Exhibit 10.13
WARRANT AGREEMENT
By and Between
THANE INTERNATIONAL, INC.
and
PARIBAS NORTH AMERICA, INC.
Dated as of June 10, 1999
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (as amended, modified and supplemented from
time to time, this "AGREEMENT") dated as of June 10, 1999 and entered into by
and between THANE INTERNATIONAL, INC., a Delaware corporation (the "COMPANY"),
and PARIBAS NORTH AMERICA, INC. ("PNA" or the "PURCHASER").
W I T N E S S E T H :
WHEREAS, in connection with an Affiliate of the Purchaser making
certain loans to the Company on the terms and conditions set forth in the Credit
Agreement (as hereinafter defined), the Company has agreed to issue and sell to
the Purchaser, on the date hereof, (i) certain common stock purchase warrants,
as hereinafter described (the "NON-CONTINGENT WARRANTS"), to purchase initially,
in the aggregate, 73,449 Class B Shares of the Company, subject to adjustment as
set forth herein and in the Warrant Certificates (as hereinafter defined), and
with all rights and obligations thereto as set forth in the Equityholders
Agreement (as hereinafter defined), and (ii) certain common stock purchase
warrants, as hereinafter described (the "CONTINGENT WARRANTS" and, together with
the Non-Contingent Warrants, the "WARRANTS"), to purchase initially, in the
aggregate, from and after the occurrence of a Triggering Event (as hereinafter
defined), 20,440 Class B Shares of the Company, subject to adjustment as set
forth herein and in the Warrant Certificates, and with all rights and
obligations thereto as set forth in the Equityholders Agreement;
WHEREAS, in connection with the sale of the Warrants, certain parties
are entering into the Equityholders Agreement, dated as of June 10, 1999, by and
among the Company, the Purchaser and the investors listed therein (as amended,
modified and supplemented from time to time, the "EQUITYHOLDERS AGREEMENT").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1.
DEFINED TERMS
The following terms when used in this Agreement, including its
preamble and recitals, shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"AFFILIATE" shall mean, as applied to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to "control" another Person
if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" shall have the meaning provided in the preamble of this
Agreement.
"APPLICABLE LAW" shall mean all provisions of laws, statutes,
ordinances, rules, regulations, permits or certificates of any Governmental
Authority applicable to such Person or any of its assets or property, and all
judgments, injunctions, orders and decrees of all courts, arbitrators or
Governmental Authorities in proceedings or actions in which such Person is a
party or by which any of its assets or properties are bound.
"BOARD" shall have the meaning set forth in Section 9.
"BUSINESS DAY" shall mean any day except Saturday, Sunday and any day
which in the City of New York shall be a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"CERTIFICATE" shall mean the Certificate of Incorporation of the
Company, as amended through the date hereof.
"CHANGE OF CONTROL" shall have the meaning provided in the Credit
Agreement.
"CLASS A SHARES" shall mean the Company's Class A Voting Common Stock,
par value $.0001 per share.
"CLASS B SHARES" shall mean the Company's Class B Non-Voting Common
Stock, par value $.0001 per share.
"CLOSING DATE" shall mean the initial date of issuance of Warrants
under this Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the 1933 Act.
"COMMON STOCK" shall mean the Class A Shares, the Class B Shares and
any other equity of the Company which is not limited to a fixed sum or stated
value in respect of the rights of the holders thereof to participate in
dividends or distributions or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company or any other securities of
the Company into which such Common Stock or such other securities shall be
reclassified or changed, including by reason of a merger, consolidation,
reorganization or recapitalization.
"COMPANY" shall have the meaning provided in the preamble of this
Agreement.
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"CONTINGENT WARRANTS" shall have the meaning provided in the recitals
of this Agreement.
"CREDIT AGREEMENT" shall mean the Credit Agreement dated as of June
10, 1999, among the Company, the Banks party thereto and Paribas, as Agent, as
such agreement may be amended, supplemented or otherwise modified from time to
time, including all related notes, collateral documents and guarantees, entered
into in connection therewith, as the same may be amended, modified or
supplemented from time to time.
"EQUITY SECURITIES" shall mean (i) all shares of capital stock of the
Company, including all Common Stock, (ii) all securities (debt or equity)
convertible into or exchangeable for shares of capital stock of the Company and
(iii) all options, warrants, and other rights to purchase or otherwise acquire
from the Company (A) shares of capital stock of the Company or (B) securities
convertible into or exchangeable for shares of capital stock of the Company, now
or hereafter issued by the Company (including any Equity Securities issued or
issuable with respect thereto, whether by dividend, split, combination of
shares, recapitalization, merger, consolidation, or other corporate
reorganization, or upon conversion or exchange therefor).
"EQUITYHOLDERS AGREEMENT" shall have the meaning set forth in the
recitals hereto.
"EQUIVALENT NONVOTING SECURITY" shall mean, with respect to any
security issued or to be issued by any Person, a security of such Person that is
identical in rights and benefits to such first security, except that (a) the
equivalent security shall not be entitled to vote on any matter on which holders
of voting securities of such Person are entitled to vote, other than as required
by Applicable Law or with respect to any amendment or repeal of any provision of
the Organizational Documents of such Person or any other agreement or instrument
pursuant to which the equivalent security was issued which provision
specifically affects such equivalent security, (b) subject to such reasonable
restrictions as any affected Regulated Holder may request (including any
restriction necessary to prevent the violation by such Regulated Holder of any
provision of Applicable Law with respect to its ownership of voting securities),
the equivalent security shall be convertible in a one-to-one ratio into the
first security and (c) the terms of the equivalent security shall include such
provisions requested by any affected Regulated Holder as are reasonable and
equitable to ensure that (i) the equivalent security is treated comparably to
the first security with respect to dividends, distributions, stock or unit
splits, reclassifications, capital reorganizations, mergers, consolidations and
other similar events and transactions, (ii) the conversion right provided in
clause (b) above is equitably protected and (iii) the acquisition of the
equivalent security will not cause such Regulated Holder to violate Applicable
Law.
"EXERCISE PRICE" shall have the meaning provided in Section 5.
"EXPIRATION DATE" shall have the meaning provided in Section 5.
"HIG WARRANT" means the warrant to purchase initially an aggregate of
188,679.2 shares of Common Stock issued to HIG Infomercial Company on the date
hereof.
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"GOVERNMENTAL AUTHORITY" means any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
or any court, in each case whether of the United States of America or foreign.
"HOLDER" means any Purchaser (so long as it holds of record any
Warrants or Warrant Shares) and any other registered holder of any of the
Warrants or Warrant Shares.
"INDEPENDENT FINANCIAL EXPERT" means a nationally recognized
investment banking firm (a) that does not (and whose directors, officers,
employees and Affiliates do not) have a direct or indirect material financial
interest in the Company, (b) that has not been, and, at the time it is called
upon to serve as an Independent Financial Expert under this Agreement is not
(and none of whose directors, officers, employees or Affiliates is) a promoter,
director or officer of the Company, (c) that has not been retained during the
preceding two years by the Company for any purpose, and (d) that is otherwise
qualified to serve as an independent financial advisor. Any such Person may
receive customary compensation and indemnification by the Company for opinions
or services it provides as an Independent Financial Expert.
"INDEPENDENT THIRD PARTY" means any person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Common Stock
on a fully diluted basis (a "5% OWNER"), who is not controlling, controlled by
or under common control with any such 5% Owner and who is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner and/or such other persons.
"ISSUANCE NOTICE" shall have the meaning provided in Section 14.
"NON-CONTINGENT WARRANTS" shall have the meaning provided in the
recitals of this Agreement.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any Person, each
instrument or other document that (a) defines the existence of such Person,
including its articles or certificate of incorporation or certificate of
formation, as filed or recorded with an applicable Governmental Authority or (b)
governs the internal affairs of such Person, including its bylaws, operating
agreement, regulations or partnership agreement, in each case as amended,
supplemented or restated.
