Exhibit 10.32
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF
ANY STATE, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SECURITIES LAWS AND THE
RULES AND REGULATIONS THEREUNDER OR AN EXEMPTION THEREFROM AND IN COMPLIANCE
WITH THE RESTRICTIONS CONTAINED HEREIN.
WARRANT
To Subscribe for and Purchase
Common Stock of
XXXX INDUSTRIES, INC.
THIS IS TO CERTIFY THAT, for value received, Fleet National Bank of
Connecticut (f/k/a Shawmut Bank Connecticut, National Association) ("Lender")
having offices at Xxx Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, or its
successors is entitled to subscribe for and purchase from Xxxx Industries, Inc.,
a Delaware corporation (the "Company"), 400,000 shares of the duly authorized,
validly issued, fully paid and nonassessable shares of the Company's voting
Common Stock, $.01 par value per share (the "Common Stock"), at an exercise
price (the "Initial Exercise Price") of the lesser of (a) $1.00 per share and
(b) 75% of the price per share of the Common Stock as published in the Wall
Street Journal or as reflected by a comparable source ("Market Price") as of the
date which is two (2) Business days prior to the effective date of exercise of
this Warrant ("Warrant"). This Warrant is issued in connection with the Amended
and Restated Commercial Revolving Loan, Term Loan and Security Agreement dated
December 28, 1995 between the Company, Alcore, Inc. and Lender (as same has been
or may be amended, modified or supplemented from time to time, the "Loan
Agreement"). All capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Loan Agreement. This Warrant shall
expire on (x) December 27, 2005 or (y) the first anniversary of the indefeasible
payment in full of all Obligations under the Loan Agreement and the irrevocable
termination thereof.
This Warrant is subject to the following provisions, terms and conditions:
11. Exercise of Warrant.
11.1 Manner of Exercise. This Warrant may be exercised by the holder
hereof (the "Holder") at any time on or after March 31, 1996, during normal
business hours on any day other than a Saturday, Sunday or legal holiday in the
State of New York (a "Business Day"), by surrender of this Warrant, with the
form of subscription at the end of this Warrant as Exhibit A (or a reasonable
facsimile thereof) duly executed by the Holder, to the Company at its principal
office, accompanied by payment of the Exercise Price (as hereinafter defined)
for such shares, in cash, by certified or official bank check payable to the
order of the Company or, at the option of Lender, by reduction of the
outstanding Obligations payable to Lender; provided that this Warrant may only
be exercised in whole and may not be exercised in part. The Holder shall
thereupon be entitled to receive the number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock determined as provided
herein.
11.2 When Exercise Effective. Exercise of this Warrant shall be deemed
to have been effected immediately prior to the close of business on the Business
Day on which this Warrant shall have been surrendered to the Company as provided
in Section 1.1. At such time the person, corporation or other entity (a
"Person") in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such exercise as provided in Section 1.3
shall be deemed to have become the holder or holders of record thereof.
11.3 Delivery of Stock Certificates. As soon as practicable after the
exercise of this Warrant, in whole, and in any event within ten (10) Business
Days thereafter, the Company at its expense (including the payment by it of any
applicable taxes other than income or transfer taxes) will cause the following
to be issued in the name of and delivered to the Holder (bearing the applicable
legend specified in Article 5): a certificate or certificates for the number of
duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock to which the Holder shall be entitled upon such exercise.
11.4 Shares to be Fully Paid; Reservation of Shares; Listing. The
Company covenants and agrees that: (i) all shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof; (ii) without limiting the generality of the foregoing, it
will from time to time take all such action as may be required to assure that
the par value, if any per share of the Common Stock is at all times equal to or
less than the Exercise Price per share of the Common Stock issuable pursuant to
this Warrant; (iii) during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have a sufficient
number of shares of Common Stock authorized and reserved for the purpose of
issue or transfer upon exercise of the rights represented by this Warrant; (iv)
upon the exercise of this Warrant, it will, at its expense, promptly notify each
securities exchange on which any Common Stock is at the time listed of such
issuance, and maintain a listing of all shares of Common Stock from time to time
issuable upon the exercise of the Warrant, and, if applicable under the
provisions of Article 7 below, will register under the Securities Act of 1933
(or any similar statute then in effect) ("Securities Act") all shares of Common
Stock from time to time so issuable; provided, however, that the Company need
not list such shares of Common Stock so long as there are in the Treasury of the
Company a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
12. Adjustments. The above provisions are, however, subject to the
following:
12.1 Initial Exercise Price; Adjustment of Warrant Purchase Price. The
Initial Exercise Price shall be subject to adjustment from time to time as
hereinafter provided (such price or price as last adjusted, as the case may be,
the "Exercise Price"). Upon each adjustment of the number of shares purchasable
pursuant hereto, the Exercise Price shall be adjusted by multiplying the
Exercise Price in existence immediately prior to such adjustment by a fraction,
the numerator of which is the total maximum number of Warrant Shares issuable
upon exercise of this Warrant prior to such adjustment and the denominator of
which is the total maximum number of Warrant Shares issuable upon exercise of
this Warrant after such adjustment.
