EXHIBIT 10.99
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND NEITHER THIS WARRANT NOR ANY SUCH SHARES MAY BE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
WARRANT
To Purchase Common Stock of Aris Industries, Inc.
a New York corporation
Xx. 000 Xxx Xxxx, Xxx Xxxx
000,000 Shares September 30, 1996
THIS IS TO CERTIFY that Xxxxxx Financial, Inc., a Delaware corporation having
its principal place of business at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, or its registered assigns, is entitled upon the due exercise hereof at
any time during the Exercise Period (as hereinafter defined) to purchase 584,345
shares of Common Stock, $.01 par value, of Aris Industries, Inc., a New York
corporation (the "Company"), at an Exercise Price of $.01 per share and to
exercise the other rights, powers and privileges hereinafter provided, all on
the terms and subject to the conditions set forth herein. The foregoing Exercise
Price and number of shares of Common Stock purchasable hereunder are subject to
adjustment as hereinafter set forth.
ARTICLE I
DEFINITIONS
The terms defined in this Article I, whenever used in this Warrant, shall have
the following respective meanings:
"Adjustment Transaction" shall mean any of (i) the declaration of a dividend
upon, or distribution in respect of, any of the Company's capital stock, payable
in Common Stock, Convertible Securities or Stock Purchase Rights, (ii) the
subdivision or
combination by the Company of its outstanding Common Stock into a larger or
smaller number of shares of Common Stock, as the case may be, (iii) a Dilutive
Transaction, (iv) any capital reorganization or reclassification of the capital
stock of the Company, (v) the consolidation or merger of the Company with or
into another corporation, (vi) the sale or transfer of the property of the
Company as (or substantially as) an entirety or (vi) any event as to which the
foregoing clauses are not strictly applicable but the failure to make an
adjustment in the Exercise Price hereunder would not fairly protect the purchase
rights, without dilution, represented by this Warrant.
"Affiliate" shall mean, with respect to any Person (i) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the stock or other
evidence of ownership having ordinary voting power in the election of directors
of such Person, (ii) each Person that controls, is controlled by or is under
common control with such Person or any Affiliate of such Person or (iii) each of
such Person's officers, directors, joint ventures and partners. For the purpose
of this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Closing Date" means September 30, 1996.
"Commission" means the Securities and Exchange Commission or another Federal
agency from time to time administering the Securities Act.
"Common Stock" means the Company's Common Stock, $.01 par value, any stock into
which such stock shall have been changed or any stock resulting from any
reclassification of such stock and any class of capital stock of the Company now
or hereafter authorized having the right to share in distributions either of
earnings or assets of the Company without limit as to amount or percentage.
"Company" has the meaning set forth on the cover page of this Warrant and shall
include any successor corporation.
"Convertible Securities" means evidences of indebtedness, shares of stock (other
than Common Stock) or other securities which are convertible into or
exchangeable for, with or without payment of additional consideration,
additional shares
of Common Stock, either immediately or upon the arrival of a specified date or
the happening of a specified event.
"Current Market Price" as to any security on any date specified herein means the
average of the daily closing prices for the thirty (30) consecutive trading days
before such date excluding any trades which are not bona fide arm's length
transactions. The closing price for each day shall be (i) the mean between the
closing high bid and low asked quotations of any such security in the
over-the-counter market as shown by the National Association of Securities
Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use, if so
quoted, as reported by any member firm of the New York Stock Exchange selected
by the Company, (ii) if not quoted as described in clause (i), the mean between
the high bid and low asked quotations for any such security as reported by the
National Quotation Bureau Incorporated or any similar successor organization, as
reported by any member firm of the New York Stock Exchange selected by the
Company, or (iii) if any such security is listed or admitted for trading on any
national securities exchange, the last sale price of any such security, regular
way, or the mean of the closing bid and asked prices thereof if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which any such security is listed. If any such security is quoted on
a national securities or central market system in lieu of a market or quotation
system described above, the closing price shall be determined in the manner set
forth in clause (i) of the preceding sentence if bid and asked quotations are
reported but actual transactions are not, and in the manner set forth in clause
(iii) of the preceding sentence if actual transactions are reported.
"Dilutive Transaction" shall mean any issuance by the Company after the Closing
Date to employees, directors, officers or consultants of the Company or its
subsidiaries, any Affiliate of the foregoing or any Affiliate of the Company of
shares of Common Stock (or Stock Purchase Rights or Convertible Securities that
would permit the purchase of Common Stock but other than Employee Benefit Shares
or Stock Purchase Rights or Convertible Securities to purchase or convert into
Employee Benefit Shares) for a consideration less than the greater of (i) the
Exercise Price per share then in effect or (ii) the then Fair Value per share
then in effect.
"Employee Benefit Shares" mean shares of Common Stock issued to and held by a
person upon exercise of such person's rights, or upon the grant to such person,
(i) under a stock incentive,
stock option, stock bonus, stock purchase or other benefit plan, program or
contract of the Company for, or (ii) as a component of compensation to,
employees, directors, officers and/or consultants of the Company or its
subsidiaries, which is approved by the Board of Directors of the Company.