"PERMITTED TRANSFEREE" shall mean any "Bank" under and as defined in
the Credit Agreement or any Affiliate, officer, director, partner or employee
thereof, any Affiliate of any Holder or any officer, director, partner or
employee of any Holder.
"PERSON" or "PERSONS" means and includes natural persons,
corporations, limited partnerships, general partnerships, limited liability
companies, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
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"PNA" shall have the meaning provided in the preamble of this
Agreement.
"PREEMPTIVE RIGHT" shall have the meaning provided in Section 14.
"PUBLIC OFFERING" shall mean any offering of Common Stock to the
public (i) pursuant to an offering registered under the Securities Act or (ii)
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act (or any similar rule then in effect).
"PUBLICLY TRADED" means, with respect to any security, that such
security is (a) listed on a domestic securities exchange, (b) quoted on NASDAQ
or (c) traded in the domestic over-the-counter market, which trades are reported
by the National Quotation Bureau, Incorporated.
"PURCHASER" shall have the meaning provided in the preamble of this
Agreement.
"REFINANCING AGREEMENT" shall mean any "refinancing" of the Credit
Agreement or any Refinancing Agreement (i.e., borrowing under a different credit
agreement in which Paribas is not a party and using the proceeds of such
borrowing to repay all obligations under such refinanced agreement).
"REGULATED HOLDER" means any Holder (i) that, directly or indirectly
because of its ownership by an entity that is subject to Regulation Y, is
subject to the provisions of Regulation Y and (ii) that holds shares of Common
Stock or Warrants to purchase shares of Common Stock.
"REGULATION Y" means Regulation Y of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such
Regulation).
"REORGANIZATIONS" shall have the meaning provided in Section 9(g).
"REQUISITE HOLDERS" means Holders holding Warrants and/or Warrant
Shares representing at least a majority of all Warrant Shares issued or issuable
upon exercise of Warrants outstanding on the date of determination.
"SECTION 11(C) TRANSACTION" shall have the meaning provided in Section
11(c).
"TRIGGERING EVENT" means (i) the occurrence of a "Triggering Event"
under, and as defined in, the HIG Warrant as in effect on the date hereof, or
(ii) any other event, condition or circumstance which causes the HIG Warrant to
become exercisable.
"VALUATION PROCEDURE" means, with respect to the determination of any
amount or value required to be determined in accordance with such procedure, a
determination (which shall be final and binding on the Company and the Holders)
made (i) by agreement among the Company and the Requisite Holders within 20 days
following the event requiring such
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determination or (ii) in the absence of such an agreement, by an Independent
Financial Expert selected in accordance with the further provisions of this
definition. If required, an Independent Financial Expert shall be selected
within five days following the expiration of the 20-day period referred to
above, either by agreement among the Company and the Requisite Holders or, in
the absence of such agreement, by lot from a list of four potential Independent
Financial Experts remaining after the Company nominates three, the Requisite
Holders nominate three, and each side eliminates one potential Independent
Financial Expert. The Independent Financial Expert shall be instructed by the
Company and the Requisite Holders to make its determination within 20 days of
its selection. The fees and expenses of an Independent Financial Expert selected
hereunder shall be paid by the Company unless the Independent Financial Expert's
determination pursuant to the Valuation Procedure is within 10% of the amount
proposed by the Company in connection with the Valuation Procedure and not
agreed to by the Requisite Holders, in which case such fees and expenses shall
be paid 50% by the Holders (on a pro rata basis) participating in the
transaction to which the determination relates and 50% by the Company.
"WARRANT CERTIFICATES" shall have the meaning provided in Section 2.
"WARRANT DOCUMENTS" means this Agreement, the Warrant Certificates and
the Equityholders Agreement.
"WARRANT NUMBER" shall have the meaning provided in Section 9.
"WARRANT SHARES" means (a) the shares of Common Stock issued or
issuable upon exercise of a Warrant in accordance with Section 5 or upon
exchange of a Warrant in accordance with Section 5 and shares of Common Stock
issuable upon a future exercise or exchange for such securities, (b) all other
securities or other property issued or issuable upon any such exercise or
exchange in accordance with this Agreement and (c) any securities of the Company
distributed with respect to, or issued upon the conversion of, the securities
referred to in the preceding clauses (a) and (b).
"WARRANTS" shall have the meaning provided in the recitals of this
Agreement.
SECTION 2.
SALE AND ISSUANCE OF WARRANTS; WARRANT SHARES
The Company hereby sells to the Purchaser and the Purchaser hereby
purchases from the Company, subject to the conditions and restrictions contained
in this Agreement, the Warrants for good and valuable consideration, receipt of
which is hereby acknowledged. The Company will issue and deliver on the date
hereof certificates evidencing the Warrants (the "WARRANT Certificates").
Warrant Certificates shall be dated the date of issuance by the Company. Each
Warrant to be issued on the date hereof under this Agreement shall entitle the
Holder thereof (subject, in the case of any Contingent Warrant, to the prior
occurrence of a Triggering Event) to exercise such Warrant for one Class B
Share.
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SECTION 3.
EXECUTION OF WARRANT CERTIFICATES;
MUTILATED OR MISSING WARRANT CERTIFICATES
Warrant Certificates shall be signed on behalf of the Company by its
President or a Vice President. Each Warrant Certificate shall also be manually
signed on behalf of the Company by its Secretary or an Assistant Secretary.
In case any of the Warrant Certificates shall be mutilated, lost,
stolen or destroyed, the Company shall, upon request of the Holder of any such
Warrant Certificate, issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate.
SECTION 4.
REGISTRATION/RESERVATION OF WARRANT SHARES
The Company shall number and register the Warrant Certificates in a
register as they are issued. The Company may deem and treat the registered
Holders of the Warrant Certificates as the absolute owners thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes and shall not be affected by any notice to the
contrary. The Warrants shall be registered initially in such name or names as
the Purchaser shall designate.
The Company shall at all times reserve and keep available shares of
each class of Common Stock, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants and the
subsequent conversion of such Warrant Shares, the maximum number of Class A
Shares and Class B Shares which may then be deliverable upon the exercise of all
outstanding options, warrants (including the Warrants) or other securities
convertible into or exchangeable for Common Stock.
The Company covenants that all Warrant Shares and other equity
interests issued upon exercise of Warrants or upon conversion of Warrant Shares
will, upon payment of the Exercise Price therefor (in the case of an exercise of
Warrants) and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof.
If and so long as any outstanding Common Stock may be listed on any
securities exchange in the United States or quoted NASDAQ, the Company shall use
its best efforts to cause all reserved Warrant Shares to be listed or quoted on
each such exchange upon official notice of issuance upon such exercise.
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SECTION 5.
WARRANTS; EXERCISE OF WARRANTS
Subject to the terms of this Agreement, (a) each Holder shall have the
right, which may be exercised at any time or from time to time during the period
commencing on the date hereof and ending at 5:00 p.m., New York time, on June
10, 2009 (the "EXPIRATION DATE"), to receive from the Company the number of
fully paid Warrant Shares which the Holder may at the time be entitled to
receive on exercise of the Non-Contingent Warrants and payment of the Exercise
Price then in effect for such Warrant Shares, and (b) each Holder shall have the
right, which may be exercised at any time or from time to time during the period
commencing upon the occurrence of a Triggering Event and ending at 5:00 p.m.,
New York time, on the Expiration Date, to receive from the Company the number of
fully paid Warrant Shares which the Holder may at the time be entitled to
receive on exercise of the Contingent Warrants and payment of the Exercise Price
then in effect for such Warrant Shares. Each Warrant not exercised prior to 5:00
p.m., New York time, on the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time; provided that the occurrence of the Expiration Date shall not
relieve the Company of any obligation to any Holder which arose pursuant to the
terms of this Agreement prior to such date.
