1
AGREEMENT OF PURCHASE AND SALE
This Agreement of Purchase and Sale (the "Agreement"), is made and
entered into effective as of December 29, 1995, by and between Florafax
International, Inc., a Delaware corporation (the "Seller"), and St. Xxxxx
Capital Partners, L.P., a Delaware limited partnership (the "Purchaser"), and
sets forth the terms and conditions of the sale and purchase of a $2,500,000 7%
Convertible Promissory Note, substantially in the form attached hereto as
Exhibit A (the "Note"). For purposes of this Agreement, the term "Seller" is
defined to mean Florafax International, Inc. and each of its subsidiaries.
WHEREAS, the Seller desires to issue and sell to the Purchaser, and
the Purchaser desires to purchase and accept from the Seller, the Note in the
form of Exhibit A, on the terms and subject to the conditions set forth herein,
the obligations of which of the Seller are secured by a Security Agreement
between the Seller and the Purchaser attached as Exhibit B (the "Security
Agreement").
WHEREAS, the Seller and the Purchaser desire to make certain
representations, warranties and agreements in connection with the purchase and
sale of the Note contemplated hereby.
WHEREAS, the Seller desires to sell to the Purchaser: (i) 250,000
warrants to purchase shares of Seller's common stock, par value $.01 per share
(the "Common Stock") on the date hereof (the "Commitment Warrants"), and (ii)
400,000 warrants upon the occurrence of certain conditions set forth herein
(the "Funding Warrants"), all of which Warrants shall have the terms and be
subject to the conditions set forth in the Form of Warrants attached hereto as
Exhibit C1 and Exhibit C2, respectively (the Commitment Warrants and the
Funding Warrants are collectively referred to herein as the "Warrants").
WHEREAS, the Seller desires to grant to the Purchaser certain
registration rights in respect to the shares of Seller's Common Stock that may
be acquired on the conversion of the Note or the exercise of the Warrants,
which registration rights shall have the terms and be subject to the conditions
set forth in the Registration Rights Agreement attached hereto as Exhibit D
(the "Registration Rights Agreement"; this Agreement, the Note, the Security
Agreement, the Warrants and the Registration Rights Agreement are collectively
referred to as the "Transaction Documents").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein, the parties agree as
follows:
ARTICLE I
Purchase and Sale
1.1 Purchase and Sale of the Note and the Warrants. Subject to
the terms of this Agreement, the Seller agrees to and does hereby issue, sell
and deliver: (i) the Commitment Warrants on the date hereof, and (ii) the Note
and the Funding Warrants to the Purchaser at the Closing (as
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defined herein), and Purchaser agrees to and does hereby purchase and accept
the Note and the Warrants from the Seller on such dates.
1.2 Consideration for Purchase of the Note. Subject to the terms
of this Agreement, the Purchaser hereby agrees to pay to the Seller at Closing,
by check or wire transfer to the account of the Seller, $2,500,000, as the
consideration for the purchase of the Note (the "Note Consideration").
1.3 Consideration for Purchase of the Warrants. Subject to the
terms of this Agreement, the Purchaser hereby agrees to pay to the Seller on
the date hereof or at Closing, as the case may be, by check or wire transfer to
the account of the Seller, $0.001 per Warrant, as the consideration for the
purchase of the Warrants (the "Warrants Consideration"; the Note Consideration
and the total Warrants Consideration are collectively referred to as the
"Consideration").
ARTICLE II
Representations and Warranties of Seller
Seller represents and warrants to the Purchaser as follows:
2.1 Organization, Standing and Qualification. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. Seller is licensed and qualified to do
business as a foreign corporation in each jurisdiction in which the character
of Seller's properties, owned or leased, or the nature of its activities makes
such qualification or license necessary, except where failure to be so licensed
and qualified would not have a material adverse effect on Seller's business.
2.2 Authority; No Defaults. Seller has all requisite corporate
power and authority to enter into the Transaction Documents and to carry out
its obligations thereunder. The execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of Seller.
The Transaction Documents have been executed and delivered by Seller and
constitute the valid and binding obligation of Seller, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, moratorium and
other similar laws affecting creditors' rights generally and general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The execution and delivery of the Transaction
Documents do not, and the consummation of the transactions contemplated hereby
and thereby will not, conflict with or result in a breach of or the
acceleration of any obligation under, or constitute a default or event of
default (or event which, with notice or lapse of time or both, would constitute
a default) under, any provision of any charter, bylaw, indenture, mortgage,
lien, lease, agreement, contract, instrument, order, judgment, decree,
ordinance or regulation, or any restriction to which any property of Seller is
subject or by which Seller is bound, the effect of which would be materially
adverse to Seller. Seller is not, nor is it alleged to be, in material
violation or default of any applicable law, statute, order, rule or regulation
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promulgated or judgment entered by any court, administrative agency or
commission or other governmental agency or instrumentality, domestic or foreign
(a "Governmental Entity"), relating to or affecting the operation, conduct or
ownership of the property or business of Seller.
2.3 Approvals. Except for compliance with the provisions of the
Securities Exchange Act of 1934 (the "Exchange Act"), the Securities Act of
1933 (the "Securities Act") and the blue sky laws of various states, there is
no legal impediment to the execution and delivery of the Transaction Documents
by Seller or to the consummation of the transactions contemplated thereby, and
no filing or registration with, or authorization, consent or approval of, a
Governmental Entity, shareholders or any other third party is necessary for the
consummation by Seller of the transactions contemplated thereby.
2.4 SEC Documents. Seller has made all filings with the
Securities and Exchange Commission ("SEC") that it has been required to make
under the Securities Act and the Exchange Act since August 31, 1991. Seller
has provided to the Purchaser a true, complete and correct copy of Seller's
annual report on Form 10-KSB for the fiscal year ended August 31, 1995,
together with all amendments thereto, and any and all filings with the SEC made
by Seller (including all requested exhibits to such filings) since the filing
of said Form 10-KSB (all such documents that have been filed with the SEC, as
amended, are referred to as the "Seller SEC Documents"). As of their
respective dates, and except as amended, the Seller SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and none of the Seller SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Seller included in the Seller SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
the unaudited statements, as permitted by Form 10-Q) and fairly present
(subject, in the case of the unaudited statements, to normal recurring audit
adjustments) the consolidated financial position of Seller as of the dates
thereof and the consolidated results of its operations and cash flows for the
periods then ended. Except as set forth in the Seller SEC Documents, since
August 31, 1995, (i) there have been no material adverse changes in the
Seller's business, operations or financial condition and (ii) Seller's
operations have been conducted in the ordinary course of business except as
disclosed in writing to the Purchaser.
2.5 Litigation. Except as set forth in Seller SEC Documents or
set forth in Schedule 2.5, as of the date of this Agreement, there is no suit,
action, proceeding or investigation pending or, to the best knowledge of
Seller, threatened against or affecting Seller (or any of its respective
officers or directors in connection with the business of Seller), nor is there
any outstanding judgment, order, writ, injunction or decree against Seller,
which judgment would have a material adverse effect on Seller. Seller is not
subject to any court order, writ, injunction, decree, settlement agreement or
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judgment that contains or orders any on-going obligations, whether prohibitory
or mandatory in nature, the performance of which would have a material adverse
effect on Seller.
2.6 Capitalization. Seller has authorized capital stock of (a)
18,000,000 shares of Common Stock of which, as of December 31, 1995, there are
6,022,973 shares issued and outstanding, and (b) 600,000 shares of preferred
stock, par value $10 per share, ("Preferred Stock"), of which, as of December
31, 1995, 0 are issued and outstanding. All of the issued and outstanding
shares of Common Stock were duly and validly issued and are fully paid and
non-assessable. None of the outstanding shares of Common Stock have been
issued in violation of any preemptive rights of the current or past
stockholders of Seller. As of the date hereof, the Seller has reserved for
issuance (i) an aggregate of 125,000 shares of Common Stock issuable on
issuance of stock options to employees, officers, directors and other persons,
and (ii) an aggregate of 1,177,823 shares of Common Stock issuable on exercise
of convertible securities other than those listed in (i) above. Except as set
forth on Schedule 2.6, or described above in (i) and (ii), and except for
shares that may be issued in connection with completed or pending acquisitions,
there are no outstanding options, warrants or rights to subscribe for, or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of Seller or
contracts, commitments, understandings or arrangements by which Seller is or
may be obligated to issue additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its capital
stock. All of the Common Stock issued on the conversion of the Note or the
exercise of the Warrants will be fully paid, non-assessable and free and clear
of any preemptive rights and, subject to compliance with the statutes and
regulations referred to in Section 2.3, Encumbrances. As used in this
Agreement, the term "Encumbrance" means and includes (i) any security interest,
mortgage, deed of trust, lien, charge, pledge, proxy, adverse claim, equity,
power of attorney, or restriction of any kind, including but not limited to,
any restriction or servitude on the use, transfer, receipt of income, or other
exercise of any attributes of ownership, other than restrictions imposed by the
Securities Act or any state blue sky laws, and (ii) any Uniform Commercial Code
financing statement or other public filing, notice or record that by its terms
purports to evidence or notify interested parties of any of the matters
referred to in clause (i) that has not been terminated or released by another
proper public filing, notice or record.
2.7 Subsidiaries. Schedule 2.7 sets forth a true, complete and
correct list of each subsidiary of Seller, including state or country of
organization and address of its principal executive offices. Each subsidiary
of Seller is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite corporate power and authority to own, to lease or to operate its
properties and to carry on its business as it is now being conducted and is
duly qualified or licensed to do business in each jurisdiction in which the
character of its properties, owned or leased, or the nature of its activities
makes such qualification or license necessary, unless the failure to be so
licensed or qualified would not have a material, adverse effect on Seller.
Except as set forth in Schedule 2.7, all outstanding shares of capital stock of
each subsidiary of Seller were duly and validly issued and are fully paid,
nonassessable and owned by Seller or a subsidiary of Seller, free and clear of
all Encumbrances. There are no options, warrants or other rights, agreements
or commitments (including preemptive rights) obligating Seller or any of its
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subsidiaries to issue, to sell or to transfer any shares of capital stock or
other securities of any subsidiary of Seller.
2.8 Liabilities. Except as set forth in Schedule 2.8, Seller has
no liabilities or obligations, either accrued, absolute, contingent, or
otherwise that have a material adverse effect on the value or business of
Seller, and Seller has no knowledge of any potential liability that it
reasonably believes would likely result in a material adverse effect on the
value or business of the Seller, other than those (a) reflected or reserved
against in the unaudited consolidated balance sheet of Seller at November 30,
1995 or disclosed in other Seller SEC Documents or (b) incurred in the ordinary
course of business since November 30, 1995.
2.9 Licenses, Permits, Authorizations, Etc. Seller holds all
approvals, authorizations, consents, licenses, orders, franchises, rights,
registrations and permits of any type required to operate its business as
presently conducted, except where failure to be so authorized would not have a
material adverse effect on Seller's business. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
will not result in any revocation, cancellation, suspension or modification of
any such approval, authorization, consent, license, order, franchise, right,
registration or permit.
2.10 Title to Assets; Encumbrances. Except as set forth in
Schedule 2.10:
2.10.1 Seller has good and indefeasible title to its assets,
whether real, personal or intangible, free and clear of all Encumbrances except
(i) as reflected in the Seller SEC Documents, (ii) liens for current taxes and
assessments not yet due or being contested in good faith by appropriate
proceedings, (iii) mechanic's liens arising under the operation of law for
actions contested in good faith or for which payment arrangements have been
made, (iv) liens granted or incurred by Seller in the ordinary course of its
business or financing of equipment, office space, furniture and computers in
the ordinary course of its business, and (v) easements, rights of way,
encroachments or other reductions or matters affecting title which do not
prevent the assets from being used for the purpose for which they are currently
being used;
2.10.2 There are no parties in possession of any of the assets of
Seller other than personal property held by third parties in the reasonable and
ordinary course of business. Seller enjoys full, free and exclusive use and
quiet enjoyment of its assets and its rights pertaining thereto. Seller enjoys
peaceful and undisturbed possession under all leases under which it is a
lessee, and each such lease is a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
2.11 Taxes and Returns. Seller has filed all required tax returns
and reports. Seller has paid all taxes, assessments and governmental charges
and penalties which it has incurred, except such as are being or may be
contested in good faith by appropriate proceedings. Seller is not delinquent
in the payment of any tax, assessment or governmental charge. No deficiencies
for any taxes have been proposed, asserted, or assessed against Seller, and no
requests for waivers of the time to assess
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any such tax are pending. For the purposes of this Agreement, the term "tax"
(including, with correlative meaning, the terms "taxes" and "taxable") shall
include all federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, withholding, excise and
other taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts.
2.12 Insurance. Each policy of property, fire and casualty,
product liability, worker's compensation, professional liability and title
insurance and other forms of insurance (except group, health and life policies)
and each bond issued or posted by any person with respect to any operations or
other activities of Seller is, to the knowledge of Seller, the legal, valid and
binding obligation of the insurer or bond issuer, enforceable in accordance
with its terms, and is in an amount and provides for coverage as is customary
in the ordinary business practices of Seller's industry.
2.13 Hazardous Wastes and Substances. Except as set forth in
Seller SEC Documents, to the reasonable knowledge of Seller neither the
operations of Seller nor the use of its assets violates any applicable federal,
state or local law, statute, ordinance, rule, regulation, memorandum of
understanding, order or notice requirement pertaining to the collection,
transportation, storage, treatment, discharge, release or disposal of hazardous
or non-hazardous waste or substances, including without limitation (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Section Section 9601 et seq.), as amended from time to time on or
before the Closing Date ("CERCLA") (including, without limitation, as amended
pursuant to the Superfund Amendments and Reauthorization Act of 1986), and such
regulations promulgated under CERCLA on or before the Closing Date, (ii) the
Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section Section 6901
et seq.), as amended from time to time ("RCRA") on or before the Closing Date,
and such regulations promulgated under RCRA, (iii) any applicable federal,
state or local laws or regulations relating to the environment in effect on the
Closing Date (collectively, the "Applicable Environmental Laws"). Except as
set forth in the Seller SEC Documents, none of the operations of Seller has
ever been conducted nor have any of its assets been used in such a manner as to
constitute a violation of any of the Applicable Environmental Laws. Except as
set forth in Seller SEC Documents, no notice has been served on Seller by any
person or Governmental Entity regarding any existing, pending or threatened
investigation or inquiry related to violations under any Applicable
Environmental Law, or regarding any claims for corrective action, remedial
obligations or contribution for removal costs or damages under any Applicable
Environmental Law or regarding the designation of Seller or any of its
affiliates as a potentially responsible party for any facility under the
Applicable Environmental Laws, nor, to the reasonable knowledge of Seller, does
any fact or circumstance exist which, if disclosed publicly, would be
reasonably likely to result in the service on Seller of any such notice. Except
as set forth on Seller SEC Documents, to the reasonable knowledge of Seller,
there has been no action taken, or omitted to be taken by Seller which has
caused, or would be reasonably likely to cause, a "release" of any "hazardous
substance" at any "facility", without limitation, within the meaning of such
terms as defined in the Applicable Environmental Laws.
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ARTICLE III
Representations and Warranties of Purchaser
Purchaser represents and warrants to the Seller as follows:
3.1 Organization, Standing and Qualification. Purchaser is a
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware.
3.2 Authority; No Defaults. Purchaser has all requisite corporate
power and authority to enter into the Transaction Documents and to carry out
its obligations thereby. The execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary partnership action on the part of
Purchaser.
ARTICLE IV
The Closing
4.1 Time and Place. The closing of the purchase and sale of the
Note and the Funding Warrants (the "Closing") will take place on February 28,
1996 (the "Closing Date"), at the offices of Xxxxxx & Xxxxxx, L.L.P., unless
another place is agreed to by the parties.
4.2 Conditions to the Obligation of Seller. The obligation of
Seller to effect the Closing is subject to the Purchaser delivering, or causing
to be delivered, to Seller at the Closing the Consideration.
4.3 Conditions to the Obligation of Purchaser. The obligation of
Purchaser to effect the Closing is subject to Seller delivering, or causing to
be delivered, to Purchaser at the Closing the following documents:
4.3.1 copies, certified by the Secretary of State of the
State of Delaware, of the Articles of Incorporation of Seller and all
amendments thereto;
4.3.2 copies, certified by the Secretary of Seller as of
the Closing Date, of the bylaws of Seller and all amendments thereto;
4.3.3 copies, certified by a certificate of the Secretary
of Seller as of the Closing Date, of resolutions duly adopted by the board of
directors of Seller, authorizing the execution and delivery by Seller of the
Transaction Documents and all other agreements or other documents contemplated
thereby, the completion of the sale of the Note and Warrants and the taking of
all such other corporate action as shall have been required as a condition to,
or in connection with, the sale of the Note and Warrants;
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4.3.4 the Note;
4.3.5 the Security Agreement and any related financing
statements;
4.3.6 the Funding Warrants;
4.3.7 a certificate of an officer of the Seller, in a form
acceptable to the Purchaser in its sole discretion, that each of the
representations and warranties of Seller in the Transaction Documents are true
as of the Closing Date;
4.3.8 an opinion of Xxxxxxxx Xxxx Xxxxxxxxxx Xxxxxx Xxxxxxx
& Xxxxxx Incorporated, counsel to the Seller, in the form attached hereto as
Exhibit E; and
4.3.9 evidence, to the satisfaction of Purchaser in its
sole discretion, that all shares of Common Stock issuable upon conversion of
the Note or exercise of the Warrants have been approved for trading on the
Nasdaq Stock Market's OTC Bulletin Board.
ARTICLE V
General Provisions
5.1 Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained in this Agreement shall
survive the Closing until such time as the Purchaser is no longer the owner of
any of the Shares.
5.2 Notices. All notices or other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person, transmitted by
telecopier (with receipt confirmed) or mailed by registered or certified first
class mail, postage prepaid, return receipt requested to the parties hereto at
the address set forth below (as the same may be changed from time to time by
notice similarly given) or the last known business or residence address of such
other person as may be designated by either party hereto in writing.
(a) If to Seller:
Florafax International, Inc.
0000 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxx
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(b) If to Purchaser:
St. Xxxxx Capital Corp.
0000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx
5.3 Miscellaneous. This Agreement and the other Transaction
Documents (i) constitute the entire agreement and supersede all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof, (ii) shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns and is not intended to confer upon any other person any rights or
remedies hereunder, (iii) shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of Delaware and
(iv) may be executed in two or more counterparts which when read together shall
constitute a single agreement.