"Exercise Period" means the period commencing on the Closing Date and
terminating on the tenth anniversary of the Closing Date.
"Exercise Price" means the price per share of Common Stock set forth on the
cover page of this Warrant, as such price may be adjusted pursuant to Article
IV.
"Fair Value" means the fair value of the appropriate security, property, assets,
business or entity (taking into account the value to such business or entity of
any covenant not to compete in favor thereof) as determined by an opinion of an
independent investment banking firm of national reputation (which may be the
firm regularly retained by the Company) selected by the Company and reasonably
acceptable to the holder(s) of this Warrant or, if Fair Value is being
determined other than for purposes of Article IV, the holders of Issued Warrant
Shares (who, if more than one, shall agree among themselves by a two-thirds
majority). In the case of any event which gives rise to a requirement to
determine "Fair Value" pursuant to this Warrant, the Company shall be
responsible for initiating the process by which Fair Value shall be determined
as promptly as practicable, but in any event within thirty (30) days, following
such event. Such investment banking firm shall determine the fair value of the
security, property, assets, business or entity, as the case may be, in question
and deliver its opinion in writing to the Company and to each such holder. The
determination so made shall be conclusive and binding on the Company and such
holders. The fees and expenses of any such determination made by such investment
banking firm shall be borne by the Company. In determining Fair Value, no
discount shall be imposed by reason of a minority ownership interest or the
illiquidity of the stock interest being valued. The Fair Value of the Warrant
Shares shall be determined without regard to the fact that the Warrant Shares
may constitute a minority ownership interest in a closely held corporation.
Notwithstanding the foregoing, if the Common Stock is traded on a public market,
Fair Value means, with reference to the Warrant Shares, the Current Market Price
of the Common Stock as of any date of determination.
"Initial Holder" means Xxxxxx Financial, Inc.
"Issuable Warrant Shares" means the number of shares of Common Stock issuable
from time to time upon exercise of this Warrant.
"Issued Warrant Shares" means (a) the cumulative total of shares of Common Stock
issued from time to time upon exercise of this Warrant plus (b) any shares of
Common Stock issued as a stock dividend with respect to any shares of the type
described in (a) or as part of a stock split affecting such shares.
"Notice of Exercise" means the form of Notice of Exercise set
forth on Exhibit 1.
"Permitted Payment Methods" means either of (a) wire transfer of immediately
available funds to an account in a bank located in the United States designated
by the payee for such purpose or (b) delivery of a certified or official bank
check.
"Person" means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, institution,
public benefit corporation, entity or government (whether federal, state,
country, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Securities Act" means the Securities Act of 1933, as amended, or any successor
Federal statute, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect from time to time.
"Stock Purchase Rights" means any warrants, options or other rights to subscribe
for, purchase or otherwise acquire any shares of Common Stock or any Convertible
Securities.
"Warrant" means this Warrant dated as of Closing Date issued to the Initial
Holder and all warrants issued upon the partial exercise, transfer or division
of, or in substitution for, any warrant.
"Warrant Shares" means the Issuable Warrant Shares plus the
Issued Warrant Shares.
The following terms have the meanings given to them in the indicated Sections of
this Warrant:
Term Section
---- -------
"Distribution" 6.1
"Piggy-Back Shares" 5.1
"Rule 144" 5.8
"Rule 144A" 5.8
Whenever used in this Warrant, any noun or pronoun shall be deemed to include
both the singular and plural and to cover all genders, and the words "herein,"
"hereof," and "hereunder" and words of similar import shall refer to this
instrument as a whole, including any amendments hereto. Unless specified
otherwise, all Article, Section and Exhibit references shall be to the Articles,
Sections and Exhibits of or to this Warrant.
ARTICLE II
EXERCISE OF WARRANT
2.1 Right to Exercise. On the terms and subject to the conditions of this
Article II, the holder hereof shall have the right, at its option, to exercise
this Warrant in whole or in part at any time during the Exercise Period.
2.2 Manner of Exercise; Issuance of Common Stock. To exercise this Warrant,
the holder hereof shall deliver to the Company (a) a Notice of Exercise duly
executed by such holder specifying the number of shares of Common Stock to be
purchased, (b) an amount equal to the aggregate Exercise Price for all shares of
Common Stock to be purchased pursuant to this Warrant and (c) this Warrant. At
the option of such holder, payment of the Exercise Price may be made by (A)
either of the Permitted Payment Methods, (B) deduction from the number of shares
delivered upon exercise of the Warrant of a number of shares which has an
aggregate Current Market Price on the date of exercise equal to the aggregate
Exercise Price for all shares to be purchased pursuant to this Warrant (or in
the event that the Current Market Price is not then ascertainable, then at such
price per share as the Company and the holder hereof may mutually agree upon or,
if the Company and the holder hereof are unable so to agree, then at the Fair
Value determined according to the procedures set forth within the definition of
such term) or (C) by any combination of the foregoing methods.
