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XXXXX TICONDEROGA COMPANY
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COMMON STOCK PURCHASE WARRANT
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Expiring September 26, 2003
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TABLE OF CONTENTS
1. Exercise of Warrant . . . . . . . . . . . . . . . . . . . . .1
1.1. Manner of Exercise . . . . . . . . . . . . . . . . . . . .1
1.2. When Exercise Deemed Effected. . . . . . . . . . . . . . .2
1.3. Delivery of Stock Certificates, etc. . . . . . . . . . . .2
1.4. Company to Reaffirm Obligations. . . . . . . . . . . . . .2
1.5. Payment by Application of the Notes. . . . . . . . . . . .3
2. Adjustment of Common Stock Issuable Upon Exercise.. . . . . .3
2.1. Number of Shares; Warrant Price. . . . . . . . . . . . . .3
2.2. Adjustment of Warrant Price. . . . . . . . . . . . . . . .3
2.2.1. Issuance of Additional Shares of Common Stock. . . . .3
2.2.2. Extraordinary Dividends and Distributions . . . . . . .4
2.3. Treatment of Options and Convertible Securities. . . . . .4
2.4. Treatment of Stock Dividends, Stock Splits, etc. . . . . .6
2.5. Computation of Consideration . . . . . . . . . . . . . . .6
2.6. Adjustments for Combinations, etc. . . . . . . . . . . . .8
2.7. Dilution in Case of Other Securities . . . . . . . . . . .8
2.8. Minimum Adjustment of Warrant Price. . . . . . . . . . . .8
2.9. Special Adjustment of Warrant Price. . . . . . . . . . . .8
3. Consolidation, Merger, Sale of Assets,
Reorganization, etc.. . . . . . . . . . . . . . . . . . . . .9
3.1. General Provisions . . . . . . . . . . . . . . . . . . . .9
3.2. Assumption of Obligations. . . . . . . . . . . . . . . . 10
4. Other Dilutive Events . . . . . . . . . . . . . . . . . . . 11
5. No Dilution or Impairment . . . . . . . . . . . . . . . . . 11
6. Accountants' Report as to Adjustments . . . . . . . . . . . 12
7. Notices of Corporate Action . . . . . . . . . . . . . . . . 12
8. Restrictions on Transfer. . . . . . . . . . . . . . . . . . 13
8.1. Restrictive Legends. . . . . . . . . . . . . . . . . . . 13
8.2. Notice of Proposed Transfer; Opinions of Counsel . . . . 13
8.3. Termination of Restrictions. . . . . . . . . . . . . . . 14
9. Registration under Securities Act, etc. . . . . . . . . . . 14
9.1. Maintenance of Effective Registration. . . . . . . . . . 14
9.2. Incidental Registration. . . . . . . . . . . . . . . . . 15
9.3. Registration Procedures. . . . . . . . . . . . . . . . . 16
9.4. Underwritten Offerings . . . . . . . . . . . . . . . . . 19
9.5. Preparation; Reasonable Investigation. . . . . . . . . . 21
9.6. Certain Rights of Holders. . . . . . . . . . . . . . . . 21
9.7. Indemnification. . . . . . . . . . . . . . . . . . . . . 21
9.8. Adjustments Affecting Registrable Securities . . . . . . 23
9.10. Covenants Relating to Rule 144 . . . . . . . . . . . . . 24
10. Availability of Information. . . . . . . . . . . . . . . . 24
11. Reservation of Stock, etc. . . . . . . . . . . . . . . . . 24
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12. Listing on Securities Exchange . . . . . . . . . . . . . . 24
13. Ownership, Transfer and Substitution of Warrants . . . . . 25
13.1. Ownership of Warrants. . . . . . . . . . . . . . . . . . 25
13.2. Transfer and Exchange of Warrants. . . . . . . . . . . . 25
13.3. Replacement of Warrants. . . . . . . . . . . . . . . . . 25
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 25
15. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 30
16. No Rights or Liabilities as Stockholder . . . . . . . . . . 30
17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 30
18. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 31
19. Expiration. . . . . . . . . . . . . . . . . . . . . . . . . 31
Form of Subscription
Form of Notice
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Common Stock Purchase Warrant
Expiring September 26, 0000
Xxx Xxxx, Xxx Xxxx
____________, 19__
PPN#255860 2#4
No. W-
XXXXX TICONDEROGA COMPANY, a Delaware corporation (the
"Company"), for value received, hereby certifies that ___________________
or registered assigns, is entitled to purchase from the Company ______
duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock, par value $1.00 per share, of the Company (the "Common
Stock") at the purchase price per share of $7.24, at any time or from
time to time on or after the Initial Exercise Date and prior to 3 P.M.,
New York City time, on September 26, 2003 (or such later date as may be
determined pursuant to section 20), all subject to the terms, conditions
and adjustments set forth below in this Warrant.
This Warrant is one of the Common Stock Purchase Warrants
(the "Warrants", such term to include all Warrants issued in substitution
therefor) originally issued in connection with the issue and sale by the
Company of $16,500,000 aggregate principal amount of its 12.00% Notes due
September 26, 2003 (together with all notes issued in substitution
therefor, the "Notes"), pursuant to the Note and Warrant Purchase
Agreements (collectively, the "Purchase Agreement"), each dated as of
September 26, 1996, between the Company and the institutional investors
named therein. The Warrants originally so issued evidence rights to
purchase an aggregate of 300,000 shares of Common Stock, subject to
adjustment as provided herein. Certain capitalized terms used in this
Warrant are defined in section 14.
1. EXERCISE OF WARRANT. 1.1. MANNER OF EXERICSE. This
Warrant may be exercised by the holder hereof, in whole or in part,
during normal business hours on any Business Day by surrender of this
Warrant, with the form of subscription at the end hereof (or a reasonable
facsimile thereof) duly executed by such holder, to the Company at its
principal office (or, if such exercise shall be in connection with an
underwritten Public Offering of shares of Common Stock (or Other
Securities) subject to this Warrant, at the location at which the Company
shall have agreed to deliver the shares of Common Stock (or Other
Securities) subject to such offering), accompanied by payment, in cash or
by certified or official bank check payable to the order of the company
or by the application of Notes in the manner provided in section 1.5 (or
by any combination of such methods), in the amount obtained by
multiplying (a) the number of shares of Common Stock (without giving
effect to any adjustment therein) designated in such form of subscription
by (b) $7.24 and such holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock (or Other Securities) determined as provided in
sections 2 through 4.