5.4 Publicity. Seller and Purchaser promptly shall advise and
cooperate with the other prior to issuing, or permitting any of its directors,
officers, employees or agents to issue, any press release with respect to this
Agreement or the explicit transactions contemplated hereby. Notwithstanding the
foregoing, without the prior consent of the Purchaser, neither Seller nor any
of its directors, officers, employees or agents shall issue any press release
which includes the name of the Purchaser or any of the Purchaser' affiliates.
5.5 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party.
5.6 Schedules. All statements contained in any exhibit, schedule,
appendix, certificate or other instrument delivered by or on behalf of the
parties hereto, or in connection with the transactions contemplated hereby, are
an integral part of this Agreement and shall be deemed representations and
warranties hereunder.
5.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which constitutes an original execution and, in the
aggregate, constitute a single document.
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SELLER'S SIGNATURE PAGE
IN WITNESS WHEREOF, Seller has signed this Agreement as of the date first
written above.
FLORAFAX INTERNATIONAL, INC.
-----------------------------------
Xxxxx X. Xxxx, President
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PURCHASER'S SIGNATURE PAGE
IN WITNESS WHEREOF, Purchaser has signed this Agreement as of the
date first written above.
ST. XXXXX CAPITAL PARTNERS, L.P.
By: St. Xxxxx Capital Corp., its General Partner
-----------------------------------------------
Xxxx X. Xxxxxxxx, President
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS NOTE AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW. THE SECURITIES
REPRESENTED BY THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE
SECURITIES LAWS.
FLORAFAX INTERNATIONAL, INC.
7% Convertible Promissory Note
$2,500,000 Houston, Texas February 28, 1996
Florafax International, Inc., a Delaware corporation (hereinafter
called the "Company," which term includes any directly or indirectly controlled
subsidiaries or successor entities), for value received, hereby promises to pay
to St. Xxxxx Capital Partners, L.P., a Delaware limited partnership
(hereinafter called "Holder"), or its registered assigns, the principal sum of
Two Million Five Hundred Thousand Dollars ($2,500,000) together with accrued
interest on the amount of such principal sum, payable in accordance with the
terms set forth below.
THE OBLIGATIONS OF THE COMPANY CONTAINED IN THIS NOTE ARE SUBJECT TO
THE TERMS OF A SECURITY AGREEMENT BETWEEN THE COMPANY AND THE HOLDER DATED AS
OF FEBRUARY 28, 1996 (THE "SECURITY AGREEMENT").
ARTICLE I
Definitions
For all purposes of this Note, except as otherwise expressly provided
or unless the context otherwise requires: (i) The terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular; (ii) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles as promulgated from time to time by the Association of
Independent Certified Public Accountants; and (iii) the words "herein" and
"hereof" and other words of similar import refer to this Note as a whole and
not to any particular Article, Section or other subdivision.
1.1 "Board of Directors" means the board of directors of the
Company as elected from time to time or any duly authorized committee of that
board.
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1.2 "Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in Houston, Texas
are authorized or obligated by law or executive order to be closed.
1.3 "Common Stock" means shares of common stock, par value $.01
per share, of the Company.
1.4 "Company Financial Statements" shall mean those audited
financial statements of the Company included in the Company's most recent
annual report as filed with the United States Securities and Exchange
Commission on Form 10-K, and any amendments thereto.
1.5 "Conversion Price" means the price per share determined in
accordance with Articles IV and V (as adjusted in accordance with the terms of
this Note) at which shares of Common Stock shall be delivered to Holder upon
conversion of this Note into Common Stock.
1.6 "Default" means any event which is, or after notice or
passage of time would be, an Event of Default.
1.7 "Event of Default" has the meaning specified in Section 3.1.
1.8 "Indebtedness" of any Person means all indebtedness of such
Person, whether outstanding on the date of this Note or hereafter created,
incurred, assumed or guaranteed, (i) for the principal of, premium on and
interest on all debts of the Person whether outstanding on the date of this
Note or thereafter created for money borrowed by such Person (including
capitalized lease obligations), money borrowed by others (including capitalized
lease obligations) and guaranteed, directly or indirectly, by such Person, or
purchase money indebtedness, or indebtedness secured by property ("Purchase
Money Indebtedness") at the time of the acquisition of such property by such
Person, for the payment of which the Person is directly or contingently liable;
(ii) for all accrued obligations of the Person in respect of any contract,
agreement or instrument imposing an obligation upon the Person to pay over
funds; (iii) for all trade debt of the Person; and (iv) for all deferrals,
renewals, extensions and refundings of, and amendments, modifications and
supplements to, any of the indebtedness referred to in (i), (ii) or (iii)
above.
1.9 "Market Price" for any day, when used with reference to Common
Stock, shall mean the price of said Common Stock determined by reference to the
last reported sale price for the Common Stock on such day on the principal
securities exchange on which the Common Stock is listed or admitted to trading
or if no such sale takes place on such date, the average of the closing bid and
asked prices thereof as officially reported, or, if not so listed or admitted
to trading on any securities exchange, the last sale price for the Common Stock
on the National Association of Securities Dealers national market system on
such date, or, if there shall have been no trading on such date or if the
Common Stock shall not be listed on such system, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any NASD member
firm selected from time to time by the Company for such purpose.
1.10 "Maturity Date", when used with respect to the Note means
February 28, 1997 (or such earlier date upon which the Note become due and
payable).
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1.11 "Note" means this 7% Convertible Promissory Note.
1.12 "Outside Financing" shall be defined as (i) any transaction
where the Company sells or transfers its equity or debt securities for cash
whether in public or private offerings and (ii) any financing from a bank or
other entity acting as a financial institution made to the Company or any
Subsidiary other than (x) Purchase Money Indebtedness incurred in the ordinary
course of business, and (y) amounts advanced under the terms of the Independent
Sales Organization and Merchant Servicing Agreement by and between the Company
and Universal Savings Bank, F.A., dated December 31, 1995.
1.13 "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
1.14 "SEC" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act of 1933.
1.15 "Subsidiary" means a corporation or other entity in which more
than 50% of the outstanding voting stock or equity interests is owned or
controlled, directly or indirectly, by the Company or any combination of the
Company and one or more other Subsidiaries. For the purposes of this
definition, "voting stock" means stock or other interests which ordinarily has
voting power for the election of directors, and equity interests means the
right to receive the profits of the entity, when disbursed, or the assets of
the entity upon liquidation or dissolution.
ARTICLE II
Payments
2.1 Interest. From the date of this Note through the Maturity
Date, interest shall accrue hereunder on the unpaid outstanding principal sum
of this Note at at a rate equal to 7% per annum calculated on the basis of a
360-day year. All past due amounts of principal and interest shall bear
interest at 15% per annum calculated on the basis of a 360-day year until paid.
2.2 Payment of Principal and Interest. The principal and unpaid
interest of this Note shall be due and payable in full on the Maturity Date.
2.3 Prepayments; Escrow of Funds.
2.3.1. At any time before the Maturity Date, the Company may
prepay all or any part of this Note by making a voluntarily deposit of funds
into an escrow account for the benefit of Holder and upon terms acceptable to
the Holder (the "Escrow Account") to be applied towards payment of the amount
of the principal and accrued interest due under this Note (the "Outstanding
Balance"). The Company shall provide notice of such deposit to the Holder (the
"Escrow Notice").
2.3.2. Immediately upon the closing of an Outside Financing,
the Company will deposit an amount into the Escrow Account equal to the lesser
of (i) the net proceeds received by the
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Company or any Subsidiary from such Outside Financing; or (ii) the amount
required to make the total funds in the Escrow Account (the "Escrow Balance")
equal the Outstanding Balance. The Company shall transmit notice of such
Outside Financing (the "Financing Notice") within one business day of the
closing of the Outside Financing. Upon the closing of each subsequent Outside
Financing, additional deposits into the Escrow Account shall be made in
accordance with this section.
2.3.3. Upon the deposit of any funds into the Escrow
Account, such funds shall be allocated toward the payment of accrued interest
on the date of such deposit and any balance shall be allocated to prepayment of
the outstanding principal of the Note on the date of such deposit. Principal
to which funds have been allocated in the Escrow Account shall cease accruing
interest under the Note on the date of such deposit and shall be prepaid 10
Business Days after receipt of notice of such deposit by the Holder. The
Company will transmit notice to the Holder within one business day of such
deposit. Ten (10) Business Days after receipt of such notice by the Holder,
any amount of funds in the Escrow Account attributable to a portion of the Note
which was converted into Common Stock, as contemplated by Section 4.1 hereof,
will be disbursed to the Company and the remainder will be disbursed to the
Holder.
2.4 Manner of Payment upon Maturity. At maturity, payment of
principal and interest on this Note will be made by delivery of checks to
Holder at its address as set forth in this Note or wire transfers pursuant to
instructions from Holder. If the date upon which the payment of principal and
interest is required to be made pursuant to this Note occurs other than on a
Business Day, then such payment of principal and interest shall be made on the
next occurring Business Day following said payment date and shall include
interest through said next occurring Business Day.
ARTICLE III
Remedies
3.1 Events of Default. An "Event of Default" occurs if:
3.1.1. the Company defaults in the payment or a mandatory
prepayment by deposit of funds into escrow of the principal or interest of the
Note when such principal or interest becomes due and payable; or
3.1.2. the Company defaults in the performance of any
covenant made by the Company, and such default remains uncured for a period of
30 days in (i) the Agreement of Purchase and Sale by and between the Company
and the Holder dated as of December 29, 1995 (the "Purchase Agreement"), (ii)
the Common Stock Purchase Warrants issued by the Company to the Holder (the
"Warrants"); (iii) the Registration Rights Agreement dated as of December 29,
1995 by and between the Company and the Holder (the "Registration Rights
Agreement"); (iv) the Security Agreement; or (v) this Note, provided that a
default in the performance of any covenant in Sections 8(a), 8(c), 8(d), 8(e),
8(f), 8(h), 8(i), 8(j), 8(k), 8(l), 8(m) or 8(n) of the Security Agreement; or
Section 6.1 of this Note shall be an event of Default immediately upon
occurrence; or
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3.1.3. any representation or warranty made by the Company in
the Purchase Agreement, the Warrants, the Registration Rights Agreement, this
Note or in any certificate furnished by the Company in connection with the
consummation of the transaction contemplated thereby, is untrue in any material
respect as of the date of making thereof; or
3.1.4. the Company defaults in the payment when due (whether
by lapse of time, by declaration, by call for redemption or otherwise) of the
principal of or interest on any Indebtedness of the Company (other than the
Indebtedness evidenced by the Note or good-faith disputes with trade creditors)
having an aggregate principal amount in excess of $100,000 and such default
remains uncured for a period of 15 days; or
3.1.5. a court of competent jurisdiction enters a final and
non-appealable judgment or judgments against the Company or any property or
assets of the Company for the payment of money aggregating $100,000 or more in
excess of applicable insurance coverage; or
3.1.6. a court of competent jurisdiction enters (i) a decree
or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of the property of
the Company or ordering the winding up or liquidation of the affairs of the
Company; or
3.1.7. the Company: (i) commences a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or any other case or proceeding to be
adjudicated a bankrupt or insolvent; (ii) files a petition, answer or consent
seeking reorganization or similar relief under any applicable federal or state
law; (iii) makes an assignment for the benefit of creditors; or (iv) admits in
writing its inability to pay its debts generally as they become due; or
3.1.8. any person or group (within the meaning of Section
13(d) of the Securities Exchange Act of 1934) becomes the beneficial owner of
25% or more of the total voting power of the Company and was not the beneficial
owner of 25% or more of the total voting power of the Company as of the date of
this Note;
3.1.9. the Company: (i) merges or consolidates with or into
any other Person, unless the Company is the surviving or acquiring party; (ii)
the Company dissolves or liquidates; or (iii) the Company sells all or any
substantial portion of its assets.
3.2 Acceleration of Maturity. This Note and all accrued interest
shall (i) automatically become immediately due and payable if an Event of
Default described in Sections 3.1.6, 3.1.7, 3.1.8 or 3.1.9 occurs, and (ii)
become immediately due and payable at the option of the Holder in its sole
discretion if any other Event of Default occurs.
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ARTICLE IV
Conversion of Note
4.1 Conversion Privilege and Conversion Price. Subject to and
upon compliance with the provisions of this Article, at the option of Holder,
all or any part of this Note may be converted at any time, at the amount of
principal and accrued interest hereof, into fully paid and nonassessable shares
of Common Stock (the "Shares"), calculated as to each conversion to the nearest
1/100 of a share at the Conversion Price, determined as hereinafter provided,
in effect at the time of conversion. The Conversion Price shall be initially
$1.25 per share of Common Stock. The principal amount of this Note shall be
reduced by the amount so converted as if payment or prepayment in such amount
has occurred.
4.2 Mandatory Conversion. If, at any time: (i) the Market Price
of the Company's common stock for each of the previous 20 consecutive trading
days shall be $3.00 or more and (ii) the average daily trading volume for such
20- day period shall be at least 25,000 shares, then, upon ten days notice from
the Company to the Holder, the Note shall be converted into Common Stock in
accordance with the procedure described in Section 4.1 at the Conversion Price
in effect on the date of said conversion.
ARTICLE V
Adjustment of Conversion Price
5.1 Anti-Dilution Provisions. The Conversion Price shall be
subject to adjustment from time to time as provided herein. Upon each
adjustment of the Conversion Price, the holder of this Note shall thereafter be
entitled to purchase, at the Conversion Price resulting from such adjustment,
the number of shares of Common Stock obtained by multiplying the Conversion
Price in effect immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment and dividing
the product thereof by the Conversion Price resulting from such adjustment.
5.2 Adjustment of Conversion Price Upon Issuance of Common Stock.
5.2.1. If and whenever after the date hereof the Company
shall issue or sell any Common Stock for no consideration or for a
consideration per share less than the Conversion Price, the Conversion Price
shall be reduced (but not increased, except as otherwise specifically provided
herein), to the price (calculated to the nearest one-tenth of a cent)
determined by dividing (x) an amount equal to the sum of (1) the aggregate
number of shares of Common Stock outstanding immediately prior to such issue or
sale multiplied by the then existing Conversion Price plus (2) the
consideration received by the Company upon such issue or sale by (y) the
aggregate number of shares of Common Stock outstanding immediately after such
issue or sale.
5.2.2. No adjustment shall be made in the Conversion Price
in the event that the Company issues, in one or more transactions, (i) Common
Stock upon exercise of any options issued to officers, directors or employees
of the Company pursuant to a stock option plan or an employment,
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severance or consulting agreement as now or hereafter in effect, the 1996
Nonemployee Directors' Stock Option Plan, or the Management Incentive Stock
Plan, in each case approved by the Board of Directors, provided that the
aggregate number of shares of Common Stock which may be issuable, including
options issued prior to the date hereof, under all such employee plans and
agreements shall at no time exceed the number of such shares of Common Stock
that are issuable under currently effective employee plans and agreements, the
1996 Nonemployee Directors' Stock Option Plan, or the Management Incentive
Stock Plan; (ii) Common Stock upon conversion of this Note or exercise of the
Warrants; (iii) Common Stock upon exercise of any stock purchase warrant or
option (other than the options referred to in clause (i) above) or other
convertible security outstanding on the date hereof; or (iv) Common Stock
issued as consideration in acquisitions. In addition, for purposes of
calculating any adjustment of the Conversion Price, all of the shares of Common
Stock issuable pursuant to any of the foregoing shall be assumed to be
outstanding prior to the event causing such adjustment to be made.
5.2.3. In case at any time after the date hereof the Company
shall in any manner grant (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase Common Stock or any
options, except for options issued to officers, directors or employees of the
Company pursuant to a stock option plan in effect as of the date hereof, the
1996 Nonemployee Directors' Stock Option Plan, or the Management Incentive
Stock Plan, for the purchase of Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such convertible or
exchangeable stock or securities being herein called "Convertible Securities"),
whether or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per
share for which shares of Common Stock are issuable upon the exercise of such
rights or options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if any, payable to
the Company upon the exercise of such rights or options, or plus, in the case
of such rights or options that relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon the conversion or exchange
of all such Convertible Securities issuable upon the exercise of such rights or
options) shall be less than the Conversion Price in effect as of the date of
granting such rights or options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options or upon
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights or options shall be deemed to be outstanding as of the
date of the granting of such rights or options and to have been issued for such
price per share, with the effect on the Conversion Price specified herein.
Except as provided herein, no further adjustment of the Conversion Price shall
be made upon the actual issuance of such Common Stock or of such Convertible
Securities upon exercise of such rights or options or upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible
Securities.
5.2.4. If: (i) the purchase price provided for in any right
or option, (ii) the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities, or (iii) the rate at
which any Convertible Securities are convertible into or exchangeable for
Common Stock shall be decreased (other than by reason of provisions designed to
protect against dilution), the
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Conversion Price then in effect shall be decreased to the Conversion Price that
would have been in effect had such rights, options or Convertible Securities
provided for such changed purchase price, additional consideration or
conversion rate at the time initially issued.
5.2.5. In case at any time Common Stock or Convertible
Securities or any rights or options to purchase Common Stock or Convertible
Securities shall be issued or sold for cash, the total amount of cash
consideration shall be deemed to be the amount received by the Company. If at
any time any Common Stock, Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued or
sold for consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration, as determined reasonably and in good faith by the Board of
Directors of the Company. If at any time any Common Stock, Convertible
Securities or any rights or options to purchase any Common Stock or Convertible
Securities shall be issued in connection with any merger or consolidation in
which the Company is the surviving corporation, the amount of consideration
received therefor shall be deemed to be the fair value, as determined
reasonably and in good faith by the Board of Directors of the Company, of such
portion of the assets and business of the nonsurviving corporation as such
Board of Directors may determine to be attributable to such Common Stock,
Convertible Securities, rights or options as the case may be. In case at any
time any rights or options to purchase any shares of Common Stock or
Convertible Securities shall be issued in connection with the issuance and sale
of other securities of the Company, together consisting of one integral
transaction in which no consideration is allocated to such rights or options by
the parties, such rights or options shall be deemed to have been issued without
consideration.
5.2.6. In the case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock or Convertible
Securities, or (ii) to subscribe for or purchase Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the
issuance or sale of the Common Stock or Convertible Securities deemed to have
been issued or sold as a result of the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
5.2.7. The number of shares of Common Stock outstanding at
any given time shall not include shares owned directly by the Company in
treasury, and the disposition of any such shares shall be considered an
issuance or sale of Common Stock.