As of any date of determination, the price at which each Warrant shall
be exercisable (the "EXERCISE PRICE") shall be an amount per Warrant Share equal
to the quotient of (i) $650,000 less the aggregate amount paid by the Holder(s)
prior to such date as the Exercise Price in respect of any Warrants exercised
prior to such date divided by (ii) the sum of (x) the aggregate number of
Warrant Shares issuable upon the exercise of all outstanding unexercised
Non-Contingent Warrants plus (y) from and after the occurrence of a Triggering
Event, the aggregate number of Warrant Shares issuable upon the exercise of all
outstanding unexercised Contingent Warrants. By way of example: (I) as of the
date hereof, the Exercise Price equals (i) $650,000 divided by (ii) 73,449
Warrant Shares, or $8.85 per Warrant Share, and (II) upon the occurrence of a
Triggering Event, if no Non-Contingent Warrants have theretofore been exercised,
the Exercise Price will equal (i) $650,000 divided by the sum of (x) 73,449
Warrant Shares plus (y) 20,440 Warrant Shares, or $6.92 per Warrant Share (it
being understood and agreed by the parties that the intent of the foregoing
method for calculating the Exercise Price is to ensure that the aggregate
Exercise Price for all Warrants (including any Warrants already exercised or
then being exercised but excluding any Contingent Warrants that are not then
exercisable as a result of a Triggering Event's not having occurred) shall at
all times equal $650,000). Each class of the Common Stock shall have a par value
of no greater than the effective Exercise Price.
A Non-Contingent Warrant may be exercised upon surrender to the
Company, at its address set forth on the signature pages hereto, of the Warrant
Certificate or Warrant Certificates to be exercised with the form of election to
purchase attached thereto duly completed and signed, and upon payment to the
Company of the Exercise Price for the number of Warrant Shares in respect of
which such Warrants are then exercised. A Contingent Warrant may be exercised in
the same manner as a Non-Contingent Warrant at any time after the occurrence of
a
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Triggering Event. Payment of the aggregate Exercise Price may be made, at the
option of the applicable Holder, by cash, certified or bank cashier's check or
wire transfer.
Subject to the provisions of Sections 6 and 8, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as such Holder may designate a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants (and such other consideration as may be deliverable upon exercise
of such Warrants) together with, at the sole option of the Holder, cash for
fractional Warrant Shares as provided in Section 7. Such certificate or
certificates shall be deemed to have been issued and the Person so named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and the purchase form attached
thereto and payment of the Exercise Price, irrespective of the date of delivery
of such certificate or certificates for Warrant Shares.
Upon receipt by the Company of such Warrant and such purchase form
attached thereto, together with the Exercise Price, at the office of the
Company, in proper form for exercise, the Holder thereof shall be deemed to be
the holder of record of the shares of Common Stock specified in such purchase
form, notwithstanding that the transfer books of the Company shall then be
closed or that certificates (if any) representing the Warrant Shares shall not
then be actually delivered to the Holder.
Each Warrant shall be exercisable, at the election of the Holder
thereof (subject, in the case of any Contingent Warrant, to the prior occurrence
of a Triggering Event), either in full or from time to time in part and, in the
event that a Warrant Certificate is exercised in respect of fewer than all of
the Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section 5 and of Section 2.
All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the Holders during normal business hours at its office.
SECTION 6.
PAYMENT OF TAXES
The Company will pay all taxes and other governmental charges
(including all documentary stamp taxes, but excluding all foreign, federal,
state or local income taxes payable by a Holder) in connection with the issuance
or delivery of the Warrants hereunder, including all such taxes attributable to
the initial issuance or delivery of Warrant Shares upon the exercise of Warrants
and payment of the Exercise Price. The Company shall not, however, be required
to pay any tax that may be payable in respect of any subsequent transfer of the
Warrants or any transfer involved in the issuance and delivery of Warrant Shares
in a name other than that in which the Warrants to which such issuance relates
were registered, and, if any such tax would
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otherwise be payable by the Company, no such issuance or delivery shall be made
unless and until the Person requesting such issuance has paid to the Company the
amount of any such tax, or it is established to the reasonable satisfaction of
the Company that any such tax has been paid.
SECTION 7.
FRACTIONAL INTERESTS
The Company shall not be required to issue fractional Warrant Shares
on the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same Holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 7, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall, at the Holder's option, pay
an amount in cash equal to the fair market value (as agreed upon by the Company
and the Holder based upon (a) if any shares of Common Stock are then publicly
traded, the current market price per share of Common Stock, or (b) otherwise,
the price per share that would be paid by a willing buyer to a willing seller
for the entire common equity of the Company, using valuation techniques then
prevailing in the securities industry; provided that if the Company and the
Holder are unable to agree on such fair market value, such fair market value
shall be determined in accordance with the Valuation Procedure) of the Warrant
Share so issuable multiplied by such fraction.
SECTION 8.
LIMITATIONS ON CERTAIN HOLDERS
Notwithstanding anything in this Agreement or any Warrant Certificate
to the contrary, no Regulated Holder and no transferee of such Regulated Holder,
may exercise the Warrants for a number of Warrant Shares which would permit such
Regulated Holder, together with its Affiliates and transferees, to own or
control a number of Warrant Shares greater than that permitted by Applicable Law
including, without limitation, Regulation Y.
SECTION 9.
ADJUSTMENT OF NUMBER OF
WARRANT SHARES ISSUABLE AND EXERCISE PRICE
The number of Warrant Shares issuable upon the exercise of each
Warrant (the "WARRANT NUMBER") is initially one. The Warrant Number is subject
to adjustment from time to time upon the occurrence of any event enumerated in,
or as otherwise provided in, this Section 9.
(a) Adjustment for Change in Equity. If the Company:
(i) subdivides or reclassifies its outstanding shares of Common
Stock into a greater number of shares of capital stock or declares a
stock dividend on its Common Stock in shares of its capital stock;
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(ii) combines or reclassifies its outstanding shares of Common
Stock into a smaller number of shares; or
(iii) issues, by reclassification of its Common Stock, any
capital stock;
then the Warrant Number in effect immediately prior to such action shall be
adjusted so that the Holder of any Warrant thereafter exercised may receive, at
no additional cost to such Holder, the aggregate number and kind of shares of
capital stock of the Company which it would have owned immediately following
such action if such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification and shall become
effective immediately after the record date in the case of a dividend. Such
adjustment shall be made successively whenever any event listed above shall
occur. If, as a result of an adjustment made pursuant to this paragraph, the
Holder of any Warrant thereafter exercised shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company (the "BOARD") shall in good faith determine the
allocation of each adjusted Exercise Price between or among shares of such
classes of capital stock, which shall be reasonably approved by the Requisite
Holders.
(b) When De Minimis Adjustment Deferred. No adjustment in the Warrant
Number need be made unless the adjustment would require an increase or decrease
of at least one-tenth of one percent in the Warrant Number. Any adjustments that
are not made shall be carried forward and taken into account in any subsequent
adjustment, provided that no such adjustment shall be deferred beyond the date
on which a Warrant is exercised. All calculations under this Section 9 shall be
made to the nearest 1/10th of a share.
(c) Notice of Adjustment. Whenever the Warrant Number is adjusted, the
Company shall provide the notices required by subsection 11(a) hereof. Whenever
the Warrant Number is required to be adjusted, as herein provided, the Company
shall mail by first class, postage prepaid, to each Holder, notice of such
adjustment or adjustments and a certificate of a firm of nationally recognized
independent public accountants selected by the Board (who may be the regular
accountants employed by the Company) setting forth the Warrant Number after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.