12.2 Adjustment for Additional Issuances. If and whenever after the
date hereof the Company shall in any manner (i) issue or sell any shares of any
class of its Common Stock, (ii) grant (whether directly or by assumption in a
merger or otherwise) any rights to subscribe for or to purchase, or any options
for the purchase of, any class of Common Stock or any stock or securities
convertible into or exchangeable for any class of Common Stock (such rights or
options being herein called "Options" and such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), (iii) issue or sell
(whether directly or by assumption in a merger or otherwise) Convertible
Securities, whether or not the rights to exchange or convert thereunder are
immediately exercisable or (iv) declare a dividend or make any other
distribution upon any stock of the Company payable in any class of Common Stock,
Options or Convertible Securities (any of the matters referred to in clauses
(i), (ii), (iii) and (iv) being an "Event"), then the Holder shall thereafter be
entitled to purchase at the Exercise Price resulting from any such adjustment
the number of shares (as adjusted from time to time, the "Warrant Shares")
obtained by dividing the number of shares purchasable pursuant hereto
immediately prior to such Event (with respect to each class of Common Stock) by
the sum of the total number of shares of Common Stock outstanding immediately
prior to such Event plus the total maximum number of shares of Common Stock
issuable upon the exercise of any Options or upon the conversion or exchange of
all Convertible Securities, in each case outstanding immediately prior to such
Event, and multiplying the result by the sum of the total number of shares of
Common Stock outstanding immediately after such Event plus the total maximum
number of shares of Common Stock issuable upon the exercise of any Options or
upon the conversion or exchange of all Convertible Securities, in each case
outstanding immediately after such Event.
12.3 Subdivision or Combination of Stock. In case the Company shall at
any time subdivide its outstanding shares of any class of Common Stock into a
greater number of shares or, in case the outstanding shares of any class of
Common Stock of the Company shall be combined into a smaller number of shares,
then, the number of shares of Common Stock thereafter constituting Warrant
Shares shall be adjusted so as to consist of the number of shares of Common
Stock which a record holder of the number of shares of Common Stock constituting
Warrant Shares immediately prior to the happening of such event would own or be
entitled to receive after the happening of such event.
12.4 Reorganization, Reclassification, Consolidation, Merger or Sale.
In case the Company shall reorganize its capital, reclassify its capital stock,
merge or consolidate into another corporation, or sell, transfer or otherwise
dispose of all or substantially all of its property, assets or business to
another corporation, and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation are to be received by or
distributed to the holders of Common Stock, then the Holder shall have the right
thereafter to receive, upon exercise of such Warrant prior to the Expiration
Date, a number of Warrant Shares equal to the number of shares of common stock
of the successor or acquiring corporation receivable upon or as a result of such
reorganization, reclas- sification, merger, consolidation or disposition of
assets, by a holder of the number of shares of Common Stock constituting Warrant
Shares immediately prior to such event, subject to subsequent adjustments to the
number of shares of common stock of the successor or acquiring corporation
constituting Warrant Shares as provided in this Article 2. If, pursuant to the
terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, any cash, shares of stock or other securities or property
of any nature whatsoever (including warrants or other subscription or purchase
rights) are to be received by or distributed to the holders of Common Stock in
addition to common stock of the successor or acquiring corporation, the Holder,
upon exercise thereof prior to the Expiration Date, shall be entitled to receive
with respect to each Warrant Share cash in an amount equal to the amount of any
such cash applicable to the number of shares of Common Stock then constituting
Warrant Shares and the fair value (as determined in good faith by the Board of
Directors of the Company) of any and all such shares of stock or other
securities or property to be received by or distributed to the holders of Common
Stock of the Company. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the Company) in order to
provide for adjustments of Warrant Shares which shall be as nearly equivalent as
practicable to the adjustments provided for in this Article 2. For the purposes
of this Article 2, common stock of the successor or acquiring corporation shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidence of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Article 2 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or dispositions of assets.
Notwithstanding the foregoing, if a purchase, tender or exchange offer is made
to and accepted by the holders of more than 50% of the outstanding shares of
Common Stock of the Company, (I) at the option of the Company, the Company may
purchase this Warrant for cash at a price equal to the excess of (i) the product
of the per share price paid in such purchase, tender offer or exchange offer
(taking any non-cash consideration into account at its fair market value) and
the Exercise Shares then in effect less (ii) the product of the then Exercise
Price and the Exercise Shares (as hereinafter defined) then in effect and (II)
the Company shall not effect any consolidation, merger or sale with the Person
having made such offer or with any Affiliate of such Person, unless prior to the
consummation of such consolidation, merger or sale the Holder shall have been
given a reasonable opportunity to then elect to receive upon the exercise of
this Warrant either the stock, securities or assets then issuable with respect
to the Common Stock of the Company or the stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer.
12.5 Notice of Adjustment. Whenever the number of shares of Common
Stock constituting Warrant Shares shall be adjusted pursuant to this Article 2
or otherwise or upon any adjustment of the Exercise Price, then and in each such
case the Company shall promptly obtain the opinion of a firm of independent
certified public accountants (which may be the regular auditors of the Company)
selected by the Company's Board of Directors, which opinion shall state the
Exercise Price resulting from such adjustment and specifying the increase or
decrease, if any, in the number of shares of Common Stock constituting Warrant
Shares, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. The Company will promptly mail a
copy of such accountants' opinion to the registered holder of this Warrant at
the address of such holder as shown on the books of the Company.