5.3 Stock Dividends. In case the Company shall declare a dividend
or make any other distribution upon any shares of the Company, payable in
Common Stock or Convertible Securities, any Common Stock or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
5.4 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced and the number of Shares into
which this Note may be converted immediately prior to such subdivision shall be
proportionately increased, and conversely, in the event that the outstanding
shares of Common Stock shall at any time be combined into a smaller number of
shares, the Conversion Price in effect
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immediately prior to such combination shall be proportionately increased and
the number of Shares into which this Note may be converted immediately prior to
such combination shall be proportionately reduced.
5.5 Reorganizations and Asset Sales. If any capital
reorganization or reclassification of the capital stock of the Company, or any
consolidation, merger or share exchange of the Company with another Person, or
the sale, transfer or other disposition of all or substantially all of its
assets to another Person shall be effected in such a way that holders of Common
Stock shall be entitled to receive capital stock, securities or assets with
respect to or in exchange for their shares, then the following provisions shall
apply:
5.5.1. As a condition of such reorganization,
reclassification, consolidation, merger, share exchange, sale, transfer or
other disposition, lawful and adequate provisions shall be made whereby the
Holder shall thereafter have the right to purchase and receive upon the terms
and conditions specified in this Note, such shares of capital stock, securities
or assets as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of Shares
immediately theretofore so receivable had such reorganization,
reclassification, consolidation, merger, share exchange or sale not taken
place, and in any such case appropriate provision reasonably satisfactory to
such holder shall be made with respect to the rights and interests of such
holder to the end that the provisions hereof (including, without limitation,
provisions for adjustments of the Conversion Price and of the number of Shares
receivable upon the exercise) shall thereafter be applicable, as nearly as
possible, in relation to any shares of capital stock, securities or assets
thereafter deliverable upon the exercise of Note.
5.5.2. In the event of a merger, share exchange or
consolidation of the Company with or into another Person as a result of which a
number of shares of common stock or its equivalent of the successor Person
greater or lesser than the number of shares of Common Stock outstanding
immediately prior to such merger, share exchange or consolidation are issuable
to holders of Common Stock, then the Conversion Price in effect immediately
prior to such merger, share exchange or consolidation shall be adjusted in the
same manner as though there were a subdivision or combination of the
outstanding shares of Common Stock.
5.5.3. The Company shall not effect any such consolidation,
merger, share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other
than the Company) resulting from such consolidation, share exchange or merger
or the Person purchasing or otherwise acquiring such assets shall have assumed
by written instrument executed and mailed or delivered to the Holder hereof at
the last address of such Holder appearing on the books of the Company the
obligation to deliver to such Holder such shares of capital stock, securities
or assets as, in accordance with the foregoing provisions, such Holder may be
entitled to receive, and all other liabilities and obligations of the Company
hereunder. Upon written request by the Holder hereof, such Successor Person
will issue a new Note revised to reflect the modifications in this Note
effected pursuant to this Section 5.5.
5.5.4. If a purchase, tender or exchange offer is made to
and accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange
or sale, transfer or other disposition of all or substantially all
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of the Company's assets with the Person having made such offer or with any
affiliate of such Person, unless prior to the consummation of such
consolidation, merger, share exchange, sale, transfer or other disposition the
holder hereof shall have been given a reasonable opportunity to then elect to
receive upon the conversion of the Note either the capital stock, securities or
assets then issuable with respect to the Common Stock or the capital stock,
securities or assets, or the equivalent, issued to previous holders of the
Common Stock in accordance with such offer.
5.6 Adjustment for Asset Distribution. If the Company declares a
dividend or other distribution payable to all holders of shares of Common Stock
in evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Conversion Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per
share of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made whenever any such dividend or distribution is made
and shall be effective as of the date as of which a record is taken for purpose
of such dividend or distribution or, if a record is not taken, the date as of
which holders of record of Common Stock entitled to such dividend or
distribution are determined.
5.7 De Minimis Adjustments. No adjustment in the number of shares
of Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon conversion of the Note and no adjustment in the Conversion
Price shall be required unless such adjustment would require an increase or
decrease of at least $.01 in the Conversion Price; provided, however, that any
adjustments which are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations shall be
made to the nearest full share or nearest one hundredth of a dollar, as
applicable.
5.8 Notice of Adjustment. Whenever the Conversion Price or the
number of Shares issuable upon the conversion of the Note shall be adjusted as
herein provided, or the rights of the holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted
Conversion Price and the adjusted number of Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Conversion Price and the adjusted number of Shares issuable upon the
conversion of the Note or specifying the other shares of stock, securities or
assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based. The Company shall cause to be mailed to the Holder
hereof copies of such Officer's Certificate together with a notice stating that
the Conversion Price and the number of Shares purchasable upon conversion of
the Note have been adjusted and setting forth the adjusted Conversion Price and
the adjusted number of Shares purchasable upon conversion of the Note.
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5.9 Notifications to Holders. In case at any time the Company
proposes:
(i) to declare any dividend upon its Common Stock
payable in capital stock or make any special dividend or other
distribution (other than cash dividends) to the holders of its
Common Stock;
(ii) to offer for subscription pro rata to all of
the holders of its Common Stock any additional shares of
capital stock of any class or other rights;
(iii) to effect any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation, merger or share exchange of the Company with
another Person, or sale, transfer or other disposition of all
or substantially all of its assets; or
(iv) to effect a voluntary or involuntary
dissolution, liquidation or winding up of the Company,
then, in any one or more of such cases, the Company shall give the holder
hereof (a) at least 10 days (but not more than 90 days) prior written notice of
the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such issuance, reorganization,
reclassification, consolidation, merger, share exchange, sale, transfer,
disposition, dissolution, liquidation or winding up, and (b) in the case of any
such issuance, reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer, disposition, dissolution, liquidation or winding up,
at least 10 days (but not more than 90 days) prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (a) shall also specify, in the case of any such dividend, distribution
or subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock, as the case may be, for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition,
dissolution, liquidation or winding up, as the case may be.
5.10 Company to Prevent Dilution. If any event or condition occurs
as to which other provisions of this Article are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Note evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect
the exercise or purchase rights of the holder hereof under any provisions of
this Note, then the Company shall make such adjustments in the application of
such provisions, in accordance with such essential intent and principles, so as
to protect such exercise and purchase rights as aforesaid, and any adjustments
necessary with respect to the Conversion Price and the number of Shares
purchasable hereunder so as to preserve the rights of the holder hereunder. In
no event shall any such adjustment have the effect of increasing the Conversion
Price as otherwise determined pursuant to this Article except in the event of a
combination of shares.
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ARTICLE VI
Covenants
The Company covenants and agrees that, so long as this Note is
outstanding:
6.1 Use of Proceeds. The Company will use the proceeds of this
Note to pay the outstanding obligations to Estate of Xxxxxxx X. Xxxxx, Xx.;
Residuary Trust created under the will of Xxxxx Xxxxx Xxxxxxx; The Farmers
Museum, Inc.; New York State Historical Association; The Xxxx Xxxxxxx Xxxxxxx
Hospital; The Xxxxx Foundation; The Xxxxxx Foundation; Xxxx X. Xxxxxx; Xxxx
Xxxxxx Xxxxx XX; and Xxxxxxx X. Xxxxxxxx.
6.2 Payment of Principal and Accrued Interest. The Company will
duly and punctually pay or cause to be paid the principal sum of this Note,
together with interest accrued thereon from the date hereof to the date of
payment, in accordance with the terms hereof.
6.3 Corporate Existence. The Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right or
franchise if it shall reasonably determine that the preservation thereof is no
longer desirable in the conduct of its business.
6.4 Taxes; Claims; etc. The Company will promptly pay and
discharge all lawful taxes, assessments, and governmental charges or levies
imposed upon it or upon its income or profits, or upon any of its properties,
real, personal, or mixed, before the same shall become in default, as well as
all lawful claims for labor, materials, and supplies or otherwise which, if
unpaid, might become a lien or charge upon such properties or any part thereof,
and which lien or charges will have a material adverse effect on the business
of the Company; provided, however, that the Company shall not be required to
pay or cause to be paid any such tax, assessment, charge, levy, or claim prior
to institution of foreclosure proceedings if the validity thereof shall
concurrently be contested in good faith by appropriate proceedings and if the
Company shall have established reserves deemed by the Company adequate with
respect to such tax, assessment, charge, levy, or claim.
6.5 Maintenance of Existence and Properties. The Company will,
and will cause each Subsidiary to, keep its material properties in good repair,
working order, and condition, ordinary wear and tear excepted, so that the
business carried on may be properly conducted at all times in accordance with
prudent business management.
6.6 SEC Reports. The Company will deliver to the Holder within 20
days after it files them with the SEC, copies of its annual and quarterly
reports and of the information, documents, and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. The Company will
timely comply with its reporting and filing obligations under the applicable
federal securities laws.
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6.7 Notice of Defaults. The Company will promptly notify the
Holder in writing of the occurrence of (i) any Event of Default under this
Note, and (ii) any event of default (or if any event of default would result
upon any payment with respect to this Note) with respect to any Indebtedness as
such event of default is defined therein or in the instrument under which it is
outstanding, permitting holders to accelerate the maturity of such
Indebtedness.
6.8 Mergers and Acquisitions. Without the consent of the Holder
the Company or any Subsidiary will not dissolve, liquidate, consolidate or
merge with or sell or transfer all or a substantial portion of its assets to
any Person.
6.9 Compliance with Laws. The Company will promptly comply with
all laws, ordinances and governmental rules and regulations to which it is
subject.
ARTICLE VII
Miscellaneous
7.1 Collection Fees. If this Note is placed in the hands of an
attorney for collection, and if it is collected through any legal proceedings
at law or in equity or in bankruptcy, receivership or other court proceedings,
the Company hereby undertakes to pay all costs and expenses of collection
including, but not limited to, court costs and the reasonable attorney's fees
of Holder.
7.2 Consent to Amendments. This Note may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if and only if the Company shall obtain
the written consent to such amendment, action or omission to act from the
holders of a majority of the aggregate principal amount of the Note.
7.3 Benefits of Note; No Impairment of Rights of Holder of Senior
Indebtedness. Nothing in this Note, express or implied, shall give to any
Person, other than the Company, Holder, and their successors any benefit or any
legal or equitable right, remedy or claim under or in respect of this Note.
7.4 Successors and Assigns. All covenants and agreements in this
Note contained by or on behalf of the Company and the Holder shall bind and
inure to the benefit of the respective successors and assigns of the Company
and the Holder.
7.5 Restrictions on Transfer. Subject to the provisions of this
Section, this Note is transferable in the same manner and with the same effect
as in the case of a negotiable instrument payable to a specified person.
7.6 Notice; Address of Parties. Except as otherwise provided, all
communications to the Company or Holder provided for herein or with reference
to this Note shall be deemed to have been sufficiently given or served for all
purposes on the third business day after being sent as certified or registered
mail, postage and charges prepaid, to the following addresses: if to the
Company: Florafax International, Inc., 0000 00xx Xxxxxx, Xxxx Xxxxx, XX 00000,
Attn: Xxxxx X. Xxxx, or at any other address designated by the Company in
writing to Holder; if to Holder: St. Xxxxx Capital Corp.,
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0000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attn: Xxxx X. Xxxxxxxx, or at
any other address designated by Holder to the Company in writing.
7.7 Separability Clause. In case any provision in this Note shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions in such jurisdiction
shall not in any way be affected or impaired thereby; provided, however, such
construction does not destroy the essence of the bargain provided for
hereunder.
7.8 Governing Law. This Note shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware (without regard
to principles of choice of law).
7.9 Usury. It is the intention of the parties hereto to conform
strictly to the applicable laws of the State of Delaware and the United States
of America, and judicial or administrative interpretations or determinations
thereof regarding the contracting for, charging and receiving of interest for
the use, forbearance, and detention of money (referred to as "Applicable Law").
The Holder shall have no right to claim, to charge or to receive any interest
in excess of the maximum rate of interest, if any, permitted to be charged on
that portion of the amount representing principal which is outstanding and
unpaid from time to time by Applicable Law. Determination of the rate of
interest for the purpose of determining whether this Note is usurious under
Applicable Law shall be made by amortizing, prorating, allocating and spreading
in equal parts during the period of the actual time of this Note, all interest
or other sums deemed to be interest (referred to in this Section as "Interest")
at any time contracted for, charged or received from the Company in connection
with this Note. Any Interest contracted for, charged or received in excess of
the maximum rate allowed by Applicable Law shall be deemed a result of a
mathematical error and a mistake. If this Note is paid in part prior to the
end of the full stated term of this Note and the Interest received for the
actual period of existence of this Note exceeds the maximum rate allowed by
Applicable Law, Holder shall credit the amount of the excess against any amount
owing under this Note or, if this Note has been paid in full, or in the event
that it has been accelerated prior to maturity, Holder shall refund to the
Company the amount of such excess, and shall not be subject to any of the
penalties provided by Applicable Law for contracting for, charging or receiving
Interest in excess of the maximum rate allowed by Applicable Law. Any such
excess which is unpaid shall be canceled.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed on the date first above written.
FLORAFAX INTERNATIONAL, INC.
-----------------------------------------------------
Xxxxx X. Xxxx, President
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EXHIBIT B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is executed
February 28, 1996, by FLORAFAX INTERNATIONAL, INC., a Delaware corporation
("Florafax" or "Debtor"; as used herein, "Debtor" shall mean Florafax
International, Inc. and each of its Subsidiaries), and ST. XXXXX CAPITAL
PARTNERS, L.P., a Delaware corporation (the "Purchaser"), in connection with
the purchase of the 7% Convertible Promissory Note issued by Debtor.
WHEREAS concurrent with the execution of this Security Agreement,
Debtor will execute its 7% Convertible Promissory Note made payable to the
Purchaser (as amended, supplemented or restated, the "Note");
WHEREAS it is expressly understood between Debtor and the Purchaser
that the execution and delivery of this Security Agreement is an integral part
of the transactions contemplated by the Agreement for Purchase and Sale between
the Purchaser and the Debtor dated as of December 29, 1995 and is a condition
precedent to Purchasers' purchase of the Note.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are acknowledged, Debtor
covenants and agrees with the Purchaser as follows:
1. Certain Definitions. Unless otherwise defined in this
Security Agreement, each capitalized term used but not defined in this Security
Agreement will have the meaning given that term in the UCC. If the definition
given in Chapter 9 of the UCC conflicts with the definition given that term in
any other chapter of the UCC, the Chapter 9 definition shall control. As used
in this Security Agreement, the following terms have the meanings indicated:
"Accounts" means all accounts, instruments, receivables, accounts
receivable, contract rights, chattel paper, documents, general intangibles,
book debts, any and all amounts due to Debtor from a factor, arising from
Debtor's sale of goods or rendition of services, and all the books and records
pertaining to the foregoing, and the cash or non-cash proceeds resulting
therefrom and all security and guaranties therefor.
"Affiliate" of a Person means any other individual or entity who
directly or indirectly controls, is controlled by, or is under common control
with, that Person.
"Debt" means, for any Person, (a) all obligations required by GAAP to
be classified upon a balance sheet as liabilities, (b) liabilities secured by
any Lien existing on property owned or acquired by that Person, (c) obligations
that have been (or under GAAP should be) capitalized for financial reporting
purposes, and (d) all guaranties, endorsements and other contingent obligations
with respect to Debt of others.
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"Default" means an "Event of Default" as defined in the Note.
"Distribution" means, with respect to any shares of any capital stock
or other equity securities or other interests issued by a Person, (a) the
retirement, redemption, purchase or other acquisition for value of those
securities by such Person, (b) the declaration or payment of any dividend on or
with respect to those securities by such Person, (c) any loan or advance by
that Person to, or other investment by that Person in, the holder of any of
those securities, and (d) any other payment by that Person with respect to
those securities.
"Equipment" means any and all of Debtor's furnishings, machinery,
furniture, fixtures and equipment, wherever located, whether now owned or
hereafter acquired including without limitation, all manufacturing,
distribution, selling, data processing and office equipment and all appliances
and trade fixtures (excluding equipment in which Debtor's interest is a
leasehold interest), together with all increases, parts, fittings, accessories,
equipment, and special tools now or hereafter affixed to any part thereof and
thereto, together with all substitutes and replacements thereof, all accessions
and attachments thereto, and all tools, parts and equipment now or hereafter
added to or used in connection with the foregoing.
"GAAP" means generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board.
"Inventory" means any and all of Debtor's inventory, including without
limitation any and all goods held for sale or lease or being processed for sale
or lease in Debtor's business as now or hereafter conducted and all returned,
reclaimed, refused or repossessed goods, whether now owned or hereinafter
acquired, including all materials, goods and work in process, finished goods,
and other tangible property held for sale or lease or furnished or to be
furnished under contracts of service or used or consumed in Debtor's business,
along with all documents (including documents of title) covering inventory, all
cash and non-cash proceeds from the sale of inventory including proceeds from
insurance and including such property the sale or other disposition of which
has given rise to accounts and which has not been returned to or repossessed or
stopped in transit by Debtor. "Inventory" includes each of the foregoing items
whether they are in the possession of Debtor or a bailee or other person for
sale, storage, transit, processing, use or otherwise.
"Lien" means any lien, mortgage, security interest, pledge,
assignment, charge, title retention agreement or encumbrance of any kind and
any other arrangement for a creditor's claim to be satisfied from assets or
proceeds prior to the claims of other creditors or the owners.
"Obligation" means (a) the amount due under the Note, (b) all
indebtedness, liabilities and obligations of Debtor arising under this Security
Agreement, (c) interest accruing on, and attorneys' fees, court costs, and
other costs of collection reasonably incurred in the collection or enforcement
of, any of the indebtedness, liabilities, or obligations described in clauses
(a) and (b) above, and (d) any and all renewals and extensions of, or
amendments to, any of the indebtedness, liabilities, and obligations described
in clauses (a) through (c) above.
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"Patents" means, individually and collectively, all of Debtor's rights
in and to all patents and patent applications and the inventions and
improvements described or claimed in those patents and patent applications, and
any patented improvements and/or enhancements thereof now or hereafter owned,
controlled or acquired by Debtor, and (a) any reissues, divisions,
continuations, renewals, reexaminations, related applications, extensions and
continuations-in-part thereof, (b) all income, royalties, damages and payments
now and hereafter due, received and/or payable under and with respect thereto,
including, without limitation, damages and payments for past, present or future
infringements thereof, (c) the right to xxx for or bring injunctive proceedings
with respect to past, present and future infringements thereof, (d) all
licenses, agreements, and general intangibles relating thereto and (e) all
books, records, computer tapes or disks, instructions, flow diagrams,
specification sheets, source codes, object codes, and any other physical
manifestations of or documentation relating to any of the foregoing.