(d) Reorganizations. In case of any capital reorganization or the
consolidation or merger of the Company with or into another Person (other than a
merger or consolidation in which the Company is the surviving entity and which
does not result in any reclassification of the outstanding shares of Common
Stock into shares of other stock or other securities or property), or the sale
of all or substantially all of the property or assets of the Company
(collectively, such actions being hereinafter referred to as "REORGANIZATIONS"),
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of Warrant Shares theretofore deliverable) the number of shares of
stock, units, membership or partnership interests or other securities or
property to which a Holder of the number of Warrant Shares that would otherwise
have been deliverable upon the exercise of such Warrant, would have been
entitled
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upon such Reorganization if such Warrant had been exercised in full immediately
prior to such Reorganization. In case of any Reorganization, appropriate
adjustment, as determined in good faith by the Board, whose determination shall
be described in a duly adopted resolution certified by the Company's Secretary
or Assistant Secretary, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of Holders so that the
provisions set forth herein shall thereafter be applicable, as nearly as
possible, in relation to any shares or other securities or property thereafter
deliverable upon exercise of Warrants. The Company shall not effect or permit
any such Reorganization unless (i) the successor entity resulting from such
Reorganization or the Person purchasing such assets is a corporation duly
organized and validly existing under the laws of a state of the United States
and (ii) prior to or simultaneously with the consummation of such Reorganization
the successor entity (if other than the Company) resulting from such
Reorganization or the Person purchasing such assets shall expressly assume, by a
supplemental Warrant Agreement or other acknowledgment executed and delivered to
the Holder(s) in a form substantially similar hereto, the obligation to deliver
to each such Holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such Holder may be entitled to purchase, and all
other obligations and liabilities under this Agreement. No non-cash
distributions of Equity Securities shall be made to a Regulated Holder or its
Affiliate or transferee which would cause such Regulated Holder, Affiliate or
transferee to be in violation of any Applicable Law.
(e) Form of Warrants. Irrespective of any adjustments in the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrant Certificates initially
issuable pursuant to this Agreement.
(f) Adjustments in Other Securities. If as a result of any event or
for any other reason, any adjustment is made which increases the number of
shares of Common Stock issuable upon conversion, exercise or exchange of, or in
the conversion or exercise price or exchange ratio applicable to, any Equity
Securities outstanding on the Closing Date, then a corresponding adjustment
shall be made hereunder to adjust the number of shares of Common Stock issuable
upon exercise of the Warrants, but only to the extent that no such adjustment
has been made pursuant to subsection 9(a) with respect to such event or for such
other reason.
(g) Other Dilutive Events. If any company action shall occur as to
which the provisions of this Section 9 are not strictly applicable but as to
which the failure to make any adjustment would adversely affect the purchase
rights or value represented by the Warrants in accordance with the essential
intent and principles of this Section 9 (which are to place the Holder in a
position as nearly equal as possible to the position the Holder would have
occupied had the Holder purchased shares of Common Stock on the date hereof (and
holders of Class A Shares and Class B Shares are to be treated equally except
with respect to voting rights)) then, in each such case, the Company shall
appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company) to give
their written advice upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Section 9, necessary to
preserve, without dilution, the purchase
12
rights represented by Warrants. Upon receipt of such written advice, the Company
will promptly mail a copy thereof to Holders and will make the adjustments
described therein.
(h) Exercise Price Adjustment. Whenever the Warrant Number is adjusted
as herein provided, the Exercise Price payable upon exercise of each Warrant
shall be adjusted in accordance with the principles set forth in Section 5.
(i) Dissolution, Liquidation or Winding Up. Notwithstanding any other
provision of this Agreement, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, each Holder shall be
entitled to share, with respect to the Warrant Shares issuable upon exercise of
the Holder's Warrants, equally and ratably in any cash or non-cash distributions
payable to holders of Common Stock, less the aggregate Exercise Price payable
upon the exercise of such Warrants. The Company shall give notice to each Holder
at the earliest practicable time (and, in any event, not less than 20 days
before the date of such dissolution, liquidation or winding-up, as the case may
be) and each Holder of outstanding Warrants shall be entitled to share equally
and ratably in any cash or noncash distributions payable to holders of Common
Stock. In case of any such voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company shall hold in escrow any funds or other
property which a Holder is entitled to receive in respect of such Holder's
Warrant Shares at the time of any distribution. No such Holder will be entitled
to receive payment of any such distribution until such Holder has surrendered
the Warrant Certificates evidencing such Warrant to the Company. From and after
such voluntary or involuntary dissolution, liquidation or winding up with
respect to the Company, all rights of the Holders, except the right to receive
such distribution, without interest, upon the surrender of the Warrant
Certificates, shall cease and terminate and such Warrants shall not thereafter
be transferred (except with the consent of the Company) and such Warrants shall
not be deemed to be outstanding for any other purpose whatsoever. For the
purposes of this Agreement, neither the voluntary sale, lease, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Company, nor the consolidation or merger of the Company with one or more other
corporations, shall be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, with respect to the Company.
(j) Miscellaneous. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the Holders shall become entitled to
purchase any securities of the Company other than, or in addition to, Common
Stock, thereafter the number or amount of such other securities so purchasable
upon exercise of each Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Warrant Shares contained in this Section 9, and the
provisions of Sections 5, 6, 7 and 8 with respect to the Warrant Shares or the
Common Stock shall apply on like terms to any such other securities.
(k) Regulated Holders. If, in the opinion of any Regulated Holder, the
receipt by such Regulated Holder of Warrant Shares (or any security included
therein) upon any exercise or exchange pursuant to this Section 9 or the receipt
of any dividend or distribution pursuant to Section 10 would cause such
Regulated Holder to violate any provision of Applicable Law with
13
respect to its ownership of securities of the Company, then at the option of
such Holder, (i) the Company shall cooperate with such Regulated Holder in any
efforts by such Regulated Holder to dispose of some or all of such securities in
a prompt and orderly manner, including providing (and authorizing such Regulated
Holder to provide) financial and other information concerning the Company to any
prospective purchaser of such securities sufficient in the written opinion of
counsel to such Regulated Holder (which may be internal counsel) needed to
prevent such exercise or exchange or the receipt of such dividend or
distribution from causing the ownership of the equity or voting securities of
such Regulated Holder to exceed the quantity of such equity as such Regulated
Holder is permitted under Applicable Law to own or (ii) the Company will use its
best efforts (including using its best efforts to cause its Certificate to be
amended) to create an Equivalent Nonvoting Security with respect to Warrant
Shares (or any such security included therein) which would not cause the
Regulated Holder to violate any provision of Applicable Law, and such Regulated
Holder shall be entitled to receive upon such exercise or exchange, in lieu of
such number (as it shall specify) of shares of Common Stock or other Warrant
Shares (or any such security included therein) otherwise receivable by such
Regulated Holder, the same number of shares or other units of such Equivalent
Nonvoting Security.
(l) Ratable Treatment of Non-Contingent and Contingent Warrants. All
adjustments made pursuant to this Section 9 shall apply equally to
Non-Contingent Warrants and Contingent Warrants without altering the condition
that Contingent Warrants may not be exercised prior to the occurrence of a
Triggering Event.
SECTION 10.
PAYMENTS IN RESPECT OF DIVIDENDS AND DISTRIBUTIONS
If the Company pays any dividend or makes any distribution (whether in
cash, property or securities of the Company) payable to the holders of Common
Stock, then the Company shall simultaneously pay to each Holder of
Non-Contingent Warrants (and, in the event a Triggering Event shall have
occurred, to each Holder of Contingent Warrants), other than to any Holder of
Warrants delivering a written notice to the Company within 10 Business Days of
the notice delivered to such Holder pursuant to Section 11(c) hereof, an amount
equal to the dividend or distribution which would have been paid to such Holder
on the Warrant Shares receivable upon the exercise in full of such Warrant had
such Warrant been fully exercised immediately prior to the record date for such
dividend or distribution (and any Class B Share had been immediately converted
into a Class A Share) or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividend or distribution are to be
determined; provided however, that in the event the receipt by any Holder of any
such asset distribution would result in a violation of Applicable Law applicable
to such Holder, such Holder shall be entitled to receive an amount of cash in
lieu of such asset distribution equal to the value (determined in accordance
with the Valuation Procedure) of the asset distribution which would otherwise be
received by such Holder.