12.6 Other Provisions Applicable to Adjustments or Exercise. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock constituting Warrant Shares hereinbefore
provided for in this Article 2 or upon exercise of this Warrant:
(a) When Adjustments Are To Be Made. The adjustments required by this
Article 2 shall be made whenever and as often as any specified event
requiring an adjustment shall occur. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business on
the date of its occurrence.
(b) Fractional Interests. In computing adjustments under this Article
or shares of Common Stock upon an exercise of this Warrant, fractional
interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
(c) Adjustments for Fractional Interests. No adjustments computed
pursuant to this Article 2 shall be made until such time as the fractional
interest is at least one-hundredth of a share.
12.7 Fractional Warrants and Fractional Warrant Shares.
(a) The Company may, but shall not be required to, issue fractions of
Warrant Shares upon the exercise of Warrants. In the event that the Company
elects not to issue fractions of Warrant Shares it shall make an adjustment in
respect of a fractional interest in a Warrant by paying in cash to the person or
entity entitled to a fractional interest in a Warrant an amount equal to the
corresponding fractional part of the then current Market Price.
(b) The Company may, but shall not be required to, issue fractions of
Warrants or distribute Warrant Certificates that evidence fractional Warrants.
In the event that it elects not to issue fractions of Warrants or fractional
Warrants it shall make an adjustment in respect of a fractional interest in a
Warrant Share by paying in cash to the person or entity entitled to a fraction
of a Warrant Share an amount equal to the corresponding fractional part of the
purchase price of a Warrant Share.
12.8 Record Date. In case the Company shall take record of the holders
of its Common Stock for the purpose of entitling them (i) to receive a dividend
or other distribution payable in Common Stock, Options or Convertible
Securities, or (ii) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such rights of subscription or
purchase, as the case may be.
12.9 Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered an
issue or sale of Common Stock for the purposes of this Article 2.
13. Notices of Corporate Action; Certain Events.
13.1 In case at any time:
(a) the Company shall declare a cash dividend on its Common Stock
other than out of consolidated earnings for any fiscal year determined in
accordance with generally accepted accounting purposes;
(b) the Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than cash dividends) to the holders
of its Common Stock;
(c) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(d) there shall be any capital reorganization, or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with another corporation (other than a subsidiary of the Company in which the
Company is the surviving or continuing corporation and no change occurs in the
Company's Common Stock), or sale of all or substantially all of its assets to
another corporation); or
(e) there shall be voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or more of said
cases, the Company shall give written notice, by first class mail, postage
prepaid, addressed to the holder of this Warrant at
the address of such holder as shown on the books of the Company, of (a) the date
on which the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights, or (b) the date (or, if not
then known, a reasonable approximation thereof by the Company) on which such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such notice
shall also specify (or, if not then known, reasonably approximate) the date as
of which the holders of Common Stock of record shall participate in such
dividend, distribution or subscription rights, or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, as the case may be. Such written notice shall be
given at least 10 days prior to the action in question and not less than 10 days
prior to the record date or the date on which the Company's transfer books are
closed in respect thereof.
13.2 If any event occurs as to which in the opinion of the Board of
Directors the other provisions of this Article 3 are not strictly applicable but
the lack of any adjustment would not in the opinion of the Board of Directors
fairly protect the purchase rights of this Warrant in accordance with the
essential intent and principles of such provisions, or if strictly applicable
would not fairly protect the purchase rights of the Warrant in accordance with
the essential intent and principles of such provisions, the Board of Directors
shall appoint a firm of independent certified public accountants (which may be
the regular auditors of the Company) which shall give their opinion as to the
adjustments,if any necessary to preserve, without dilution, on a basis
consistent with the essential intent and principles established in the other
provisions of this Article 3, the exercise rights of the registered holders of
this Warrant. Upon receipt of such opinion, the Board of Directors of the
Company shall forthwith make the adjustments described therein.
14. Actions Prohibited.
The Company will not (i) increase the par value of any shares
receivable upon the exercise of the rights represented hereby above the Exercise
Price then in effect, (ii) issue any capital stock of any class preferred as to
dividends or as to the distribution of assets upon voluntary or involuntary
liquidation, dissolution or winding-up of the Company unless the rights of the
holders thereof shall be limited to a fixed sum or percentage of par value in
respect of participation in dividends and in any such distribution of assets or
(iii) take any action which results in any adjustment of the Exercise Price if
the total number of shares of Common Stock issuable after such action upon the
exercise of the rights represented by all of the Warrants would exceed the total
number of shares of Common Stock then authorized by the Company's charter and
available for the purpose of issue upon such exercise.
15. Restrictive Legends. Each Warrant issued upon direct or indirect
transfer or in substitution for any Warrant shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or under the
securities laws of any State, and may not be sold or otherwise
transferred except pursuant to an effective registration under such Act
and securities laws and the rules and regulations thereunder or an
exemption therefrom. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of the Warrant."