"Permitted Debt" means (a) the Obligation; (b) debt arising from
endorsing negotiable instruments for collection in the ordinary course of
business; (c) purchase money debt incurred to finance equipment in the ordinary
course of business; (d) trade payables that are for goods furnished or services
rendered in the ordinary course of business and that are payable in accordance
with customary trade terms; (e) amounts due and owing under the Independent
Sales Organization and Merchant Servicing Agreement by and between Debtor and
Universal Savings Bank, F.A., dated December 31, 1995 (the "Universal Savings
Agreement"); and (f) amounts due and owing to Citrus Bank of Florida, N.A. on
December 29, 1995 (the "Citrus Debt").
"Permitted Liens" means (a) Liens now or hereafter securing the Obligation; (b)
purchase money Liens incurred to finance equipment in the ordinary course of
business; (c) pledges or deposits made to secure payment of workers'
compensation, unemployment insurance, or other forms of governmental insurance
or benefits or to participate in any fund in connection with workers'
compensation, unemployment insurance, pensions, or other social security
programs; (d) good-faith pledges or deposits made to secure performance of
bids, tenders, contracts (other than for the repayment of borrowed money), or
leases, or to secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds in the ordinary course of
business; (e) Liens for taxes and liens imposed by operation of law (including
Liens of mechanics, materialmen, warehousemen, carriers and landlords), if (i)
no amounts are due and payable and no Lien has been filed (or agreed to), or
(ii) the validity or amount secured thereof is being contested in good faith by
lawful proceedings diligently conducted, reserves required by GAAP have been
made, and levy and execution thereon have been (and continue to be) stayed or
payment thereof is covered in full (subject to the customary deductible) by
insurance; (f) liens pursuant to the Universal Savings Agreement and Liens
pursuant to the Citrus Debt.
"Pledged Shares" means all shares of capital stock or other evidences
of ownership now or hereafter issued to Debtor by any entity and the
Certificate(s) representing the Pledged Shares and all dividends, cash,
instruments and other property from time-to-time received, receivable or
otherwise distributed in respect of or in exchange of any Pledged Shares.
"Security Interest" means the security interest granted and the pledge
and assignment made under the terms of this Security Agreement.
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"Subsidiary" means any entity of which more than 50% (in number of
votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by Debtor.
"Tribunal" means any (a) local, state, or federal judicial, executive,
or legislative instrumentality, or (b) private arbitration board or panel.
"Trademarks" means, individually and collectively, all trademarks,
trade names and service marks registrations, applications, rights to use and
common law rights therein now or hereafter owned, controlled or acquired by
Debtor and all of Debtor's rights in and to (a) all trade names, service marks
and trademarks in which it has rights, and (b) all renewals thereof, (c) all
income, payments, royalties, damages and payments now and hereafter due or
payable with respect thereto, including, without limitation, damages and
payments for past, present or future infringements thereof, (d) the right to
xxx for or bring injunctive proceedings with respect to past, present and
future infringements thereof, (e) the goodwill of Debtor's business connected
with, symbolized by, or in any way related to any of the Trademarks, (f) all
licenses, agreements, and general intangibles relating to any of the foregoing
and (g) all books, records, computer tapes or disks, instructions, flow
diagrams, specification sheets, source codes, object codes, and any other
physical manifestations of or documentation relating to any of the foregoing.
"UCC" means the Uniform Commercial Code, as adopted in Texas,
provided, however, that to the extent the perfection or the effect of
perfection (or non-perfection) of the Security Interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Texas "UCC" means, with respect to the provisions of this Security
Agreement relating to perfection or the effect of perfection (or
non-perfection), the Uniform Commercial Code in effect in such jurisdiction.
2. Note. This Security Agreement is being executed and delivered
pursuant to the terms and conditions of the Note.
3. Security Interest. Subject to the terms and conditions of
this Security Agreement, and to secure the prompt, unconditional and complete
payment and performance of the Obligation when due, Debtor grants to the
Purchaser a security interest in all of Debtor's right, title and interest in
the Collateral and Debtor transfers, pledges, and assigns as security to the
Purchaser all of Debtor's right, title, and interest in the Collateral.
4. No Assumption or Modification. The Security Interest is given
to secure the prompt, unconditional, and complete payment and performance of
the Obligation when due, and is given as security only. The Purchaser does not
assume and shall not be liable for any of Debtor's liabilities, duties, or
obligations under or in connection with the Collateral. The Purchaser's
acceptance of this Security Agreement, or its taking any action in carrying out
this Security Agreement, does not constitute the Purchaser's approval of the
Collateral or the Purchaser's assumption of any obligation under or in
connection with the Collateral. This Security Agreement does not affect or
modify Debtor's obligations with respect to the Collateral.
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5. Collateral. As used in this Agreement, the term "Collateral"
means the following items and types of property, wherever located, whether now
owned or hereafter acquired by Debtor:
(a) Accounts
(b) Inventory
(c) Equipment
(d) Pledged Shares
(e) Trademarks
(f) Patents
The description of Collateral contained in this Section includes after
acquired Collateral and proceeds of the Collateral.
6. Fraudulent Conveyance. Notwithstanding anything contained in
this Agreement to the contrary, Debtor agrees that if, but for the application
of this Section, the Obligation or any Security Interest would constitute a
preferential transfer under 11 U.S.C. Section 547, a fraudulent conveyance
under 11 U.S.C. Section 548 (or any successor section of that Code) or a
fraudulent conveyance or transfer under any state fraudulent conveyance or
fraudulent transfer law or similar Law in effect from time to time (each a
"Fraudulent Conveyance"), then the Obligation and each affected Security
Interest will be enforceable to the maximum extent possible without causing the
Obligation or any Security Interest to be a Fraudulent Conveyance, and shall be
deemed to have been automatically amended to carry out the intent of this
Section.
7. Representations and Warranties. Debtor represents and
warrants to the Purchaser as follows:
(a) Binding Obligation. This Security Agreement creates
a legal, valid and binding lien in and to the Collateral in favor of the
Purchaser and enforceable against Debtor. Once perfected, the Security
Interest will constitute a first and prior lien on the Collateral subject only
to Permitted Liens. The creation of the Security Interest does not require the
consent of any third party.
(b) Pledged Shares. The Pledged Shares are duly
authorized, validly issued, fully paid and non-assessable and are not subject
to purchase or similar rights of any Person. Transfer of the Pledged Shares is
subject to no restrictions, other than restrictions imposed by applicable
securities and corporate laws, and Debtor is not a party to or otherwise bound
by any agreement which restricts the right of any present or future holder of
any of the Pledged Shares with respect to transfer of the Pledged Shares.
(c) Place of Business; Location of Records. Debtor's
place of business and chief executive office is located at 0000 00xx Xxxxxx,
Xxxx Xxxxx, Xxxxxxx 00000.
(d) No Lien. Debtor has not executed any prior transfer,
assignment, pledge, security interest or hypothecation covering the Collateral
or any interest in the Collateral other than Permitted Liens. Further, there
is no assignment, pledge, security interest, hypothecation, lien or other
encumbrance on any assets of any issuer of Pledged Shares, other than Permitted
Liens. No
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Pledged Shares are in the possession of any Person asserting any claim to or
security interest in the Pledged Shares. Debtor owns all presently existing
Collateral.
(e) No Defenses. The amounts due Debtor under the
Collateral are not subject to any material setoff, counterclaim, defense,
allowance or adjustment (other than discounts for prompt payment shown on the
invoice) or to any material dispute, objection or complaint by any Obligor.
(f) Existence and Ownership of Patents and Trademarks.
Debtor is the sole and exclusive owner of the right, title and interest in and
to the Patents and Trademarks free and clear of any Liens, registered user
agreements, covenants by Debtor not to xxx third Persons or licenses. To the
reasonable knowledge of Debtor, Debtor has full right to use the Patents and
Trademarks. To the best of Debtor's knowledge, all Patents and Trademarks
owned, controlled or acquired by Debtor, or which Debtor has a right to use:
(i) are subsisting and have not been adjudged or claimed to be invalid or
unenforceable (either in whole or in part) and Debtor is not aware of any basis
for such a claim, (ii) are valid and enforceable, (iii) are in the name of
Debtor, (iv) are properly recorded and/or filed in the U.S. Patent and
Trademark Office and (v) Debtor has taken all necessary steps to properly
record or file ownership in the name of Debtor in the proper foreign filing
offices (the "Foreign Filing Offices") with respect to foreign Patents and
Trademarks, as appropriate.
(g) Third Parties Rights. Except as set forth in
Schedule 7(g) to Debtor's knowledge, no claim has been made that the ownership
or use of any of the Patents and Trademarks, or the manufacture, use or sale of
any product made in accordance therewith or service rendered thereunder, does
or may violate the rights of any third Person, and Debtor has no knowledge of
any third party rights which may be infringed or otherwise violated by the use
of any of the Patents and Trademarks.
(h) Registration. To the best of Debtor's knowledge,
Debtor has properly completed all required filings, payments, renewals and
obligations in the United States Patent and Trademark Offices or the
appropriate Foreign Filing Offices, as the case may be, to maintain Patents and
Trademarks as fully valid and enforceable.
8. Covenants. Debtor covenants and agrees with the Purchaser as
follows:
(a) Approval of Rights. After a Default occurs, Debtor
will take all actions the Purchaser requests to obtain any Tribunal's consent
to or approval of the Purchaser's rights under this Security Agreement,
including, without limitation, the right to sell all or any part of the
Collateral upon a Default without the Tribunal's further consent or approval.
Debtor agrees that the Purchaser's remedies at law for Debtor's failure to
comply with this provision would be inadequate and that the harm to the
Purchaser would not be adequately compensable in damages. Debtor agrees that
this provision may be specifically enforced.
(b) Perform Obligations. Debtor will: (i) perform all of
its obligations under or in connection with the Collateral in accordance with
customary business practices; (ii) promptly notify the Purchaser of any change
in any fact or circumstances represented by Debtor with respect to any
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of the Collateral; and (iii) promptly notify the Purchaser of any claim, action
or proceeding affecting the Security Interest or title to all or any of the
Collateral and, at the request of the Purchaser, appear in and defend, at
Debtor's expense, any such action or proceeding.
(c) Assurances. Debtor shall not change its name or
address for notices hereunder or relocate Debtor's principal place of business
or chief executive office unless prior thereto Debtor (i) gives the Purchaser
ten (10) days prior written notice thereof (such notice to include, without
limitation, the name of the county or parish and state into which any such
relocation is to be made) and (ii) executes and delivers all such additional
documents and performs all additional acts as the Purchaser, in its sole
discretion, may reasonably request in order to continue or maintain the
existence and priority of the Security Interest in such Collateral.
(d) Further Assurances. From time to time, Debtor will
promptly execute and deliver to the Purchaser all other assignments,
certificates, supplemental documents, financing statements and do all other
acts the Purchaser reasonably requests in order to create, evidence, perfect,
continue or maintain the existence and priority of the Security Interest and in
order to perfect the Security Interest in all future Collateral including,
without limitation, the execution and filing of such financing statements as
the the Purchaser may reasonably require.
(e) Taxes. Debtor will promptly pay when due any and all
taxes, other than those which are being contested in good faith by lawful
proceedings diligently conducted, against which reserves required by GAAP have
been made, and in respect of which levy and execution of any Lien have been and
continue to be stayed.
(f) Payment of Obligations. Debtor will promptly pay,
renew and extend all of its material obligations as they become due, unless the
obligations are being contested in good faith by appropriate proceedings.
(g) Maintenance of Existence, Assets, and Business.
Debtor will (i) maintain its corporate existence and good standing and its
authority to transact business in all states where necessary; (ii) maintain all
licenses, permits and franchises necessary for its business; and (iii) keep all
of its assets that are useful in and necessary to its business in good working
order and condition (ordinary wear and tear excepted) and make all necessary
repairs and replacements.
(h) Debt. Without the written consent of Purchaser,
Debtor may not create, incur or suffer to exist any Debt, other than Permitted
Debt.
(i) Liens. Without the written consent of Purchaser,
Debtor may not create, incur or suffer or permit to be created or incurred or
to exist any Lien upon the Collateral, other than Permitted Liens.
(j) Transactions with Affiliates. Without the written
consent of Purchaser, Debtor may not enter into any transaction with any of its
Affiliates, other than transactions in the ordinary course of business and upon
fair and reasonable terms not materially less favorable than it could obtain or
could become entitled to in an arm's-length transaction with a non-Affiliate.
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(k) Loans, Advances and Investments. Without the written
consent of Purchaser, Debtor may not make any loan, advance, extension of
credit or capital contribution to, make any investment in, or purchase or
commit to purchase any stock or other securities or evidences of Debt of, or
interests in, any other Person, other than dividends between the Company and
its Subsidiaries.
(l) Dividends and Distributions. Without the written
consent of Purchaser, Debtor may not declare, make or pay any Distribution,
other than dividends between the Company and its Subsidiaries.
(m) Sale of Assets. Without the written consent of
Purchaser, Debtor may not sell, assign, lease, transfer or otherwise dispose of
any of its assets, other than the following types of dispositions of assets:
(i) sales of inventory in the ordinary course of business, (ii) the sale,
discount or transfer of delinquent accounts receivable in the ordinary course
of business for purposes of collection, (iii) occasional sales, leases or other
dispositions of immaterial assets for consideration not less than fair market
value, (iv) sales, leases or other dispositions of assets that are obsolete or
have negligible fair market value, and (v) sales of equipment for a fair and
adequate consideration (but if replacement equipment is necessary for the
proper operation of the business of the seller, the seller must promptly
replace the sold equipment).
(n) Mergers and Dissolutions. Without the written
consent of Purchaser, Debtor may not merge or consolidate with any other Person
or liquidate, wind up or dissolve (or suffer any liquidation or dissolution).
9. Default; Remedies. Upon the occurrence of a Default, the
Purchaser has the following cumulative rights and remedies under this Security
Agreement:
(a) Rights. The Purchaser may exercise any and all
rights available to a the Purchaser under the UCC as enacted in Texas or any
other applicable jurisdiction, as amended, in addition to any and all other
rights afforded by this Security Agreement, at law, in equity, or otherwise,
including, without limitation, applying by appropriate judicial proceedings for
appointment of a receiver for all or part of the Collateral (and Debtor hereby
consents to any such appointment).
(b) Pledged Shares. Debtor and the Purchaser acknowledge
that the Purchaser must, in exercising its rights to foreclose upon and sell
any of the Pledged Shares, conduct itself in accordance with the applicable
requirements of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and state securities laws (collectively, and together
with any rules and regulations promulgated pursuant thereto, the "Securities
Laws"). Accordingly, the Purchaser may have difficulty, by reason of legal
restrictions and limitations imposed by the Securities Laws, in selling the
Pledged Shares at a price which approximates their fair market value, were it
not for such restrictions. Debtor acknowledges and agrees that (i) the
Purchaser may seek to dispose of the Pledged Shares without registration or
qualification under the Securities Laws, provided that in any such transaction
the Purchaser requires the purchaser or purchasers of the Pledged Shares to
represent and warrant their intent not to distribute the Pledged Shares in
violation of the Securities Laws, and any disposition so effected shall not be
deemed "commercially unreasonable," and (ii) the Purchaser may disclose any
information it has obtained concerning any issuer of Pledged Shares, even
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if obtained in confidence, if the Purchaser considers such disclosure to
potential purchasers of the Pledged Shares at a foreclosure sale to be in its
sole discretion necessary to comply with the Securities Laws.
(c) Debtor's Agent. The Purchaser shall be deemed to be
irrevocably appointed as Debtor's agent and attorney-in-fact with all right and
power to enforce all of Debtor's rights and remedies under or in connection
with the Collateral. All reasonable costs, expenses and liabilities incurred
and all payments made by the Purchaser as Debtor's agent and attorney-in-fact,
including, without limitation, reasonable attorney's fees and expenses, shall
be considered a loan by the Purchaser to Debtor which shall be repayable on
demand and shall accrue interest at the Default Rate and shall be part of the
Obligation.
(d) Notice. Reasonable notification of the time and
place of any public sale of the Collateral, or reasonable notification of the
time after which any private sale or other intended disposition of the
Collateral is to be made, shall be sent to Debtor and to any other Person
entitled to notice under the UCC; provided that, if any of the Collateral
threatens to decline speedily in value or is of the type customarily sold on a
recognized market, the Purchaser may sell or otherwise dispose of the
Collateral without notification, advertisement or other notice of any kind. It
is agreed that notice sent or given not less than five calendar days prior to
the taking of the action to which the notice relates is reasonable notification
and notice for the purposes of this subparagraph. It shall not be necessary
that the Collateral be at the location of the sale.
(e) Application of Proceeds. The Purchaser shall apply
the proceeds of any sale or other disposition of the Collateral under this
Section as follows: First, to the payment of all its expenses incurred in
retaking, holding, and preparing any of the Collateral for sale(s) or other
disposition, in arranging for such sale(s) or other disposition, and in
actually selling or disposing of the same (all of which are part of the
Obligation); second, toward repayment of amounts reasonably expended by the
Purchaser under this Section; and third, toward payment of the balance of the
Obligation in the order and manner specified in the Note. Any surplus
remaining shall be delivered to Debtor or as a court of competent jurisdiction
may direct. If the proceeds are insufficient to pay the Obligation in full,
Debtor shall remain liable for any deficiency.
10. Other Rights of the Purchaser.
(a) Collection. If a Default has occurred and is
continuing, then the Purchaser shall have the right in its own name or in the
name of Debtor to (A) demand, collect, receive, receipt for, and xxx for any
amounts due or to become due with respect to Collateral; (B) take control of
cash and other proceeds of the Collateral; (C) endorse the name of Debtor on
any notes, acceptances, checks, drafts, money orders, or other evidences of
payment on Collateral that may come into the possession of the Purchaser; (D)
take such action (in its own name or in the name of Debtor) as the Purchaser
shall deem appropriate for the collection of any amounts owed with respect to
Collateral or upon which a delinquency exists, if any Debtor fails or refuses
to make payment on the Collateral when due; and (E) do all other acts and
things necessary to carry out the intent of this Security Agreement.
Notwithstanding any other provision of this Security Agreement to the contrary,
the Purchaser shall not be liable for its failure to collect, or for its
failure to exercise diligence in the
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collection of, any amounts owed with respect to the Collateral, nor shall it be
under any duty to anyone except Debtor to account for funds that it shall
actually receive under this Security Agreement. Without limiting the
generality of the foregoing, the Purchaser shall have no responsibility for
ascertaining any maturities, calls, conversions, exchanges, offers, tenders or
similar matters relating to any Collateral, or for informing Debtor with
respect to any of such matters (regardless of whether the Purchaser actually
has, or may be deemed to have, knowledge of such matters). The receipt of the
Purchaser to any Debtor shall be a full and complete release, discharge, and
acquittance to any such issuer, to the extent of any amount so paid by such
issuer to the Purchaser.
