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EXHIBIT 5
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY SUCH APPLICABLE STATE LAWS.
NO. 002
WARRANT TO PURCHASE
SHARES OF
COMMON STOCK
OF
CLARION TECHNOLOGIES, INC.
THIS IS TO CERTIFY that, for value received, XXXXXXX XXXXX MEZZANINE
CAPITAL FUND III, L.P., a Delaware limited partnership ("WBMCF"), or its
registered assigns, is entitled to purchase from CLARION TECHNOLOGIES, INC., a
Delaware corporation (together with any successor thereto, the "Company"), at
any time during the period specified in Section 1(a) hereof, Two Million
(2,000,000) shares of Common Stock, par value of $0.001 per share, of the
Company (the "Common Stock"), described in Section 1 of this Warrant, at a price
of $0.0001 per share (the "Exercise Price"), subject to adjustment as
hereinafter set forth, and to exercise the other rights, powers and privileges
hereinafter provided, all on the terms and subject to the conditions and
hereinafter set forth.
This Warrant has been issued by the Company pursuant to that certain Senior
Subordinated Loan Agreement dated as of July 21, 2000, as amended by that
certain Waiver, Consent and First Amendment to Senior Subordinated Loan
Documents as of April 17, 2001, among the Company and its subsidiaries made a
party thereto, as Borrower, and WBMCF and certain other Lenders set forth in
Schedule 2.1 thereto, as Lenders (as same may be amended, supplemented, restated
or otherwise modified from time to time, in compliance with the terms thereof,
the "Loan Agreement") in consideration of the loans to the Company and its
subsidiaries by WBMCF and such additional Lenders provided for in the Loan
Agreement.
Capitalized terms used herein without definition shall have the meanings
set forth in Section 13 hereof, or if not therein defined, as ascribed to them
in the Loan Agreement. If the Loan Agreement is terminated prior to the
termination of this Warrant, such terms shall have the definitions given to them
in the Loan Agreement as in effect immediately prior to its termination. The
Company and Holder agree that the value of this Warrant on the date of issue is
Five Cents ($0.05) per Warrant Share.
1. Exercise of Warrant.
(a) Subject to the terms and conditions set forth herein, Holder shall
have the right, at its option, to exercise this Warrant in whole, at any time
and from time to time during the period commencing on the earlier of June 30,
2001 and the date of a Sale or Change of Control and ending on July 21, 2010
(the "Exercise Period"). To exercise this Warrant, Holder shall deliver to the
Company (i) a Notice of Exercise in the form attached hereto duly completed and
executed, (ii) an amount equal to the Exercise Price, and (iii) this Warrant. At
the option of Holder, payment of the Exercise Price shall be
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made: (A) by wire transfer of funds to an account in a bank located in the
United States designated by the Company for such purpose, (B) by certified or
official bank check payable to the order of the Company, (C) by deduction from
the number of shares of Common Stock otherwise to be delivered upon exercise of
the Warrant that number of shares of Common Stock which has an aggregate Fair
Market Value equal to the aggregate Exercise Price for all shares of Common
Stock to be purchased, or (D) by any combination of the foregoing methods.
(b) Upon receipt of the required deliveries, the Company shall, as
promptly as practicable, cause to be issued and delivered to Holder or, subject
to Section 11 hereof, the Person designated in the Notice of Exercise, a
certificate or certificates representing shares of Common Stock equal in the
aggregate to the number of shares of Common Stock specified in the Notice of
Exercise (less any shares of Common Stock in payment of a cashless exercise
pursuant to Section 1(a)(C) above). The Company shall pay all reasonable
expenses and other charges payable in connection with the preparation, execution
and delivery of stock certificates pursuant to this Section 1.
2. Reservation. The Company shall at all times during the Exercise Period
reserve and keep available, solely for issuance and delivery upon the exercise
of this Warrant, a number of authorized shares of Common Stock equal to the
number of shares issuable upon exercise of this Warrant.
3. Adjustments. The Exercise Price and the number of shares of Common
Stock issuable upon the exercise of this Warrant shall be subject to
adjustment as hereafter set forth:
(a) In the event that at any time the Company shall: (i) make any
dividend or other distribution with respect to its Common Stock in shares of its
Common Stock, or (ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or (iii) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, then the
Exercise Price shall be adjusted to that price determined by multiplying the
Exercise Price in effect immediately prior to such event by a fraction (A) the
numerator of which shall be the total number of shares of Common Stock
immediately prior to such event, and (B) the denominator of which shall be the
total number of shares of Common Stock of the Company immediately after such
event.
