number of Warrants to be issued hereunder and shall
deliver such Warrant Certificates pursuant to written instructions of the
Company. As used in this Warrant Agreement, the term "business day" shall mean
any day other than Saturday or Sunday or a day on which banking institutions in
the State of New York or the city in which the office of the Warrant Agent is
located are authorized or obligated by law or executive order to close.
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ARTICLE 2
WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS
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2.1 Exercise Price. Each Warrant Certificate for the Warrants shall,
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when signed by the Chairman, Chief Executive Officer or President or any Vice
President, and by the Chief Financial Officer or Treasurer or any Assistant
Treasurer, or Secretary or any Assistant Secretary, of the Company and
countersigned by the Warrant Agent, entitle the registered holder thereof,
subject to the provisions of Article 3 hereof, to purchase from the Company one
share of Common Stock for each Warrant evidenced thereby, at the purchase price
of $18.91 per share (the "Initial Exercise Price"), or such adjusted number of
shares at such adjusted purchase price as may be established from time to time
pursuant to the provisions of Article 4 hereof, payable in full at the time of
exercise of the Warrant.
2.2 Exercisability of Warrants. Each Warrant may be exercised at any
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time on or after January 28, 2000 (the "Effective Date"), but not after 5:00
P.M., New York City time, on the earlier of the tenth anniversary of the
Effective Date, or the business day immediately preceding the Call Date (as
defined in Section 3.2). The term "Exercise Deadline" as used in this Agreement
shall mean the latest time and date at which the Warrants may be exercised.
2.3 Procedure for Exercise of Warrants. During the period specified
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in and subject to the provisions of Section 2.2 hereof, the Warrants may be
exercised by surrendering the Warrant Certificates representing such Warrants to
the Warrant Agent at its office, which is presently at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, with the election to purchase form set forth on the
Warrant Certificate properly completed and duly executed, with signatures
guaranteed by a member firm of a national securities exchange, a commercial bank
or trust company located in the United States, a member of the National
Association of Securities Dealers, Inc. ("NASD") or other eligible guarantor
institution which is a participant in a signature guarantee program (as such
terms are defined in Reg. 240.17Ad-15 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) acceptable to the Warrant Agent ("Signatures
Guaranteed"), accompanied by payment in full of the Exercise Price as provided
in Section 2.1 in effect at the time of such exercise, together with such taxes
as are specified in Section 7.1 hereof, for each share of Common Stock with
respect to which such Warrants are being exercised. Such Exercise Price and
taxes shall be paid in full by certified check or money order, payable in United
States currency to the order of the Company. The date on which any Warrant is
exercised in accordance with this Section 2.3(a) is sometimes referred to herein
as the "Date of Exercise" of such Warrant.
2.4 Issuance of Warrant Shares. As soon as practicable after the
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Date of Exercise of any Warrants, the Company shall issue, or cause the transfer
agent for the Common Stock, if any, to issue, a certificate or certificates for
the
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number of full shares of Common Stock to which such holder is entitled,
registered in accordance with the instructions set forth in the election to
purchase. All Warrant Shares shall be validly authorized and issued, fully paid
and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof. 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 of Exercise of the Warrants resulting in the issuance of such shares,
irrespectively of the date of issuance or delivery of such certificate for the
Warrant Shares.
2.5 Certificates for Unexercised Warrants. In the event that less
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than all of the Warrants represented by a Warrant Certificate are exercised, the
Warrant Agent shall upon receipt of all necessary information, execute and mail,
by first-class mail, within 30 days of the Date of Exercise, to the registered
holder of such Warrant Certificate, or such other Person as shall be designated
in the election to purchase, a new Warrant Certificate representing the number
of full Warrants not exercised. In no event shall a fraction of a Warrant be
exercised, and the Warrant Agent shall distribute no Warrant Certificates
representing fractions of Warrants under this or any other section of this
Agreement. Fractions of shares shall be treated as provided in Section 4.12.
2.6 Reservation of Shares. The Company shall at all times reserve
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and keep available for issuance upon the exercise of Warrants a number of its
authorized but unissued shares of Common Stock that will be sufficient to permit
the exercise in full of all outstanding Warrants.
2.7 Disposition of Proceeds. The Warrant Agent shall account at
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least monthly (or more frequently upon the request of the Company) to the
Company with respect to Warrants exercised and concurrently deliver to the
Company all funds received upon the exercise of Warrants.
ARTICLE 3
CALL OF WARRANTS
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3.1 Call Price. The Company (or its successor by merger) may, at its
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option, upon not less than 30 days' nor more than 60 days' notice given at any
time within 90 days following a Qualified Change of Control (as defined in
Section 3.4 hereof), call for redemption all of the outstanding Warrants at the
call price per warrant (such price is hereinafter referred to as the "Call
Price") determined by the Company using the formula set forth on Exhibit B
hereto. In the event the Company exercises its right to redeem the Warrants,
such Warrants will be exercisable until the close of business on the business
day immediately preceding the date fixed for redemption in such notice. If any
Warrant called for redemption is not exercised by
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such time, such Warrant shall cease to be exercisable and the holder thereof
shall be entitled only to the Call Price, without interest thereon. The Company
(or its successor by merger) shall have the option to pay the Call Price in
cash, equity securities or new warrants to purchase equity securities, or any
combination thereof, provided, however, that if the Call Price is to be paid in
other than cash, (a) the issuance of capital stock or other equity securities
and/or new warrants (and the underlying equity securities issuable upon exercise
thereof) to be issued in payment of part or all of the Call Price shall be
registered under the Securities Act of 1933, (b) such capital stock or other
equity securities and/or such new warrants (together with the underlying equity
securities issuable upon the exercise thereof) shall be, immediately following
the issuance as part of the Call Price, (i) registered pursuant to Section 12 of
the Exchange Act, (ii) held of record by not less than 300 Persons and (iii)
listed on a national securities exchange or authorized to be quoted in an inter-
dealer quotation system of a registered national securities association, and (c)
the issuer thereof shall have received an opinion from a nationally recognized
investment banking firm to the effect that the value of the securities to be
issued in payment of the Call Price, together with any cash to be paid in
connection therewith, has a fair market value equal, on the fifth business day
prior to the Call Date (as defined in Section 3.2), to not less than the Call
Price, and provided, further, that if any new warrants are to be issued in full
or partial payment of the Call Price, the terms and conditions of those new
warrants (other than number of shares and exercise price) shall be substantially
similar to the terms of the Warrants issued under this Warrant Agreement. As
used in this Warrant Agreement, "close of business" shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
business day it shall mean 5:00 P.M., New York City time, on the next succeeding
business day.