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1.2. WHEN EXERCISE DEEMED EFFECTED. Each 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, and at such
time the person or persons in whose name or names any certificate or
certificates for shares of Common Stock (or Other Securities) 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.
1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as
practicable after the exercise of this Warrant, in whole or in part, and
in any event within ten Business Days thereafter (unless such exercise
shall be in connection with an underwritten Public Offering of shares of
Common Stock (or Other Securities) subject to this Warrant, in which
event concurrently with such exercise), the Company at its expense
(including the payment by it of any applicable stamp or document taxes)
will cause to be issued in the name of and delivered to the holder hereof
or, subject to section 8, as such holder (upon payment by such holder of
any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share
to which such holder would otherwise be entitled, cash in an amount
equal to the same fraction of the Market Price per share of such
Common Stock (or Other Securities) on the Business Day next
preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock equal
(without giving effect to any adjustment therein) to the number of
such shares called for on the face of this Warrant minus the number
of such shares designated by the holder upon such exercise as
provided in section 1.1.
1.4. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at
the time of or at any time after each exercise of this Warrant, upon the
request of the holder hereof or of any shares of Common Stock (or Other
Securities) issued upon such exercise, acknowledge in writing its
continuing obligation to afford to such holder all rights (including,
without limitation, any right of registration of any shares of Common
Stock (or Other Securities) issuable upon exercise of this Warrant pur-
suant to section 9) to which such holder shall continue to be entitled
after such exercise in accordance with the terms of this Warrant,
provided that if any such holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Company to
afford such rights to such holder.
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1.5. PAYMENT BY APPLICATION OF THE NOTES. Upon any exercise
of this Warrant, the holder hereof may, at its option, instruct the
Company, by so specifying in the form of subscription submitted therewith
as provided in section 1.1, to apply to the payment required by section
1.1 all or any part of the principal amount then due and of the interest
on such principal amount then due on any one or more Notes at the time
held by such holder, in which case the Company will accept the aggregate
amount of principal and interest on such principal specified in such form
of subscription in satisfaction of a like amount of such payment. In
case less than the entire unpaid principal amount of any Note shall be so
specified, the principal amount so specified shall be credited, as of the
date of such exercise, against the installments of principal then
remaining unpaid on such Note either in the inverse order of their
maturity dates or in the direct order of their maturity dates as such
holder shall instruct in such form of subscription. Within five days
after receipt of any such notice, the Company will pay to the holder of
the Notes submitting such form of subscription, in the manner provided in
such Notes and the Purchase Agreement, all unpaid interest accrued to the
date of exercise of such Warrant on the principal amount so specified in
such form of subscription that is not applied to the payment required by
section 1.1 under this section 1.5.
2. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERICSE. 2.1.
NUMBER OF SHARES; WARRANT PRICE. The number of shares of Common Stock
which the holder of this Warrant shall be entitled to receive upon each
exercise hereof shall be determined by multiplying the number of shares
of Common Stock which would otherwise (but for the provisions of this
section 2) be issuable upon such exercise, as designated by the holder
hereof pursuant to section 1.1, by a fraction of which (i) the numerator
is $7.24 and (ii) the denominator is the Warrant Price in effect on the
date of such exercise. The "Warrant Price" shall initially be $7.24 per
share, shall be adjusted and readjusted from time to time as provided in
this section 2 and, as so adjusted or readjusted, shall remain in effect
until a further adjustment or readjustment thereof is required by this
section 2.
2.2. ADJUSTMENT OF WARRANT PRICE. 2.2.1. ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In case the Company, at any time or
from time to time after September 26, 1996 (the "Initial Date"), shall
issue or sell Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to section 2.3 or
2.4) without consideration or for a consideration per share less than the
Base Price in effect, in each case, on the date of and immediately prior
to such issue or sale, then, and in each such case, subject to section
2.8, such Warrant Price shall be reduced, concurrently with such issue or
sale, to a price (calculated to the nearest .001 of a cent) determined by
multiplying such Warrant Price by a fraction,
(a) the numerator of which shall be (i) the number of shares
of Common Stock outstanding immediately prior to such issue or sale
plus (ii) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase
at the Base Price, and
(b) the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such issue or sale,
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PROVIDED that, for the purposes of this section 2.2.1, (x) immediately
after any Additional Shares of Common Stock are deemed to have been
issued pursuant to section 2.3 or 2.4, such Additional Shares shall be
deemed to be outstanding, and (y) treasury shares shall not be deemed to
be outstanding.
2.2.2. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case
the Company at any time or from time to time after the Initial Date shall
declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or additional stock or
other securities or property or Options by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement) on
any Common Stock, other than (a) a dividend payable in Additional Shares
of Common Stock or in Options for Common Stock or (b) a regular, periodic
dividend payable in cash and declared out of the earned surplus of the
Company as at the date thereof as increased by any credits (other than
credits resulting from a revaluation of property) and decreased by any
debits made thereto after such date, then, and in each such case, subject
to section 2.8, the Warrant Price in effect immediately prior to the
close of business on the record date fixed for the determination of
holders of any class of securities entitled to receive such dividend or
distribution shall be reduced, effective as of the close of business on
such record date, to a price (calculated to the nearest .001 of a cent)
determined by multiplying such Warrant Price by a fraction,
(i) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-
dividend trading, less the value of such dividend or distribution
(as determined in good faith by the Board of Directors of the
Company) applicable to one share of Common Stock, and
(ii) the denominator of which shall be such Current Market
Price.