(b) In the event that at any time the Company shall issue or sell any
shares of Common Stock (except shares of Common Stock issued upon exercise of
this Warrant) for a consideration per share less than the Fair Market Value
thereof, then upon each such issuance the Exercise Price shall be adjusted to
that price determined by multiplying the Exercise Price in effect immediately
prior to the time of such issue or sale by a fraction (A) the numerator of which
shall be the number of shares of Common Stock immediately prior to such issuance
or sale plus the number of shares of Common Stock which the aggregate
consideration for the total number of such additional shares of Common Stock so
issued or sold would purchase at the Fair Market Value thereof on the date of
such issuance or sale, and (B) the denominator of which shall be the number of
shares of Common Stock immediately prior to such issuance or sale plus the
number of such additional shares of Common Stock so issued or sold. The
provisions of this subsection (b) shall not apply to any additional shares of
Common Stock which are distributed to holders of Common Stock as a stock
dividend or subdivision for which an adjustment is provided for under subsection
(a) of this Section 3.
(c) In the event any shares of Common Stock shall be issued or sold
for cash, the consideration received by the Company therefor shall be deemed to
be the amount of the cash received by the Company therefor or, if such shares of
Common Stock are offered by the Company for subscription, the subscription price
or, if such shares of Common Stock are sold to underwriters or dealers for
public offering without a subscription offer, the initial public offering price,
in each case excluding any amount
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paid or receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts or expenses paid or incurred by the
Company in connection with such issuance or sale.
(d) In the event any shares of Common Stock shall be issued or sold
for a consideration other than cash, the amount of such consideration shall be
deemed to be the fair value of such consideration at the time of such issuance
as determined by the board of directors of the Company (the "Board") in the good
faith exercise of their business judgment.
(e) Upon any adjustment of the Exercise Price as provided in this
Section 3, the holder hereof shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares of Common
Stock obtained by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Common Stock purchasable hereunder
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(f) Whenever the Exercise Price or the number of shares of Common
Stock issuable upon exercise of this Warrant is adjusted pursuant to this
Section 3, the Company shall promptly deliver a notice to the holder of this
Warrant setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment and the method by which such adjustment was
calculated.
(g) Notwithstanding anything herein to the contrary, an adjustment as
provided in Section 3(b) above shall not be made if the Company issues
securities (i) to employees, officers or directors of the Company to the extent
approved by the Board, (ii) as payment of all or any part of the purchase price
of any business or assets thereof acquired by the Company or any of its
Subsidiaries, (iii) to any lender in connection with the incurrence of
Indebtedness by the Company or any of its Subsidiaries, (iv) upon the exercise
of any option or other right described in any of clauses (i) through (iii), (v)
upon exercise of options, warrants or other agreements or rights to purchase
capital stock of the Company entered into prior to the date hereof and set forth
on Schedule 4.3 to the Loan Agreement, or (vi) by means of bona fide public
offerings or private placements pursuant to Section 4(2) of the Securities Act,
Rule 144A, Regulation D or Regulation S thereunder of any security trading on
any national securities exchange or in the over-the-counter market, or of a
security directly or indirectly convertible or exchangeable for any such
security, involving at least one investment bank of national reputation.
4. Mergers, Consolidations, Etc. In the case of any consolidation or
merger of the Company with another entity or any reorganization or
reclassification of the Common Stock or other equity securities of the Company,
then, as a condition of such consolidation, merger, reorganization or
reclassification, lawful and adequate provision shall be made whereby Holder
shall thereafter have the right to receive upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore purchasable hereunder, such shares of stock, securities
or assets as may be (by virtue of such consolidation, merger, reorganization or
reclassification) issued or payable with respect to or in exchange for a number
of outstanding shares of Common Stock equal to the number of shares of Common
Stock immediately theretofore so purchasable hereunder had such consolidation,
merger, reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
Holder to the end that the provisions hereof shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon exercise of this Warrant. The Company shall not
effect any such consolidation or merger, unless prior to or simultaneously with
the consummation thereof, the successor entity (if other than the Company)
resulting from such consolidation or merger shall assume by written instrument
executed and delivered to Holder, the obligation to deliver to Holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, Holder may be entitled to receive.
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5. Dividends; Redemption. If the Board shall (a) declare any dividend or
other distribution on the shares of the Common Stock, except by way of a stock
dividend payable on all of the Common Stock, or (b) authorize the redemption or
repurchase of any shares of the Common Stock, the Company shall deliver notice
thereof to Holder not less than twenty (20) days prior to the record date fixed
for determining shareholders entitled to participate in such dividend,
distribution, redemption or repurchase, and Holder shall have the right to
participate in such dividend, distribution, redemption or repurchase to the same
extent Holder would have participated if it had previously fully exercised this
Warrant prior to such record date. The provisions of this Section 5 shall not
apply to distributions made in connection with transactions covered by Section
3.