Upon receipt of the required deliveries, the Company shall, as promptly as
practicable but in any event within five Business Days thereafter, cause to be
issued and delivered to the holder hereof (or its nominee) or, subject to
Article V, the transferee designated in the Notice of Exercise, a certificate or
certificates representing shares of Common Stock equal to the aggregate number
of shares of Common Stock specified in the Notice of Exercise (less any shares
in payment of a cashless exercise pursuant to Section 2.2(B)). Such certificate
or certificates shall be registered in the name of the holder hereof (or its
nominee) or in the name of such transferee, as the case may be. If this Warrant
is exercised in part, the Company shall, at the time of delivery of such
certificate or certificates, unless the Exercise Period has then expired, issue
and deliver to the holder hereof or, subject to Article V, the transferee so
designated in the Notice of Exercise, a new Warrant evidencing the right of the
holder hereof or such transferee to purchase the aggregate number of shares of
Common Stock for which this Warrant shall not have been exercised, and this
Warrant shall be canceled.
2.3 Effectiveness of Exercise. Unless otherwise requested by the holder
hereof, this Warrant shall be deemed to have been exercised and such certificate
or certificates shall be deemed to have been issued, and the holder or
transferee so designated in the Notice of Exercise shall be deemed to have
become the holder of record of such shares for all purposes, as of the close of
business on the date on which each of the Notice of Exercise, payment of the
Exercise Price (unless a cashless exercise is being effected pursuant to Section
2.2(B)) and this Warrant are received by the Company.
2.4 Fractional Shares. The Company shall not issue fractional shares of
Common Stock upon any exercise of this Warrant. As to any fractional share of
Common Stock which the holder hereof would otherwise be entitled to purchase
from the Company, the Company shall purchase from the holder such fractional
share at a price equal to an amount calculated by multiplying such fractional
share (calculated to the nearest .001 of a share) by the Fair Value thereof
calculated as of the date of the Notice of Exercise. Payment of such amount
shall be made at the time of delivery of any certificate or certificates
deliverable upon such exercise in cash or by check payable to the order of the
holder hereof or, subject to Article V, the transferee designated in the Notice
of Exercise, as the case may be.
2.5 Continued Validity. A holder of shares of Common Stock issued upon the
whole or partial exercise of this Warrant shall continue to be entitled to all
rights to which a holder of this Warrant is entitled pursuant to the provisions
hereof except such rights as by their terms apply solely to the holder of a
Warrant. The Company agrees and acknowledges that each such holder of shares of
Common Stock shall be and is hereby deemed to be a third party beneficiary of
this Warrant.
ARTICLE III
REGISTRATION, TRANSFER AND EXCHANGE
The Company shall keep at its principal office an open register in which it
shall provide for the registration, transfer and exchange of this Warrant. The
holder hereof and the Company shall take such actions as may be necessary from
time to time (or as may be reasonably requested by the other party) to effect
the proper registration of this Warrant or portions hereof and in connection
with any transfer or exchange of this Warrant or portions hereof. All Warrants
issued upon any registration of transfer or exchange of Warrants shall be the
valid obligations of the Company, evidencing the same rights, and entitled to
the same benefits, as the Warrants surrendered upon such registration of
transfer or exchange.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant, the Company will execute
and deliver, in lieu thereof, a new Warrant. The Company and any agent of the
Company may treat the Person in whose name this Warrant is registered on the
register kept at the principal office of the Company as the owner and holder
thereof for all purposes.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 General Statements of Intent; Adjustment of Number of Shares
Purchasable. The Company hereby acknowledges that the initial number of shares
issuable upon exercise of this Warrant was calculated based upon the
representation of the Company that the number of shares of Common Stock
outstanding as of the Closing Date (excluding the Issuable Warrant Shares) was
11,925,416 shares. If for any reason it shall hereafter be determined by the
holder of this Warrant that the actual number of shares of Common Stock
outstanding as of the Closing Date was different from the foregoing, such holder
may notify the Company of such determination and if the Company does not
dispute the same, the Company shall forthwith reissue this Warrant with
appropriate adjustments in the initial number of shares issuable upon the
exercise hereof. If the Company shall dispute such determination and the parties
cannot otherwise resolve the dispute promptly and in good faith, then the
Company shall appoint a firm of independent public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion as to the adjustment, if any, to be made to the number
of shares issuable upon the exercise hereof. Upon receipt of such opinion, the
Company shall promptly mail a copy thereof to the holder of this Warrant and
shall make the adjustment described therein.
Without limiting the provisions of Section 4.2 hereof, it is the intent of
the parties hereto that after giving effect to any exercise of this Warrant, the
holder hereof and the holder of all Issued Warrant Shares would collectively be
the owner of (or have the right to acquire pursuant hereto) 4.9% (as such amount
may be adjusted in the event of a cashless exercise hereof pursuant to Section
2.2(B)) of the Common Stock outstanding, except as such percentage may be
reduced as a consequence of an issuance of Common Stock not requiring any
adjustment in the Exercise Price in accordance with Section 4.2.
Upon any adjustment of the Exercise Price as provided in Section 4.2, the
holder hereof 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 number of shares of Common Stock purchasable hereunder
immediately prior to such adjustment by a fraction (A) the numerator of which
shall be the Exercise Price in effect immediately prior to such adjustment and
(B) the denominator of which shall be the Exercise Price resulting from such
adjustment.