Each certificate for Common Stock issued upon the exercise of any Warrant
and each Certificate issued upon the direct or indirect transfer of any such
Common Stock shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this certificate have been acquired for
investment only and have not been registered under the Securities Act
of 1933, as amended (the "Act"), or under the securities laws of any
State. The shares represented by this certificate may not be sold or
transferred in absence of such registration or an exemption therefrom
under the Act and applicable state securities laws. Additionally, the
transfer of the shares represented by this certificate are subject to
the conditions specified in a certain Warrant (the "Warrant"), dated as
of December 28, 1995, issued by Xxxx Industries, Inc. Copies of the
Warrant are on file with the Secretary of the Company. The holder of
this certificate, by acceptance of this certificate, agrees to be bound
by the provisions of the Warrant."
16. Ownership of Warrants; Replacement of Warrants; Transfer of Warrants
and Exercise Shares.
16.1 Ownership of Warrants. The Company may treat the Person in whose
name a Warrant is registered on the books of the Company as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary.
16.2 Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of a
Warrant and, in the case of any such mutilation, upon surrender of such Warrant
for cancellation at the principal office of the Company, and, in the case of any
loss, theft or destruction, upon receipt by the Company of an indemnification
agreement reasonably satisfactory to the Company, the Company, at its expense,
will execute and deliver, in lieu thereof, a new Warrant of like tenor bearing
the applicable legend specified in Article 5.
16.3 Transfer of Warrants and Exercise Shares.
(a) Title to this Warrant and, in the event the Warrant is
exercised, any Common Stock issued upon such exercise (the "Exercise Shares"),
may be transferred by Lender without the approval of the Company at any time
after December 28, 1995 by surrender of this Warrant and certificates evidencing
the Exercise Shares at the principal office of the Company, together with a
written assignment of this Warrant substantially in the form of Exhibit B hereto
and/or stock powers, as the case may be, duly executed by the Holder or its
agent or attorney.
(b) Upon the surrender of this Warrant, the Company, at its
expense, will execute and deliver to or upon the order of the Holder a new
Warrant or Warrants of like tenor, bearing the applicable legend specified in
Article 5, in the name of the Holder or in the name or names of the permitted
assignee or assignees as the Holder may direct, representing in the aggregate
the right to subscribe for and purchase the number of shares of Common Stock
which may at such time be subscribed for and purchased hereunder. Each new
Warrant shall represent the right to subscribe for and purchase that number of
shares of Common Stock from time to time constituting such percentage of the
aggregate number of outstanding shares of Common Stock as shall be designated by
the Holder at the time of such surrender. Notwithstanding the foregoing, a
Warrant may be exercised by a new holder without first having a new Warrant
issued.
(c) Upon the surrender of stock certificates evidencing Exercise
Shares, the Company, at its expense, will execute and deliver to or upon the
order of the Holder, new stock certificates of like tenor, bearing the
applicable legends specified in Article 5, in the name of the Holder or in the
name or names of the permitted assignee or assignee as the Holder may direct,
representing the aggregate number of Exercise Shares of such surrendered stock
certificates.
17. Registration and Take-Along Rights.
17.1. Demand Registration. Subject to the limitations and conditions
set forth below in this Section 7.1, until the expiration of this Warrant, each
holder of the Warrants and/or Exercise Shares (each hereinafter "Holder") may,
in its sole discretion, request Registration (a "Demand Registration") of the
Warrants and/or Exercise Shares (hereinafter "Holder Securities"), and upon
receiving such a request, the Company shall promptly prepare and make the
filings necessary for such Demand Registration and use its best efforts to cause
such Demand Registration and use its best efforts to cause Demand Registration
to become effective. As used herein, "piggy-back opportunity" means a
consummated sale of all Holder Securities requested to be registered by Holder
pursuant to Section 7.2 below. Notwithstanding the foregoing, the Holder may
only request a Demand Registration after September 30, 1996; provided, however,
if the Company files a registration statement under the Securities Act covering
an offering to the public for cash of any of the Company's common stock which
registration includes the Holder Securities on or before September 30, 1996 and
such offering is delayed due to reasons beyond the control of the Company, then
the right of Holder to request a Demand Registration hereunder shall not
commence until December 1, 1996.
(a) The request for a Demand Registration shall be given to the
Company in writing and shall state the kind, and number of shares (or other
units), of Holder Securities to be offered and sold pursuant to such
registration and the plan of distribution or disposition for such Holder
Securities (listing each state and/or other jurisdiction in which such
distribution or disposition is intended to be made).
(b) The Company may, within 20 days after receiving a request for
a Demand Registration, give written notice to Holder that it will instead
include the Holder Securities specified in such request in a larger Registration
of its securities under the Securities Act; in which event, provided that the
Company files such Registration within 60 days after receiving such request for
a Demand Registration and, after filing, diligently undertakes to have such
Registration declared effective (and provided that such Registration is declared
effective within four months after Holder's request for such Demand
Registration), the Company shall include (subject to the right of Holder to
withdraw from such Registration) all the Holder Securities specified in Holder's
request in such larger Registration in lieu of effecting a Demand Registration
under this Section 7.1. If in any such larger Registration there is a decrease
in the number of securities delivered proposed to be registered, Holder
Securities shall have priority over any securities of the Company or any third
party, provided, however, that if any of the holders of any securities of the
Company or any warrants to purchase securities of the Company who have demand
registration rights as of the date hereof with respect to such securities (the
"Other Securities") are to be included in such larger Registration and there is
a decrease in the number of securities proposed to be registered so that all the
Other Securities and the Holder Securities cannot be included in such
Registration, then Other Securities shall have priority over Holder Securities.