6. Preemptive Rights. From time to time after the date hereof, the
Company may issue additional shares of its capital stock (including Common
Stock) or warrants or options exercisable, or securities convertible, into such
capital stock (collectively, "Additional Stock"). Subject to the last Section of
this Section 6, if the Company proposes to issue Additional Stock to any Person,
Holder shall have the right from and after the date hereof and until the
expiration of the Exercise Period, to purchase up to such number of shares of
the Additional Stock that bears the same ratio to the total number of shares of
such Additional Stock as the number of shares of Common Stock then owned by
Holder (as determined on a Fully-Diluted Basis) bears to the aggregate number of
shares of Common Stock (as determined on a Fully-Diluted Basis), upon the same
price and terms of the Additional Stock proposed to be issued. The Company shall
give written notice to Holder at least twenty (20) days prior to the issuance of
such Additional Stock specifying in reasonable detail the reason for the
proposed issuance, the terms thereof and the identity of the proposed purchaser,
if any. If Holder intends to purchase a portion of the Additional Stock, such
Holder shall (within fifteen (15) days following such written notice from the
Company) deliver written notice of such intention to the Company. The failure of
Holder to give such a notice within such time period of its intention to
purchase Additional Stock shall be deemed to be a waiver of Holder's right to
purchase such Additional Stock. The closing of the purchase of such Additional
Stock shall be held at such time and place as the Company shall determine, but
in any event not later than fifteen (15) days following the last date in which
Holder shall have given notice of its intention to exercise its rights under
this Section 6. Notwithstanding the foregoing, Holder shall not have any such
right to purchase Additional Stock if such Additional Stock is to be issued (i)
to employees, officers or directors of the Company to the extent approved by the
Board, (ii) as payment of all or any part of the purchase price or merger
consideration of any business or assets thereof acquired by the Company or any
of its Subsidiaries, (iii) to any lender in connection with the incurrence of
Indebtedness by the Company or any of its Subsidiaries, or (iv) upon the
exercise of any option or other right described in any of clauses (i) through
(iii).
7. Dissolution or Liquidation. In the event of (a) any proposed
distribution of the assets of the Company in dissolution or liquidation, (b) a
Change of Control, or (c) a Sale, the Company shall mail notice thereof to
Holder upon the earlier of (x) thirty (30) days prior to the consummation or
completion of, and, as applicable, (y) the date of execution of a definitive
agreement providing for, any of the events described in (a), (b) and (c), and
shall make no dividend or distribution to shareholders until the expiration of
thirty (30) days from the date of mailing of such notice.
8. Fully Paid Stock; Taxes. The Company covenants that the shares of
capital stock represented by each and every certificate for the Common Stock to
be delivered on the exercise of the purchase rights herein shall, at the time of
such delivery, be duly authorized, validly issued and outstanding and fully paid
and nonassessable. The Company further covenants that it shall pay all expenses
in connection with the Issued Warrant Shares and the Issuable Warrant Shares.
The Company will pay all documentary stamp taxes attributable to the initial
issuance of the Warrant and of the Issued Warrant Shares upon the exercise of
the Warrant; provided, however, that the Company shall not be
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required to pay any tax or other governmental charge which may be payable in
respect of any transfer or exchange of any Warrant certificates or any
certificates for Warrant Shares in a name other than the registered holder of a
Warrant certificate surrendered upon the exercise of a Warrant. In any such
case, no transfer or exchange shall be made unless or until the person or
persons requesting issuance thereof shall have paid to the Company the amount of
such tax or other governmental charge or shall have established to the
satisfaction of the Company that such tax or other governmental charge has been
paid or an exemption is available therefrom.
9. Registration Rights Agreement. This Warrant and the Warrant Shares are
subject to, and entitled to the benefits, rights and options set forth in, the
Registration Rights Agreement.
10. Assignment. Subject to Section 11 of this Warrant, this Warrant may be
assigned by surrender of this Warrant to the Company with the assignment
attached to this Warrant duly executed. The assignee shall receive a new
Warrant, registered in the name of such assignee or its designee and evidencing
the right to purchase the Issuable Warrant Shares.