2.3. TREATMENT OF OPTIONS AND COVERTIBLE SECURITIES. In
case the Company at any time or from time to time after the Initial Date
shall issue, sell, grant or assume, or shall fix a record date for the
determination of holders of any class of securities entitled to receive,
any Options or Convertible Securities, then, and in each such case, the
maximum number of Additional Shares of Common Stock (as set forth in the
instrument relating thereto, without regard to, any provisions contained
therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be issued for purposes of section 2.2.1 as
of the time of such issue, sale, grant or assumption or, in case such a
record date shall have been fixed, as of the close of business on such
record date (or, if the Common Stock trades on an ex-dividend basis, on
the date prior to the commencement of ex-dividend trading), provided that
such Additional Shares of Common Stock shall not be deemed to have been
issued unless the consideration per share (determined pursuant to section
2.5) of such shares would be less than the Base Price in effect, in each
case, on the date of and immediately prior to such issue, sale, grant or
assumption or immediately prior to the close of business on such record
date (or, if the Common Stock trades on an ex-dividend basis, on the date
prior to the commencement of ex-dividend trading), as the case may be,
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and provided, further, that in any such case in which Additional Shares of
Common Stock are deemed to be issued,
(a) no further adjustment of the Warrant Price shall be made
upon the subsequent issue or sale of Additional Shares of Common
Stock or Convertible Securities upon the exercise of such Options
or the conversion or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Company, or decrease in the number
of Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise),
the Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or
date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effec-
tive, be recomputed to reflect such increase or decrease insofar as
it affects such Options, or the rights of conversion or exchange
under such Convertible Securities, which are outstanding at such
time;
(c) upon the expiration of any such Options or of the rights
of conversion or exchange under any such Convertible Securities
which shall not have been exercised (or upon purchase by the
Company and cancellation or retirement of any such Options which
shall not have been exercised or of any such Convertible Securities
the rights of conversion or exchange under which shall not have
been exercised), the Warrant Price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of
the record date, or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration
(or such cancellation or retirement, as the case may be), be
recomputed as if:
(i) in the case of Options for Common Stock or of
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such
Convertible Securities and the consideration received
therefor was (x) an amount equal to (A) the consideration
actually received by the Company for the issue, sale, grant
or assumption of all such Options, whether or not exercised,
plus (B) the consideration actually received by the Company
upon such exercise, minus (C) the consideration paid by the
Company for any purchase of such Options which were not
exercised, or (y) an amount equal to (A) the consideration
actually received by the Company for the issue, sale, grant
or assumption of all such Convertible Securities which were
actually converted or exchanged, plus (B) the additional
consideration, if any, actually received by the Company upon
such conversion or exchange, minus (C) the consideration paid
by the Company for any purchase of such Convertible
Securities the rights of conversion or exchange under which
were not exercised, and
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(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such
Options, and the consideration received by the Company for
the Additional Shares of Common Stock deemed to have then
been issued was an amount equal to (x) the consideration
actually received by the Company for the issue, sale, grant
or assumption of all such Options, whether or not exercised,
plus (y) the consideration deemed to have been received by
the Company (pursuant to section 2.5) upon the issue or sale
of the Convertible Securities with respect to which such
Options were actually exercised, minus (z) the consideration
paid by the Company for any purchase of such Options which
were not exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Warrant Price by an amount
in excess of the amount of the adjustment thereof originally made
in respect of the issue, sale, grant or assumption of such Options
or Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Warrant Price shall be
made until the expiration or exercise of all such Options,
whereupon such adjustment shall be made in the manner provided in
subdivision (c) above.
In case at any time after the Initial Date the Company shall
be required to increase the number of Additional Shares of Common Stock
subject to any Option or into which any Convertible Securities (other
than the Warrants) are convertible or exchangeable pursuant to the
operation of anti-dilution provisions applicable thereto, such Additional
Shares shall be deemed to be issued for purposes of section 2.1 as of the
time of such increase.
2.4. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In
case the Company at any time or from time to time after the Initial Date
shall declare or pay any dividend or other distribution on any class of
stock of the Company payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in Common Stock), then, and in each such case,
Additional Shares of Common Stock shall be deemed to have been issued (a)
in the case of any such dividend, immediately after the close of business
on the record date for the determination of holders of any class of
securities entitled to receive such dividend, or (b) in the case of any
such subdivision, at the close of business on the day immediately prior
to the day upon which such corporate action becomes effective.
2.5. COMPUTATION OF CONSIDERATION. For the purposes of this
section 2:
(a) The consideration for the issue or sale of any
Additional Shares of Common Stock or for the issue, sale, grant or
assumption of any Options or Convertible Securities, irrespective
of the accounting treatment of such consideration, shall
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(i) insofar as it consists of cash, be computed at the
amount of cash received by the company, after deducting any
expenses paid or incurred by the Company or any commissions
or compensation paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services
and any accrued interest or dividends in connection with such
issue or sale,
(ii) insofar as it consists of consideration
(including securities) other than cash, be computed at the
Fair Value thereof at the time of such issue or sale, after
deducting any expenses paid or incurred by the Company for
any commissions or compensation paid or concessions or
discounts allowed to underwriters, dealers or others
performing similar services and any accrued interest or
dividends in connection with such issue or sale, and
(iii) in case Additional Shares of Common Stock are
issued or sold or Convertible Securities are issued, sold,
granted or assumed together with other stock or securities or
other assets of the Company for a consideration which covers
both, be the proportion of such consideration so received,
computed as provided in subdivisions (i) and (ii) above,
allocable to such Additional Shares of Common Stock or
Convertible Securities, as the case may be, all as determined
in good faith by the Board of Directors of the Company.
(b) All Options issued, sold, granted or assumed together
with other stock or securities or other assets of the Company for a
consideration which covers both, all Additional Shares of Common
Stock, Options or Convertible Securities issued in payment of any
dividend or other distribution on any class of stock of the Company
and all Additional Shares of Common Stock issued to effect a
subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock) shall be
deemed to have been issued without consideration.
(c) Additional Shares of Common Stock deemed to have been
issued for consideration pursuant to section 2.3, relating to
Options and Convertible Securities, shall be deemed to have been
issued for a consideration per share determined by dividing
(i) the total amount, if any, received and receivable
by the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to
the Company upon the exercise in full of such Options or the
conversion or exchange of such Convertible Securities or, in
the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case
computing such consideration as provided in the foregoing
subdivision (a),
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by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjust-
ment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
(d) Additional Shares of Common Stock issued or deemed to
have been issued pursuant to the operation of anti-dilution
provisions applicable to Convertible Securities (other than the
Warrants), Options or other securities of the Company (either as a
result of the adjustments provided for by the Warrants or
otherwise) shall be deemed to have been issued without
consideration.