4.2 Adjustment of Exercise Price. If any Adjustment Transaction shall
occur, the Exercise Price shall be adjusted by the Company so as to fairly
preserve, without dilution, the purchase rights represented by this Warrant in
accordance with Section 4.1 and otherwise with the essential intent and purposes
hereof. If the holder of this Warrant disputes the adjustment of the Exercise
Price made by the Company and the parties cannot otherwise resolve the dispute
promptly and in good faith, then the Company shall appoint a firm of independent
public accountants of recognized national standing (which may be the regular
auditors of the Company), which shall give their opinion as to the adjustment,
if any, to be
made to the Exercise Price as the result of the relevant Adjustment Transaction.
Upon receipt of such opinion, the Company shall promptly mail a copy thereof to
the holder of this Warrant and shall make the adjustment described therein. (For
illustrative purposes, but without limiting the requirements set forth above,
there are attached hereto as Exhibit 4.2 the mathematical formulas that would be
used to calculate the adjusted Exercise Price in the case of an issuance of
Common Stock for less than the greater of (i) the Exercise Price per share then
in effect or (ii) the then Fair Value per share.)
Anything herein to the contrary notwithstanding, the Company shall not be
required to make any adjustment of the Exercise Price in the case of (i) the
issuance of shares of Common Stock upon the exercise in whole or part of this
Warrant or (ii) the issuance of shares of Common Stock pursuant to a rights
offering in which the holder hereof elects to participate as if this Warrant had
been exercised and such holder were, at the time of any such rights offering,
then a holder of that number of shares of Common Stock to which such holder is
then entitled on the exercise hereof.
In case the Company after the date hereof shall propose to (i) pay any
dividend payable in stock to the holders of shares of Common Stock or to make
any other Distribution to the holders of shares of Common Stock, (ii) offer to
the holders of shares of Common Stock rights to subscribe for or purchase any
additional shares of any class of stock or any other rights or options or (iii)
effect any reclassification of the Common Stock (other than a reclassification
involving merely the subdivision or combination of outstanding shares of Common
Stock), or any capital reorganization or any consolidation or merger (other than
a merger in which no distribution of securities or other property is to be made
to holders of shares of Common Stock), or any sale, transfer or other
disposition of its property, assets and business as an entirety or substantially
as an entirety, or the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall mail to the holder of this Warrant
notice of such proposed action, which shall specify the date on which the stock
transfer books of the Company shall close, or a record shall be taken, for
determining the holders of Common Stock entitled to receive such stock dividends
or other Distribution or such rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution or winding up shall take place or
commence, as the case may be, and the date as of which it is expected that
holders of Common
Stock of record shall be entitled to receive securities or other property
deliverable upon such action, if any such date is to be fixed. Such notice shall
be mailed in the case of any action covered by clause (i) or (ii) above at least
ten (10) days prior to the record date for determining holders of Common Stock
for purposes of receiving such payment or offer, or in the case of any action
covered by clause (iii) above at least thirty (30) days prior to the date upon
which such action takes place and twenty (20) days prior to any record date to
determine holders of Common Stock entitled to receive such securities or other
property. Failure to file any certificate or notice or to mail any notice, or
any defect in any certificate or notice pursuant to this Section shall not
affect the legality or validity of the adjustment of the Exercise Price or the
number of shares purchasable upon exercise of this Warrant, or any transaction
giving rise thereto.
ARTICLE V
RESTRICTIONS ON TRANSFER
Neither this Warrant nor any Issuable Warrant Shares shall be transferable
without the prior written consent of the Company except (a) to an Affiliate of
the holder hereof, (b) to a successor corporation to the holder hereof as a
result of a merger or consolidation with, or sale of all or substantially all of
the stock or assets of, the holder hereof, (c) as is or may be required by the
holder hereof to comply with any Federal or state law or any rule or regulation
of any governmental or public body or authority, (d) on thirty (30) days prior
written notice to the Company for a period of ninety (90) days immediately
following the date of such notice, to any other Person who, together with its
Affiliates, shall acquire in such transfer Warrants exercisable as to, or shares
of Common Stock representing, not more than two percent (2%) of the then
outstanding Common Stock or such greater percentage as may then be in accordance
with any applicable policy of the Federal Reserve Board relating to equity
investments by bank holding companies, (e) in a public offering pursuant to an
effective registration statement under the Securities Act or in an offering
constituting an exempt transaction under Rule 144 or Rule 144A, or (f) to any
Person under circumstances that would not result in a violation of the
Securities Act or any state securities laws.
Reference in this Article V to shares of Common Stock issuable upon the
exercise of this Warrant includes shares of Common Stock theretofore issued upon
the exercise of
the Warrant which are then evidenced by certificates required to bear the legend
set forth in Section 5.6.