3.2 Notice of Call. Notice of any call for redemption shall be given
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to the Warrant Agent by the Company upon not less than 30 days nor more than 60
days prior to the date established for such call (the "Call Date") and such
notice shall be mailed to all registered holders of Warrant Certificates to be
called by the Warrant Agent promptly after the Company shall have given such
notice to the Warrant Agent. Each such notice of call will specify the Call
Date and the Call Price. The notice will state that payment of the Call Price
will be made by the Warrant Agent upon presentation and surrender of the Warrant
Certificates representing such Warrants to the Warrant Agent at its office, and
will also state that the right to exercise the Warrants will terminate at 5:00
P.M., New York City time, on the business day immediately preceding the Call
Date.
3.3 Payment of Call Price. On or prior to the opening of business on
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the Call Date, the Company (or its successor by merger) will deposit or cause to
be deposited with the Warrant Agent funds in form satisfactory to the Warrant
Agent sufficient to pay the cash portion, if any, of the Call Price to purchase
all the Warrants being redeemed, and certificates representing the securities,
if any, which are being issued to purchase all of the Warrants being redeemed.
Payment of the Call
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Price will be made by the Warrant Agent upon presentation and surrender of the
Warrant Certificates representing such Warrants to the Warrant Agent at its
office.
3.4 Qualified Change of Control. For purposes of this Article 3, a
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"Qualified Change of Control" shall mean the occurrence of any of the following:
(i) the consummation of any transaction or series of related transactions
(including, without limitation, any merger or consolidation) the result of which
is that any Person other than Wellspring (as defined in Section 3.6), becomes
the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act), directly or indirectly, of more than 50% of the total
voting power of the equity of the Company; or (ii) the Company consolidates with
or merges into another Person or any Person consolidates with, or mergers into,
the Company, in any such event pursuant to a transaction in which the
outstanding Common Stock of the Company is changed into or exchanged for cash,
securities or other property, other than any such transaction where the holders
of the Common Stock of the Company immediately prior to such transaction own,
directly or indirectly, not less than a majority of the voting stock of the
surviving or resulting Person immediately after such transaction; provided,
however, that no Qualified Change of Control shall be deemed to have occurred
pursuant to the immediately preceding clause (i) if such transaction resulted
from the sale of Common Stock of the Company to a Person or Persons acting as
underwriters in connection with a firm commitment underwriting; and provided,
further, that no Qualified Change of Control shall be deemed to have occurred
pursuant to the immediately preceding clauses (i) or (ii) unless, as a result of
such transaction Wellspring shall have realized a return on its initial
investment in the Company pursuant to the Plan of 8% of more, on an annualized
basis, based on its initial purchase price per share of $10.00. Not later than
15 days following the occurrence of any event specified in the preceding clauses
(i) or (ii), the Company's Board of Directors shall determine whether or not
such event (a "Triggering Event") resulted in a Qualified Change of Control and
such determination shall be final and binding absent manifest error. The
determination of whether or not Wellspring has realized an 8% annualized return
on its initial $10.00 per share investment shall be based upon the appreciation
in the Fair Market Value (as defined in Section 3.5) of the Common Stock from
the Effective Date (as defined in the Plan) until the date that the Triggering
Event is publicly announced, taking into account the value of any securities
received by Wellspring in such transaction. The Board shall determine the value
of any securities received by Wellspring in such transaction based on such
securities' Fair Market Value (as defined in Section 3.5) as of the date of such
transaction. The Board of Directors shall cause the Company to promptly notify
the Warrant Agent in writing of the Board of Directors' determination as to
whether or not a Qualified Change of Control has occurred.
3.5 Fair Market Value. For purposes of this Article 3, the "Fair
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Market Value" of any security on any date shall be deemed to be the average of
the daily closing bid prices as reported by Nasdaq (or the closing price on the
primary exchange on which such security is then listed for trading, if any) for
the 30
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consecutive trading days immediately preceding the date in question. If on any
such date such security is not listed or admitted to trading on any national
securities exchange and is not quoted by NASDAQ or any similar organization, the
Fair Market Value of such security on such date shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
conclusive absent manifest error.
3.6 Wellspring Defined. For purposes of this Article 3, "Wellspring"
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shall mean any or all of PTB Acquisition Company, LLC, Wellspring Capital
Partners II, L.P., Wellspring Capital Management, LLC, any member, partner,
manager, officer or director of any of the foregoing, any Person controlling,
controlled by or under common control with any of the foregoing, or the spouse
or child of any natural Person that is one of the foregoing.