14
SECTION 11.
COVENANTS
(a) Notices of Certain Actions. In the event that the Company:
(i) shall have authorized the issuance of rights or warrants to
subscribe for or purchase capital stock of the Company since the last
notice delivered pursuant to this Section 11(a)(i) or the date hereof,
whichever is later, or of any other subscription rights or warrants to
purchase capital stock to holders of any type of capital stock of the
Company since the last notice delivered pursuant to this Section
11(a)(i) or the date hereof, whichever is later; or
(ii) shall authorize a dividend or other distribution of
evidences of its indebtedness, cash or other property or assets to
holders of any type of capital stock of the Company; or
(iii) proposes to become a party to any consolidation or merger
for which approval of any Stockholders of the Company will be
required, or to a conveyance or transfer of all or substantially all
of the properties and assets of the Company or of any capital
reorganization or reclassification or change of any type of capital
stock of the Company; or
(iv) commences a voluntary or involuntary dissolution,
liquidation or winding up; or
(v) commences a Public Offering; or
(vi) fails to comply with the provisions of this Agreement; or
(vii) proposes to take any other action which would require an
adjustment pursuant to Section 9; or
(viii) proposes any refinancing of the Credit Agreement or any
Refinancing Agreement; or
(ix) sends any notice or information to the holders of Common
Stock of the Company or the Company becomes aware of any potential
Change of Control;
then the Company shall provide a written notice to each Holder stating (i) the
date as of which the holders of record of capital stock are to be entitled to
receive any such dividends, distributions, rights or warrants to subscribe for
or purchase capital stock of the Company, (ii) the record date of such dividend
or other distribution of evidence of its indebtedness, cash or other property or
assets, (iii) the material terms of any such consolidation or merger and the
expected effective date thereof, and the material terms of any such conveyance
or transfer, and the date on which any such conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that
15
holders of record of capital stock will be entitled to exchange their capital
stock for securities or other property, if any, deliverable upon such
reclassification, conveyance, transfer, dissolution, liquidation or winding up,
(iv) the material terms of any such Public Offering (including a copy of any
prospectus, registration statement or offering statement) and the expected
effective date thereof, (v) the nature of the lack of compliance, any corrective
action taken and any rights or remedies which such lack of compliance has
bestowed on the Holders, (vi) a notice as is required by Section 9(f), (vii) a
copy of such notice sent to any of the holders of Common Stock of the Company
with respect to any such potential Change of Control, and (viii) the material
terms of any refinancing of any of the Credit Agreement or any Refinancing
Agreement (including delivery of the definitive credit documents to be executed
in connection therewith together with any other information reasonably requested
by any Holder of Warrants and/or Warrant Shares) and the expected effective date
thereof. Such notice shall be given not later than ten (10) Business Days prior
to the effective date (or the applicable record date, if earlier) of such event.
(b) Information Rights and Access Rights. Each Holder shall have the
right, whether or not such Holder has exercised or exchanged any Warrants, to
receive lists of stockholders or other information respecting the Company and
its subsidiaries as such Holder shall reasonably request, to inspect the books
and records of the Company and its subsidiaries and to visit the properties of
the Company and its subsidiaries, and to discuss the affairs, finances and
accounts of the Company or its subsidiaries with, and be advised as to the same,
by its and their officers. Nothing contained in this Agreement shall be
construed as conferring upon any Holder, prior to its exercise of any Warrant,
the right to vote or to consent or to receive notice as stockholders in respect
of any meetings of stockholders or the election of directors of the Company or
any other matter regarding the Company, or any rights whatsoever as stockholders
of the Company, except as expressly provided hereunder or under Applicable Law.
(c) Regulated Holders.
(i) Notwithstanding any other provision of this Agreement to the
contrary, except as provided in this subsection 11(c), without the
prior written consent of any Regulated Holder, the Company shall not,
directly or indirectly, redeem, purchase or otherwise acquire, convert
or take any action (including any amendment to the Certificate) with
respect to the voting rights of, or undertake any other action or
transaction (including any merger, consolidation or recapitalization)
affecting, any shares of its capital stock or other voting securities
if the result of the foregoing would be to cause the ownership of the
capital stock of the Company by such Regulated Holder, or the
ownership of voting securities of the Company (or any class thereof)
by such Regulated Holder, to exceed the quantity of such capital stock
or voting securities (or any class thereof) that such Regulated Holder
is permitted under Applicable Law to own. Any action or transaction
referred to in the preceding sentence shall be referred to herein as a
"SECTION 11(C) TRANSACTION". If the Company proposes to undertake any
action or transaction which could constitute a Section 11(c)
Transaction, it shall provide the Holders at least 15 days prior
written notice thereof. If, in the written opinion of counsel to any
Regulated Holder (which may be internal counsel) delivered within 10
days following receipt of such notice, such action or transaction
constitutes a Section 11(c)
16
Transaction with respect to such Regulated Holder, then the Company
shall delay undertaking such Section 11(c) Transaction for the purpose
of using its best efforts to agree on a manner in which to restructure
such action or transaction in a manner reasonably satisfactory to the
Company and such Regulated Holder so that it no longer would
constitute a Section 11(c) Transaction. If the Company and such
Regulated Holder are unable to agree, within 20 days of the delivery
of such written opinion, upon a manner in which to so restructure such
Section 11(c) Transaction, and such Section 11(c) Transaction is a
bona fide action or transaction proposed by the Company in good faith,
then the Company shall be permitted to undertake such Section 11(c)
Transaction if prior to or concurrently with doing so, at the election
of such Regulated Holder, the Company shall (i) cooperate with such
Regulated Holder in any efforts by such Regulated Holder to dispose of
some or all of such Warrants or Warrant Shares in a prompt and orderly
manner, including providing (and authorizing such Regulated Holder to
provide) financial and other information concerning the Company to any
prospective purchaser of such Warrants or Warrant Shares sufficient in
the written opinion of counsel to such Regulated Holder (which may be
internal counsel) needed to prevent such Section 11(c) Transaction
from causing the ownership of the capital stock or voting securities
of such Regulated Holder to exceed the quantity of such capital stock
as such Regulated Holder is permitted under Applicable Law to own or
(ii) provide or cause to be provided for such Regulated Holder in
connection with any such action or transaction a number of shares or
other units of Equivalent Nonvoting Securities equal to the same
number of Warrant Shares.
(ii) If it becomes unlawful for any Regulated Holder to continue
to hold some or all of the Warrants or Warrant Shares held by it, or
restrictions are imposed on any Regulated Holder by Applicable Law
which, in the reasonable judgment of such Regulated Holder, make it
unduly burdensome to continue to hold such Warrants or Warrant Shares,
the Company shall (i) cooperate with such Regulated Holder in any
efforts by such Regulated Holder to dispose of some or all of such
Warrants or Warrant Shares in a prompt and orderly manner, including
providing (and authorizing such Regulated Holder to provide) financial
and other information concerning the Company to any prospective
purchaser of such Warrants or Warrant Shares and (ii) at the request
of such Regulated Holder, take all steps (including using its best
efforts to cause its Certificate to be amended) necessary to create an
Equivalent Nonvoting Security with respect to the Warrant Shares then
held by such Regulated Holder and permit such Regulated Holder to
exchange Warrant Shares for the same number of shares or other units
of such Equivalent Nonvoting Security.