5.1 Incidental Registration and Qualification. If the Company proposes to
register any securities of the Company under the Securities Act on any
registration form (otherwise than for the registration of securities to be
offered and sold by the Company pursuant to (a) an employee benefit plan, (b) a
dividend or interest reinvestment plan, (c) other similar plans or (d)
reclassifications of securities, mergers, consolidations and acquisitions of
assets), then not less than forty-five (45) days prior to each such registration
the Company shall give to the holder hereof and the holders of Issued Warrant
Shares bearing the legend required by Section 5.6 written notice of such
proposal which shall describe in detail the proposed registration and
distribution and, upon the written request of the holder hereof or a holder of
Issued Warrant Shares furnished within twenty (20) days after the date of any
such notice, proceed to include in such registration such Warrant Shares
("Piggy-Back Shares") as have been requested by any such holder to be included
in such registration. The Company will in each instance use its best efforts to
cause all such Piggy-Back Shares to be registered under the Securities Act and
qualified under the securities or blue sky laws of any jurisdiction requested by
a prospective seller, all to the extent necessary to permit the sale or other
disposition thereof (in the manner stated in such request) by a prospective
seller of the securities so registered.
If the managing underwriter, who shall be selected by the Person who
initiated such registration, advises the Company in writing that, in its
opinion, the inclusion of the Piggy-Back Shares with the securities being
registered by the Company and other prospective sellers would materially
adversely affect the distribution of all such securities, then (a) first the
Company may sell the shares of its Common Stock that it desires to sell in such
registration and second each prospective seller (including the holders of the
Piggy-Back Shares but other than the Company) may sell that proportion of the
shares of Common Stock to be sold in the proposed distribution which the number
of shares of Common Stock proposed to be sold by such prospective seller
(including the holders of the Piggy-Back Shares but other than the Company)
bears to the aggregate number of shares of Common Stock proposed to be sold by
all such prospective sellers (including the holders of the Piggy-Back Shares) or
(b) a prospective seller (including the holders of the Piggy-Back Shares) may at
its option delay its offering and sale for a period not to exceed ninety (90)
days after the effective date of such registration as such managing underwriter
shall reasonably request. In the event of such delay, the Company shall use its
best efforts to effect any registration or qualification under the Securities
Act and the securities or blue sky laws of any jurisdiction as may be necessary
to permit such prospective seller to make its proposed offering and sale
following the end of such period of delay and shall pay all expenses related
thereto in accordance with Section 5.4.
The holder hereof and any holder of Issued Warrant Shares who has requested
shares of Common Stock to be included in a registration pursuant to this
Section, by acceptance hereof or thereof, agrees to (a) the selection by the
Company or such other security holder of the underwriter to manage such
registration and (b) execute an underwriting agreement with such underwriter
that is (i) reasonably satisfactory to such holder and (ii) in customary form.
Nothing in this Section shall be deemed to require the Company to proceed with
any registration of its securities after giving the notice as provided herein;
provided, however, that the Company shall pay all expenses incurred pursuant to
such notice in accordance with Section 5.4.
5.2 Registration and Qualification Procedures. Whenever the Company is
required by the provisions of Section 5.1 to effect the registration of any
Warrant Shares under the Securities Act, the Company will, as expeditiously as
is possible, take such steps as are necessary or appropriate (and will consult
in good faith with the relevant holder of Warrant Shares as to what steps may be
included) to prepare for a registration or qualification of its securities,
including without limitation preparing and filing with the Commission a
registration statement, and amendments and supplements thereto, furnishing to
each seller sufficient copies of prospectuses, preparing and filing
registrations under the blue sky laws of applicable jurisdictions, entering into
and performing underwriting agreements, keeping each seller advised as to the
progress of the steps being taken and otherwise taking such actions in
cooperation with each seller as are customarily taken or required in connection
with the public registration and sale of securities. The Company, the holder
hereof and each holder of Issued Warrant Shares shall cooperate with each other
in supplying such information as may be necessary for any of such parties to
complete and file any information reporting forms presently or hereafter
required by the Commission or any commissioner or other authority administering
the blue sky or securities laws of any
jurisdiction where shares of Common Stock are proposed to be sold pursuant to
this Article V.
5.3 Holdback Agreements. Each of the holder hereof and the Company agrees
not to effect any public sale or distribution of the Company's equity securities
or securities convertible into or exchangeable or exercisable for any of such
securities during the seven (7) days prior to or ninety (90) days after any
underwritten registration pursuant to Section 5.1 has become effective, except
as part of such underwritten registration and except pursuant to registrations
on Form S-8 or S-4 or any successor or similar forms thereto, and the Company
agrees to cause each Person who purchases its equity securities (other than
Employee Benefit Shares) or any securities convertible into or exchangeable or
exercisable for any of such securities at any time after the date of this
Warrant (other than in a public offering) to agree not to effect any such public
sale or distribution of such securities, during such period.
5.4 Allocation of Expenses. If the Company is required by the provisions of
this Article V to use its best efforts to effect the registration or
qualification under the Securities Act or any state securities or blue sky laws
of any of the Warrant Shares, the Company shall pay all professional fees
(including the costs and expenses incurred by such professionals), all expenses
and all registration fees in connection therewith, including, without
limitation, the reasonable legal fees, costs and expenses of counsel to any
holder of this Warrant or Warrant Shares.