ARTICLE 4
ADJUSTMENTS AND NOTICE PROVISIONS
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4.1 Adjustment of Exercise Price. Subject to the provisions of this
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Article 4, the Exercise Price in effect from time to time and the number of
shares of Common Stock issuable upon exercise of the Warrants shall be subject
to adjustment, as follows:
4.1.1 In case the Company shall at any time after the date hereof
(i) declare a dividend on the outstanding Common Stock payable in shares of any
class of its capital stock, (ii) subdivide the outstanding Common Stock into a
larger number of shares, (iii) combine the outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares of its capital stock by
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation), then, in each case, the Exercise Price in effect, and the number
of shares of Common Stock issuable upon exercise of the Warrants outstanding, at
the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, shall be proportionately adjusted
so that the holders of the Warrants after such time shall be entitled to receive
the aggregate number and kind of shares which, if such Warrants had been
exercised immediately prior to such time, such holders would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
4.1.2 In case the Company shall distribute to all holders of
Common Stock (including any such distribution made to the shareholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash or assets (other
than (i)
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distributions and dividends payable in shares of Common Stock or (ii) cash
dividends paid out of retained earnings), or rights, options or warrants to
subscribe for or purchase Common Stock, or securities convertible into or
exchangeable for shares of Common stock, then, in each case, the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to the record date for the determination of shareholders entitled to receive
such distribution by a fraction, the numerator of which shall be the Current
Market Price (as determined pursuant to Section 4.2 hereof) per share of Common
Stock on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
conclusive for all purposes) of the portion of the evidences of indebtedness or
assets so to be distributed, or of such rights, options, or warrants or
convertible or exchangeable securities, or the amount of such cash, applicable
to one share, and the denominator of which shall be such Current Market Price
per share of Common Stock. Such adjustment shall become effective at the close
of business on such record date.
4.2 Current Market Price. For the purpose of any computation under
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Section 3.1 and this Article 4, the Current Market Price per share of Common
Stock on any date shall be deemed to be the average of the daily closing bid
prices as reported by Nasdaq (or such exchange on which the Common Stock is then
traded) for the 30 consecutive trading days immediately preceding the date in
question. If on any such date the Common Stock is not listed or admitted to
trading on any national securities exchange and is not quoted by NASDAQ or any
similar organization, the fair value of a share of Common Stock on such date as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive for all purposes, shall be deemed to be the
Current Market Price.
4.3 No Adjustments to Exercise Price. No adjustment in the Exercise
--------------------------------
Price shall be required if such adjustment is less than $.05; provided, however,
that any adjustments which by reason of this Article 4 are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Article 4 shall be made to the nearest
cent or to the nearest one hundredth of a share, as the case may be.
4.4 Deferral of Adjustments to Exercise Price. In any case in which
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this Article 4 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Company may elect to
defer, until the occurrence of such event, issuing to the holders of the
Warrants, if any holder has exercised a Warrant after such record date, the
shares of Common Stock, if any, issuable upon such exercise over and above the
shares of Common Stock, if any, issuable upon such exercise on the basis of the
Exercise Price in effect prior to such adjustment; provided, however, that the
Company shall deliver to such exercising holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
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4.5 Adjustment to Number of Shares. Upon each adjustment of the
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Exercise Price as a result of the calculations made in Section 4.1(b) hereof,
the Warrants shall thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of shares (calculated to the nearest hundredth)
obtained by dividing (A) the product obtained by multiplying the number of
shares purchasable upon exercise of the Warrants prior to adjustment of the
number of shares by the Exercise Price in effect prior to adjustment of the
Exercise Price by (B) the Exercise Price in effect after such adjustment of the
Exercise Price.
4.6 Reorganizations. In case of any capital reorganization, other
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than in the cases referred to in Section 4.1 hereof, or the consolidation or
merger of the Company with or into another Person (other than (i) a merger or
consolidation in which the Company is the surviving or continuing corporation
and which does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property, or (ii) a consolidation
or merger of the Company in which the Company is not the surviving or continuing
corporation and which constitutes a Qualified Change of Control and in which the
shares of Common Stock outstanding prior to such consolidation or merger were
converted, as a result of such consolidation or merger, into consideration other
than equity securities), or in the case of any sale, lease or conveyance of
another Person of the property and assets of any nature of the Company as an
entirety or substantially as an entirety (such actions being hereinafter
collectively referred to as "Reorganizations"), there shall thereafter be
deliverable upon exercise of any Warrant (in lieu of the number of shares of
Common Stock theretofore deliverable) the number of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
which would otherwise have been deliverable upon the exercise of such Warrant
would have been entitled upon such Reorganization if such Warrant had been
exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the Board
of Directors of the Company, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of Warrant holders so
that the provisions set forth herein shall thereafter be applicable, as nearly
as possible, in relation to any shares or other property thereafter deliverable
upon exercise of Warrants. Any such adjustment shall be made by and set forth in
a supplemental agreement between the Company, or any successor thereto, and the
Warrant Agent and shall for all purposes hereof be conclusively deemed to be an
appropriate adjustment. The Company shall not effect any such Reorganization
unless upon or prior to the consummation thereof the successor corporation, or
if the Company shall be the surviving corporation in any such Reorganization and
is not the issuer of the shares of stock or other securities or property to be
delivered to holders of shares of the Common Stock outstanding at the effective
time thereof, then such issuer, shall assume by written instrument the
obligation to deliver to the registered holder of any Warrant Certificate such
shares of stock, securities, cash or other property as such holder shall be
entitled to purchase in accordance with the foregoing provisions. In
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the event of sale, lease or conveyance or other transfer of all or substantially
all of the assets of the Company as part of a plan for liquidation of the
Company, all rights to exercise any Warrant shall terminate 30 days after the
Company gives written notice to each registered holder of a Warrant Certificate
that such sale or conveyance or other transfer has been consummated. In the
event of a consolidation or merger of the Company in which the Company is not
the surviving or continuing corporation and which constitutes a Qualified Change
of Control and where the Company or its successor by merger has not exercised
its right to call the Warrants pursuant to Section 3.1 hereof and where the
outstanding shares of Common Stock outstanding immediately prior to the
consummation of such merger or consolidation were converted, as a result of such
consolidation or merger, into consideration other than equity securities, the
number of shares for which each Warrants then remaining outstanding shall be
adjusted, effective as of the date on which the Qualified Change of Control
occurred (the "Adjustment Date"), so that the aggregate value of the then
outstanding Warrants shall be equal to the value (the "Adjusted Value")
calculated as set forth in Exhibit B hereto.