(d) Observation Rights of the Holders. The Company hereby covenants
and agrees that the Company shall provide each of the Holders with reasonable
notice of all meetings of the Board and meetings of committees which have been
delegated any decision making authority by the Board. The Company shall invite
or cause to be invited a representative of each of the Holders (each, an
"Observer") to attend (in person or by telephone, at such Observer's option if
the meeting is not a telephone meeting) each such meeting or committee meeting,
provided that in the case of telephonic meetings conducted in accordance with
Applicable Law,
17
each of such Holders' representative will be given the opportunity to
participate in such telephonic meetings. Each Observer shall be provided with
all advance materials provided to the Board and such committee members at the
same time that such Board and committee members are provided such information.
Following any such meeting, the Company shall provide each Holder with copies of
the agenda and minutes with respect thereto, whether or not an Observer
participated in or attended such meeting. If the Company, the Board or any of
the stockholders proposes to take any action by written consent in lieu of a
meeting, the Board shall forward the form of such written consent to such
representatives prior to its execution and at the same time as it is forwarded
to, or prepared by, the Board or such stockholders.
(e) Current Public Information. The Company will file all reports
required to be filed by it under the 1933 Act and the 1934 Act and the rules and
regulations adopted by the Commission thereunder, and will take such further
action as any Holder may reasonably request, all to the extent required to
enable such Holder to sell Warrant Shares pursuant to Rule 144 or Rule 144A
adopted by the Commission under the 1933 Act. Upon request, the Company will
deliver to any such Holder a written statement as to whether it has complied
with such requirements.
(f) Public Disclosures. The Company will not disclose any Holder's
name or identity as an investor in the Company in any press release or other
public announcement, unless such disclosure is required by Applicable Law or
governmental regulations (including in connection with any filings under the
1933 Act and the 0000 Xxx) or by order of a court of competent jurisdiction in
which case prior to making such disclosure the Company will give written notice
to such Holder describing in reasonable detail the proposed content of such
disclosure and will permit the Holder to review and comment upon the form and
substance of such disclosure.
(g) Certain Restrictions. The Company will not without the consent of
the Requisite Holders, take any action, corporate or otherwise, the effect of
which would be to alter, impair or affect adversely either the rights of the
Holders or the duties and obligations of the Company under the Warrant
Documents.
(h) Specific Performance. Each Holder shall have the right to specific
performance by the Company of the provisions of this Agreement, in addition to
any other remedies it may have at law or in equity. The Company hereby
irrevocably waives, to the extent that it may do so under Applicable Law, any
defense based on the adequacy of a remedy at law which may be asserted as a bar
to the remedy of specific performance in any action brought against the Company
for specific performance of this Agreement by any Holder of the Warrants or
Warrant Shares.
SECTION 12.
AMENDMENTS AND WAIVERS
(a) Consent of Holders. No amendment, modification, termination or
waiver of any provision of this Agreement and the Warrant Certificates or
consent to any departure by the Company therefrom, shall in any event be
effective without the written concurrence of the
18
Requisite Holders; provided, however, that without the consent of each Holder
affected, no amendment, modification, termination or waiver may:
(i) make any change to the definition of "Requisite Holders";
(ii) make any change that adversely affects any Holder; or
(iii) make any change in the foregoing amendment and waiver
provisions; or
(iv) make any change to Section 9 or 14 and the definitions
relating thereto.
In connection with any amendment, modification, termination or waiver
under this Section 12, the Company may offer, but shall not be obligated to
offer, to any Holder who consents to such amendment, modification, termination
or waiver, consideration for such Holder's consent, so long as such
consideration is offered pro rata to all Holders.
(b) Solicitation of Holders. The Company will not effect any proposed
amendment, modification, termination or waiver of any of the provisions of this
Agreement or the Warrant Certificates unless each Holder (irrespective of the
amount of Warrants or Warrant Shares then owned by it) shall be informed thereof
by the Company prior to the effectuation thereof and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
information which is sufficient in the Company's reasonable discretion to enable
such Holder to make an informed decision with respect thereto. Executed or true
and correct copies of any amendment, modification, termination or waiver
effected pursuant to the provisions of this Section 12 shall be delivered by the
Company to each Holder of outstanding Warrants or Warrant Shares forthwith
following the date on which the same shall have been executed and delivered by
the Holder or Holders of the requisite percentage of outstanding Warrant Shares.
Any failure by the Company to deliver such copies shall not, however, in any way
impair or affect the validity of any such amendment, modification, termination
or waiver.
(c) Revocation and Effect of Consents. Until an amendment,
modification, termination or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of a
Warrant or Warrant Shares, even if notation of the consent is not made on any
Warrant Certificate or stock certificate. However, any such Holder or subsequent
Holder may revoke any such consent by notice to the Company received before the
date on which the Requisite Holders have consented (and not theretofore revoked
such consent) to such amendment, modification, termination or waiver.
(d) The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
modification, termination or waiver, which record date shall be at least ten
(10) Business Days prior to the first solicitation of such consent. If a record
date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent
19
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than ninety
(90) days after such record date.
SECTION 13.
TRANSFERS
(a) Permitted Transferees. Each Holder shall be permitted, subject to
the provisions of subsection 13(c) below, to transfer any Warrants or Warrant
Shares (and the rights relating thereto under this Agreement and the other
Warrant Documents) to any Permitted Transferee.
(b) Limitations on Transfers. In addition to the rights of transfer
under Section 13(a), each Holder, subject to the provisions of subsections 13(c)
below, shall be permitted to transfer any Warrants or Warrant Shares (and the
rights relating thereto under this Agreement and the other Warrant Documents) to
any other Person; provided that:
(i) such transfer is made pursuant to a registration statement
under the 1933 Act or Rule 144 promulgated under the 1933 Act; or
(ii) such transfer is made to a Person pursuant to an exemption
from the registration requirements of the 1933 Act; provided, that if
such transfer is being made pursuant to an exemption from such
registration requirements, then:
(A) the applicable transferee (or, in the case of an account
manager, the managed account on behalf of which the account manager is
acting) is an "accredited investor" as defined in Regulation D
promulgated under the 1933 Act; and
(B) such transferee represents to the Company in writing that it
is acquiring such Warrants or Warrant Shares solely for its own
account (or in the case of account managers, on behalf of managed
accounts) and not as nominee or agent for any other Person (other than
for such managed accounts, if applicable) and not with a view to, or
for offer or sale in connection with, any distribution thereof (within
the meaning of the 1933 Act), without prejudice, however, to its right
at all times to sell or otherwise dispose of all or any part of said
Warrants or Warrant Shares pursuant to a registration statement under
the 1933 Act or pursuant to an exemption from the registration
requirements of the 1933 Act, and subject, nevertheless, to the
disposition of its property being at all times within its control.
(c) Warrant Register. The Company shall promptly register the transfer
of any outstanding Warrants in the Warrant register and any outstanding Warrant
Shares in a share register to be maintained by the Company upon surrender
thereof accompanied by a written instrument or instruments of transfer in form
reasonably satisfactory to the Company, duly executed by the registered Holder
or Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Upon any such registration of transfer, a new Warrant
or Warrant Share, as the case may be, shall be issued and delivered with all
reasonable dispatch to the transferee(s) and such transferee(s) shall be deemed
to have become
20
the Holder(s) of record of such Warrant or Warrant Share, as the case may be,
and the surrendered Warrant or Warrant Share, as the case may be, shall be
canceled and disposed of by the Company.
(d) Transferees to be Bound. Each transferee acquiring Warrants or
Warrant Shares pursuant to this Agreement shall agree (so long as any such
Warrant Shares would continue to be Warrant Shares upon the consummation of such
transfer) in writing to be bound by the provisions of this Agreement prior to or
concurrently with any such acquisition of Warrants or Warrant Shares.