2.6. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common
Stock, the Warrant Price in effect immediately prior to such combination
or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
2.7. DILUTION IN CASE OF OTHER SECURITIES. In case any
Other Securities shall be issued or sold or shall become subject to issue
or sale upon the conversion or exchange of any stock (or Other
Securities) of the Company (or any issuer of Other Securities or any
other Person referred to in section 3) or to subscription, purchase or
other acquisition pursuant to any Options issued or granted by the
Company (or any such other issuer or Person) for a consideration such as
to dilute, on a basis consistent with the standards established in the
other provisions of this section 2, the purchase rights granted by this
Warrant, then, and in each such case, the computations, adjustments and
readjustments provided for in this section 2 with respect to the Warrant
Price shall be made as nearly as possible in the manner so provided and
applied to determine the amount of Other Securities from time to time
receivable upon the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.
2.8. MINIMUM ADJUSTMENT OF WARRANT PRICE. If the amount of
any adjustment of the Warrant Price required pursuant to this section 2
would be less than one one-hundredth (.01) of a cent, such amount shall
be carried forward and adjustment with respect thereto made at the time
of and together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall
aggregate at least one one-hundredth (.01) of a cent.
2.9. SPECIAL ADJUSTMENT OF WARRANT PRICE. If the Company
shall fail to maintain the effective registration of Registrable
Securities in accordance with section 9.1 of this Warrant (other than for
reasons outside the Company's control), and such failure shall continue
for a period of 30 days from (a) in the case of the registration required
to be effected pursuant to section 9.1(a), November 15, 1997, or (b) in
the case of such registration ceasing to remain in effect, the date
thereof, the Warrant Price in effect at the time of such failure will,
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effective on such 30th day, be reduced to an amount equal to 85% of the
Warrant Price in effect on such 30th day. Thereafter, on each anniversary
of such 30th day, if the Company's failure to comply with section 9.1
shall not have been cured, the Warrant Price shall be further reduced
to an amount equal to 85% of the Warrant Price in effect on such anniversary
date. The Warrant Price Adjustments provided for in this section 2.9
shall be without prejudice to any other right, power or remedy referred
to herein or in the Purchase Agreement or now or hereafter available at
law, in equity, by statute or otherwise.
3. CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION,
ETC. 3.1. GENERAL PROVISIONS. In case the Company, after the Initial
Date, (a) shall consolidate with or merge into any other Person and shall
not be the continuing or surviving corporation of such consolidation or
merger, or (b) shall permit any other Person to consolidate with or merge
into the Company and the Company shall be the continuing or surviving
Person but, in connection with such consolidation or merger, Common Stock
or Other Securities shall be changed into or exchanged for cash, stock or
other securities of any other Person or any other property, or (c) shall
transfer all or substantially all of its properties and assets to any
other Person, or (d) shall effect a capital reorganization or
reclassification of Common Stock or Other Securities (other than a
capital reorganization or reclassification resulting in the issue of
Additional Shares of Common Stock for which adjustment in the Warrant
Price is provided in section 2.2.1 or 2.2.2), then, and in the case of
each such transaction, the Company shall give written notice thereof to
each holder of any Warrant not less than 30 days prior to the
consummation thereof and proper provision shall be made so that, upon the
basis and the terms and in the manner provided in this section 3, the
holder of this Warrant, upon the exercise hereof at any time after the
consummation of such transaction, shall be entitled to receive, at the
aggregate Warrant Price in effect at the time of such consummation for
all Common Stock (or Other Securities) issuable upon such exercise
immediately prior to such consummation, in lieu of the Common Stock (or
Other Securities) issuable upon such exercise prior to such consummation,
either of the following, as such holder shall elect by written notice to
the Company on or before the date immediately preceding the date of the
consummation of such transaction (and, in the absence of such notice, the
provisions of subdivision (ii) below shall be deemed to have been elected
by such holder):
(i) the highest amount of cash, securities or other property
to which such holder would actually have been entitled as a
shareholder upon such consummation if such holder had exercised
this Warrant immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible
to the adjustments provided for in section 2 and this section 3,
provided that if a purchase, tender or exchange offer shall have
been made to and accepted by the holders of Common Stock under
circumstances in which, upon completion of such purchase, tender or
exchange offer, the maker thereof, together with members of any
group (within the meaning of Rule 13d-5(b)(1) under the Exchange
Act) of which such maker is a part, and together with any affiliate
or associate of such maker (within the meaning of Rule 12b-2 under
the Exchange Act) and any members of any such group of which any
such affiliate or associate is a part, own beneficially (within the
meaning of Rule 13d-3 under the Exchange Act) more than 50% of the
10
outstanding shares of Common Stock, and if the holder of this
Warrant so designates in such notice given to the Company, the
holder of this Warrant shall be entitled to receive the highest
amount of cash, securities or other property to which such holder
would actually have been entitled as a shareholder if the holder of
this Warrant had exercised this Warrant prior to the expiration of
such purchase, tender or exchange offer, accepted such offer and
all of the Common Stock held by such holder had been purchased
pursuant to such purchase, tender or exchange offer, subject to
adjustments (from and after the consummation of such purchase,
tender or exchange offer) as nearly equivalent as possible to the
adjustments provided for in section 2 and this section 3; or
(ii) the number of shares of Voting Common Stock (or
equivalent equity interests) of the Acquiring Person or, if the
Acquiring Person fails to meet, but its Parent meets, the
requirements set forth in the proviso below, of its Parent, subject
to adjustments (subsequent to such corporate action) as nearly
equivalent as possible to the adjustments provided for in section 2
and this section 3, determined by dividing (x) the product obtained
by multiplying (A) the number of shares of Common Stock (or Other
Securities) to which the holder of this Warrant would have been
entitled had such holder exercised this Warrant immediately prior
to the consummation of such transaction, times (B) the greater of
the Acquisition Price and the Warrant Price in effect on the date
immediately preceding the date of such consummation, by (y) the
Current Market Price per share of the Voting Common Stock (or
equivalent equity interests) of the Acquiring Person or its Parent,
as the case may be, on the date immediately preceding the date of
such consummation;
provided that the Company shall not effect any of the transactions
described in subdivisions (a) through (d) above unless, immediately after
the date of the consummation of such transaction, the Acquiring Person or
its Parent is required to file, by virtue of having an outstanding class
of Voting Common Stock (or equivalent equity interests), reports with the
Commission pursuant to section 13 or section 15(d) of the Exchange Act,
and such Voting Stock (or equivalent equity interest) is listed or
admitted to trading on a national securities exchange or is quoted in the
NASD automated quotation system. In the event that the Acquiring Person
fulfills the requirements contained in the immediately preceding proviso,
then, if the holder of this Warrant shall elect (or shall be deemed to
elect) to receive Voting Common Stock (or equivalent equity interests)
pursuant to subdivision (ii) above, such holder shall be entitled to
receive, upon the basis stated in such subdivision (ii), only the Voting
Common Stock (or equivalent equity interests) of the Acquiring Person.