Subject to the foregoing, Holder shall have the right to request a Demand
Registration of Holder Securities regardless of whether Holder has yet exercised
for and purchased any of such Holder Securities hereunder, and to defer purchase
of any such unissued Holder Securities or its decision to withdraw from such
Registration:
(i) Until close of the offering made pursuant to such
Registration, if such offering is made on the basis of a firm
underwriting, and if, concurrently with the execution of the
underwriting agreement for such offering, (A) Holder delivers to
the Company a binding undertaking to exercise the Warrant, for such
number of shares of unissued Holder Securities as may be required
(in addition to any already issued Holder Securities which are
subject to such offering) to fulfill the obligation for delivery of
Holder Securities which are subject to such offering, (B) if the
managing underwriter so requires, Holder delivers into escrow, with
the managing underwriter for such offering, its check (which need
not be a certified check), in an amount equal to the aggregate
Exercise Price for the maximum number of shares of unissued Holder
Securities which (together with any already issued Holder
Securities subject to such offering) may be required under the
terms of such underwriting agreement (such check to be replaced by
the closing of such offering with a certified check in the exact
amount of the aggregate Exercise Price for the number of unissued
Holder Securities to be purchased), (C) Holder delivers to the
Company and the managing underwriter for such offering such other
documents as the Company or such underwriter may reasonably require
(without materially enlarging the obligations or liability of
Holder beyond those contemplated hereby) provided, however, if the
Demand Registration does not result in the sale of all of the
Holder Securities subject to such offering, any check or other
documents delivered to the Company or the managing underwriter or
both shall promptly be returned to Holder and Holder shall still be
entitled to one Demand Registration, or Holder may direct the
managing underwriter to deliver the check to the Company and the
unissued Holder Securities shall be issued to Holder; or,
otherwise,
(ii) within five (5) business days following receipt of
written notice that such Registration has become effective.
The selection, if any, of a managing underwriter who will, or will
manage a group of underwriters who will, undertake the sale and distribution of
the Holder Securities to be included in the registration statement filed under
this Section 7.1 shall be made by the Company, subject to the prior approval of
the Holder, which approval will not be withheld unreasonably, provided, however,
that the approval of Holder is subject to the right of first refusal to be the
underwriter on the part of X.X. Xxxxxxx & Company, Inc.
The Company shall have sole control in connection with preparing,
filing, amending or supplementing any registration statement under the
Securities Act to be filed on behalf of the Holders but Holders shall control
the compensation to be paid to the underwriters in connection with a Demand
Registration. The underwriters shall have sole control in connection with
determining whether withdrawal of any registration statement to be filed on
behalf of the Holders is appropriate. In the event that a Holder of Holders
shall have requested registration pursuant to the provisions of this Section 7.1
and the underwriters shall have thereafter withdrawn such registration
statement, such withdrawn registration statement shall not be deemed one of the
demand registration statements which may be requested pursuant to this Section
7.1.
The Company will pay all registration expenses in connection with all
attempted registrations of Holder Securities under this Section 7.1 whether or
not such Demand Registration is successfully concluded for any reason
whatsoever. The rights on behalf of any Holder under this Section 7.1 shall be
exercisable by any successor Holder or Holder Securities (other than the
Company) who shall have acquired all Holder Securities held by its immediate
transferor,but only if and to the extent that such rights shall not previously
have been exercised by such Holder or by any other such successor Holder of such
Holder Securities. Holder may voluntarily withdraw at any time from any
registration covering shares demanded or requested to be registered.
17.2. Incidental (Piggy-Back) Registration. At any time until the
expiration of this Warrant, if the Company files or proposes to file a
registration statement under the Securities Act covering an offering, whether by
the Company or any of its other stockholders, of any of the Company's stock to
the public for cash (other than pursuant to any employee benefit plan or
employee option plan) and the registration form for such registration may also
be used for the registration of Holder Securities, then the Company shall
promptly give Holder written notice of such proposed registration (including a
list of the states and/or other jurisdictions, if any, in which the Company
intends to qualify such offering under "blue sky" or other applicable securities
laws). Subject to the limitations and conditions set forth below in this Section
7.2, the Company shall include in such registration (a "Piggy-Back
Registration"), whether as initially filed or by pre-effective amendment all of
the Holder Securities specified by Holder in a written request given the Company
within 20 days after Holder receives such notice from the Company.
(a) The Company shall not be obligated to include such Holder
Securities in a Piggy-Back Registration if, in the written opinion of its
counsel addressed to Holder, all such Holder Securities may be immediately sold
in public trading without registration.
(b) Except as set forth in (c) and (d) below, the Company shall
not be obligated to include in a Piggy-Back Registration any Holder Securities
which, in the opinion of its investment banker (stated in writing by such
investment banker to Holder) would materially interfere with the proposed
offering by the Company of its securities, provided, however, that the amount of
Holder Securities which shall be excluded from such Piggy-Back Registration
shall be determined on a pro rata basis with the securities of all persons other
than the Company and Other Securities to be included in such Piggy-Back
Registration.