(b) Performance. In the event Debtor fails to preserve
the priority of the Security Interest in any of the Collateral, then the
Purchaser may (but is not required to) prosecute or defend any suits in
relation to the Collateral. Any sum which may be expended or paid by the
Purchaser under this subparagraph (including, without limitation, court costs
and reasonable attorneys' fees and expenses) shall bear interest from the date
of expenditure or payment at the Default Rate (as defined in the Note) until
paid and, together with such interest, shall be payable by Debtor to the
Purchaser upon demand and shall be part of the Obligation.
(c) Record Ownership of Securities. If a Default exists,
the Purchaser may have the Pledged Shares registered in its name, or in the
name of its nominee or nominees, as pledgee, and, as to any Pledged Shares so
registered, Debtor shall execute and deliver (or cause to be executed and
delivered) to the Purchaser all such proxies, powers of attorney, dividend
coupons or orders, and other documents as the Purchaser may reasonably request
to exercise the voting rights and powers to which it is entitled under this
Security Agreement or to receive the dividends and other payments with respect
to such Pledged Shares which it is authorized to receive and retain under this
Security Agreement.
(d) Voting of Securities. If no Default exists, Debtor
may exercise all voting rights pertaining to the Pledged Shares. If a Default
exists, the right to vote the Pledged Shares may, in the Purchaser's sole
discretion, be vested exclusively in the Purchaser. Debtor hereby irrevocably
constitutes and appoints the Purchaser the proxy and attorney-in-fact of
Debtor, with full power of substitution, to vote and to act with respect to any
and all Pledged Shares standing in the name of Debtor or with respect to which
Debtor is entitled to vote and act, but such proxy may not be exercised unless
a Default exists. This proxy is coupled with an interest, is irrevocable, and
shall continue until the Obligation has been paid and performed in full.
(e) Certain Proceeds. All stock dividends or other
non-cash distributions made on or with respect to the Pledged Shares, and any
proceeds of any Collateral (whether such dividends, distributions or proceeds
result from a subdivision, combination or reclassification of the outstanding
capital stock of any issuer or as a result of any merger, consolidation,
acquisition or other exchange of assets or otherwise) shall be part of the
Collateral under this Security Agreement, shall be held in trust for the
benefit of the Purchaser and shall be delivered promptly to the Purchaser
(accompanied by proper instruments of assignment and stock powers executed by
Debtor in accordance with the Purchaser's instructions) to be held subject to
the terms of this Security Agreement.
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(f) Indemnification. Debtor hereby assumes all liability
for the Collateral, for the Security Interest, and for any use, possession,
maintenance, and management of, all or any of the Collateral, arising from
Debtor's actions prior to the date of any foreclosure or deemed foreclosure of
the Security Interest, including, without limitation, any taxes arising as a
result of, or in connection with, the transactions contemplated herein, and
agrees to assume liability for, and to indemnify and hold Purchaser harmless
from and against, any and all claims, causes of action, or liability, for
injuries to or deaths of Persons and damage to property, howsoever arising from
or incident to such use, possession, maintenance, management, whether such
Persons be agents or employees of Debtor or of third parties, or such damage to
property of Debtor or of others. Unless expressly prohibited by applicable
Law, Debtor agrees to indemnify, save, and hold Purchaser harmless from and
against, and covenants to defend Purchaser against, any and all losses,
damages, claims, costs, penalties, liabilities, and expenses, including,
without limitation, court costs and attorneys' fees, howsoever arising or
incurred because of, incident to, or with respect to Collateral or any use,
possession, maintenance, or management thereof.
11. Miscellaneous.
(a) Term. Upon full and final payment of the Obligation
this Security Agreement shall terminate upon receipt by the Purchaser of
Debtor's written notice of such termination; provided that no Debtor shall ever
be obligated to make inquiry as to the termination of this agreement, but shall
be fully protected in making payment directly to the Purchaser.
(b) Actions Not Releases. The Security Interest and
Debtor's obligation and the Purchaser's rights under this Security Agreement
shall not be released, diminished, impaired or adversely affected by the
occurrence of any one or more of the following events: (i) the taking or
accepting of any other security or assurance for any or all of the Obligation;
(ii) any release, surrender, exchange, subordination or loss of any security or
assurance at any time existing in connection with any or all of the Obligation;
(iii) the modification of, amendment to or waiver of compliance with any terms
of the Note; (iv) the insolvency, bankruptcy or lack of corporate or trust
power of any party at any time liable for the payment of any or all of the
Obligation, whether now existing or occurring in the future; (v) any renewal,
extension or rearrangement of the payment of any or all of the Obligation,
either with or without notice to or consent of Debtor or any adjustment,
indulgence, forbearance or compromise that may be granted or given by the
Purchaser to Debtor; (vi) any neglect, delay, omission, failure or refusal of
the Purchaser to take or prosecute any action in connection with the Note;
(vii) any failure of the Purchaser to notify Debtor of any renewal, extension
or assignment of the Obligation or any part of the Obligation, or of any other
action taken or refrained from being taken by the Purchaser against Debtor or
any new agreement between the Purchaser and Debtor, it being understood that,
the Purchaser shall not be required to give Debtor any notice of any kind under
any circumstances whatsoever with respect to or in connection with the
Obligation, including, without limitation, notice of acceptance of this
Security Agreement or any Collateral ever delivered to or for the account of
the Purchaser under this Security Agreement; (viii) the illegality, invalidity
or unenforceability of all or any part of the Obligation against any third
party obligated with respect thereto by reason of the fact that the Obligation,
or the interest paid or payable with respect thereto, exceeds the amount
permitted
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by law, the act of creating the Obligation, or any part of the Obligation, is
ultra xxxxx, or the officers, partners or trustees creating same acted in
excess of their authority, or for any other reason; or (ix) if any payment by
any party obligated with respect to such payment is held to constitute a
preference under applicable Laws or for any other reason the Purchaser is
required to refund such payment or pay the amount to someone else.
(c) Waivers. Except to the extent expressly otherwise
provided in this Security Agreement, Debtor waives (i) any right to require the
Purchaser to proceed against any other Person, to exhaust its rights in
Collateral, or to pursue any other right which the Purchaser may have; (ii)
with respect to the Obligation, presentment and demand for payment, protest,
notice of protest and nonpayment, notice of acceleration, and notice of the
intention to accelerate; and (iii) all rights of marshaling in respect of any
and all of the Collateral.
(d) Financing Statement. The Purchaser shall be entitled
at any time to (i) file this Security Agreement or a carbon, photographic or
other reproduction of this Security Agreement, as a financing statement, but
the failure of the Purchaser to do so shall not impair the validity or
enforceability of this Security Agreement and (ii) sign a financing statement
covering the Collateral on behalf of Debtor.
(e) Amendments. This Security Agreement may only be
amended by a writing jointly executed by Debtor and the Purchaser, and
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
(f) Multiple Counterparts. This Security Agreement may
be executed in any number of identical counterparts with the same effect as if
all signatories had signed the same document. In making proof of this Security
Agreement, it shall not be necessary to produce or account for more than one
set of counterpart signatures.
(g) Parties Bound. This Security Agreement shall be
binding on Debtor and its successors and assigns and shall inure to the benefit
of the Purchaser and its successors and assigns. The obligations and
agreements of Debtor under this Security Agreement shall be binding upon its
successors and assigns, and delivery or other accounting of Collateral to
Debtor shall discharge the Purchaser of all liability therefor.
(h) Assignment. Neither Debtor nor the Purchaser
may, without the other party's prior written consent, assign any rights,
duties, or obligations under this Security Agreement. In the event of an
assignment of all or part of the Obligation, the Security Interest and other
rights and benefits under this Security Agreement, to the extent applicable to
the part of the Obligation so assigned, may be transferred with the Obligation.
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(i) Notice. Any required notice must be given to Debtor
or the Purchaser at the following addresses (or telecopier numbers):
DEBTOR PURCHASER
------ ---------
Florafax International, Inc. St. Xxxxx Capital Partners, L.P.
0000 00xx Xxxxxx c/o St. Xxxxx Capital Corp.
Xxxx Xxxxx, XX 00000 0000 Xxx Xxxxxx, 0xx Xxxxx
Attn: Xxxxx X. Xxxx Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Notice shall be deemed to have been given (a) if by mail, on the third
business day after it is enclosed in an envelope and properly addressed,
stamped, sealed, certified return receipt requested, and deposited in the
appropriate official postal service, or (b) if by any other means when actually
delivered. Either party may change the address or telecopy number at which it
receives notice by giving five (5) day's advance written notice to the other
party.
(i) Governing Law. This agreement will be construed and
its performance enforced in accordance with the laws of the state of Delaware
and the laws of the United States of America.
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IN WITNESS WHEREOF, this Security Agreement is executed by the Company
as of the date first set forth above.
FLORAFAX INTERNATIONAL, INC. and each of
its Subsidiaries: [TO COME]
-----------------------------------------
Xxxxx X. Xxxx, President
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IN WITNESS WHEREOF, this Security Agreement is executed by the
Purchaser as of the date first set forth above.
ST. XXXXX CAPITAL PARTNERS, L.P.
By: St. Xxxxx Capital Corp., its general partner
-------------------------------------------------
Xxxx X. Xxxxxxxx, President
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EXHIBIT C1
THE SECURITIES REPRESENTED BY THESE WARRANTS AND THE COMMON STOCK ISSUABLE
THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW. THE SECURITIES
REPRESENTED BY THESE WARRANTS MAY NOT BE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS.
WARRANTS
to Purchase Common Stock of
FLORAFAX INTERNATIONAL, INC.
Expiring on January 1, 2001
This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, St. Xxxxx Capital Partners, L.P. (the "Holder") or its assigns,
is entitled to subscribe for and purchase from the Company (as hereinafter
defined), in whole or in part, 250,000 shares of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock (as hereinafter
defined) at an initial Exercise Price (as hereinafter defined) per share of
$1.00, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. The number of Warrants (as hereinafter defined), the
number of shares of Common Stock purchasable hereunder, and the Exercise Price
therefor are subject to adjustment as hereinafter set forth. These Warrants
and all rights hereunder shall expire at 5:00 p.m., Houston, Texas time, on
January 1, 2001 (the "Expiration Date").
ARTICLE I
Definitions
As used herein, the following terms shall have the meanings set forth
below:
1.1 "Company" shall mean Florafax International, Inc., a Delaware
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
1.2 "Common Stock" shall mean and include the Company's Common
Stock, par value $.01 per share, authorized on the date of the original issue
of these Warrants and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale,
43
transfer or other disposition of assets, the stock or other securities provided
for herein, and (ii) any other shares of common stock of the Company into which
such shares of Common Stock may be converted.
1.3 "Exercise Price" shall mean the initial purchase price of
$1.00 per share of Common Stock payable upon exercise of the Warrants, as
adjusted from time to time pursuant to the provisions hereof.
1.4 "Market Price" for any day, when used with reference to Common
Stock, shall mean the price of said Common Stock determined by reference to the
last reported sale price for the Common Stock on such day on the principal
securities exchange on which the Common Stock is listed or admitted to trading
or if no such sale takes place on such date, the average of the closing bid and
asked prices thereof as officially reported, or, if not so listed or admitted
to trading on any securities exchange, the last sale price for the Common Stock
on the National Association of Securities Dealers national market system on
such date, or, if there shall have been no trading on such date or if the
Common Stock shall not be listed on such system, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any NASD member
firm selected from time to time by the Company for such purpose.
1.5 "Note" shall mean the 7% Convertible Promissory Note of the
Company issued to St. Xxxxx Capital Partners, L.P.
1.6 "Outstanding," when used with reference to Common Stock, shall
mean (except as otherwise expressly provided herein) at any date as of which
the number of shares thereof is to be determined, all issued shares of Common
Stock, except shares then owned or held by or for the account of the Company.
1.7 "Trading Days" shall mean any days during the course of which
the principal securities exchange on which the Common Stock is listed or
admitted to trading is open for the exchange of securities.
1.8 "Warrant" shall mean the right upon exercise to purchase one
Warrant Share.
1.9 "Warrant Shares" shall mean the shares of Common Stock
purchased or purchasable by the holder hereof upon the exercise of the
Warrants.
ARTICLE II
Exercise of Warrants
2.1 Method of Exercise. The Warrants represented hereby may be
exercised by the holder hereof, in whole or in part, at any time and from time
to time on or after the date hereof until 5:00 p.m., Houston, Texas time, on
the Expiration Date. To exercise the Warrants, the holder hereof shall
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deliver to the Company, at the Warrant Office designated herein, (i) a written
notice in the form of the Subscription Notice attached as an exhibit hereto,
stating therein the election of such holder to exercise the Warrants in the
manner provided in the Subscription Notice; (ii) payment in full of the
Exercise Price (A) in cash or by bank check for all Warrant Shares purchased
hereunder, or (B) through a "cashless" or "net-issue" exercise of each such
Warrant ("Cashless Exercise"); the holder shall exchange each Warrant subject
to a Cashless Exercise for that number of Warrant Shares determined by
multiplying the number of Warrant Shares issuable hereunder by a fraction, the
numerator of which shall be the difference between (x) the Market Price and (y)
the Exercise Price for each such Warrant, and the denominator of which shall be
the Market Price; the Subscription Notice shall set forth the calculation upon
which the Cashless Exercise is based, or (C) a combination of (A) and (B)
above; and (iii) these Warrants. The Warrants shall be deemed to be exercised
on the date of receipt by the Company of the Subscription Notice, accompanied
by payment for the Warrant Shares and surrender of these Warrants, as
aforesaid, and such date is referred to herein as the "Exercise Date". Upon
such exercise, the Company shall, as promptly as practicable and in any event
within five business days, issue and deliver to such holder a certificate or
certificates for the full number of the Warrant Shares purchased by such holder
hereunder, and shall, unless the Warrants have expired, deliver to the holder
hereof a new Warrant representing the number of Warrants, if any, that shall
not have been exercised, in all other respects identical to these Warrants. As
permitted by applicable law, the Person in whose name the certificates for
Common Stock are to be issued shall be deemed to have become a holder of record
of such Common Stock on the Exercise Date and shall be entitled to all of the
benefits of such holder on the Exercise Date, including without limitation the
right to receive dividends and other distributions for which the record date
falls on or after the Exercise Date and to exercise voting rights.
2.2 Expenses and Taxes. The Company shall pay all expenses and
taxes (including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.
2.3 Reservation of Shares. The Company shall reserve at all times
so long as the Warrants remain outstanding, free from preemptive rights, out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Warrants, a sufficient number of shares of Common
Stock to provide for the exercise of the Warrants.
2.4 Valid Issuance. All shares of Common Stock that may be issued
upon exercise of the Warrants will, upon issuance by the Company, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof and, without limiting the
generality of the foregoing, the Company shall take no action or fail to take
any action which will cause a contrary result (including, without limitation,
any action that would cause the Exercise Price to be less than the par value,
if any, of the Common Stock).
2.5 Purchase Agreement. The Warrants represented hereby are part
of a duly authorized issue and sale of warrants to purchase Common Stock issued
and sold pursuant to that certain
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Agreement of Purchase and Sale, effective as of December 29, 1995, (the
"Agreement") between the Company and the Holder. The Holder shall be entitled
to the rights to registration under the Securities Act and any applicable state
securities or blue sky laws to the extent set forth in the Registration Rights
Agreement between the Company and the Holder effective as of December 29, 1995
(the "Registration Rights Agreement"). The terms of the Agreement and
Registration Rights Agreement are hereby incorporated herein for all purposes
and shall be considered a part of this Warrant as if they had been fully set
forth herein. Notwithstanding the previous sentence, in the event of any
conflict between the provisions of the Agreement and of this Warrant, the
provisions of this Warrant shall control.
2.6 Acknowledgment of Rights. At the time of the exercise of the
Warrants in accordance with the terms hereof and upon the written request of
the holder hereof, the Company will acknowledge in writing its continuing
obligation to afford to such holder any rights (including, without limitation,
any right to registration of the Warrant Shares) to which such holder shall
continue to be entitled after such exercise in accordance with the provisions
of these Warrants; provided, however, that if the Holder hereof shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to such Holder any such rights.
2.7 No Fractional Shares. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of these Warrants. If
more than one Warrant shall be presented for exercise at the same time by the
same holder, the number of full shares of Common Stock which shall be issuable
upon such exercise shall be computed on the basis of the aggregate number of
whole shares of Common Stock purchasable on exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section, be issuable on the exercise of this Warrant, the
Company shall pay an amount in cash calculated by it to be equal to the Market
Price of one share of Common Stock at the time of such exercise multiplied by
such fraction computed to the nearest whole cent.
ARTICLE III
Transfer
3.1 Warrant Office. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's offices at 0000 00xx Xxxxxx, Xxxx Xxxxx, XX 00000
and may subsequently be such other office of the Company or of any transfer
agent of the Common Stock in the continental United States as to which written
notice has previously been given to the Holder. The Company shall maintain, at
the Warrant Office, a register for the Warrants in which the Company shall
record the name and address of the Person in whose name these Warrants has been
issued, as well as the name and address of each permitted assignee of the
rights of the registered owner hereof.
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3.2 Ownership of Warrants. The Company may deem and treat the
Person in whose name the Warrants are registered as the holder and owner hereof
until provided with notice to the contrary. The Warrants may be exercised by
an assignee for the purchase of Warrant Shares without having new Warrants
issued.
3.3 Restrictions on Transfer of Warrants. These Warrants may be
transferred, in whole or in part, by the Holder. The Company agrees to
maintain at the Warrant Office books for the registration and transfer of the
Warrants. The Company, from time to time, shall register the transfer of the
Warrants in such books upon surrender of this Warrant at the Warrant Office
properly endorsed or accompanied by appropriate instruments of transfer and
written instructions for transfer. Upon any such transfer and upon payment by
the holder or its transferee of any applicable transfer taxes, new Warrants
shall be issued to the transferee and the transferor (as their respective
interests may appear) and the surrendered Warrants shall be cancelled by the
Company. The Company shall pay all taxes (other than securities transfer taxes
or income taxes) and all other expenses and charges payable in connection with
the transfer of the Warrants pursuant to this Section.
3.4 Compliance with Securities Laws. Subject to the terms of the
Registration Rights Agreement and notwithstanding any other provisions
contained in these Warrants, the Holder understands and agrees that the
following restrictions and limitations shall be applicable to all Warrant
Shares and to all resales or other transfers thereof pursuant to the Securities
Act:
3.4.1 The holder hereof agrees that the Warrant Shares may
not be sold or otherwise transferred unless the Warrant Shares are registered
under the Securities Act and applicable state securities or blue sky laws or
are exempt therefrom.