3.2. ASSUMPTION OF OBLIGATIONS. Notwithstanding anything
contained in this Warrant or the Purchase Agreement to the contrary, the
Company will not effect any of the transactions described in subdivisions
(a) through (d) of section 3.1 unless, prior to the consummation thereof,
each Person (other than the Company) which may be required to deliver any
cash, stock or other securities or other property upon the exercise of
this Warrant as provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the holder of this Warrant,
(a) the obligations of the Company under this Warrant (and if the Company
shall survive the consummation of such transaction, such assumption shall
11
be in addition to, and shall not release the Company from,
any continuing obligations of the Company under this Warrant) and (b) the
obligation to deliver to such holder such cash, stock or other securities
or other property as, in accordance with the foregoing provisions of this
section 3, such holder may be entitled to receive, and such Person shall
have similarly delivered to such holder an opinion of counsel for such
Person, which counsel shall be reasonably satisfactory to such holder,
stating that this Warrant shall thereafter continue in full force and
effect and the terms hereof (including, without limitation, all of the
provisions of section 2 and this section 3) shall be applicable to the
cash, stock or other securities or other property which such Person may
be required to deliver upon any exercise of this Warrant or the exercise
of any rights pursuant hereto. Nothing in this section 3 or in section 7
shall be deemed to authorize the Company to enter into any transaction
not otherwise permitted by the Purchase Agreement.
4. OTHER DILUTIVE EVENTS. In case any event shall occur as
to which the provisions of section 2 or section 3 are not strictly
applicable but the failure to make any adjustment would not fairly
protect the purchase rights represented by this Warrant in accordance
with the essential intent and principles of such sections, then, in each
such case, the Company shall appoint a firm of independent public
accountants of recognized national standing (which may be the regular
auditors of the Company), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in sections 2 and 3, necessary to preserve,
without dilution, the purchase rights represented by this Warrant. Upon
receipt of such opinion the Company will promptly mail a copy thereof to
the holder of this Warrant and shall make the adjustments described
therein.
5. NO DILUTION OF IMPAIRMENT. The Company will not, by
amendment of its certificate of incorporation or through any
consolidation, merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not permit the par
value of any shares of stock receivable upon the exercise of this Warrant
to exceed the amount payable therefor upon such exercise, and, if the
Warrant Price in effect at any time shall be reduced to such par value,
the Company will promptly cause the par value of such shares to be
reduced to $0.01, (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock upon the exercise of all of the
Warrants from time to time outstanding, (c) will not take any action
which results in any adjustment of the Warrant Price if the total number
of shares of Common Stock (or Other Securities) issuable after the action
upon the exercise of all of the Warrants would exceed the total number of
shares of Common Stock (or other Securities) then authorized by the
Company's certificate of incorporation and available for the purpose of
issue upon such exercise and, (d) will not issue any capital stock of any
class which has the right to more than one vote per share or which is
preferred as to dividends or as to the distribution of assets upon
12
voluntary or involuntary dissolution, liquidation or winding-
up, unless such stock is sold for a cash consideration at least equal to
the amount of its preference upon voluntary or involuntary dissolution,
liquidation or winding-up and the rights of the holders thereof shall be
limited to a fixed percentage (not exceeding 15%) of such cash
consideration in respect of participation in dividends.
6. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS. (a) In each case
of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable upon the exercise of the Warrants, the Company at
its expense will promptly compute such adjustment or readjustment in
accordance with the terms of the Warrants and prepare a report setting
forth such adjustment or readjustment and showing in reasonable detail
the method of calculation thereof and the facts upon which such adjust-
ment or readjustment is based, including without limitation a statement
of (i) the consideration received or to be received by the Company for
any Additional Shares of Common Stock issued or sold or deemed to have
been issued, (ii) the number of shares of Common Stock outstanding or
deemed to be outstanding, and (iii) the Warrant Price in effect
immediately prior to such issue or sale and as adjusted and readjusted
(if required by section 2) on account thereof. The Company will
forthwith mail a copy of each such report to each holder of a Warrant.
Any holder of a Warrant may notify the Company in writing within ten days
following receipt of any such report that it disagrees with the Company's
computation of such adjustment or readjustment, and may request the
Company to cause independent public accountants of recognized national
standing selected by the Company (which may be the regular auditors of
the Company), at the Company's expense, to verify such computation and
prepare a report setting forth the information required to be set forth
in the Company's report.
(b) The Company will, upon the written request at any time
of any holder of a Warrant, furnish to such holder a report setting forth
the Warrant Price at the time in effect and showing in reasonable detail
how it was calculated. The Company will also keep copies of all reports
prepared pursuant to subdivision (a) and (b) of this section 6 at its
principal office and will cause the same to be available for inspection
at such office during normal business hours by any holder of a Warrant or
any prospective purchaser of a Warrant designated by the holder thereof.
7. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a
regular periodic dividend payable in cash out of earned surplus) or
other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and
any other Person or any transfer of all or substantially all the
assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
13
the Company will mail to each holder of a Warrant a notice specifying (i)
the date or expected date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right, and (ii) the date or
expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place and the time, if any such time
is to be fixed, as of which the holders of record of Common Stock (or
Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up.
Such notice shall be mailed at least 20 days prior to the date therein
specified, in the case of any date referred to in the foregoing
subdivision (i), and at least 90 days prior to the date therein
specified, in the case of the date referred to in the foregoing
subdivision (ii).
8. RESTRICTIONS ON TRANSFER. 8.1. RESTRICTIVE LEGENDS.
Except as otherwise permitted by this section 8, each Warrant originally
issued pursuant to the Purchase Agreement and each Warrant issued upon
direct or indirect transfer or in substitution for any Warrant pursuant
to section 13 shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"This Warrant and any shares acquired upon the exercise of
this Warrant have not been registered under the Securities Act of
1933 and may not be transferred in the absence of such registration
or an exemption therefrom under such Act."