(c) In any underwritten primary offering where the Company's
underwriter advises in writing that, in such underwriter's reasonable opinion,
the number of Holder Securities requested to be included in a Piggy-Back
Registration exceeds the number that effectively can be sold in such offer, the
Company shall give priority for inclusion in such registration, first, to the
securities the Company proposes to sell, second, to the Other Securities
requested to be included and third, on a pro rata basis, to the Holder
Securities and to other securities requested to be included.
(d) In any underwritten secondary offering on behalf of any of the
Company's stockholders (other than Holder) where the underwriter advises the
Company in writing that,in such underwriter's opinion, the number of securities
requested to be included in such a registration exceeds the number that
effectively can be sold in such offering, the Company shall give priority to
Other Securities requested to be included and then shall reduce on a pro rata
basis the Holder Securities requested to be included and other securities
requested to be included in such registration.
Subject to the foregoing, Holder shall have the right to request inclusion of
Holder Securities in any Piggy- Back Registration regardless of whether any of
such Holder Securities have yet been exercised for and purchased hereunder, and
to defer the purchase of any such unissued Holder Securities, or its decision to
withdraw from such registration:
(i) Until close of the offering pursuant to such registration,
if such offering is made on the basis of a firm underwriting, and
if, concurrently with the execution of the underwriting agreement
for such offering, (A) Holder delivers to the Company a binding
undertaking to exercise the Warrant, for such number of shares of
unissued Holder Securities as may be required (in addition to any
already issued Holder Securities which are subject to such
offering) to fulfill the obligation for delivery of Holder
Securities under such underwriting agreement (but in no event for
more than the aggregate remaining number of shares of Holder
Securities purchasable under the Warrant),(B) if the managing
underwriter so requires, Holder delivers into escrow, with the
managing underwriter for such offering, its check (which need not
be a certified check), in an amount equal to the aggregate Exercise
Price for the maximum number of shares of unissued Holder
Securities (together with any already issued Holder Securities
subject to such offering) may be required under the terms of such
underwriting agreement (such check to be replaced by the closing of
such offering with a certified check in the exact amount of the
aggregate Exercise Price for the number of unissued Holder
Securities to be purchased), (C) Holder delivers to the Company and
the managing underwriter for such offering such other documents as
the Company or such underwriter may reasonably require (without
materially enlarging the obligations or liability of Holder beyond
those contemplated hereby) provided, however, if the Piggy- Back
Registration does not result in the sale of all of the Holder
Securities subject to such offering, any check or other documents
delivered to the Company or the managing underwriter or both shall
promptly be returned to Holder and Holder shall still be entitled
to further Piggy-Back Registrations, or Holder may direct the
managing underwriter to deliver the check to the Company and the
unissued Holder Securities shall be issued to the Holder; or,
otherwise.
(ii) Within five (5) business days following receipt of
written notice that such registration has become effective.
The Company will pay all registration expenses in connection with each
registration of Holder Securities under the Section 7.2 and in connection with
all requests for such registrations. No registration effected under this Section
7.2 shall relieve the Company from its obligation to effect registrations upon
request under Section 7.1.
Holder may withdraw from a Piggy-Back Registration at any time without
consequence to its registration rights.
17.3. Registration Procedures. If and whenever the Company is required
to use its best efforts to effect the registration of any Holder Securities
under the Securities Act as provided herein, the Company will promptly:
(a) prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all such securities covered by such registration statement until
such time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement, but in no event for a period of more than nine
months after such registration statements becomes effective;
(c) furnish to each seller of such securities such number of
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus comprised in such registration statement (including each preliminary
prospectus), in conformity with the requirements of the Securities Act, and such
other documents, as such seller may reasonably request in order to facilitate
the disposition of the securities owned by such seller;
(d) use its best efforts to register or qualify such securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States (including territories and
commonwealths thereof) as each seller shall reasonably request, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, to subject itself to taxation in any such jurisdiction, or to consent
to general service of process in any such jurisdiction; and
(e) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act within the period mentioned in
subdivision (b) of this Section 7.3, of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing (and upon
receipt of such notice and until a supplemented or amended prospectus as set
forth below is available, each seller will not offer or sell any securities
covered by the registration statement and will return all copies of the
prospectus to the Company if requested to do so by it), and at the request of
any such seller a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
The Company may require each seller of any securities as to which any
registration or qualification is being effected to furnish the Company such
information regarding such seller and the distribution of such securities as the
Company may from time to time request in writing and as shall be required by law
in connection therewith.