4.7 Reclassifications. In case of reclassification or change of the
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shares of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or as a result of a subdivision or combination, but
including any change in the shares into two or more classes or series of
shares), or in case of any consolidation or merger of another Person into the
Company in which the Company is the continuing corporation and in which there is
a reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or as a result of a subdivision or combination, but including any change in the
shares into two or more classes or series of shares), the holders of the
Warrants shall have the right thereafter to receive upon exercise of the
Warrants solely the kind and amount of shares of stock and other securities,
property, cash, or any combination thereof receivable upon such
reclassification, change, consolidation or merger by a holder of the number of
shares of Common Stock for which the Warrants might have been exercised
immediately prior to such reclassification, change, consolidation or merger.
Thereafter, appropriate provision shall be made for adjustments which shall be
as nearly equivalent as practicable to the adjustments in Article 4. The above
provisions of this Section 4.7 shall similarly apply to successive
reclassifications and changes of shares of Common Stock.
4.8 Verification of Computations. Whenever the exercise price is
----------------------------
adjusted as provided in this Article 4, the Company will promptly obtain a
certificate of a firm of independent public accountants of recognized standing
selected by the Board of Directors (who may be the regular auditors of the
Company) setting forth the exercise price as so adjusted and a brief statement
of the facts and computation accounting for such adjustment, and will make
available a brief summary thereof to the Warrant Agent and to the holders of the
Warrant Certificates, at their addresses listed on the register maintained for
that purpose by the Warrant Agent (which
11
summary may be included in any notice of adjustment required by Section 4.10
hereof). The Warrant Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall have no duty with
respect to and shall not be deemed to have knowledge of any such adjustment
unless and until it has received such certification.
4.9 Notice of Certain Actions. In case at any time the Company shall
-------------------------
propose:
4.9.1 to pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution (other
than regularly scheduled cash dividends which are not in a greater amount per
share than the most recent such cash dividend) to all holders of Common Stock;
or
4.9.2 to issue any rights, warrants or other securities to all
holders of Common Stock entitling them to purchase any additional shares of
Common Stock or any other rights, warrants or other securities; or
4.9.3 to effect any Reorganization, or any reclassification or
change of outstanding shares of Common Stock, described in Section 4.7; or
4.9.4 to effect any liquidation, dissolution or winding-up of
the Company; or
4.9.5 to take any other action which would cause an adjustment
to the Exercise Price;
then, in each such case, the Company shall promptly cause notice of such
proposed action to be mailed to the Warrant Agent. Such notice shall specify the
date on which the books of the Company shall close, or a record shall be taken,
for determining holders of Common Stock entitled to receive such stock dividend
or other distribution or such rights or warrants, or the date on which such
reclassification, change, consolidation, merger, sale, lease, other disposition,
liquidation, dissolution, winding up or exchange or other action shall take
place or commence, as the case may be, the date as of which it is expected that
holders of record of Common Stock shall be entitled to receive securities or
other property deliverable upon such action, if any such date has been fixed.
The Company shall cause copies of such notice to be mailed to each registered
holder of a Warrant Certificate. Such notice shall be mailed, in the case of any
action covered by Subsection 4.9.1 or 4.9.2 above, at least 15 days prior to the
record date for determining holders of the Common Stock for purposes of
receiving such payment or offer; in the case of any action covered by Subsection
4.9.3 or 4.9.4 above, at least 15 days prior to the earlier of the date upon
which such action is to take place or any record date to determine holders of
Common Stock entitled to receive such securities or other property; and in the
case of any
12
action covered by Subsection 4.9.5 above, no more than 15 days after such
action. In addition, within 30 days following the occurrence of a Qualified
Change of Control, the Company (or its successor by merger) shall mail a notice
stating that Qualified Change of Control has occurred to the Warrant Agent and
to each registered holder of a Warrant Certificate.
4.10 Notice of Adjustments. Whenever any adjustment is made pursuant
---------------------
to this Article 4, the Company shall cause written notice of such adjustment to
be sent by registered mail, postage prepaid to the Warrant Agent within 15 days
thereafter, such notice to include in reasonable detail (i) the events
precipitating the adjustment, (ii) the computation of any adjustments, and (iii)
the Exercise Price, the number of shares or the securities or other property
purchasable upon exercise of each Warrant and the Call Trigger Price after
giving effect to such adjustment. The Warrant Agent shall within 15 business
days after receipt of such notice from the Company and all other necessary
information cause a similar notice to be mailed to each registered holder of a
Warrant Certificate.
4.11 Warrant Certificate Amendments. Irrespective of any adjustments
------------------------------
pursuant to this Article 4, Warrant Certificates theretofore or thereafter
issued need not be amended or replaced but certificates thereafter issued shall
bear an appropriate legend or other notice of any adjustments.
4.12 Fractional Shares. The Company shall not be required upon the
-----------------
exercise of any Warrant to issue fractional shares of Common Stock which may
result from adjustments in accordance with this Article 4 to the Exercise Price
or number of shares of Common Stock purchasable under each Warrant. If more
than one Warrant is exercised at one time by the same registered holder, the
number of full shares of Common Stock which shall be deliverable shall be
computed based on the number of shares deliverable in exchange for the aggregate
number of Warrants exercised. With respect to any final fraction of a share
called for upon the exercise of any Warrant or Warrants, the Company shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price of a share of Common Stock calculated in
accordance with Section 4.2.
ARTICLE 5
OTHER PROVISIONS RELATING TO
RIGHTS OF REGISTERED HOLDERS
OF WARRANT CERTIFICATES
----------------------------
5.1 Rights of Warrant Holders. No Warrant Certificate shall entitle
-------------------------
the registered holder thereof to any of the rights of a shareholder of the
Company, including, without limitation, the right to vote, to receive dividends
and other
13
distributions, or to receive any notice of, or to attend, meetings of
shareholders or any other proceedings of the Company.