SECTION 14.
PREEMPTIVE RIGHTS
Except as provided in the last sentence of this Section 14, the
Company shall not issue or sell any Equity Securities or sell any rights to
subscribe for or options to purchase such Equity Securities for cash or debt,
unless the Company shall first provide to each of the Holders of Non-Contingent
Warrants (and, after the occurrence of a Triggering Event, each of the Holders
of Contingent Warrants) notice (the "ISSUANCE NOTICE") of its intent to offer
such Equity Securities. The Issuance Notice shall contain (i) a description of
the new Equity Securities, (ii) the total number of new Equity Securities
authorized to be sold and (iii) the price and payment terms. Each such Holder
(or at the election of such Holder, any of its Affiliates) shall have the right
(the "PREEMPTIVE RIGHT"), to subscribe for and purchase the number of new Equity
Securities as will enable such Holder (when taken together with any Affiliate to
whom such Holder has transferred the Preemptive Right), immediately after giving
effect to the proposed issuance and exercise of the preemptive rights by all
other Persons with preemptive rights for the purchase of such new Equity
Securities, to own Equity Securities (rounded to the nearest one thousandth of a
whole share) as shall represent the same percentage of the aggregate number of
Equity Securities outstanding on a fully diluted basis as was owned by such
Holder (when taken together with any Affiliate to whom such Holder has
transferred the Preemptive Right), immediately prior to such issuance; provided,
however, that any Holder or any of its Affiliates exercising such Preemptive
Right shall have the option to elect to receive, in lieu of such new Equity
Securities, the same type of Equity Securities that such Holder or such
Affiliate currently owns or has the right to acquire pursuant to any existing
warrant, option or other right or any other Equivalent Nonvoting Security
acceptable to such Holder or such Affiliate. Any Holder or any of its Affiliates
may exercise such Preemptive Right, in whole or in part, on the terms and
conditions and for the purchase price per Equity Security set forth in the
Issuance Notice (subject to such Holder's and such Affiliate's right to elect to
receive the same type of securities currently owned or acquirable by such Holder
or such Affiliate or to receive an Equivalent Nonvoting Security), by giving to
the Company notice to such effect, within fifteen (15) days after the giving of
the Issuance Notice. If any Holder or any of its Affiliates does not exercise
such Holder's Preemptive Right or does not purchase the full number of new
Equity Securities to which it is entitled, the new Equity Securities not so
purchased shall be allotted successively among the Holders desiring to purchase
such new Equity Securities, according to their then respective ownership
interest in the Company (determined on a fully diluted basis and assuming for
purposes of this Section 14 that all outstanding Non-Contingent Warrants (and,
21
after the occurrence of a Triggering Event, all Contingent Warrants) have been
exercised, whether or not then exercisable), without regard to the ownership
interests of the non-exercising Holders, at the time of each successive
allotment (after giving effect to acquisitions under prior allotments), until
the earliest to occur of (i) all of the new Equity Securities offered have been
purchased, (ii) each Holder has purchased and received the full number of new
Equity Securities that it desires to purchase and (iii) 45 days following the
date of the Issuance Notice. Upon the earliest to occur of (i), (ii) and (iii)
in the preceding sentence and for a period of 180 days thereafter, the Company
shall have the power to issue and sell any or all of the new Equity Securities
referred to in the applicable Issuance Notice as to which no Preemptive Right
has been exercised, but only upon the terms and conditions and for a purchase
price not lower than the purchase price set forth in the Issuance Notice. The
Company shall not have the power to issue or sell any Equity Securities after
the expiration of such 180-day period unless the Company again gives an Issuance
Notice and complies with the other provisions of this Section 14 with respect
thereto. Each Holder or any of its Affiliates electing to purchase new Equity
Securities shall tender the purchase price therefor within thirty (30) days from
the date of the Issuance Notice. Notwithstanding the foregoing, the Preemptive
Right shall not apply to (i) any issuance pursuant to the exercise of the
Warrants, (ii) shares of Common Stock issued to directors, officers, consultants
or employees of the Company pursuant to the Company's Stock Option Plan, dated
and as in effect as of the date hereof, (iii) capital stock issued to
Independent Third Parties in connection with a merger, acquisition, plan of
exchange or consolidation of another company, (iv) any sale of securities to be
issued pursuant to a registration statement filed pursuant to the Securities Act
with the Securities and Exchange Commission, (v) Common Stock repurchased from
the Executives (as defined in the Stockholders Agreement, dated and as in effect
on the date hereof, among the Company and the Stockholders a party thereto)
pursuant to their respective employment agreements and subsequently reissued or
(vi) any Common Stock issued upon the conversion of any convertible security or
upon the exercise of any right, option or warrant, in each case only to the
extent that the Company shall have complied with, and given each Holder the
opportunity to exercise its Preemptive Rights with respect to, the original
issuance of the Equity Securities for which such Common Stock are being issued
pursuant to.
Anything contained herein to the contrary notwithstanding, no Holder
shall be entitled to any Preemptive Right with respect to any Contingent Warrant
until after the occurrence of a Triggering Event.
SECTION 15.
MISCELLANEOUS
(a) Notices. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and shall be made by personal service, telecopy, United States mail or
reputable courier service:
(i) if to the Purchaser or subsequent Holder, at the address or
telecopy number set forth on the signature pages to this Agreement, or
such other address as shall be designated in a written notice
delivered to the Company; and
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(ii) if to the Company, at the address or telecopy number set
forth on the signature pages to this Agreement, or such other address
as shall be designated in a written notice delivered to the other
parties hereto.
Unless otherwise specifically provided herein, any notice or other
communication shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telecopy, or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed.
(b) Failure or Indulgence Not Waiver: Remedies Cumulative. No failure
or delay on the part of any Holder in the exercise of any power, right or
privilege hereunder or under any other Warrant Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement and
the other Warrant Documents are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
(c) Severability. In case any provision in or obligation under this
Agreement or the Warrant Certificates shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
(d) Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(f) Successors and Assigns. This Agreement shall be binding on the
parties hereto and their respective successors and assigns and shall insure to
the benefit of the parties hereto and the successors and assigns of each Holder.
(g) Counterparts. This Agreement and any amendments, waivers, consents
or supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
(h) Holder of Warrant Not a Stockholder. Prior to the exercise of a
Warrant, no Holder, except as specifically provided herein or in the Warrant,
shall be entitled to any of the rights of, or be deemed to be, a stockholder.
23
(i) Pro Rata Purchase. If at any time the Company or any of its
non-stockholder Affiliates shall offer to purchase any Equity Securities, the
Company shall make each offer pro rata to all Holders of Warrant Shares and
Warrants, and any purchase shall be allocated pro rata among the Holders of
Warrant Shares and Warrants accepting the offer to purchase.
* * * * *
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
Notice Address: THANE INTERNATIONAL, INC.
---------------
00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, XX 00000 By: /s/Xxxxxxx X. Xxx
Attention: Xxxxxxx Xxx -------------------------------
Telephone: Name: Xxxxxxx X. Xxx
Facsimile: Title:
with a copy to:
HIG Infomercial Company
c/o HIG Capital Management, L.L.C.
0000 Xxxxxxxx Xxx Xxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Notice Address: PARIBAS NORTH AMERICA, INC.
--------------
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 By /s/ illegible
Attention: Xxxxxxx Xxxxxxx --------------------------------
Telephone: 000-000-0000 Name:
Facsimile: 000-000-0000 Title:
with a copy to:
O'Melveny & Xxxxx LLP
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
AMENDMENT TO WARRANT AGREEMENT
April 25, 0000
Xxxxxxx Xxxxx Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention:
Ladies and Gentlemen:
Reference is made to that certain Warrant Agreement dated as of June
10, 1999 (as amended, restated, supplemented or otherwise modified as of the
date hereof, the "WARRANT AGREEMENT", the terms defined therein being used
herein as therein defined), between Thane International, Inc. (the "COMPANY")
and Paribus North America, Inc. (the "PURCHASER").