Except as otherwise permitted by this section 8, each certificate for
Common Stock (or Other Securities) issued upon the exercise of any
Warrant and each certificate issued upon the direct or indirect transfer
of any such Common Stock (or Other Securities) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be
transferred in the absence of such registration or an exemption
therefrom under such Act. Such shares are also subject to certain
restrictions on transferability imposed by Common Stock Purchase
Warrants expiring September 26, 2003, a copy of which is on file at
the offices of the Company."
8.2. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior
to any transfer of any Restricted Securities which are not registered
under an effective registration statement under the Securities Act (other
than a transfer pursuant to Rule 144 or any comparable rule under such
Act), the holder thereof will give written notice to the Company of such
holder's intention to effect such transfer and to comply in all other
respects with this section 8.2. Each such notice (a) shall describe the
manner and circumstances of the proposed transfer in sufficient detail to
enable counsel to render the opinions referred to below, and (b) shall
designate counsel for the holder giving such notice (who may be in-house
counsel for such holder). The holder giving such notice will submit a
copy thereof to the counsel designated in such notice. The following
provisions shall then apply:
14
(i) If in the opinion of counsel for the holder the proposed
transfer may be effected without registration, such holder shall
thereupon be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by such holder to
the Company. Each Warrant or certificate, if any, issued upon or
in connection with such transfer shall bear the appropriate
restrictive legend set forth in section 8.1 unless, in the opinion
of such counsel, such legend is no longer required to insure
compliance with the Securities Act.
(ii) If the opinion of such counsel for the holder is not to
the effect that the proposed transfer may legally be effected
without registration of such Restricted Securities under the
Securities Act, such holder shall not be entitled to transfer such
Restricted Securities (other than in a transfer pursuant to Rule
144 or any comparable rule under the Securities Act) until the
conditions specified in subdivision (i) above shall be satisfied or
until registration of such Restricted Securities under the
Securities Act has become effective.
Notwithstanding the foregoing provisions of this section 8.2, the holder
of any Restricted Securities shall be permitted to transfer any such
Restricted Securities pursuant to Rule 144A under the Securities Act,
provided that each transferee agrees in writing to be bound by all the
restrictions on transfer of such Restricted Securities contained in this
section 8.2. The Company will pay the reasonable fees and disbursements
of counsel (other than in-house counsel) for any holder of Restricted
Securities and of counsel for the Company in connection with all opinions
rendered by them pursuant to this section 8.2 and pursuant to section
8.3.
8.3. TERMINATION OF RESTRICTIONS. The restrictions imposed
by this section 8 upon the transferability of Restricted Securities shall
cease and terminate as to any particular 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 Restricted Securities, (b) when, in the opinions
of both counsel for the holder thereof and counsel for the Company, such
restrictions are no longer required in order to insure compliance with
the Securities Act, or (c) when such securities have been beneficially
owned, by a person who has not been an affiliate of the Company for at
least three months, for a period of at least three years, all as
determined under Rule 144 under the Securities Act. Whenever such
restrictions shall terminate as to any Restricted Securities, as soon as
practicable thereafter and in any event within five days, the holder
thereof shall be entitled to receive from the Company, without expense
(other than transfer taxes, if any), new securities of like tenor not
bearing the applicable legend set forth in section 8.1 hereof.
9. REGISTRATION UNDER SECURITIES ACT, ETC. 9.1. MAINTENANCE
OF EFFECTIVE REGISTRATION. (a) General. The Company agrees to prepare
and file with the Commission not later than February 15, 1997, and upon
the effectiveness thereof to maintain on a current basis and until the
expiration of the Warrants in accordance with the terms thereof, a
registration under the Securities Act of Registrable Securities so as to
permit an offering thereof at other than a fixed price into an existing
trading market on or through the facilities of a national securities
15
exchange or from time to time through one or more underwriters, including
by means of a shelf registration pursuant to Rule 415 under the Securities
Act.
(b) Expenses. The Company will pay all Registration
Expenses in connection with any registration effected pursuant to this
section 9.1, except that the Company will pay the expense of obtaining
"comfort" letters pursuant to subdivision (f)(ii) of section 9.3 only in
the case of such letters delivered (i) on the effective date of any
registration statement, (ii) on the closing date of any underwritten
Public Offering and (iii) on the date of the first sale of Registrable
Securities other than in an underwritten Public Offering.
(c) Selection of Underwriters. If, in the discretion of the
holders of a majority (by number of shares) of the Registrable
Securities, any offering pursuant to this section 9.1 shall constitute an
underwritten offering, the underwriter or underwriters thereof shall be
selected, after consultation with the Company, by such holders and shall
be acceptable to the Company, which shall not unreasonably withhold its
acceptance of such underwriter or underwriters.
9.2. INCIDENTAL REGISTRATION. (a) Right to Include
Registrable Securities. Notwithstanding any limitation contained in
section 9.1, if the Company at any time proposes to register any of its
securities under the Securities Act (other than by a registration on Form
S-4 or S-8 or any successor or similar forms), whether or not for sale
for its own account, in a manner which would permit registration of
Registrable Securities for sale to the public under the Securities Act,
it will each such time give prompt written notice to all holders of
Registrable Securities of its intention to do so and of such holders'
rights under this section 9.2. Upon the written request of any such
holder made within 20 days after receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed
of by such holder and the intended method of disposition thereof), the
Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been
so requested to register by the holders thereof, to the extent requisite
to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be registered,
by inclusion of such Registrable Securities in the registration statement
which covers the securities which the Company proposes to register,
provided that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register or to delay
registration of such securities, the Company may, at its election, give
written notice of such determination to each holder of Registrable
Securities and, thereupon, (a) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith),
without prejudice, however, to the Company's obligation to maintain
registration under section 9.2, and (b) in the case of a determination to
delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering
such other securities. No registration effected under this section 9.2
shall relieve the Company of its obligation to maintain the registration
16
required under section 9.1 except that the Company may de-register any
Registrable Securities from the registration maintained pursuant to
section 9.1 upon the disposal thereof in accordance with any such
registration statement effected under this section 9.2. The Company
will pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to this section 9.2.