5.2 Lost, Stolen, Mutilated or Destroyed Warrant Certificates. If
---------------------------------------------------------
any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
Company shall direct the Warrant Agent to execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Warrant Certificate, or in
lieu of or in substitution for a lost, stolen or destroyed Warrant Certificate,
a new Warrant Certificate for the number of Warrants represented by the Warrant
Certificate so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Warrant Certificate, and of
the ownership thereof, and indemnity, if requested, all satisfactory to the
Company and the Warrant Agent. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges incidental thereto as the Company or Warrant Agent
may prescribe. Any such new Warrant Certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
ARTICLE 6
SPLIT UP, COMBINATION, EXCHANGE, TRANSFER
AND CANCELLATION OF WARRANT CERTIFICATES
----------------------------------------
6.1 Split Up, Combination, Exchange and Transfer of Warrant
-------------------------------------------------------
Certificates. Prior to Exercise Deadline, Warrant Certificates, subject to the
------------
provisions of Section 6.2, may be split up, combined or exchanged for other
Warrant Certificates representing a like aggregate number of Warrants or may be
transferred in whole or in part. Any holder desiring to split up, combine or
exchange a Warrant Certificate or Warrant Certificates shall make such request
in writing delivered to the Warrant Agent at its office and shall surrender the
Warrant Certificate or Warrant Certificates so to be split up, combined or
exchanged at said office. Subject to any applicable laws, rules or regulations
restricting transferability, any restriction on transferability that may appear
on a Warrant Certificate in accordance with the terms hereof, or any ""top-
transfer""instructions the Company may give to the Warrant Agent to implement
any such restrictions (which instructions the Company is expressly authorized to
give), transfer of outstanding Warrant Certificates may be effected by the
Warrant Agent from time to time upon the books of the Company to be maintained
by the Warrant Agent for that purpose, upon a surrender of the Warrant
Certificate to the Warrant Agent at its office, with the assignment form set
forth in the Warrant Certificate duly executed and with Signatures Guaranteed.
Upon any such surrender for split up, combination, exchange or transfer, the
Warrant Agent shall execute and deliver to the Person entitled thereto a Warrant
Certificate or Warrant Certificates, as the case may be, as so requested. The
Warrant Agent may
14
require the holder to pay a sum sufficient to cover any tax or charge that may
be imposed in connection with any split up, combination, exchange or transfer of
Warrant Certificates prior to the issuance of any new Warrant Certificate. The
Warrant Agent shall have no duty or obligation under this Section unless and
until it is satisfied that all such taxes and/or charges have been paid.
6.2 Cancellation of Warrant Certificates. Any Warrant Certificate
------------------------------------
surrendered upon the exercise of Warrants or for split up, combination, exchange
or transfer, or purchased or otherwise acquired by the Company, shall be
canceled and shall not be reissued by the Company; and, except as provided (i)
in Section 2.5, in case of the exercise of less than all of the Warrants
evidenced by a Warrant Certificate, or (ii) in Section 6.1, in case of a split
up, combination, exchange or transfer of the Warrants evidenced by a Warrant
Certificate, no Warrant Certificate shall be issued hereunder in lieu of such
canceled Warrant Certificate. Any Warrant Certificate so cancelled shall be
retained by the Warrant Agent for a period of seven years thereafter, after
which it shall be destroyed unless the Warrant Agent is otherwise directed by
the Company.
6.3 Agreement of Warrant Certificate Holders. Every holder of a
----------------------------------------
Warrant Certificate by accepting the same consents and agrees with the Company
and the Warrant Agent and with every other holder of a Warrant Certificate that:
6.3.1 transfer of the Warrant Certificates shall be registered on
the books of the Company maintained for that purpose by the Warrant Agent only
if surrendered at the office of the Warrant Agent, duly and properly endorsed or
accompanied by a proper instrument of transfer, with Signatures Guaranteed; and
6.3.2 prior to due presentment for registration of transfer, the
Company and the Warrant Agent may deem and treat the Person in whose name the
Warrant Certificate is registered as the absolute owner thereof and of the
Warrants evidenced thereby (notwithstanding any notations of ownership or
writing on the Warrant Certificates made by anyone other than the Company or the
Warrant Agent) for all purposes whatsoever, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
ARTICLE 7
PROVISIONS CONCERNING THE WARRANT AGENT
AND OTHER MATTERS
--------------------------
7.1 Payment of Taxes and Charges. The Company will from time to time
----------------------------
promptly pay to the Warrant Agent, or make provisions satisfactory to the
Warrant Agent for the payment of, all taxes and charges that may be imposed by
the United States or any state upon the Company or the Warrant Agent in
connection with
15
the issuance or delivery of shares of Common Stock upon the exercise of any
Warrants, but any taxes or charges in connection with the issuance of Warrant
Certificates or certificates for shares of Common Stock in any name other than
that of the registered holder of the Warrant Certificate surrendered shall be
paid by such registered holder; and, in such case, the Company shall not be
required to issue or deliver any Warrant Certificate or certificate for shares
of Common Stock until such taxes or charges shall have been paid or it has been
established to the Company's satisfaction that no tax or charge is due. The
Warrant Agent shall have no duty or obligation under this Section unless and
until it is satisfied that all such taxes and/or charges have been paid.
7.2 Resignation or Removal of Warrant Agent. The Warrant Agent may
---------------------------------------
resign its duties and be discharged from all further duties and liabilities
hereunder after giving 30 days' notice in writing to the Company, except that
such shorter notice may be given as the Company shall, in writing, accept as
sufficient. Upon comparable notice to the Warrant Agent, the Company may remove
the Warrant Agent; provided, however, that in such event the Company shall
appoint a new Warrant Agent, as hereinafter provided. If the Warrant Agent
resigns or becomes or incapacitated to act or otherwise, the Company shall
appoint in writing a new Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Warrant Agent
or by the registered holder of any Warrant Certificate, then the registered
holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Any successor Warrant
Agent, whether appointed by the Company or any such court, shall be in good
standing and incorporated under the United States banking laws or under the laws
of any State within the United States, having its principal office within the
United States. Any new Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to the former Warrant Agent and to the Company, an
instrument accepting such appointment under substantially the same terms and
conditions as are contained herein and thereupon such new Warrant Agent, without
any further act or deed, shall become vested with the rights, powers, duties and
responsibilities of the Warrant Agent and the former Warrant Agent shall cease
to be the Warrant Agent; but if for any reason it becomes necessary or expedient
to have the former Warrant Agent execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the former Warrant
Agent.