17.4. Take-Along.
(a) If, during the period the Warrants are exercisable, the Company
proposes to sell any Common Stock or Convertible Securities (collectively,
"Securities") other than pursuant to a Registration, the Company shall cause the
proposed terms of the offering of such Securities (the "Offering") to be reduced
to writing (which writing shall include the purchase price of each of the
securities which is subject to the Offering, the identity of the proposed
purchaser or purchasers, or, if not so identifiable, the class of proposed
purchasers and a list of the states in which the Offering may be made) (the
"Offering Disclosure") and shall notify each Holder in writing (the "Offering
Notice") of its wish to make the Offering and shall otherwise comply with the
provisions of this Section 7.4, provided, however, that the provisions of this
Section shall not apply to sales or transfers of Common Stock pursuant to
Sections 7.1 and 7.2. The Offering Notice shall contain an irrevocable offer to
sell on behalf of each Holder such Securities as such Holder may designate, on
up to a pro rata basis (according to beneficial ownership of Common Stock,
assuming full exercise of Warrant and with the proportionate right of
oversubscription to the extent any other Holder does not elect to accept the
offer set forth in the Offer Notice), at a purchase price equal to the price
contained in, and on the same terms and conditions of, the Offering Disclosure,
and shall be accompanied by a true copy of the Offering Disclosure. If sales are
proposed to be made by the Company pursuant to a series of related sales, the
higher of (i) the average price in all such sales and (ii) the most recent sale,
shall apply. If the consideration stated in the Offering is not cash, then the
purchase price to be stated in the offer contained in the Offering Notice will
be determined pursuant to an appraisal of the value of such consideration, the
terms and conditions of which appraisal will be mutually agreed upon by the
Company on the one hand and the Holders on the other after the receipt by them
of the Offering Notice. To the extent that the sale of Securities contemplated
by the Disclosure Notice requires the qualification of such Securities for sale
in any state, the Company shall qualify the Securities to be sold in the
Offering for sale in such additional states as may be reasonably requested by
the Holders.
(b) Each of the Holders who wishes to sell Securities in the
Offering shall deliver to the Company, within 20 days of the delivery of the
Offering Notice, a written election (the "Take-Along Election") to include in
the sale pursuant to the Offering such Securities as are designated in the
Take-Along Election, subject to paragraph (c) below (the "Take- Along
Securities"). The Company shall not be permitted to sell any Securities subject
to the Offering unless the Take-Along Securities are simultaneously sold in the
Offering, provided, however, in the event all of the Securities (including the
Take-Along Securities) proposed to be sold in the Offering cannot be sold, the
amount sold by the Company shall have priority over the amount sold by the
Holder.
(c) The number of Warrants or Exercise Shares, as the case may
be, which any Holder shall be entitled to include in its Take-Along Election
shall not exceed the product of (i) the number of Warrants or Exercise Shares,
as the case may be, owned by such Holder, multiplied by (ii) a percentage
calculated by dividing the aggregate number of Securities which the Company
proposes to sell pursuant to the Offering by the total number of Securities to
be outstanding after the Offering.
(d) Upon delivering a Take-Along Election, such Holder will, if
requested by the Company execute and deliver a custody agreement and power of
attorney (a "Custody Agreement and Power of Attorney") in form and substance
satisfactory to the Company with respect to the Securities which are to be sold
by such Holder pursuant hereto. The Custody Agreement and Power of Attorney will
provide, among other things, that such Holder will deliver to and deposit in
custody with the custodian and attorney-in-fact named therein a certificate or
certificates representing such Securities (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as such
Holder's agent and attorney-in-fact with full power and authority to act under
the Custody Agreement and Power of Attorney on such Holder's behalf with respect
to the matters specified herein relating to the sale of such Securities in
accordance with the provisions of this Warrant.
(e) The Company shall enter into agreements and take all other
appropriate actions to expedite or facilitate the Offering, including:
(i) making such representations and warranties to the Holders
and any purchasers of Take-Along Securities in form, substance and scope as
are customarily made by issuers in private placements;
(ii) obtaining opinions of counsel to the Company and updates
thereof addressed to each selling Holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in private
placements and such other matters as may be reasonably requested by such
Holders and underwriters, which counsel and opinions shall be reasonably
satisfactory (in form, substance and scope) to the underwriters, if any, and
a majority in interest of the Holders of the Take-Along Securities being
sold, and
(iii) delivering such documents and certificates as may be
reasonably requested by a majority in interest of the Holders of Take-Along
Securities being sold or the underwriters, if any, to evidence compliance
with this paragraph (e) and with any customary conditions contained in any
agreement entered into by the Company in connection with the Offering.
(f) The Holders of the Take-Along Securities being so sold agree
to pay all of the underwriting discounts and commissions (but not fees) and
transfer taxes on such Take-Along Securities. The Company agrees that the costs
and expenses which it is obligated to pay in connection with the Offering,
whether or not such Offering is successfully concluded for any reason
whatsoever, include, but are not limited to, the fees and expenses of counsel
for the Company, the fees and expenses of the Company's accountants, reasonable
fees and expenses of counsel to Holders in connection with such Offering, all
other costs and expenses incident to the preparation and printing of the
Offering Disclosure and any other documents furnished by the Company to Holders
or purchasers of the Take-Along Securities (the "Private Sale Documents"), the
costs incurred in connection with the qualification for sale under the "blue
sky" or other securities laws in the states and other jurisdictions determined
pursuant to Section 7.4(a) above, including fees and expenses of counsel for the
Company and the Holders in respect thereto, and the costs of supplying a
reasonable number of Private Sale Documents to the Holders.