11. Restrictions on Transferability.
(a) Neither this Warrant nor the Issued Warrant Shares shall be
transferable except upon satisfaction of the conditions specified in this
Section 11 (which conditions are intended to ensure compliance with the
provisions of the Securities Act of 1933, as amended, and any applicable state
securities laws). All transfers of this Warrant or the Issuable Warrant Shares
shall comply with these conditions as if the proposed transfer were a transfer
of the respective Issuable Warrant Shares.
(b) Each Warrant shall bear on the face thereof a legend
substantially in the form of the notice endorsed on the first page of this
Warrant. Each certificate representing Issued Warrant Shares initially issued
upon the exercise of any Warrant and each certificate issued to a subsequent
transferee of such certificate shall bear all legends and be subject to the
conditions set forth in this Warrant.
12. Certain Covenants.
(a) Requisite Approvals. The Company shall use its best efforts to
obtain all necessary or desirable approvals for the performance by the Company
of this Agreement (including without limitation the adjustments set forth in
Section 3) from whatsoever source required, including, but not limited to (i) at
the request of Holder, the Company's shareholders at the next meeting thereof,
whether annual or special, as called in the Company's discretion or otherwise in
accordance with the Company's bylaws, or (ii) any governmental authority or
regulatory body of the United States or of any state required in connection with
the lawful issuance of the Warrant Shares.
(b) Access to Records. Each Loan Party shall use its best efforts to
make available all such records, including, without limitation, stock ledgers,
necessary for Holder to calculate the adjustments contemplated in Section 3
hereof.
13. Definitions.
In addition to the terms defined elsewhere in this Warrant, the
following terms shall have the meanings set forth below:
"Exercise Date" shall mean the date on which this Warrant is
exercised.
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"Fair Market Value" per share of Common Stock shall mean, at any date
of determination thereof:
(a) if shares of Common Stock are listed or admitted to trading on
any national securities exchange or traded on any national market system, the
average of the daily closing prices for the thirty (30) trading days immediately
preceding such date, excluding any trades which are not bona fide, arms' length
transactions. The closing price for each day shall be the last sale price on
such date or, if no such sale takes place on such date, the average of the
closing bid and asked prices on such date, in each case as officially reported
on the principal national securities exchange or national market system on which
shares of Common Stock are then listed, admitted to trading or traded;
(b) if shares of Common Stock are not listed or admitted to trading
on any national securities exchange or traded on any national market system, the
average of the reported closing bid and asked prices thereof on such date in the
over-the-counter market as shown by the National Association of Securities
Dealers automated quotation system or, if shares of Common Stock are not then
quoted in such system, as published by the National Quotation Bureau,
Incorporated or any similar successor organization; or
(c) if shares of Common Stock are not listed or admitted to trading
on any national exchange or traded on any national market system and if no
closing bid and asked prices are then quoted or published in the
over-the-counter market, the price as determined in good faith by the agreement
of Holder and the Board; provided, however, that if Holder and the Board cannot
agree on a price within fifteen (15) days after (as applicable) issuance of for
which the Fair Market Value is being determined pursuant to Sections 3(b) or
3(d), Holder and the Board shall jointly retain a nationally recognized
investment banking firm or other firm providing similar valuation services a
("Valuation Firm") experienced in the appraisal of companies which are engaged
in the business of the Company and which is not an Affiliate of the Company or
any shareholder thereof within seven (7) days after the expiration of such
fifteen (15) day period. If the Company and Holder are unable to agree on the
selection of a Valuation Firm within such seven (7) day period, the Company and
Holder, within seven (7) days after expiration of such seven (7) day period,
shall each select a Valuation Firm and the two Valuation Firms so selected shall
jointly select a third Valuation Firm which shall make the determination of the
Fair Market Value of the Common Stock. The Valuation Firm selected in accordance
with the foregoing procedure shall be instructed to determine such value within
fifteen (15) days after selection and any such determination shall be final and
binding upon the parties. The fees and expenses for such determination made by
any Valuation Firm shall be borne by the Company.
Fair Market Value of a share of Common Stock shall be determined under clause
(c) by dividing the fair market value of the Company by the number of shares of
Common Stock outstanding as of the date of determination, determined on a
Fully-Diluted Basis. In such determination of Fair Market Value, the following
specific principles shall be applied by the Valuation Firm:
(i) the Valuation Firm shall assume that all of the assets and
properties of the Company are sold as a going concern, on an orderly basis
(and not on a liquidation basis), at their fair market values based on an
enterprise value as of the Valuation Date;
(ii) the Valuation Firm shall assume that all indebtedness of
the Company is prepaid in full as of the Valuation Date (and, in doing so,
disregard the amount of any prepayment penalties, yield enhancement
premiums or the like) and that the Company has paid the holders of
preferred stock or similar securities, if any, amounts payable thereon, the
aggregate amount of which shall be taken into account in arriving at the
Fair Market Value; and
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(iii) the Valuation Firm shall assume that the remaining proceeds
of such a sale are distributed pro rata on a Fully-Diluted Basis to the
shareholders of the Company.