5.5 Indemnification. In connection with any registration or qualification
of securities under this Article V, the Company agrees to indemnify the holder
hereof and the holders of any shares of Common Stock issuable upon the exercise
hereof and each underwriter thereof, including each Person, if any, who controls
the holder or such stockholder or underwriter within the meaning of Section 15
of the Securities Act, against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation and the costs, fees and
expenses of legal counsel) caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement, preliminary prospectus,
prospectus or notification or offering circular (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) or
caused by 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, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement or omission or alleged omission based upon
information furnished in writing to the Company by the holder or any such
stockholder or underwriter expressly for use therein. The Company and each
officer, director and controlling Person of the Company shall be indemnified
respectively by the holder of this Warrant and by the holders of any Issued
Warrant Shares for all such losses, claims, damages, liabilities and expenses
(including the costs of reasonable investigation and the costs, fees and
expenses of legal counsel) caused by any such untrue, or alleged untrue,
statement or any such omission or alleged omission, based upon information
furnished in writing to the Company by the holder hereof or any such stockholder
expressly for use therein.
The indemnifying party shall be entitled to participate in and, to the
extent it may wish, jointly with any other indemnifying party, to assume the
defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(a) the indemnifying party agrees to pay the same, (b) the indemnifying party
fails to assume the defense of such action with counsel reasonably satisfactory
to the indemnified party or (c) the named parties to any such action (including
any impleaded parties) have been advised by such counsel that representation of
such indemnified party and the indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct (in which case
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party). No indemnifying party shall be
liable for any settlement entered into without its consent, which consent shall
not be withheld unreasonably.
If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities, expenses or actions in respect thereof referred to
herein, then each indemnifying party shall in lieu of indemnifying such
indemnified party contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities, expenses or
actions in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand, and the sellers of such Common
Stock, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities, expenses or actions as
well as any other relevant equitable considerations, including the failure to
give the notice required hereunder. The Company and the holder hereof agree that
it would not be just and equitable if contribution pursuant to this Section were
determined by any method of allocation which did not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section, in no event shall the amount contributed by any seller of Common
Stock exceed the net proceeds received by such seller from the sale of Common
Stock to which such contribution claim relates. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
Each holder of this Warrant and each holder of shares of Issued Warrant
Shares bearing the legend required by Section 5.6, by acceptance hereof or
thereof, as the case may be, agrees to the indemnification and contribution
provisions of this Section 5.5.
5.6 Legend on Warrants and Certificates. Each Warrant shall bear a legend
in substantially the following form:
"This Warrant and any shares of Common Stock issuable upon the exercise of
this Warrant have not been registered under the Securities Act of 1933, as
amended, and neither this Warrant nor any such shares may be transferred in the
absence of such registration or an exemption therefrom under such Act."
In case any shares are issued upon the exercise in whole or in part of this
Warrant or are thereafter transferred, in either case under such circumstances
that no registration under the Securities Act is required, each certificate
representing such shares shall bear the following legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be transferred in the
absence of such registration or an exemption therefrom under such Act. In
addition, any transfer of these shares is subject to the conditions specified in
the Warrant dated September 30, 1996, originally issued by Aris Industries, Inc.
(the "Company") to Xxxxxx Financial, Inc. to purchase shares of Common Stock,
$.01 par
value, of the Company. A copy of the form of such Warrant is on file with the
Secretary of the Company at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and will
be furnished without charge by the Company to the holder of this certificate
upon written request to the Secretary of the Company at such address."
5.7 Termination of Restrictions. The restrictions imposed under this
Article V upon the transferability of this Warrant, or of Issuable Warrant
Shares or Issued Warrant Shares, shall cease when (a) a registration statement
covering such Issuable Warrant Shares or Issued Warrant Shares becomes effective
under the Securities Act or (b) the Company receives an opinion of counsel for
the holder thereof reasonably acceptable to the Company that such restrictions
are no longer required in order to ensure compliance with the Securities Act.
When such restrictions terminate, the Company shall, or shall instruct its
transfer agent and registrar to, issue new certificates in the name of the
holder not bearing the legends required under Section 5.6.
5.8 Rule 144 and Rule 144A. The Company covenants that it will file all
reports required to be filed by it with the Commission, and that it will take
such further action as a holder may reasonably request, all to the extent
required from time to time to enable such holder to sell Warrant or Warrant
Shares without registration under the Securities Act pursuant to Rule 144 ("Rule
144") (or any similar rule then in effect) promulgated by the Commission under
the Securities Act. Upon the request of a holder, the Company will deliver to
such holder a notice stating whether it has complied with such requirements. The
Company covenants that it will provide to each holder or any prospective
purchaser of such holder's Warrant or Warrant Shares the information required to
be delivered under paragraph (d)(4) of Rule 144A ("Rule 144A") (or any similar
rule then in effect) promulgated by the Commission under the Securities Act in
respect of a transaction qualifying for an exemption under Rule 144A and it will
take such further action as a holder may reasonably request, all to the extent
required from time to time, to enable such holder to sell its Warrant or Warrant
Shares without registration under the Securities Act pursuant to Rule 144A.