17.5. Indemnification.
(a) In the event of any registration of any Warrants or restricted
securities under the Securities Act pursuant to paragraph 7.1 or 7.2 or sale of
Take-Along Securities pursuant to Section 7.4, the Company will indemnify and
hold harmless the seller of such securities and each underwriter of such
securities and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller or
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (ii) 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; and the Company will reimburse such
seller and each such underwriter and each such controlling person for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument executed by
such seller, underwriter or controlling person specifically for use in the
preparation thereof.
(b) The Company may require, as a condition to including any
Holder Securities in any registration statement filed pursuant to Section 7.1 or
7.2 or any Take-Along Securities in any Offering pursuant to Section 7.4, that
the Company shall have received an undertaking satisfactory to it from the
prospective seller or underwriter of such securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in paragraph
(a) of this Section 7.5) the Company, each director of the Company, each officer
of the Company who shall sign such registration statement or furnish the Private
Sale Documents, any person who controls the Company within the meaning of the
Securities Act and any underwriter designated by the Company to manage the sale
of such securities, with respect to any statement in or omission from such
registration statement, Private Sale Document, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto, if
such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument executed by
such seller or underwriter specifically for use in the preparation of such
Private Sale Document, registration statement, preliminary prospectus, final
prospectus, amendment or supplement.
(c) Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in the preceding
subdivisions of this Section 7.5, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action, provided that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 7.5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof. No indemnifying party, in the
defense of any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
18. Termination of Restrictions and Put and Call Options. The restrictions
imposed by this Warrant upon the transferability, and exercise, of Warrants and
restricted securities shall cease and terminate as to any particular Warrants or
restricted securities, (a) when such securities shall have been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering such securities, or (b) when in the opinions of
both counsel for the holder thereof and counsel for the Company such
restrictions shall terminate as to any Warrants or restricted securities, the
holder thereof shall be entitled to receive from the Company, without expense,
new certificates of like tenor not bearing the respective legends set forth in
Article 5.
19. No Rights or Liabilities as Shareholder. Nothing contained in this
Warrant shall be construed as conferring upon the Holder any rights as a
shareholder of the Company or as imposing any liabilities on the Holder to
purchase any securities or as a shareholder of the Company, whether such
liabilities are asserted by the Company or by creditors or shareholders of the
Company or otherwise.
20. Notices. All notices and other communications under this Warrant shall
be in writing and shall be mailed by registered or certified mail, return
receipt requested, addressed (a) if to the Holder or any holder of Common Stock,
at the registered address of such holder as set forth in the applicable register
kept at the principal office of the Company, or (b) if to the Company, to the
attention of its President at its principal office, provided that the exercise
of any Warrant shall be effected in the manner provided in Article 1.
21. Successors and Permitted Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefits of and be binding upon the successors of the
Company and the successors and assigns of the Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from time to time of
this Warrant and shall be enforceable by any such Holder.
22. Amendment. This Warrant may be modified or amended or the provisions
thereof waived with the written consent of the Company and the Holder.
23. Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of New York.
24. Call Option.
14.1 The Company shall have the option, exercisable from December 28,
1995 through December 27, 1998 to call, in whole, the Warrants and Exercise
Shares issued hereunder and subject hereto (the "Call Option") at a price (the
"Call Price") equal to (i) $3,321,469.34 less (ii) $1,961,951.84 less (iii) the
aggregate amount of principal payments made with respect to the Term Loan (the
"Aggregate Amount"), provided, however, if the Term Loan has been paid in full
pursuant to Section 2.3(b) of the Loan Agreement, then the Aggregate Amount
shall be deemed to be $500,000. The Company shall pay the aggregate Call Price
within thirty (30) days after the Lender receives notice (the "Call Notice") of
exercise of the Call Option (but in no event sooner than three (3) days after
the Call Price is determined).
14.2 Payment. The Company shall pay when due the Call Price to Lender,
by wire transfer of immediately available funds to such bank accounts of the
Holder as shall be provided in writing to the Company, or to such other location
as Lender shall have given notice of to the Company pursuant to the provisions
of the Loan Agreement.
IN WITNESS WHEREOF, the Company has executed this instrument as of the day
and year first above written.
XXXX INDUSTRIES, INC.
By:________________________________
Xxxx Xxxxxxx, Chairman and
Chief Executive Officer
Exhibit A
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To: _____________________
The undersigned registered holder of the enclosed Warrant hereby irrevocably
exercise such Warrant for, and purchases thereunder, _______ shares of Common
Stock of_________________, and herewith makes payment of $____________ therefor
and requests that the certificates for such shares be issued in the name of, and
delivered to the undersigned registered holder.
Dated:____________________
-------------------------------
(Signature must conform
in all respects to name
of holder as specified on
the face of the
Warrant)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
Exhibit B
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the enclosed Warrant
hereby sells, assigns and transfers unto ______________________________ the
right represented by such Warrant to purchase ______ shares of Common Stock of
___________________, to which such Warrant relates, and appoints _____________
Attorney to make such transfer on the books of ____________________, maintained
for such purpose, with full power of substitution in the premises.
Dated:____________________
-------------------------------
(Signature must conform
in all respects to name
of holder as specified on
the face of the
Warrant)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
---------------------------