7.3 Notice of Appointment. Not later than the effective date of the
---------------------
appointment of a new Warrant Agent, the Company shall cause notice thereof to be
mailed to the former Warrant Agent and the transfer agent, if any, for the
Common Stock and shall forthwith cause a copy of such notice to be mailed to
each registered holder of a Warrant Certificate. Failure to mail such notice,
or any defect contained therein, shall not affect the legality or validity of
the appointment of the successor Warrant Agent.
16
7.4 Merger of Warrant Agent. Any company into which the Warrant
-----------------------
Agent may be merged or with which it may be consolidated, or any company
resulting from any merger or consolidation to which the Warrant Agent shall be a
party, shall be the successor Warrant Agent under this Agreement without further
act, provided that such company would be eligible for appointment as a successor
Warrant Agent under the provisions of Section 7.2 hereof. Any such successor
Warrant Agent may adopt the prior countersignature of any predecessor Warrant
Agent and distribute Warrant Certificates countersigned but not distributed by
such predecessor Warrant Agent, or may countersign the Warrant Certificates in
its own name.
7.5 Company Responsibilities. The Company agrees that it shall (i)
------------------------
pay the Warrant Agent reasonable compensation for all its services as Warrant
Agent hereunder and will reimburse the Warrant Agent upon demand for all
expenses, advances, disbursements and expenditures that the Warrant Agent may
reasonably incur in the execution and administration of this Warrant Agreement
and the exercise and performance of its duties hereunder (including reasonable
fees and expenses of its counsel); (ii) provide the Warrant Agent, upon request,
with sufficient funds to pay any cash due pursuant to Section 4.12 upon exercise
of Warrants; and (iii) perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all further and other acts,
instruments and assurances as may reasonably be required by the Warrant Agent
for the carrying out or performing by the Warrant Agent of the provisions of
this Agreement.
7.6 Certification for the Benefit of Warrant Agent. Whenever in the
----------------------------------------------
performance of its duties under this Agreement the Warrant Agent shall deem it
necessary or desirable that any matter be proved or established or that any
instructions with respect to the performance of its duties hereunder be given by
the Company prior to taking or suffering any action hereunder, such matter may
be deemed to be conclusively proved and established, or such instructions may be
given, by a certificate or instrument signed by the Chairman, the Chief
Executive Officer, the President, a Vice President, the Secretary or the
Treasurer of the Company and delivered to the Warrant Agent. Such certificate
or instrument may be relied upon by the Warrant Agent for any action taken,
suffered or omitted in good faith by it under the provisions of this Agreement;
but in its discretion the Warrant Agent may in lieu thereof accept other
evidence of such matter or may require such further or additional evidence as it
may deem reasonable.
7.7 Books and Records. The Warrant Agent shall maintain the
-----------------
Company's books and records for registration and registration of transfer of the
Warrant Certificates issued hereunder. Such books and records shall show the
names and addresses of the respective holder of the Warrant Certificates, the
number of Warrants evidenced on its face by each Warrant Certificate and the
date of each Warrant Certificate.
17
7.8 Liability of Warrant Agent. The Warrant Agent shall only be
--------------------------
liable hereunder for its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction. The Warrant Agent shall act
hereunder solely as an agent for the Company and its duties shall be determined
solely by the provisions hereof. The Warrant Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this Warrant
Agreement or in the Warrant Certificates (except its counter-signature thereof)
or be required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only. The Warrant Agent will
not incur any liability or responsibility to the Company or to any holder of any
Warrant Certificate for any action taken, suffered or any failure to take
action, in reliance on any notice, resolution, waiver, consent, order,
certificate or other paper, document or instrument reasonably believed by the
Warrant Agent to be genuine and to have been signed, sent or presented by the
proper party or parties. The Warrant Agent shall not be under any responsibility
in respect of the validity of this Warrant Agreement or the execution and
delivery hereof by the Company or in respect of the validity or execution of any
Warrant Certificate (except its counter-signature thereof); not shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Warrant Certificate; nor shall it be responsible for
the making of any adjustment required under the provisions of Article 4 hereof
or responsible for the manner, method or amount of any such adjustment or the
facts and computations that would require any such adjustment; nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or other securities
to be issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of Common Stock or other securities will, when issued, be
validly authorized and issued and fully paid and nonassessable.
7.9 Use of Attorneys, Agents and Employees. The Warrant Agent may
--------------------------------------
execute and exercise any of the rights or powers hereby vested in it or perform
any duty hereunder either itself or by or through its attorneys, agents or
employees.
7.10 Indemnification. The Company agrees to indemnify the Warrant
---------------
Agent and save it harmless against any and all losses, expenses, damage, fine,
penalty, claim, demand settlement or liabilities, including judgments, costs and
reasonable counsel fees arising out of any action taken, suffered or omitted by
the Warrant Agent in connection with its acceptance and administration of this
Warrant Agreement, except as a result of the gross negligence or willful
misconduct of the Warrant Agent as determined by a court of competent
jurisdiction. The indemnity provided herein shall survive the termination of
this Warrant Agreement and the resignation or removal of the Warrant Agent. The
costs and expenses incurred in enforcing this right of indemnification shall be
paid by the Company. Anything to the contrary notwithstanding, in no event shall
the Warrant Agent be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Warrant Agent has been advised of the likelihood of
such loss or damage. Any liability of the Warrant Agent under
18
this Warrant Agreement will be limited to the amount of fees paid by the Company
to the Warrant Agent.