3.4.2 A legend in substantially the following form will be
placed on the certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
OTHER APPLICABLE SECURITIES LAWS."
3.4.3 Stop transfer instructions will be imposed with
respect to the Warrant Shares so as to restrict resale or other transfer
thereof.
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ARTICLE IV
Anti-Dilution
4.1 Anti-Dilution Provisions. The Exercise Price shall be subject
to adjustment from time to time as provided herein. Upon each adjustment of
the Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
4.2 Adjustment of Exercise Price Upon Issuance of Common Stock.
4.2.1 If and whenever after the date hereof the Company
shall issue or sell any Common Stock for no consideration or for a
consideration per share less than the Exercise Price, the Exercise Price shall
be reduced (but not increased, except as otherwise specifically provided
herein) to the price (calculated to the nearest one-tenth of a cent) determined
by dividing (x) an amount equal to the sum of (1) the aggregate number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by then existing Exercise Price plus (2) the consideration received
by the Company upon such issue or sale by (y) the aggregate number of shares of
Common Stock outstanding immediately after such issue or sale.
4.2.2 No adjustment shall be made in the Exercise Price in
the event that the Company issues, in one or more transactions, (i) Common
Stock or convertible securities upon exercise of any options issued to
officers, directors or employees of the Company pursuant to a stock option plan
or an employment, severance or consulting agreement as now or hereafter in
effect, the 1996 Nonemployee Directors' Stock Option Plan, or the Management
Incentive Stock Plan, in each case approved by the Board of Directors, provided
that the aggregate number of shares of Common Stock which may be issuable,
including options issued prior to the date hereof, under all such employee
plans and agreements shall at no time exceed the number of such shares of
Common Stock that are issuable under currently effective employee plans and
agreements, the 1996 Nonemployee Directors' Stock Option Plan, or the
Management Incentive Stock Plan; (ii) Common Stock upon conversion of the Note
pursuant to the terms of the Notes or the Warrants; (iii) Common Stock upon
exercise of any stock purchase warrant or option (other than the options
referred to in clause (i) above) or other convertible security outstanding on
the date hereof; or (iv) Common Stock issued as consideration in acquisitions.
In addition, for purposes of calculating any adjustment of the Exercise Price,
all of the shares of Common Stock issuable pursuant to any of the foregoing
shall be assumed to be outstanding prior to the event causing such adjustment
to be made.
4.2.3 In case at any time after the date hereof the Company
shall in any manner grant (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase Common Stock or any
options, except for options issued to officers, directors or employees
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of the Company pursuant to a stock option plan in effect as of the date hereof,
the 1996 Nonemployee Directors' Stock Option Plan, or the Management Incentive
Stock Plan, for the purchase of Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such convertible or
exchangeable stock or securities being herein called "Convertible Securities"),
whether or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per
share for which shares of Common Stock are issuable upon the exercise of such
rights or options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if any, payable to
the Company upon the exercise of such rights or options, or plus, in the case
of such rights or options that relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon the conversion or exchange
of all such Convertible Securities issuable upon the exercise of such rights or
options) shall be less than the Exercise Price in effect as of the date of
granting such rights or options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options or upon
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights or options shall be deemed to be outstanding as of the
date of the granting of such rights or options and to have been issued for such
price per share, with the effect on the Exercise Price specified herein.
Except as provided herein, no further adjustment of the Exercise Price shall be
made upon the actual issuance of such Common Stock or of such Convertible
Securities upon exercise of such rights or options or upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible
Securities.
4.2.4 If: (i) the purchase price provided for in any right
or option, (ii) the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for Common
Stock shall be decreased (other than under or by reason of provisions designed
to protect against dilution), the Exercise Price then in effect shall be
decreased to the Exercise Price that would have been in effect had such rights,
options or Convertible Securities provided for such changed purchase price,
additional consideration or conversion rate at the time initially issued.
4.2.5 In case at any time Common Stock or Convertible
Securities or any rights or options to purchase Common Stock or Convertible
Securities shall be issued or sold for cash, the total amount of cash
consideration shall be deemed to be the amount received by the Company. If at
any time any Common Stock, Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued or
sold for consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration, as determined reasonably and in good faith by the Board of
Directors of the Company. If at any time any Common Stock, Convertible
Securities or any rights or options to purchase any Common Stock or Convertible
Securities shall be issued in connection with any merger or consolidation in
which the Company is the surviving corporation, the amount of
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consideration received therefor shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be attributable to such
Common Stock, Convertible Securities, rights or options as the case may be. In
case at any time any rights or options to purchase any shares of Common Stock
or Convertible Securities shall be issued in connection with the issuance and
sale of other securities of the Company, together consisting of one integral
transaction in which no consideration is allocated to such rights or options by
the parties, such rights or options shall be deemed to have been issued without
consideration.
4.2.6 In the case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock or Convertible
Securities, or (ii) to subscribe for or purchase Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the
issuance or sale of the Common Stock or Convertible Securities deemed to have
been issued or sold as a result of the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
4.2.7 The number of shares of Common Stock outstanding at
any given time shall not include shares owned directly by the Company in
treasury, and the disposition of any such shares shall be considered an
issuance or sale of Common Stock.
4.3 Stock Dividends. In case the Company shall declare a dividend
or make any other distribution upon any shares of the Company, payable in
Common Stock or Convertible Securities, any Common Stock or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
4.4 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced and the number of Warrant
Shares purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely, in the event
that the outstanding shares of Common Stock shall at any time be combined into
a smaller number of shares, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased and the number of Warrant
Shares purchasable upon the exercise of this Warrant immediately prior to such
combination shall be proportionately reduced.
4.5 Reorganizations and Asset Sales. If any capital
reorganization or reclassification of the capital stock of the Company, or any
consolidation, merger or share exchange of the Company with another Person, or
the sale, transfer or other disposition of all or substantially all of its
assets to another Person shall be effected in such a way that holders of Common
Stock shall be entitled to receive capital stock, securities or assets with
respect to or in exchange for their shares, then the following provisions shall
apply:
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4.5.1 As a condition of such reorganization,
reclassification, consolidation, merger, share exchange, sale, transfer or
other disposition, lawful and adequate provisions shall be made whereby the
Holder shall thereafter have the right to purchase and receive upon the terms
and conditions specified in these Warrants and in lieu of the Warrant Shares
immediately theretofore receivable upon the exercise of the rights represented
hereby, such shares of capital stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of Warrant Shares immediately theretofore
so receivable had such reorganization, reclassification, consolidation, merger,
share exchange or sale not taken place, and in any such case appropriate
provision reasonably satisfactory to such holder shall be made with respect to
the rights and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise
Price and of the number of Warrant Shares receivable upon the exercise) shall
thereafter be applicable, as nearly as possible, in relation to any shares of
capital stock, securities or assets thereafter deliverable upon the exercise of
Warrants.
4.5.2 In the event of a merger, share exchange or
consolidation of the Company with or into another Person as a result of which a
number of shares of common stock or its equivalent of the successor Person
greater or lesser than the number of shares of Common Stock outstanding
immediately prior to such merger, share exchange or consolidation are issuable
to holders of Common Stock, then the Exercise Price in effect immediately prior
to such merger, share exchange or consolidation shall be adjusted in the same
manner as though there were a subdivision or combination of the outstanding
shares of Common Stock.
4.5.3 The Company shall not effect any such consolidation,
merger, share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other
than the Company) resulting from such consolidation, share exchange or merger
or the Person purchasing or otherwise acquiring such assets shall have assumed
by written instrument executed and mailed or delivered to the holder hereof at
the last address of such holder appearing on the books of the Company the
obligation to deliver to such holder such shares of capital stock, securities
or assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive, and all other liabilities and obligations of the Company
hereunder. Upon written request by the holder hereof, such successor Person
will issue a new Warrant revised to reflect the modifications in this Warrant
effected pursuant to this Section.
4.5.4 If a purchase, tender or exchange offer is made to
and accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange
or sale, transfer or other disposition of all or substantially all of the
Company's assets with the Person having made such offer or with any affiliate
of such Person, unless prior to the consummation of such consolidation, merger,
share exchange, sale, transfer or other disposition the holder hereof shall
have been given a reasonable opportunity to then elect to receive upon the
exercise of the Warrants either the capital stock, securities or assets then
issuable with respect to the Common Stock or the capital stock, securities or
assets, or the equivalent, issued to previous holders of the Common Stock in
accordance with such offer.
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4.6 Adjustment for Asset Distribution. If the Company declares a
dividend or other distribution payable to all holders of shares of Common Stock
in evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per
share of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made whenever any such dividend or distribution is made
and shall be effective as of the date as of which a record is taken for purpose
of such dividend or distribution or, if a record is not taken, the date as of
which holders of record of Common Stock entitled to such dividend or
distribution are determined.
4.7 De Minimis Adjustments. No adjustment in the number of shares
of Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon an exercise of each Warrant and no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least $0.01 in the Exercise Price; provided, however, that any
adjustments are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations shall be made to the
nearest full share or nearest one hundredth of a dollar, as applicable.
4.8 Notice of Adjustment. Whenever the Exercise Price or the
number of Warrant Shares issuable upon the exercise of the Warrants shall be
adjusted as herein provided, or the rights of the holder hereof shall change by
reason of other events specified herein, the Company shall compute the adjusted
Exercise Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock,
securities or assets receivable as a result of such change in rights, and
showing in reasonable detail the facts and calculations upon which such
adjustments or other changes are based. The Company shall cause to be mailed
to the holder hereof copies of such Officer's Certificate and an independent
accountants' opinion together with a notice stating that the Exercise Price and
the number of Warrant Shares purchasable upon exercise of the Warrants have
been adjusted and setting forth the adjusted Exercise Price and the adjusted
number of Warrant Shares purchasable upon the exercise of the Warrants.
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4.9 Notifications to Holders. In case at any time the Company
proposes:
(i) to declare any dividend upon its Common Stock payable
in capital stock or make any special dividend or other distribution
(other than cash dividends) to the holders of its Common Stock;
(ii) to offer for subscription pro rata to all of the
holders of its Common Stock any additional shares of capital stock of
any class or other rights;
(iii) to effect any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation, merger or share exchange of the Company with another
Person, or sale, transfer or other disposition of all or substantially
all of its assets; or
(iv) to effect a voluntary or involuntary dissolution,
liquidation or winding up of the Company,
then, in any one or more of such cases, the Company shall give the holder
hereof (a) at least 10 days (but not more than 90 days) prior written notice of
the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such issuance, reorganization,
reclassification, consolidation, merger, share exchange, sale, transfer,
disposition, dissolution, liquidation or winding up, and (b) in the case of any
such issuance, reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer, disposition, dissolution, liquidation or winding up,
at least 10 days (but not more than 90 days) prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (a) shall also specify, in the case of any such dividend, distribution
or subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock, as the case may be, for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition,
dissolution, liquidation or winding up, as the case may be.
4.10 Company to Prevent Dilution. If any event or condition occurs
as to which other provisions of this Article are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect
the exercise or purchase rights of the holder hereof under any provisions of
this Warrant, then the Company shall make such adjustments in the application
of such provisions, in accordance with such essential intent and principles, so
as to protect such exercise and purchase rights as aforesaid, and any
adjustments necessary with respect to the Exercise Price and the number of
Warrant Shares purchasable hereunder so as to preserve the rights of the holder
hereunder. In no event shall any such adjustment have the effect of increasing
the Exercise Price as otherwise determined pursuant to this Article except in
the event of a combination of shares.
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ARTICLE V
Miscellaneous
5.1 Entire Agreement. These Warrants, together with the
Agreement, contain the entire agreement between the holder hereof and the
Company with respect to the Warrant Shares purchasable upon exercise hereof and
the related transactions and supersedes all prior arrangements or
understandings with respect thereto.
5.2 Governing Law. This warrant shall be governed by and construed
in accordance with the laws of the State of Delaware.
5.3 Waiver and Amendment. Any term or provision of these Warrants
may be waived at any time by the party which is entitled to the benefits
thereof and any term or provision of these Warrants may be amended or
supplemented at any time by agreement of the holder hereof and the Company,
except that any waiver of any term or condition, or any amendment or
supplementation, of these Warrants shall be in writing. A waiver of any breach
or failure to enforce any of the terms or conditions of these Warrants shall
not in any way effect, limit or waive a party's rights hereunder at any time to
enforce strict compliance thereafter with every term or condition of these
Warrants.
5.4 Illegality. In the event that any one or more of the
provisions contained in this Warrant shall be determined to be invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of these Warrants shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
5.5 Copy of Warrant. A copy of these Warrants shall be filed
among the records of the Company.
5.6 Notice. Any notice or other document required or permitted to
be given or delivered to the holder hereof shall be in writing and delivered
at, or sent by certified or registered mail to such holder at, the last address
shown on the books of the Company maintained at the Warrant Office for the
registration of these Warrants or at any more recent address of which the
holder hereof shall have notified the Company in writing. Any notice or other
document required or permitted to be given or delivered to the Company, other
than such notice or documents required to be delivered to the Warrant Office,
shall be delivered at, or sent by certified or registered mail to, the offices
of the Company at 0000 00xx Xxxxxx, Xxxx Xxxxx, XX 00000 or such other address
within the continental United States of America as shall have been furnished by
the Company to the holder of this Warrant.
5.7 Limitation of Liability; Not Stockholders. No provision of
these Warrants shall be construed as conferring upon the holder hereof the
right to vote, consent, receive dividends or receive notices (other than as
herein expressly provided) in respect of meetings of stockholders for the
election of directors of the Company or any other matter whatsoever as a
stockholder of the
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Company. No provision hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the purchase price of any shares of Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
5.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, mutilation
or destruction of these Warrants, and in the case of any such loss, theft or
destruction upon delivery of an appropriate affidavit in such form as shall be
reasonably satisfactory to the Company and include reasonable indemnification
of the Company, or in the event of such mutilation upon surrender and
cancellation of these Warrants, the Company will make and deliver new Warrants
of like tenor, in lieu of such lost, stolen, destroyed or mutilated Warrants.
Any Warrants issued under the provisions of this Section in lieu of any
Warrants alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrants, shall constitute an original contractual obligation on the part of
the Company. These Warrants shall be promptly canceled by the Company upon the
surrender hereof in connection with any exchange or replacement. The Company
shall pay all taxes (other than securities transfer taxes or income taxes) and
all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section.
5.9 Registration Rights. The Warrant Shares shall be entitled to
such registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Agreement.
5.10 Headings. The Article and Section and other headings herein
are for convenience only and are not a part of this Warrant and shall not
affect the interpretation thereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name.
Dated: January __, 1996
FLORAFAX INTERNATIONAL, INC.
----------------------------------------------
Xxxxx X. Xxxx, President
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SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrants, hereby elects
to exercise purchase rights represented thereby for, and to purchase
thereunder, ____________ shares of the Common Stock covered by such Warrants,
and herewith makes payment in full for such shares, and requests (a) that
certificates for such shares (and any other securities or other property
issuable upon such exercise) be issued in the name of, and delivered to,
______________________________________________________ and (b), if such shares
shall not include all of the shares issuable as provided in such Warrants, that
new Warrants of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.
-------------------------------------------
Date:
-------------------------
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ASSIGNMENT
For value received, ____________________________, hereby sells,
assigns and transfers unto ____________________ _______ these Warrants,
together with all rights, title and interest therein, and does irrevocably
constitute and appoint ______________________________ attorney, to transfer such
Warrants on the books of the Company, with full power of substitution.
-------------------------------------------
Date:
-------------------------
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EXHIBIT C2
THE SECURITIES REPRESENTED BY THESE WARRANTS AND THE COMMON STOCK ISSUABLE
THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW. THE SECURITIES
REPRESENTED BY THESE WARRANTS MAY NOT BE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS.
WARRANTS
to Purchase Common Stock of
FLORAFAX INTERNATIONAL, INC.
Expiring on January 1, 2001
This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, St. Xxxxx Capital Partners, L.P. (the "Holder") or its assigns,
is entitled to subscribe for and purchase from the Company (as hereinafter
defined), in whole or in part, 400,000 shares of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock (as hereinafter
defined) at an initial Exercise Price (as hereinafter defined) per share of
$1.00, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. The number of Warrants (as hereinafter defined), the
number of shares of Common Stock purchasable hereunder, and the Exercise Price
therefor are subject to adjustment as hereinafter set forth. These Warrants
and all rights hereunder shall expire at 5:00 p.m., Houston, Texas time, on
January 1, 2001 (the "Expiration Date").
ARTICLE I
Definitions
As used herein, the following terms shall have the meanings set forth
below:
1.1 "Company" shall mean Florafax International, Inc., a Delaware
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
1.2 "Common Stock" shall mean and include the Company's Common
Stock, par value $.01 per share, authorized on the date of the original issue
of these Warrants and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale,
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transfer or other disposition of assets, the stock or other securities provided
for herein, and (ii) any other shares of common stock of the Company into which
such shares of Common Stock may be converted.
1.3 "Exercise Price" shall mean the initial purchase price of
$1.00 per share of Common Stock payable upon exercise of the Warrants, as
adjusted from time to time pursuant to the provisions hereof.
1.4 "Market Price" for any day, when used with reference to Common
Stock, shall mean the price of said Common Stock determined by reference to the
last reported sale price for the Common Stock on such day on the principal
securities exchange on which the Common Stock is listed or admitted to trading
or if no such sale takes place on such date, the average of the closing bid and
asked prices thereof as officially reported, or, if not so listed or admitted
to trading on any securities exchange, the last sale price for the Common Stock
on the National Association of Securities Dealers national market system on
such date, or, if there shall have been no trading on such date or if the
Common Stock shall not be listed on such system, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any NASD member
firm selected from time to time by the Company for such purpose.
1.5 "Note" shall mean the 7% Convertible Promissory Note of the
Company issued to St. Xxxxx Capital Partners, L.P.
1.6 "Outstanding," when used with reference to Common Stock, shall
mean (except as otherwise expressly provided herein) at any date as of which
the number of shares thereof is to be determined, all issued shares of Common
Stock, except shares then owned or held by or for the account of the Company.
1.7 "Trading Days" shall mean any days during the course of which
the principal securities exchange on which the Common Stock is listed or
admitted to trading is open for the exchange of securities.
1.8 "Warrant" shall mean the right upon exercise to purchase one
Warrant Share.