(b) Priority in Incidental Registrations. If a registration
pursuant to this section 9.2 involves an underwritten offering and the
managing underwriter advises the Company in writing that, in its opinion,
the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering, the Company will
include in such registration to the extent of the number which the
Company is so advised can be sold in such offering securities determined
as follows:
(i) if such registration as initially proposed by the
Company was solely a primary registration of its securities, (x)
first, the securities proposed by the Company to be sold for its
own account, (y) second, any Registrable Securities requested to be
included in such registration, pro rata among the holders thereof
requesting such registration on the basis of the number of shares
of such securities requested to be included by such holders, and
(z) third, any other securities of the Company proposed to be
included in such registration, in accordance with the priorities,
if any, then existing among the Company and the holders of such
other securities, and
(ii) if such registration as initially proposed by the
Company was in whole or in part requested by holders of securities
of the Company, other than holders of Registrable Securities,
pursuant to demand registration rights, (x) first, such securities
held by the holders initiating such registration, pro rata among
the holders thereof, on the basis of the number of shares of such
securities requested to be included by such holders, (y) second,
any Registrable Securities requested to be included in such
registration, pro rata among the holders thereof requesting such
registration on the basis of the number of shares of such
securities requested to be included by such holders and (z) third,
any other securities of the Company proposed to be included in such
registration, in accordance with the priorities, if any, then
existing among the Company and the holders of such other
securities.
9.3. REGISTRATION PROCEDURES. If and whenever the Company
is required to maintain effective on a current basis a registration
statement under the Securities Act pertaining to any Registrable
Securities as provided in sections 9.1 and 9.2, the Company will as
expeditiously as possible:
(a) prepare and file with the Commission the requisite
registration statement (including such audited financial statements
as may be required by the Securities Act or the rules and
regulations promulgated thereunder) to effect such registration and
use its best efforts to cause such registration statement to become
effective, provided that before filing such registration statement
or any amendments thereto, the Company will furnish to the counsel
17
selected by the holders of Registrable Securities whose
Registrable Securities are to be included in such registration
copies of all such documents proposed to be filed, which documents
will be subject to the review of such counsel, and provided,
further, that the Company may discontinue any registration of its
securities which are not Registrable Securities at any time prior
to the effective date of the registration statement relating
thereto;
(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 maintain the effec-
tiveness of such registration statement and to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement until the
earlier of 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
or, in the case of any registration maintained pursuant to section
9.1, the expiration of the Warrants in accordance with the terms
thereof or, in the case of any registration pursuant to section
9.2, 90 days after such registration statement becomes effective,
provided that if less than all the Registrable Securities are
withdrawn from registration after the relevant period, the shares
to be so withdrawn shall be allocated pro rata among the holders
thereof on the basis of the respective numbers of Registrable
Securities held by them included in such registration;
(c) furnish to each seller of Registrable Securities
covered by such registration statement (and each Requesting Holder)
such number of conformed 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
contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such
other documents, as such seller may reasonably request;
(d) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws
of such jurisdictions as each seller thereof shall reasonably
request, to keep such registration or qualification in effect for
so long as such registration statement remains in effect, and take
any other action which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, 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 would not but for the requirements of this
subdivision (d) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
18
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof to consummate
the disposition of such Registrable Securities;
(f) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller (and the underwriters,
if any), of
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement and dated the
date of any closing of any sale of Registrable Securities,
reasonably satisfactory in form and substance to such seller,
and
(ii) a "comfort" letter, dated the effective date of
such registration statement and dated the date of any closing
of any sale of Registrable Securities, signed by the
independent public accountants who have certified the
Company's financial statements included in such registration
statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' letter, with respect to events
subsequent to the date of such financial statements, as are cus-
tomarily covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in underwritten
Public Offerings of securities and, in the case of the accountants'
letter, such other financial matters, as such seller (or the under-
writers, if any) may reasonably request;
(g) notify each holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, 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 a 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 under which they were made, and at the request of any
such holder promptly prepare and furnish to such holder 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 under which they were made;
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with
the first full calendar month after the effective date of such
19
registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act, and
not file any amendment or supplement to such registration statement
or prospectus to which any such seller shall have reasonably
objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder, having
been furnished with a copy thereof at least five business days
prior to the filing thereof;
(i) provide a transfer agent and registrar for all
Registrable Securities covered by such registration statement not
later than the effective date of such registration statement; and
(j) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange
on which any of the securities of the same class as the Registrable
Securities are then listed.
The Company may require each holder of Registrable Securities
as to which any registration is being effected to furnish the Company
such information regarding such holder and the distribution of such
securities as the Company may from time to time reasonably request in
writing.
Each holder of Registrable Securities agrees by the
acquisition of such Registrable Securities that upon receipt of any
notice from the Company of the happening of any event of the kind
described in subdivision (g) of this section 9.3, such holder will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until such holder's receipt of the copies of the supplemented
or amended prospectus contemplated by subdivision (g) of this section 9.3
and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event
the Company shall give any such notice, the periods referred to in sub-
division (b) of this section 9.3 shall be extended by a number of days
equal to the number of days during the period from and including the
giving of notice pursuant to subdivision (g) of this section 9.3 and
including the date when each seller of any Registrable Securities covered
by such registration statement shall receive the copies of the
supplemented or amended prospectus contemplated by subdivision (g) of
this section 9.3.
9.4. UNDERWRITTEN OFFERINGS. (a) Requested Underwritten
Offerings. If requested by the underwriters for any underwritten
offering by holders of Registrable Securities pursuant to the
registration maintained under section 9.1, the Company will enter into an
underwriting agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to each such holder,
the underwriters and the Company and to contain such representations and
warranties by the Company and such other terms as are customarily
contained in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in section 9.7. The
holders of Registrable Securities to be distributed by such underwriters
20
shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to
and for the benefit of such underwriters shall also be made to and for
the benefit of such holders of Registrable Securities and that any or all
of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of
such holders of Registrable Securities. No holder of Registrable
Securities shall be required to make any representations or warranties to
or agreements with the Company or the underwriters other than representa-
tions, warranties or agreements regarding such holder and such holder's
intended method of distribution and any other representation required by
law.