7.11 Acceptance of Agency. The Warrant Agent hereby accepts the
--------------------
agency established by this Warrant Agreement and agrees to perform the same upon
the terms and conditions herein set forth.
7.12 Changes to Agreement. The Warrant Agent may, without the consent
--------------------
or concurrence of any registered holder of a Warrant Certificate, by
supplemental agreement or otherwise, join with the Company in making any changes
or corrections in this Warrant Agreement that they shall have been advised by
counsel (i) are required to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest error herein
contained, (ii) add to the covenants and agreements of the Company or the
Warrant Agent in this Warrant Agreement such further covenants and agreements
thereafter to be observed, or (iii) result in the surrender of any right or
power reserved to or conferred upon the Company or the Warrant Agent in this
Warrant Agreement, but which changes or corrections do not or will not adversely
affect, alter or change the rights, privileges or immunities of the registered
holders of Warrant Certificates or change or increase the Warrant Agent's
duties, liabilities or obligations.
7.13 Assignment. All the covenants and provisions of this Agreement
----------
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns.
7.14 Successor to Company. The Company will not merge or consolidate
--------------------
with or into any other Person or sell or otherwise transfer its property, assets
and business substantially as an entirety to a successor Person, unless the
Person resulting from such merger, consolidation, sale or transfer (if not the
Company) shall expressly assume, by supplemental agreement satisfactory in form
and substance to the Warrant Agent and delivered to the Warrant Agent, the due
and punctual performance and observance of each and every covenant and condition
of this Warrant Agreement to be performed and observed by the Company.
7.15 Notices. Any notice or demand required by this Warrant Agreement
-------
to be given or made by the Warrant Agent or by the registered holder of any
Warrant Certificate to or on the Company shall be sufficiently given or made if
sent by first-class or registered mail, postage prepaid, addressed (until
another address is filed in writing with the Warrant Agent by the Company) as
follows:
Paragon Trade Brands, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
19
Any notice or demand required by this Warrant Agreement to be given or made by
the registered holder of any Warrant Certificate or by the Company to or on the
Warrant Agent shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing with the Company by the Warrant Agent), as follows:
ChaseMellon Shareholder Services, L.L.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Any notice or demand required by this Agreement to be given or made by the
Company or the Warrant Agent to or on the registered holder of any Warrant
Certificate shall be sufficiently given or made, whether or not such holder
receives the notice, if sent by first-class or registered mail, postage prepaid,
addressed to such registered holder at his last address as shown on the books of
the Company maintained by the Warrant Agent. Otherwise such notice or demand
shall be deemed given when received by the party entitled thereto.
7.16 Defects in Notice. Failure to file any certificate or notice or
-----------------
to mail any notice, or any defect in any certificate or notice pursuant to this
Agreement, shall not affect in any way the rights of any registered holder of a
Warrant Certificate or the legality or validity of any adjustment made pursuant
to Article 4 hereof, or any transaction giving rise to any such adjustment, or
the legality or validity of any action taken or to be taken by the Company.
7.17 Governing Law. This Warrant Agreement and the Warrant
-------------
Certificates issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for our purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts made
and performed entirely within such state.
7.18 Standing. Nothing in this Warrant Agreement expressed and
--------
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any Person other than the
Company, the Warrant Agent, and the registered holders of the Warrant
Certificates any right, remedy or claim under or by reason of this Warrant
Agreement or of any covenant, condition, stipulation, promise or agreement
contained herein; and all covenants, conditions, stipulations, promises and
agreements contained in this Warrant Agreement shall be for the sole and
exclusive benefit of the Company and the Warrant Agent and their respective
successors and assigns, and the registered holders of the Warrant Certificates.
20
7.19 Headings. The descriptive headings of the articles and sections
--------
of this Warrant Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
7.20 Counterparts. This Warrant Agreement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
7.21 Conflict of Interest. The Warrant Agent and any shareholder,
--------------------
director, officer or employee of the Warrant Agent may buy, sell or deal in any
of the Warrant Certificates or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though the Warrant Agent were not Warrant Agent under this
Warrant Agreement. Nothing herein shall preclude the Warrant Agent from acting
in any other capacity for the Company, including, without limitation, as trustee
under any indenture or as transfer agent for the Units, Common Stock or any
other securities of the Company, or for any other legal entity.
7.22 Availability of the Warrant Agreement. The Warrant Agent shall
-------------------------------------
keep copies of this Warrant Agreement available for inspection by holders of
Warrants during normal business hours at its office. Copies of this Agreement
may be obtained upon written request addressed to:
Paragon Trade Brands, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
21
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
PARAGON TRADE BRANDS, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: VP., General Counsel and Secretary
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title: Assistant Vice President
Exhibit A
[FORM OF WARRANT CERTIFICATE]
No. ___
Certificate for ____ Warrants
NOT EXERCISABLE AFTER 5:00 P.M., NEW YORK CITY TIME, ON JANUARY 28, 2010
PARAGON TRADE BRANDS, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
THIS CERTIFIES that:
or registered assigns is the registered holder (the "Registered Holder") of the
number of Warrants set forth above, each of which represents the right to
purchase one fully paid and nonassessable share of Common Stock, par value $.01
per share (the "Common Stock"), of Paragon Trade Brands, Inc., a Delaware
corporation (the "Company"), at the initial exercise price (the "Exercise
Price") of $18.91 by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon duly executed at the office maintained
pursuant to the Warrant Agreement hereinafter referred to for that purpose by
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company, or its successor as warrant agent (any such warrant agent being herein
called the "Warrant Agent"), and by paying in full the Exercise Price, plus
transfer taxes, if any. Payment of the Exercise Price shall be made in United
States currency, by certified check or money order payable to the order of the
Company.