1.9 "Warrant Shares" shall mean the shares of Common Stock
purchased or purchasable by the holder hereof upon the exercise of the
Warrants.
ARTICLE II
Exercise of Warrants
2.1 Method of Exercise. The Warrants represented hereby may be
exercised by the holder hereof, in whole or in part, at any time and from time
to time on or after the date hereof until 5:00 p.m., Houston, Texas time, on
the Expiration Date. To exercise the Warrants, the holder hereof shall
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deliver to the Company, at the Warrant Office designated herein, (i) a written
notice in the form of the Subscription Notice attached as an exhibit hereto,
stating therein the election of such holder to exercise the Warrants in the
manner provided in the Subscription Notice; (ii) payment in full of the
Exercise Price (A) in cash or by bank check for all Warrant Shares purchased
hereunder, or (B) through a "cashless" or "net-issue" exercise of each such
Warrant ("Cashless Exercise"); the holder shall exchange each Warrant subject
to a Cashless Exercise for that number of Warrant Shares determined by
multiplying the number of Warrant Shares issuable hereunder by a fraction, the
numerator of which shall be the difference between (x) the Market Price and (y)
the Exercise Price for each such Warrant, and the denominator of which shall be
the Market Price; the Subscription Notice shall set forth the calculation upon
which the Cashless Exercise is based, or (C) a combination of (A) and (B)
above; and (iii) these Warrants. The Warrants shall be deemed to be exercised
on the date of receipt by the Company of the Subscription Notice, accompanied
by payment for the Warrant Shares and surrender of these Warrants, as
aforesaid, and such date is referred to herein as the "Exercise Date". Upon
such exercise, the Company shall, as promptly as practicable and in any event
within five business days, issue and deliver to such holder a certificate or
certificates for the full number of the Warrant Shares purchased by such holder
hereunder, and shall, unless the Warrants have expired, deliver to the holder
hereof a new Warrant representing the number of Warrants, if any, that shall
not have been exercised, in all other respects identical to these Warrants. As
permitted by applicable law, the Person in whose name the certificates for
Common Stock are to be issued shall be deemed to have become a holder of record
of such Common Stock on the Exercise Date and shall be entitled to all of the
benefits of such holder on the Exercise Date, including without limitation the
right to receive dividends and other distributions for which the record date
falls on or after the Exercise Date and to exercise voting rights.
2.2 Expenses and Taxes. The Company shall pay all expenses and
taxes (including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.
2.3 Reservation of Shares. The Company shall reserve at all times
so long as the Warrants remain outstanding, free from preemptive rights, out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Warrants, a sufficient number of shares of Common
Stock to provide for the exercise of the Warrants.
2.4 Valid Issuance. All shares of Common Stock that may be issued
upon exercise of the Warrants will, upon issuance by the Company, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof and, without limiting the
generality of the foregoing, the Company shall take no action or fail to take
any action which will cause a contrary result (including, without limitation,
any action that would cause the Exercise Price to be less than the par value,
if any, of the Common Stock).
2.5 Purchase Agreement. The Warrants represented hereby are part
of a duly authorized issue and sale of warrants to purchase Common Stock issued
and sold pursuant to that certain
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Agreement of Purchase and Sale, effective as of December 29, 1995, (the
"Agreement") between the Company and the Holder. The Holder shall be entitled
to the rights to registration under the Securities Act and any applicable state
securities or blue sky laws to the extent set forth in the Registration Rights
Agreement between the Company and the Holder effective as of December 29, 1995
(the "Registration Rights Agreement"). The terms of the Agreement and
Registration Rights Agreement are hereby incorporated herein for all purposes
and shall be considered a part of this Warrant as if they had been fully set
forth herein. Notwithstanding the previous sentence, in the event of any
conflict between the provisions of the Agreement and of this Warrant, the
provisions of this Warrant shall control.
2.6 Acknowledgment of Rights. At the time of the exercise of the
Warrants in accordance with the terms hereof and upon the written request of
the holder hereof, the Company will acknowledge in writing its continuing
obligation to afford to such holder any rights (including, without limitation,
any right to registration of the Warrant Shares) to which such holder shall
continue to be entitled after such exercise in accordance with the provisions
of these Warrants; provided, however, that if the Holder hereof shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to such Holder any such rights.
2.7 No Fractional Shares. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of these Warrants. If
more than one Warrant shall be presented for exercise at the same time by the
same holder, the number of full shares of Common Stock which shall be issuable
upon such exercise shall be computed on the basis of the aggregate number of
whole shares of Common Stock purchasable on exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section, be issuable on the exercise of this Warrant, the
Company shall pay an amount in cash calculated by it to be equal to the Market
Price of one share of Common Stock at the time of such exercise multiplied by
such fraction computed to the nearest whole cent.
ARTICLE III
Transfer
3.1 Warrant Office. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's offices at 0000 00xx Xxxxxx, Xxxx Xxxxx, XX 00000
and may subsequently be such other office of the Company or of any transfer
agent of the Common Stock in the continental United States as to which written
notice has previously been given to the Holder. The Company shall maintain, at
the Warrant Office, a register for the Warrants in which the Company shall
record the name and address of the Person in whose name these Warrants has been
issued, as well as the name and address of each permitted assignee of the
rights of the registered owner hereof.
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3.2 Ownership of Warrants. The Company may deem and treat the
Person in whose name the Warrants are registered as the holder and owner hereof
until provided with notice to the contrary. The Warrants may be exercised by
an assignee for the purchase of Warrant Shares without having new Warrants
issued.
3.3 Restrictions on Transfer of Warrants. These Warrants may be
transferred, in whole or in part, by the Holder. The Company agrees to
maintain at the Warrant Office books for the registration and transfer of the
Warrants. The Company, from time to time, shall register the transfer of the
Warrants in such books upon surrender of this Warrant at the Warrant Office
properly endorsed or accompanied by appropriate instruments of transfer and
written instructions for transfer. Upon any such transfer and upon payment by
the holder or its transferee of any applicable transfer taxes, new Warrants
shall be issued to the transferee and the transferor (as their respective
interests may appear) and the surrendered Warrants shall be cancelled by the
Company. The Company shall pay all taxes (other than securities transfer taxes
or income taxes) and all other expenses and charges payable in connection with
the transfer of the Warrants pursuant to this Section.
3.4 Compliance with Securities Laws. Subject to the terms of the
Registration Rights Agreement and notwithstanding any other provisions
contained in these Warrants, the Holder understands and agrees that the
following restrictions and limitations shall be applicable to all Warrant
Shares and to all resales or other transfers thereof pursuant to the Securities
Act:
3.4.1 The holder hereof agrees that the Warrant Shares may
not be sold or otherwise transferred unless the Warrant Shares are registered
under the Securities Act and applicable state securities or blue sky laws or
are exempt therefrom.
3.4.2 A legend in substantially the following form will be
placed on the certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
OTHER APPLICABLE SECURITIES LAWS."
3.4.3 Stop transfer instructions will be imposed with
respect to the Warrant Shares so as to restrict resale or other transfer
thereof.
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ARTICLE IV
Anti-Dilution
4.1 Anti-Dilution Provisions. The Exercise Price shall be subject
to adjustment from time to time as provided herein. Upon each adjustment of
the Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
4.2 Adjustment of Exercise Price Upon Issuance of Common Stock.
4.2.1 If and whenever after the date hereof the Company
shall issue or sell any Common Stock for no consideration or for a
consideration per share less than the Exercise Price, the Exercise Price shall
be reduced (but not increased, except as otherwise specifically provided
herein) to the price (calculated to the nearest one-tenth of a cent) determined
by dividing (x) an amount equal to the sum of (1) the aggregate number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by then existing Exercise Price plus (2) the consideration received
by the Company upon such issue or sale by (y) the aggregate number of shares of
Common Stock outstanding immediately after such issue or sale.
4.2.2 No adjustment shall be made in the Exercise Price in
the event that the Company issues, in one or more transactions, (i) Common
Stock or convertible securities upon exercise of any options issued to
officers, directors or employees of the Company pursuant to a stock option plan
or an employment, severance or consulting agreement as now or hereafter in
effect, the 1996 Nonemployee Directors' Stock Option Plan, or the Management
Incentive Stock Plan, in each case approved by the Board of Directors, provided
that the aggregate number of shares of Common Stock which may be issuable,
including options issued prior to the date hereof, under all such employee
plans and agreements shall at no time exceed the number of such shares of
Common Stock that are issuable under currently effective employee plans and
agreements, the 1996 Nonemployee Directors' Stock Option Plan, or the
Management Incentive Stock Plan; (ii) Common Stock upon conversion of the Note
pursuant to the terms of the Notes or the Warrants; (iii) Common Stock upon
exercise of any stock purchase warrant or option (other than the options
referred to in clause (i) above) or other convertible security outstanding on
the date hereof; or (iv) Common Stock issued as consideration in acquisitions.
In addition, for purposes of calculating any adjustment of the Exercise Price,
all of the shares of Common Stock issuable pursuant to any of the foregoing
shall be assumed to be outstanding prior to the event causing such adjustment
to be made.
4.2.3 In case at any time after the date hereof the Company
shall in any manner grant (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase Common Stock or any
options, except for options issued to officers, directors or employees
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of the Company pursuant to a stock option plan in effect as of the date hereof,
the 1996 Nonemployee Directors' Stock Option Plan, or the Management Incentive
Stock Plan, for the purchase of Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such convertible or
exchangeable stock or securities being herein called "Convertible Securities"),
whether or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per
share for which shares of Common Stock are issuable upon the exercise of such
rights or options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if any, payable to
the Company upon the exercise of such rights or options, or plus, in the case
of such rights or options that relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon the conversion or exchange
of all such Convertible Securities issuable upon the exercise of such rights or
options) shall be less than the Exercise Price in effect as of the date of
granting such rights or options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options or upon
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights or options shall be deemed to be outstanding as of the
date of the granting of such rights or options and to have been issued for such
price per share, with the effect on the Exercise Price specified herein.
Except as provided herein, no further adjustment of the Exercise Price shall be
made upon the actual issuance of such Common Stock or of such Convertible
Securities upon exercise of such rights or options or upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible
Securities.
4.2.4 If: (i) the purchase price provided for in any right
or option, (ii) the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for Common
Stock shall be decreased (other than under or by reason of provisions designed
to protect against dilution), the Exercise Price then in effect shall be
decreased to the Exercise Price that would have been in effect had such rights,
options or Convertible Securities provided for such changed purchase price,
additional consideration or conversion rate at the time initially issued.
4.2.5 In case at any time Common Stock or Convertible
Securities or any rights or options to purchase Common Stock or Convertible
Securities shall be issued or sold for cash, the total amount of cash
consideration shall be deemed to be the amount received by the Company. If at
any time any Common Stock, Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued or
sold for consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration, as determined reasonably and in good faith by the Board of
Directors of the Company. If at any time any Common Stock, Convertible
Securities or any rights or options to purchase any Common Stock or Convertible
Securities shall be issued in connection with any merger or consolidation in
which the Company is the surviving corporation, the amount of
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consideration received therefor shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be attributable to such
Common Stock, Convertible Securities, rights or options as the case may be. In
case at any time any rights or options to purchase any shares of Common Stock
or Convertible Securities shall be issued in connection with the issuance and
sale of other securities of the Company, together consisting of one integral
transaction in which no consideration is allocated to such rights or options by
the parties, such rights or options shall be deemed to have been issued without
consideration.
4.2.6 In the case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock or Convertible
Securities, or (ii) to subscribe for or purchase Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the
issuance or sale of the Common Stock or Convertible Securities deemed to have
been issued or sold as a result of the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
4.2.7 The number of shares of Common Stock outstanding at
any given time shall not include shares owned directly by the Company in
treasury, and the disposition of any such shares shall be considered an
issuance or sale of Common Stock.
4.3 Stock Dividends. In case the Company shall declare a dividend
or make any other distribution upon any shares of the Company, payable in
Common Stock or Convertible Securities, any Common Stock or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
4.4 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced and the number of Warrant
Shares purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely, in the event
that the outstanding shares of Common Stock shall at any time be combined into
a smaller number of shares, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased and the number of Warrant
Shares purchasable upon the exercise of this Warrant immediately prior to such
combination shall be proportionately reduced.
4.5 Reorganizations and Asset Sales. If any capital
reorganization or reclassification of the capital stock of the Company, or any
consolidation, merger or share exchange of the Company with another Person, or
the sale, transfer or other disposition of all or substantially all of its
assets to another Person shall be effected in such a way that holders of Common
Stock shall be entitled to receive capital stock, securities or assets with
respect to or in exchange for their shares, then the following provisions shall
apply:
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4.5.1 As a condition of such reorganization,
reclassification, consolidation, merger, share exchange, sale, transfer or
other disposition, lawful and adequate provisions shall be made whereby the
Holder shall thereafter have the right to purchase and receive upon the terms
and conditions specified in these Warrants and in lieu of the Warrant Shares
immediately theretofore receivable upon the exercise of the rights represented
hereby, such shares of capital stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of Warrant Shares immediately theretofore
so receivable had such reorganization, reclassification, consolidation, merger,
share exchange or sale not taken place, and in any such case appropriate
provision reasonably satisfactory to such holder shall be made with respect to
the rights and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise
Price and of the number of Warrant Shares receivable upon the exercise) shall
thereafter be applicable, as nearly as possible, in relation to any shares of
capital stock, securities or assets thereafter deliverable upon the exercise of
Warrants.
4.5.2 In the event of a merger, share exchange or
consolidation of the Company with or into another Person as a result of which a
number of shares of common stock or its equivalent of the successor Person
greater or lesser than the number of shares of Common Stock outstanding
immediately prior to such merger, share exchange or consolidation are issuable
to holders of Common Stock, then the Exercise Price in effect immediately prior
to such merger, share exchange or consolidation shall be adjusted in the same
manner as though there were a subdivision or combination of the outstanding
shares of Common Stock.
4.5.3 The Company shall not effect any such consolidation,
merger, share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other
than the Company) resulting from such consolidation, share exchange or merger
or the Person purchasing or otherwise acquiring such assets shall have assumed
by written instrument executed and mailed or delivered to the holder hereof at
the last address of such holder appearing on the books of the Company the
obligation to deliver to such holder such shares of capital stock, securities
or assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive, and all other liabilities and obligations of the Company
hereunder. Upon written request by the holder hereof, such successor Person
will issue a new Warrant revised to reflect the modifications in this Warrant
effected pursuant to this Section.
4.5.4 If a purchase, tender or exchange offer is made to
and accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange
or sale, transfer or other disposition of all or substantially all of the
Company's assets with the Person having made such offer or with any affiliate
of such Person, unless prior to the consummation of such consolidation, merger,
share exchange, sale, transfer or other disposition the holder hereof shall
have been given a reasonable opportunity to then elect to receive upon the
exercise of the Warrants either the capital stock, securities or assets then
issuable with respect to the Common Stock or the capital stock, securities or
assets, or the equivalent, issued to previous holders of the Common Stock in
accordance with such offer.
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4.6 Adjustment for Asset Distribution. If the Company declares a
dividend or other distribution payable to all holders of shares of Common Stock
in evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per
share of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made whenever any such dividend or distribution is made
and shall be effective as of the date as of which a record is taken for purpose
of such dividend or distribution or, if a record is not taken, the date as of
which holders of record of Common Stock entitled to such dividend or
distribution are determined.
4.7 De Minimis Adjustments. No adjustment in the number of shares
of Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon an exercise of each Warrant and no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least $0.01 in the Exercise Price; provided, however, that any
adjustments are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations shall be made to the
nearest full share or nearest one hundredth of a dollar, as applicable.
4.8 Notice of Adjustment. Whenever the Exercise Price or the
number of Warrant Shares issuable upon the exercise of the Warrants shall be
adjusted as herein provided, or the rights of the holder hereof shall change by
reason of other events specified herein, the Company shall compute the adjusted
Exercise Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock,
securities or assets receivable as a result of such change in rights, and
showing in reasonable detail the facts and calculations upon which such
adjustments or other changes are based, and shall obtain an opinion of the
Company's independent accountants as to the correctness of such adjustments and
calculations and to the effect that such adjustments and calculations have been
made in accordance with the terms hereof. The Company shall cause to be mailed
to the holder hereof copies of such Officer's Certificate and an independent
accountants' opinion together with a notice stating that the Exercise Price and
the number of Warrant Shares purchasable upon exercise of the Warrants have
been adjusted and setting forth the adjusted Exercise Price and the adjusted
number of Warrant Shares purchasable upon the exercise of the Warrants.
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4.9 Notifications to Holders. In case at any time the Company
proposes:
(i) to declare any dividend upon its Common Stock payable
in capital stock or make any special dividend or other distribution
(other than cash dividends) to the holders of its Common Stock;
(ii) to offer for subscription pro rata to all of the
holders of its Common Stock any additional shares of capital stock of
any class or other rights;
(iii) to effect any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation, merger or share exchange of the Company with another
Person, or sale, transfer or other disposition of all or substantially
all of its assets; or
(iv) to effect a voluntary or involuntary dissolution,
liquidation or winding up of the Company,
then, in any one or more of such cases, the Company shall give the holder
hereof (a) at least 10 days (but not more than 90 days) prior written notice of
the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such issuance, reorganization,
reclassification, consolidation, merger, share exchange, sale, transfer,
disposition, dissolution, liquidation or winding up, and (b) in the case of any
such issuance, reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer, disposition, dissolution, liquidation or winding up,
at least 10 days (but not more than 90 days) prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (a) shall also specify, in the case of any such dividend, distribution
or subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock, as the case may be, for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition,
dissolution, liquidation or winding up, as the case may be.
4.10 Company to Prevent Dilution. If any event or condition occurs
as to which other provisions of this Article are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect
the exercise or purchase rights of the holder hereof under any provisions of
this Warrant, then the Company shall make such adjustments in the application
of such provisions, in accordance with such essential intent and principles, so
as to protect such exercise and purchase rights as aforesaid, and any
adjustments necessary with respect to the Exercise Price and the number of
Warrant Shares purchasable hereunder so as to preserve the rights of the holder
hereunder. In no event shall any such adjustment have the effect of increasing
the Exercise Price as otherwise determined pursuant to this Article except in
the event of a combination of shares.
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ARTICLE V
Miscellaneous
5.1 Entire Agreement. These Warrants, together with the
Agreement, contain the entire agreement between the holder hereof and the
Company with respect to the Warrant Shares purchasable upon exercise hereof and
the related transactions and supersedes all prior arrangements or
understandings with respect thereto.
5.2 Governing Law. This warrant shall be governed by and construed
in accordance with the laws of the State of Delaware.