Pursuant to Section 12 of the Warrant Agreement, the Company and the
Purchaser hereby amend and modify the Warrant Agreement as follows:
1. The Warrant Agreement is hereby amended by adding the
following new Section 5A immediately following Section 5:
"SECTION 5A
PUT OPTION
(a) Exercise and Put Right of Purchaser. At any time on or prior
to the Expiration Date and after the earlier of (a) the maturity date
of the Loans and obligations under the Credit Agreement whether by
stated maturity, prepayment, acceleration or otherwise or (b) receipt
by Purchaser of the notice provided for in Section 11(a)(viii) (any
such event being the "PUT EVENT"), Purchaser shall have the right to
sell all or any portion of the Warrants, and the Company shall be
obligated to purchase such Warrants subject to the following terms and
conditions (such right is hereinafter referred to as the "PUT RIGHT"):
(i) Purchaser's Put Rights shall be effective as of the date any
Put Event arises and at any time on or after the date of such
Put Event;
(ii) the Purchaser shall give the Company five (5) days written
notice of its intention to exercise any Put Right which
notice shall be in the form of Exhibit A hereto and shall
state the date upon which such Put Right shall be exercised
(the "PUT DATE");
(iii) the purchase price for the Warrants the Company may be
obligated to purchase upon the exercise of any Put Right by
the Purchaser (the
"PURCHASE PRICE") shall be equal to the Fair Market Value (as
defined below);
(iv) on the applicable Put Date, the Company shall deliver payment
in same day funds to the Purchaser in an amount equal to the
Purchase Price; and
(v) in the event the Company fails to pay the Purchaser the
Purchase Price on applicable Put Date, the Company shall
thereafter be obligated to the Purchaser in an amount equal to
the greater of (i) the Purchase Price determined as of the
date such amount is actually paid in full to the Purchaser or
(ii) the Purchase Price determined on the applicable Put Date
along with interest until the date when actually paid in full
at an interest rate of 11.75% per annum, compounded monthly.
The provisions in this paragraph 5 shall not in any way limit
the remedies available to the Purchaser in the event of such
failure to make payment.
(b) Fair Market Value. For purposes of this Section 5A, "Fair
Market Value shall mean:
(i) the highest price that would be paid for the appropriate
security, property, assets, business or entity as determined
by mutual agreement reached by the Purchaser and the Company
or, in the event the parties are unable to agree, an opinion
of an independent investment banking firm or firms in
accordance with the following procedure. In the case of any
event which gives rise to a requirement to determine "Fair
Market Value", the Company is responsible for initiating the
process by which Fair Market Value will be determined as
promptly as practicable, and if the procedures contemplated
herein in connection with determining Fair Market Value have
not been complied with fully, then any such determination of
Fair Market Value for any purpose of this Agreement will be
deemed to be preliminary and subject to adjustment pending
full compliance with such procedures. Upon the occurrence of
an event requiring the determination of Fair Market Value, the
Company and the Purchaser shall engage in direct good faith
discussions to arrive at a mutually agreeable determination of
the Fair Market Value;
(ii) if the Company and the Purchaser are unable to arrive at a
mutually agreeable determination within thirty (30) days of
the notice, the Company and the Purchaser shall each retain a
separate independent investment banking firm of national
reputation (which firm, in either case, may be the independent
investment banking firm regularly retained by the Company or
the Purchaser) but, the Purchaser may retain for the benefit
of both the Company and the Purchaser a nationally recognized
independent accounting firm acceptable to both the Company and
the Purchaser (the "INDEPENDENT ACCOUNTANT") to
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resolve any remaining disputes concerning the Fair
Market Value. If the Independent Accountant is
retained then (i) the Company and the Purchaser shall
each submit to the Independent Accountant in writing,
no later than fifteen (15) days after the Independent
Accountant is retained, their respective positions
with respect to the Fair Market Value, together with
such supporting documentation as they deem necessary
or as the Independent Accountant requests, and (ii)
the Independent Accountant shall, within thirty (30)
days after receiving such information render its
decision as to the Fair Market Value which decision
shall be final and binding on, and nonappealable by,
the Company and the Purchaser. The fees and expenses
of the Independent Accountant shall be paid by the
party whose estimate of the calculation in question
is furthest from the Independent Accountant's
estimate of Far Market Value; and
(iii) in determining Fair Market Value, no discount shall
be imposed by reason of a minority ownership
interest; the absence of control; the illiquidity or
lack of marketability of the stock interest being
valued; the fact that such securities may not be
freely transferable under federal or state securities
laws; any contractual limitation or restriction with
respect to the stock being valued; or for any other
reason. Notwithstanding the foregoing, if the
Company's Warrant Shares are listed and trading on a
national stock exchange or on the NASDAQ system and
there exists and is continuing for at least thirty
(30) days a public float having a minimum value of
[Fifty Million Dollars ($50,000,000)], Fair Market
Value means, with reference to the Warrants on a per
share basis, the average of the closing bid or
closing sale price per share of the Warrant Shares on
the ten trading days immediately preceding any date
of determination."
Except for the amendments described above, the Warrant Agreement shall
remain in full force and effect and is in all respects ratified and affirmed.
This Letter Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Letter
Amendment shall become effective upon the execution of a counterpart hereof by
the Company and the Purchaser and receipt by the Company and the Purchaser of
written or telephonic notification of such execution and authorization of
delivery thereof.
This Letter Amendment and the rights and obligations of the parties
hereunder shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York, without regard to
conflicts of laws principles.
[Remainder of Page Intentionally Left Blank]
3
Sincerely,
COMPANY:
THANE INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxx
-------------------------------
Name: Xxxxxxx Xxx
Title: President
Accepted and Agreed to as
of this ____ day of April, 2001:
PURCHASER:
PARIBAS NORTH AMERICA, INC.
By:
-------------------------------
Name:
Title:
Sincerely,
COMPANY:
THANE INTERNATIONAL, INC.
By:
---------------------------
Name:
Title:
Accepted and Agreed to as
of this 25th day of April, 2001:
PURCHASER:
PARIBAS NORTH AMERICA, INC.
By: /s/ XXXXXXX XXXXXX
-------------------------------
Name: XXXXXXX XXXXXX
Title: CEO
EXHIBIT A
NOTICE OF PUT
[Date]
---------------------------
---------------------------
---------------------------
---------------------------
Attention:
-----------------
This Notice of Put is given pursuant to Section 5A(a)(ii) of the
Warrant Agreement, dated as of June 10, 1999, as amended (the "AGREEMENT"),
between Thane International, Inc. (the "COMPANY") and Paribas North America,
Inc. (the "PURCHASER"). Unless otherwise defined herein, terms used herein
shall have the meanings assigned to them in the Agreement.
The undersigned Purchaser of Warrants hereby elects to exercise its
right to put its Warrants as set forth below:
1. The Put Date shall be [______________].
2. The Purchase Price is determined in accordance with
Section [_________].
3. The Warrants covered by this Notice of Put, totaling
__________ Warrant Shares are enclosed herewith.
4. The aggregate Purchase Price is the product of the
number of Warrant Shares enclosed herewith (_________) times the
Purchase Price.
Please deposit the amount of the Purchase Price to the account of the
Purchaser at ____________________, Account No. ______________ by the Put Date.
Dated:
------------------------- -----------------------------------
(Name of Purchaser - Please Print)
By:
-------------------------------
(Signature of Purchaser or
of Duly Authorized Signatory)
Title:
----------------------------
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