The Warrants are subject to call for redemption by the Company (or its
successor by merger) upon not less than 30 days' nor more than 60 days' notice
at a call price per warrant (the "Call Price") determined pursuant to Section
3.1 of the Warrant Agreement, dated as of January 28, 2000, between the Company
and the Warrant Agent (the "Warrant Agreement"), if notice of such call (the
"Call Notice") is given by the Company to the Warrant Agent pursuant to Section
3.1 of the Warrant Agreement within 30 days following a Qualified Change of
Control (as defined in Section 3.4 of the Warrant Agreement).
No Warrant may be exercised after 5:00 P.M., New York City time, on
the expiration date (the "Expiration Date") which will be the earlier of January
28, 2010, or the business day preceding the call date specified in a Call
Notice. All Warrants evidenced hereby shall thereafter become null and void.
Prior to the Expiration Date, subject to any applicable laws, rules or
regulations restricting transferability and to any restriction on
transferability that may
A-1
appear on this Warrant Certificate in accordance with the terms of the Warrant
Agreement, the Registered Holder shall be entitled to transfer this Warrant
Certificate, in whole or in part, upon surrender of this Warrant Certificate at
the office of the Warrant Agent maintained for that purpose with the form of
assignment set forth hereon duly executed, with signatures guaranteed by a
member firm of a national securities exchange, a commercial bank or a trust
company located in the United States, or a member of the National Association of
Securities Dealers, Inc., or other eligible guarantor institution which is a
participant in a signature guarantee program (as such terms are defined in Reg.
240.17Ad-15 under the Securities Exchange Act of 1934, as amended), acceptable
to the Warrant Agent. Upon any such transfer, a new Warrant Certificate or
Warrant Certificates representing the same aggregate number of Warrants shall be
issued in accordance with instructions in the form of assignment.
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, there shall be issued to the Registered Holder a new
Warrant Certificate in respect of the Warrants not exercised.
Prior to the Expiration Date, the Registered Holder shall be entitled
to exchange this Warrant Certificate, with or without other Warrant
Certificates, for another Warrant Certificate or Warrant Certificates of the
same aggregate number of Warrants, upon surrender of this Warrant Certificate at
the office maintained for such purpose by the Warrant Agent.
Upon certain events provided for in the Warrant Agreement hereinafter
referred to, the Exercise Price, the number of shares of Common Stock issuable
upon the exercise of each Warrant are required to be adjusted.
No fractional shares will be issued upon the exercise of Warrants. As
to any final fraction of a share which the registered holder of one or more
Warrant Certificates, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, the
Company shall pay the cash value thereof determined as provided in the Warrant
Agreement.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement and is subject to the terms and provisions contained in said
Warrant Agreement, to all of which terms and provisions the Registered Holder
consents by acceptance hereof.
This Warrant Certificate shall not entitle the Registered Holder to
any of the rights of a shareholder of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions, or
to attend or receive any notice of meetings of shareholders or any other
proceedings of the Company.
This Warrant Certificate shall not be valid for any purpose unless and
until it shall have been countersigned by the Warrant Agent.
A-2
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its facsimile Corporate Seal.
PARAGON TRADE BRANDS, INC.
By:________________________________
Name:
Title:
Seal Attest:
Countersigned: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Warrant Agent
Dated: ___________ By:________________________________
Name:
Title:
A-3
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise
____________ of the Warrants represented by this Warrant Certificate and to
purchase the shares of Common Stock issuable upon the exercise of said
Warrants, and requests that certificates for such shares be issued and
delivered as follows:
ISSUE TO: __________________________________________________________
(Name)
__________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
__________________________________________________________
(SOCIAL SECURITY OR OTHER TAX IDENTIFYING NUMBER)
DELIVER TO: ________________________________________________________
(Name)
__________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
If the number of Warrants hereby exercised is less than all the
Warrants represented by this Warrant Certificate, the undersigned requests
that a new Warrant Certificate representing the number of full Warrants not
exercised be issued and delivered as set forth below.
In full payment of the purchase price with respect to the
Warrants exercised and transfer taxes, if any, the undersigned hereby
tenders payment of $_________ by certified check of money order payable to
the order of the Company in United States currency.
Dated: _________________
________________________ _____________________________________________
(Insert Social Security or (Signature of registered holder)
other identifying number(s)
of holder(s))
_____________________________________________
(signature of registered holder, if
co-owned)
NOTE: Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.
A-4
[FORM OF
ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
represented by the within Warrant Certificate, with respect to the number of
warrants set forth below:
Name of Assignee Address No. of Warrants
------------------ ------------------ -------------------------------
and does hereby irrevocably constitute and appoint ________________ to make such
transfer on the books of Paragon Trade Brands, Inc. maintained for that purpose,
with full power of substitution in the premises.
Dated: ___________, 20__
___________________________ _____________________________________________
(Insert Social security or (Signature of Assignee)
other identifying number(s)
of holder(s))
________________________________________
(Signature of Assignee
if co-owned)
NOTE: Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate.
Signature(s) Guaranteed:
A-5
Exhibit B
CALL PRICE AND ADJUSTED VALUE CALCULATIONS
The Call Price or the Adjusted Value, as applicable, shall be
determined using the Black-Scholes model with the following input values as of
the date the Qualified Change of Controls occurs:
1. The average Current Market Price for the 30 day period ending on the
date of the Qualified Change of Control.
2. The then current Exercise Price ($18.91, as such price may be adjusted
as provided in Article 4 of the Warrant Agreement).
3. The risk free rate of return shall be the then current rate for
treasury bills of comparable maturity to the remaining life of the
Warrants.
4. The remaining life of the Warrants.
5. The number of Warrants outstanding.
6. A 32.5% volatility rate.
In the case of an Adjusted Value calculation, the dollar value
obtained pursuant to the foregoing calculation shall be determined on a per
Warrant basis, and the number of shares purchasable per Warrant at the then
current Exercise Price shall be adjusted so that each Warrant will have a value,
effective as of the date of the Qualified Change of Control, equal to its
Adjusted Value.
B-1