5.3 Waiver and Amendment. Any term or provision of these Warrants
may be waived at any time by the party which is entitled to the benefits
thereof and any term or provision of these Warrants may be amended or
supplemented at any time by agreement of the holder hereof and the Company,
except that any waiver of any term or condition, or any amendment or
supplementation, of these Warrants shall be in writing. A waiver of any breach
or failure to enforce any of the terms or conditions of these Warrants shall
not in any way effect, limit or waive a party's rights hereunder at any time to
enforce strict compliance thereafter with every term or condition of these
Warrants.
5.4 Illegality. In the event that any one or more of the
provisions contained in this Warrant shall be determined to be invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of these Warrants shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
5.5 Copy of Warrant. A copy of these Warrants shall be filed
among the records of the Company.
5.6 Notice. Any notice or other document required or permitted to
be given or delivered to the holder hereof shall be in writing and delivered
at, or sent by certified or registered mail to such holder at, the last address
shown on the books of the Company maintained at the Warrant Office for the
registration of these Warrants or at any more recent address of which the
holder hereof shall have notified the Company in writing. Any notice or other
document required or permitted to be given or delivered to the Company, other
than such notice or documents required to be delivered to the Warrant Office,
shall be delivered at, or sent by certified or registered mail to, the offices
of the Company at 0000 00xx Xxxxxx, Xxxx Xxxxx, XX 00000 or such other address
within the continental United States of America as shall have been furnished by
the Company to the holder of this Warrant.
5.7 Limitation of Liability; Not Stockholders. No provision of
these Warrants shall be construed as conferring upon the holder hereof the
right to vote, consent, receive dividends or receive notices (other than as
herein expressly provided) in respect of meetings of stockholders for the
election of directors of the Company or any other matter whatsoever as a
stockholder of the
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Company. No provision hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the purchase price of any shares of Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
5.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, mutilation
or destruction of these Warrants, and in the case of any such loss, theft or
destruction upon delivery of an appropriate affidavit in such form as shall be
reasonably satisfactory to the Company and include reasonable indemnification
of the Company, or in the event of such mutilation upon surrender and
cancellation of these Warrants, the Company will make and deliver new Warrants
of like tenor, in lieu of such lost, stolen, destroyed or mutilated Warrants.
Any Warrants issued under the provisions of this Section in lieu of any
Warrants alleged to be lost, destroyed or stolen, or in lieu of any mutilated
Warrants, shall constitute an original contractual obligation on the part of
the Company. These Warrants shall be promptly canceled by the Company upon the
surrender hereof in connection with any exchange or replacement. The Company
shall pay all taxes (other than securities transfer taxes or income taxes) and
all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section.
5.9 Registration Rights. The Warrant Shares shall be entitled to
such registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Agreement.
5.10 Headings. The Article and Section and other headings herein
are for convenience only and are not a part of this Warrant and shall not
affect the interpretation thereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name.
Dated: _______________, 1996
FLORAFAX INTERNATIONAL, INC.
-------------------------------------------
Xxxxx X. Xxxx, President
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SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrants, hereby elects
to exercise purchase rights represented thereby for, and to purchase
thereunder, ____________ shares of the Common Stock covered by such Warrants,
and herewith makes payment in full for such shares, and requests (a) that
certificates for such shares (and any other securities or other property
issuable upon such exercise) be issued in the name of, and delivered to,
________________________________ and (b), if such shares shall not include all
of the shares issuable as provided in such Warrants, that new Warrants of like
tenor and date for the balance of the shares issuable thereunder be delivered
to the undersigned.
-----------------------------------------------
Date:
-------------------------
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ASSIGNMENT
For value received, ____________________________, hereby sells,
assigns and transfers unto ____________________ _______ these Warrants,
together with all rights, title and interest therein, and does irrevocably
constitute and appoint ________________________________________ attorney, to
transfer such Warrants on the books of the Company, with full power of
substitution.
-----------------------------------------------
Date:
-------------------------
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EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement") is made effective as of December 29, 1995 by and between Florafax
International, Inc., a Delaware corporation (the "Company") and St. Xxxxx
Capital Partners, L.P. (the "Purchaser").
WHEREAS, Purchaser holds a 7% Convertible Promissory Note (the
"Note"), payable by the Company, in the original principal amount of
$2,500,000, which is convertible into a number of shares as set forth in the
Note (the "Note Shares") of the Company's common stock, par value $0.01 per
share ("Common Stock");
WHEREAS, the Purchaser hold Common Stock Purchase Warrants (the
"Warrants") which may be exercised to acquire a certain number of shares of the
Common Stock, subject to adjustment (the "Warrant Shares"; the Note Shares and
the Warrant Shares are collectively referred to as the "Shares");
WHEREAS, the Company wishes to grant the Purchaser certain
registration rights in respect of the Shares, as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the meanings
set forth below:
1.1 "Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
1.2 "Purchaser" shall mean St. Xxxxx Capital Partners, L.P.
1.3 "Registrable Securities" shall mean (i) the Shares; and (ii)
any Common Stock issued or issuable at any time or from time to time in respect
of the Shares upon a stock split, stock dividend, recapitalization or other
similar event involving the Company until such Shares and Common Stock are sold
pursuant to a Registration Statement or an exemption from registration under
the Securities Act.
1.4 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 declaration or ordering by the
Commission of the effectiveness of such registration statement.
75
1.5 "Registration Expenses" shall mean all expenses, other than
Selling Expenses (as defined below), incurred by the Company in complying with
this Registration Rights Agreement, including, without limitation, all
registration, qualification and filing fees, exchange listing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company and
for the Purchaser, blue sky fees and expenses, the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company).
1.6 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.7 "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Purchaser.
1.8 "Underwritten Public Offering" shall mean a public offering in
which the Common Stock is offered and sold on a firm commitment basis through
one or more underwriters, all pursuant to an underwriting agreement between the
Company and such underwriters.
ARTICLE II
Registration Rights
2.1 Demand Registration.
2.1.1 Within 60 days of the issuance of the Note to the
Purchaser, the Company shall use its best efforts to file with the Securities
and Exchange Commission a shelf registration statement covering the resale of
the Shares on Form X-0, X-0, or S-3 (the "Registration Statement") which shall
remain effective until the earlier to occur of: (i) 3 years, or (ii) until
such time as the Holder does not beneficially own any Registrable Securities.
The Company shall use its reasonable best efforts to cause such Registration
Statement to become effective as soon as practicable and to cause the Shares to
be qualified in such state jurisdictions as the Purchaser may request.
2.1.2 Except as set forth herein and subject to the
limitations of Section 2.1.1, the Company shall take all reasonable steps
necessary to keep the Registration Statement current and effective until all
Shares have been distributed by the Purchaser including any necessary refiling
of additional registration statements.
2.1.3 The Company shall be entitled to require that the
parties refrain from effecting any public sales or distributions of the
Registrable Securities pursuant to a Registration Statement that has been
declared effective by the Commission or otherwise, if the board of directors of
the Company reasonably determines that such public sales or distributions
would interfere in any material respect with any transaction involving the
Company that the board of directors reasonably determines to be
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material to the Company. The board of directors shall, as promptly as
practicable, give the Purchasers written notice of any such development. In
the event of a request by the board of directors of the Company that the
Purchaser refrain from effecting any public sales or distributions of the
Registrable Securities, the Company shall be required to lift such restrictions
regarding effecting public sales or distributions of the Registrable Securities
as soon as reasonably practicable after the board of directors shall reasonably
determine public sales or distributions by the Purchaser of the Registrable
Securities shall not interfere with such transaction, provided, that in no
event shall any requirement that the Purchasers refrain from effecting public
sales or distributions in the Registrable Securities extend for more than 90
days.
2.2 Piggyback Registration.
2.2.1 Subject to the terms hereof, if: (i) at any time or
from time to time the Company or any shareholder of the Company shall determine
to register any of its securities (except for registration statements relating
to employee benefit plans or exchange offers), either for its own account or
the account of a security holder; and (ii) the Purchaser is the beneficial
owner of any Registrable Securities; the Company will promptly give to the
Purchaser written notice thereof no less the 10 days prior to the filing of any
registration statement; and include in such registration (and any related
qualification under blue sky laws or other compliance), and in the underwriting
involved therein, if any, such Registrable Securities as Purchaser may request
in a writing delivered to the Company within 20 days after Purchaser's receipt
of Company's written notice.
2.2.2 The Purchaser may participate in any number of
registrations until all of the Shares held by such Purchaser have been
distributed pursuant to a registration.
2.2.3 If any registration statement is an Underwritten
Public Offering, the right of the Purchaser to registration pursuant to this
Section shall be conditioned upon such Purchaser's participation in such
reasonable underwriting arrangements as the Company shall make regarding the
offering, and the inclusion of Registrable Securities in the underwriting shall
be limited to the extent provided herein. The Purchaser and all other
shareholders proposing to distribute their securities through such underwriting
shall (together with the Company and the other holders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company. Notwithstanding any other provision of this Section, if the
managing underwriter concludes in its reasonable judgment that the number of
shares to be registered for selling stockholders (including the Purchaser)
would materially adversely effect such offering, the number of Shares to be
registered, together with the number of shares of Common Stock or other
securities held by other stockholders proposed to be registered in such
offering, shall be reduced on a pro rata basis based on the number of Shares
proposed to be sold by the Purchaser as compared to the number of shares
proposed to be sold by all stockholders. If the Purchaser disapproves of the
terms of any such underwriting, it may elect to withdraw therefrom by written
notice to the Company and the managing underwriter, delivered not less than ten
days before the effective date. The Registrable Securities excluded by the
managing underwriter or withdrawn from such underwriting shall be withdrawn
from such registration, and shall
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not be transferred in a public distribution prior to 120 days after the
effective date of the registration statement relating thereto, or such other
shorter period of time as the underwriters may require.
2.2.4 The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section prior to the
effectiveness of such registration whether or not the Purchaser has elected to
include securities in such registration.
2.3 Expenses of Registration. All Registration Expenses shall be
borne by the Company. Unless otherwise stated herein, all Selling Expenses
relating to securities registered on behalf of the Purchaser shall be borne by
the Purchaser.
2.4 Best Registration Rights. If, on or after the date of this
Registration Rights Agreement, the Company grants to any person with respect to
any security issued by the Company or any of its Subsidiaries registration
rights that provide for terms that are in any manner more favorable to the
holder of such registration rights than the terms granted to the Purchaser (or
if the Company amends or waives any provision of any Agreement providing
registration rights of others or takes any other action whatsoever to provide
for terms that are more favorable to other holders than the terms provided to
the Purchaser) then this Registration Rights Agreement shall immediately be
deemed amended to provide the Purchaser with any (or all) of such more
favorable terms as the Purchaser shall elect to include herein.
2.5 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep the Purchaser advised in
writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof. At its expense, the Company will:
2.5.1 Prepare and file with the Commission a registration
statement with respect to such securities and use its commercially reasonable
efforts to cause such registration statement to become and remain effective
until the distribution described in such registration statement has been
completed;
2.5.2 Furnish to each underwriter such number of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
underwriter may reasonably request in order to facilitate the public sale of
the shares by such underwriter, and promptly furnish to each underwriter and
the Purchaser notice of any stop-order or similar notice issued by the
Commission or any state agency charged with the regulation of securities, and
notice of any Nasdaq or securities exchange listing.
2.5.3 Cause the Shares to be listed on the Nasdaq Stock
Market's OTC Bulletin Board and each Securities Exchange on which the Common
Stock is approved for listing.
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2.6 Indemnification.
2.6.1 To the extent permitted by law, the Company will
indemnify the Purchaser, each of its officers and directors and partners, and
each person controlling the Purchaser within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, to the
extent such expenses, claims, losses, damages or liabilities arise out of or
are based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other similar document, or any amendment or supplement thereto, incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by the
Company of the Securities Act or any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse
Purchaser, each of its officers and directors and partners, and each person
controlling Purchaser, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, however, that the indemnity contained
herein shall not apply to amounts paid in settlement of any claim, loss,
damage, liability or expense if settlement is effected without the consent of
the Company (which consent shall not unreasonably be withheld); provided,
further, that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of Purchaser, such controlling person
or such underwriter specifically for use therein or the violation of the
Securities Act or any rule or regulation promulgated thereunder by any such
person. Notwithstanding the foregoing, insofar as the foregoing indemnity
relates to any such untrue statement (or alleged untrue statement) or omission
(or alleged omission) made in the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Commission at the time the
registration statement becomes effective or in the final prospectus filed with
the Commission pursuant to the applicable rules of the Commission or in any
supplement or addendum thereto, the indemnity agreement herein shall not inure
to the benefit of any underwriter if a copy of the final prospectus filed
pursuant to such rules, together with all supplements and addenda thereto, was
not furnished to the person or entity asserting the loss, liability, claim or
damage at or prior to the time such furnishing is required by the Securities
Act.
2.6.2 To the extent permitted by law, the Purchaser will,
if securities held by the Purchaser are included in the securities as to which
such registration, qualification or compliance is being effected pursuant to
terms hereof, indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the
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Securities Act, and each other person selling the Company's securities covered
by such registration statement, each of such person's officers and directors
and each person controlling such persons within the meaning of Section 15 of
the Securities Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any 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 any
violation by Purchaser of any rule or regulation promulgated under the
Securities Act applicable to Purchaser and relating to action or inaction
required of Purchaser in connection with any such registration, qualification
or compliance, and will reimburse the Company, such other persons, such
directors, officers, persons, underwriters or control persons for any legal or
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Purchaser specifically for use therein; provided, however, that
the indemnity contained herein shall not apply to amounts paid in settlement of
any claim, loss, damage, liability or expense if settlement is effected without
the consent of such Purchaser (which consent shall not be unreasonably
withheld). Notwithstanding the foregoing, the liability of such Purchaser under
this subsection (b) shall be limited in an amount equal to the net proceeds
from the sale of the shares sold by Purchaser, unless such liability arises out
of or is based on willful conduct by Purchaser. In addition, insofar as the
foregoing indemnity relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or in the
final prospectus filed pursuant to applicable rules of the Commission or in any
supplement or addendum thereto, the indemnity agreement herein shall not inure
to the benefit of the Company or any underwriter if a copy of the final
prospectus filed pursuant to such rules, together with all supplements and
addenda thereto, was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act.
2.6.3 Notwithstanding the foregoing paragraphs (a) and (b)
of this Section, each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's
ability to defend such action and provided further, that the Indemnifying Party
shall not assume the defense for matters as to which there is a
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conflict of interest or as to which the Indemnifying Party is asserting
separate or different defenses, which defenses are inconsistent with the
defenses of the Indemnified Party. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. No Indemnified Party shall consent to entry of any
judgment or enter into any settlement without the consent of each Indemnifying
Party.
2.6.4 If the indemnification provided for in this Section
is unavailable to an Indemnified Party in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and all shareholders
offering securities in the offering (the "Selling Security Holders") on the
other from the offering of the Company's securities, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Selling Security Holders on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Selling
Security Holders on the other shall be the net proceeds from the offering
(before deducting expenses) received by the Company on the one hand and the
Selling Security Holders on the other. The relative fault of the Company on the
one hand and the Selling Security Holders on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the Selling
Security Holders and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Selling Security Holders agree that it would not be just
and equitable if contribution pursuant to this Section were based solely upon
the number of entities from whom contribution was requested or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section. The amount paid or payable by
an Indemnified Party as a result of the losses, claims, damages and liabilities
referred to above in this Section shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim, subject to the provisions
hereof. Notwithstanding the provisions of this Section, no Selling Shareholder
shall be required to contribute any amount or make any other payments under
this Agreement which in the aggregate exceed the proceeds received by such
Selling Shareholder unless such losses, claims, damages or liabilities are
based on conduct which such Selling Shareholder actually knows to be in
controversion of the Securities Act. No person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
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2.7 Certain Information.
2.7.1 The Purchaser agrees, with respect to any Registrable
Securities included in any registration, to furnish to the Company such
information regarding Purchaser, the Registrable Securities and the
distribution proposed by the Purchaser as the Company may reasonably request in
writing and as shall be required in connection with any registration,
qualification or compliance referred to herein.
2.7.2 The failure of the Purchaser to furnish the
information requested pursuant to this Section shall not affect the obligation
of the Company to the other Selling Security Holders who furnish such
information unless, in the reasonable opinion of counsel to the Company or the
underwriters, such failure impairs or may impair the legality of the
Registration Statement or the underlying offering.
2.8 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of Restricted Securities (used herein as defined in Rule
144 under the Securities Act) to the public without registration, the Company
agrees to use its best lawful efforts to:
2.8.1 Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times during which the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
2.8.2 File with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act (at all times during which the Company is subject to such
reporting requirements); and
2.8.3 So long as the Purchaser owns any Restricted
Securities (as defined in Rule 144 promulgated under the Securities Act), to
furnish to Purchaser forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 and with
regard to the Securities Act and the Exchange Act (at all times during which
the Company is subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Purchaser may reasonably request in
availing itself of any rule or regulation of the Commission allowing the
Purchaser to sell any such securities without registration.
2.9 Transferability. The rights conferred by this Agreement shall
be freely transferable to a recipient of Registrable Securities who agree in
writing to assume the obligations of Purchaser hereunder, and to be bound by
the provisions hereof.
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2.10 Governing Law. This Agreement shall be governed in
all respects by the laws of the State of Texas.
2.11 Entire Agreement; Amendment. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subject hereof. This Agreement, or any provision hereof, may be amended,
waived, discharged or terminated upon the written consent of the Company and
the Purchaser.
2.12 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger
including Federal Express or similar courier service, addressed (a) if to the
Purchaser: St. Xxxxx Capital Corp., 0000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000, or at such other address as the Purchaser shall have furnished to the
Company in writing, or (b) if to the Company: to Florafax International, Inc.,
0000 00xx Xxxxxx, Xxxx Xxxxx, XX 00000 or at such other address as the Company
shall have furnished to the Purchaser. Each such notice or other communication
shall for all purposes of this Agreement be treated as effective upon receipt.
2.13 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party
to this Agreement shall impair any such right, power or remedy of such party
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party to this Agreement, shall be cumulative and not
alternative.
2.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
2.15 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
2.16 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
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THE COMPANY'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Company has executed this agreement effective
upon the date first set forth above.
FLORAFAX INTERNATIONAL, INC.
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Xxxxx X. Xxxx, President
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THE PURCHASER'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Purchaser has signed this Agreement as of the
date first written above.
SAINT XXXXX CAPITAL PARTNERS, L.P.
By: St. Xxxxx Capital Corp., its General Partner
------------------------------------------
Xxxx X. Xxxxxxxx, President
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