ARTICLE VI
PARTICIPATION IN CORPORATE DISTRIBUTIONS AND OTHER RIGHTS
6.1 Company's Obligation to Make Payments.
(a) Without providing the holder of this Warrant with twenty (20) days
prior written notice, the Company shall not declare, make or pay any dividend or
other distribution, whether in cash, securities or other property, with respect
to its Common Stock (a "Distribution").
(b) The Company shall not repurchase or redeem any of its equity securities
or any securities convertible into or exchangeable for such equity securities or
any warrants or other rights to purchase such equity securities unless it
concurrently makes a cash payment to the holder of this Warrant (which shall not
be required to sell or tender for redemption any securities held by it as a
result) equal to the product of (1) the quotient obtained by dividing (x) the
aggregate amount of cash and the aggregate Fair Value of any property paid out
by the Company in connection with any such repurchase or redemption by (y) the
number of shares of Common Stock outstanding on a fully diluted (excluding
Issuable Warrant Shares) basis immediately after such repurchase or redemption
and (2) the number of shares of Common Stock then issuable upon the exercise of
this Warrant.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to the Initial Holder and each
subsequent holder of this Warrant that as of the Closing Date:
7.1 Organization and Capitalization of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York. The authorized capital of the Company consists of
50,000,000 shares of Common Stock, par value $.01 per share, and 10,000,000
shares of preferred stock, par value $.01 per share. As of the date hereof there
are 11,925,416 shares of Common Stock issued and outstanding and zero shares of
preferred stock issued and outstanding, and no shares of the Company's capital
stock are held in its treasury. No unissued shares of Common Stock are reserved
for any purpose other than for issuance upon the exercise of this Warrant and
1,200,000 shares reserved for issuance under the Company's 1993 Stock
Incentive Plan. The Company has not issued or agreed to issue any Stock Purchase
Rights or Convertible Securities except as set forth on Exhibit 7.1 hereto, and
there are no preemptive rights in effect with respect to the issuance of any
shares of Common Stock. All the outstanding shares of the Company's capital
stock have been validly issued without violation of any preemptive or similar
rights and are fully paid and nonassessable.
7.2 Authority. The Company has full corporate power and authority to
execute and deliver this Warrant and to perform all of its obligations
hereunder, and the execution, delivery and performance hereof have been duly
authorized by all necessary corporate action on its part. This Warrant has been
duly executed on behalf of the Company and constitutes the
legal, valid and binding obligation of the Company enforceable
in accordance with its terms.
7.3 No Legal Bar. Neither the execution, delivery or performance of this
Warrant will (a) conflict with or result in a violation of the articles or
certificate of incorporation or By-Laws of the Company, (b) conflict with or
result in a violation of any law, statute, regulation, order or decree
applicable to the Company or any Affiliate, (c) require any consent or
authorization or filing with, or other act by or in respect of, any governmental
authority, or (d) result in a breach of, constitute a default under or
constitute an event creating rights of acceleration, termination or cancellation
under any mortgage, lease, contract, franchise, instrument or other agreement to
which the Company is a party or by which it is bound.
7.4 Validity of Shares. When issued upon the exercise of this Warrant as
contemplated herein, shares of Common Stock will have been validly issued and
will be fully paid and nonassessable.
ARTICLE VIII
VARIOUS COVENANTS OF THE COMPANY
8.1 No Impairment or Amendment. The Company shall not by any action
including, without limitation, amending its articles or certificate of
incorporation or by-laws, any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant or impair the ability of the holder to realize upon the intended
economic value hereof, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate to protect the rights of the holder hereof against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any shares of Common Stock issuable upon the
exercise of this Warrant above the amount payable therefor upon such exercise,
(b) take all such action as may be necessary or appropriate in order that the
Company may validly issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant and (c) obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
8.2 Reservation of Common Stock. The Company will at all times reserve and
keep available, solely for issuance, sale and delivery upon the exercise of this
Warrant, a number of shares of Common Stock equal to the number of shares of
Common Stock issuable upon the exercise of this Warrant. All such shares of
Common Stock shall be duly authorized and, when issued upon exercise of this
Warrant, shall be validly issued and fully paid and non-assessable with no
liability on the part of the holders thereof.
8.3 Listing on Securities Exchange. If the Company shall list any shares of
Common Stock on any securities exchange it will, at its expense, list thereon,
maintain and increase when necessary such listing of, all Issued Warrant Shares
and, to the extent permissible under the applicable securities exchange rules,
all Issuable Warrant Shares, so long as any shares of Common Stock shall be so
listed. The Company will also so list on each securities exchange, and will
maintain such listing of, any other securities which the holder of this Warrant
shall be entitled to receive upon the exercise thereof if at the time any
securities of the same class shall be listed on such securities exchange by the
Company.
8.4 Certain Expenses. Except as specifically provided to the contrary in
Section 5.5, the Company shall pay all expenses in connection with, and all
taxes (other than stock transfer taxes) and other governmental charges that may
be imposed in respect of, the issue, sale and delivery of (a) the Warrant, (b)
the Issuable Warrant Shares and (c) the Issued Warrant Shares.