"Fully-Diluted Basis" shall mean that number of shares of Common Stock
which would be outstanding, as of the date of computation, if (i) this Warrant,
(ii) all other warrants, options or other rights to subscribe for, purchase or
otherwise acquire Common Stock or (iii) securities (including debt securities)
convertible or exchangeable for Common Stock, including the Preferred Stock, had
been converted or fully exercised.
"Holder" shall mean WBMCF or such other Person in whose name this
Warrant is registered on the books of the Company maintained for such purpose.
"Issuable Warrant Shares" shall mean the number of shares of Common
Stock issuable from time to time upon exercise of this Warrant.
"Issued Warrant Shares" shall mean the cumulative total of the shares
of Common Stock issued from time to time as a result of all prior exercises of
this Warrant.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, unincorporated organization,
association, corporation, trust, institution, entity or government.
"Public Offering" shall mean any offering by the Company of its
capital stock or equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933 as then in effect, or
any comparable statement under any similar federal statute then in force.
"Registration Rights Agreement" shall mean that certain Registration
Rights Agreement dated July 21, 2000, as amended by that certain Waiver, Consent
and First Amendment to Senior Subordinated Loan Documents dated as of April 17,
2001 by and between the Company, WBMCF and certain other holders, as amended,
supplemented, restated or otherwise modified from time to time, in compliance
with the terms thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, all as in effect from
time to time.
"Warrant" means this Warrant and all warrants hereafter issued in
exchange or substitution for this Warrant.
"Warrant Shares" shall mean the Issued Warrant Shares and the Issuable
Warrant Shares.
14. Replacement Warrants. If this Warrant shall be mutilated, lost, stolen
or destroyed, the Company may issue a new Warrant of like date, tenor and
denomination and deliver the same in exchange and substitution for and upon
surrender and cancellation of the mutilated Warrant, or in lieu of the Warrant
lost, stolen or destroyed, upon receipt of evidence satisfactory to the Company
of the loss, theft or destruction of such Warrant.
15. Warrant Holder Not a Shareholder. This Warrant does not confer upon
Holder any right to vote or to consent or to receive notice as a shareholder of
the Company, as such, in respect of any matters whatsoever, or any other rights
or liabilities as a shareholder, prior to the exercise hereof as hereinbefore
provided.
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16. Notices. Except as otherwise expressly provided herein, all notices
referred to in this Warrant shall be in writing and shall be delivered pursuant
to the notice provisions of the Loan Agreement.
17. Severability. Whenever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective under applicable law, but if
any provision of this Warrant is held to be prohibited by or invalid under
applicable law in any jurisdiction, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating any other
provision of this Agreement.
18. Survival. Notwithstanding anything to the contrary contained herein,
the provisions of Sections 6 and 12 hereof shall survive the exercise of this
Warrant in full by Holder and shall continue to be in full force and effect and
inure to the benefit of the shareholders owning the Issued Warrant Shares until
such time as there are no longer outstanding any Issued Warrant Shares.
19. Captions: Governing Law. The descriptive headings of the various
sections of this Warrant are for convenience only and shall not affect the
meaning or construction of the provisions hereof. All questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Illinois without giving effect to
any choice of law or conflict of law provision or rule.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by a duly
authorized officer and to be dated this 20th day of April, 2001.
CLARION TECHNOLOGIES, INC.
By: /s/Xxxx Xxxx
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Xxxx Xxxx, Acting Chief Financial Officer
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EXERCISE
CLARION TECHNOLOGIES, INC.
The undersigned, __________________________________, pursuant to the
provisions of the within Warrant, hereby elects to purchase _____________ shares
of Common Stock of Clarion Technologies, Inc. covered by the Warrant described
herein.
Dated:
Signature:____________________________________
Address:______________________________________
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ASSIGNMENT
FOR VALUE RECEIVED ____________________________________ hereby sells,
assigns and transfers unto ____________________________________ the Warrant
described herein and all rights evidenced thereby and does irrevocably
constitute and appoint _____________________, attorney, to transfer such Warrant
on the books of the within named corporation.
Dated:
Signature:_____________________________________
Address: ______________________________________
______________________________________