8.5 Regulatory Compliance Cooperation. Notwithstanding any other provision
of this Warrant, the Company will use its best efforts to insure that the holder
hereof does not have a
"Regulatory Problem" (as defined below) due to the Company making any
redemption, purchase or other acquisition, whether direct or indirect, or taking
other action with respect to the voting rights of, any shares of any class of
its capital stock or any securities convertible into or exchangeable for any
shares of any class of its capital stock, so as to increase the proportion of
the Company's Voting Stock which this Warrant entitles the holder to purchase or
which the holder of shares of Common Stock issuable hereunder then owns. In
addition, the Company will use its best efforts to insure that such holder does
not have a Regulatory Problem in connection with any merger, consolidation,
recapitalization or other transaction pursuant to which the holder hereof or a
holder of shares of Common Stock issuable hereunder would be required to take
any voting securities, or any securities convertible into
voting securities. Notwithstanding the foregoing, in the event that a Regulatory
Problem exists, the Company agrees in good faith to amend this Warrant
(including, if necessary, to provide that upon exercise hereof such holder shall
receive non-voting shares of Common Stock of the Company or any surviving
entity) upon the request of the holder hereof in such a way so that the
Regulatory Problem no longer exists, provided that, subject to the next
succeeding sentence, the Company shall not be required to agree to any amendment
that would have a materially adverse effect on the Company's rights under this
Warrant. The Company agrees that, so long as the economic terms of this Warrant
remain substantially the same, any such amendment shall not materially adversely
affect the rights of the Company hereunder. Without limiting the foregoing, in
the event of a Regulatory Problem the holder by acceptance of this Warrant
agrees to consent to any amendment to this Warrant requested by the Company to
provide that upon exercise hereof such holder shall receive non-voting shares of
Common Stock of the Company or any surviving entity; provided, that the economic
terms of this Warrant remain substantially the same and such amendment cures the
Regulatory Problem. For purposes of this paragraph, a Person will be deemed to
have a "Regulatory Problem" when such Person or such Person's affiliates would
own, control or have power, directly or indirectly, over a greater quantity of
securities of any kind issued by the Company than is permitted under any
requirement of any governmental authority binding on such Person.
ARTICLE IX
MISCELLANEOUS
9.1 Nonwaiver. No course of dealing or any delay or failure to exercise any
right, power or remedy hereunder on
the part of the holder hereof shall operate as a waiver of or otherwise
prejudice such holder's rights, powers or remedies.
9.2 Holder Not a Stockholder. Prior to the exercise of this Warrant as
hereinbefore provided, the holder hereof shall not be entitled to any of the
rights of a stockholder of the Company including, without limitation, the right
as a stockholder to (a) vote on or consent to any proposed action of the Company
or (b) receive (i) dividends or any other distributions made to stockholders
(except as provided in Article VI), (ii) notice of or attend any meetings of
stockholders of the Company (except as provided in Article IV) or (iii) notice
of any other proceedings of the Company (except as provided in Article IV).
9.3 Notices. Any notice, demand or delivery to be made pursuant to the
provisions of this Warrant shall be sufficiently given or made if sent by first
class mail, postage prepaid, addressed to (a) the holder of this Warrant or
Issued Warrant Shares at its last known address appearing on the books of the
Company maintained for such purpose or (b) the Company at its principal office
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Ramat,
President. The holder of this Warrant and the Company may each designate a
different address by notice to the other pursuant to this Section 9.3.
9.4 Like Tenor. All Warrants shall at all times be identical, except as to
the Preamble.
9.5 Remedies. The Company stipulates that the remedies at law of the holder
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
9.6 Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Company, the holder hereof and (to the extent provided herein) the holders
of Issued Warrant Shares, and shall be enforceable by any such holder.
9.7 Modification and Severability. If, in any action before any court or
agency legally empowered to enforce any
provision contained herein, any provision hereof is found to be unenforceable,
then such provision shall be deemed modified to the extent necessary to make it
enforceable by such court or agency. If any such provision is not enforceable as
set forth in the preceding sentence, the unenforceability of such provision
shall not affect the other provisions of this Agreement, but this Agreement
shall be construed as if such unenforceable provision had never been contained
herein.
9.8 Integration. This Warrant replaces all prior agreements, supersedes all
prior negotiations and constitutes the entire agreement of the parties with
respect to the transactions contemplated herein.
9.9 Amendment. This Warrant may not be modified or amended except by
written agreement of the Company and the holder hereof.
9.10 Headings. The headings of the Articles and Sections of this Warrant
are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
9.11 GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY THE INTERNAL LAWS (AS
OPPOSED TO CONFLICTS OF LAWS PROVISIONS) OF
THE STATE OF NEW YORK.
[signature page follows]
IN WITNESS WHEREOF, this Warrant has been executed by the Company as of the
Closing Date.
ARIS INDUSTRIES, INC.
By /s/ XXXXXXX X. RAMAT
----------------------------------
Printed Name: Xxxxxxx X. Ramat
Title: President
Attest:
/s/ XXXX XXXXXXX
----------------------------
Printed Name: Xxxx Xxxxxxx,
its Secretary