(b) Incidental Underwritten offerings. If the Company at
any time proposes to register any of its securities under the Securities
Act as contemplated by section 9.2 and such securities are to be
distributed by or through one or more underwriters, the Company will,
subject to the provisions of section 9.2(b), use its best efforts, if
requested by any holder of Registrable Securities, to arrange for such
underwriters to include the Registrable Securities to be offered and sold
by such holder among the securities to be distributed by such
underwriters. The holders of Registrable Securities to be distributed by
such underwriters shall be parties to the underwriting agreement between
the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to
the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. No holder of Registrable Securities shall be required to
make any representations or warranties to or agreements with the Company
or the underwriters other than representations, warranties or agreements
regarding such holder and such holder's intended method of distribution
and any other representation required by law.
(c) Holdback Agreements. (i) Each holder of Registrable
Securities agrees by acquisition of such Registrable Securities, if so
required by the managing underwriter, not to effect any public sale or
distribution of such securities during the seven days prior to and the 90
days after the closing of any underwritten registration pursuant to
section 9.1 or any underwritten registration pursuant to section 9.2 has
become effective, or, if the managing underwriter advises the Company in
writing that, in its opinion, no such public sale or distribution should
be effected for a specified period longer than 90 days after such
underwritten registration in order to complete the sale and distribution
of securities included in such registration and the Company gives notice
to such holder of Registrable Securities of such advice, during a
reasonable longer period after such underwritten registration, except as
part of such underwritten registration, whether or not such holder par-
ticipates in such registration.
21
(ii) The Company agrees (x) not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the seven
days prior to and the 90 days after the closing of any underwritten
registration pursuant to section 9.2 or any underwritten registration
pursuant to section 9.2 has become effective, except as part of such
underwritten registration and except pursuant to registrations on Form S-
4 or S-8 or any successor or similar forms thereto, and (y) to cause each
holder of its equity securities or of any securities convertible into or
exchangeable or exercisable for any of such securities, in each case
purchased from the Company at any time after the date of this Agreement
(other than in a Public Offering), to agree not to effect any such public
sale or distribution of such securities, during such period, or, in
either case, if the managing underwriter advises the Company in writing
that, in its opinion, no such public sale or distribution should be
effected for a specified period longer than 90 days after such
underwritten registration in order to complete the sale and distribution
of securities included in such registration, during a reasonable longer
period after such underwritten registration, except as part of such
underwritten registration.
9.5. PREPARATION; REASONABLE INVESTIGATION. In connection
with the preparation and filing of each registration statement under the
Securities Act, the Company will give the holders of Registrable
Securities registered under such registration statement, their
underwriters, if any, and their respective counsel and accountants, the
opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission,
and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to
discuss the business of the Company with its officers and the independent
public accountants who have certified its financial statements as shall
be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
9.6. CERTAIN RIGHTS OF HOLDERS. The Company will not file
any registration statement under the Securities Act which refers to any
holder of any Notes or Registrable Securities by name or otherwise as the
holder of any securities of the Company, unless it shall first have given
to such holder the right to require (a) the insertion therein of
language, in form and substance satisfactory to such holder, to the
effect that the holding by such holder of such securities does not make
such holder a "controlling person" of the Company within the meaning of
the Securities Act and is not to be construed as a recommendation by such
holder of the investment quality of the Company's debt or equity
securities covered thereby and that such holding does not imply that such
holder will assist in meeting any future financial requirements of the
Company, or (b) in the event that such reference to such holder by name
or otherwise is not required by the Securities Act or any rules and
regulations promulgated thereunder, the deletion of the reference to such
holder.
9.7. INDEMNIFICATION. (a) Indemnification by the Company.
In the event of any registration of any securities of the Company under
the Securities Act, the Company will, and hereby does, indemnify and hold
harmless the seller of Registrable Securities covered by any registration
22
statement filed pursuant to section 9.1 or 9.2, its directors and
officers, each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who
controls any such seller or any such underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which such seller or any such director or officer or
underwriter or controlling Person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon 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, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and the Company will reimburse such seller and each such
director, officer, underwriter and controlling person for any legal or
any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding, provided that with respect to any seller the Company shall
not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
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, summary
prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument
duly executed by such seller specifically stating that it is for use in
the preparation thereof, and, provided, further, that the Company shall
not be liable to any Person who participates as an underwriter, in the
offering or sale of Registrable Securities or any other Person, if any,
who controls such underwriter within the meaning of the Securities Act,
in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final
prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director,
officer, underwriter or controlling person and shall survive the transfer
of such securities by such seller.
(b) Indemnification by the Sellers. The Company may
require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to section 9.3, that the Company
shall have received an undertaking satisfactory to it from the
prospective seller of such securities, to indemnify and hold harmless (in
the same manner and to the same extent as set forth in subdivision (a) of
this section 9.7) the Company, each director of the Company, each officer
of the Company and each other person, if any, who controls the company
within the meaning of the Securities Act, with respect to any statement
or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
23
thereto, if such statement or alleged statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, provided that
such seller's obligations hereunder shall be limited to an amount equal
to the proceeds to such holder of the Registrable Securities sold
pursuant to such registration statement.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions of
this section 9.7, 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 9.7, 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, unless
in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of
such claim, the indemnifying party shall 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 shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall consent
to entry of any judgment or enter into any settlement without the consent
of the indemnified party 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.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this section 9.7 (with
appropriate modifications) shall be given by the Company and each seller
of Registrable Securities with respect to any required registration or
other qualification of securities under any Federal or state law or
regulation of any governmental authority, other than the Securities Act.
(e) Indemnification Payments. The indemnification required
by this section 9.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
9.8. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The
Company will not effect or permit to occur any combination or subdivision
of shares which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in any
registration of its securities contemplated by this section 9 or the
marketability of such Registrable Securities under any such registration.
24
9.10. COVENANTS RELATING TO RULE 144. The Company will file
reports in compliance with the Exchange Act and will, at its expense,
forthwith upon the request of any holder of Restricted Securities,
deliver to such holder a certificate, signed by the Company's principal
financial officer, stating (a) the Company's name, address and telephone
number, (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of
Common Stock of the Company outstanding as shown by the most recent
report or statement published by the Company, and (e) whether the Company
has filed the reports required to be filed under the Exchange Act for a
period of at least 90 days prior to the date of such certificate and in
addition has filed the most recent annual report required to be filed
thereunder. If at any time the Company is not required to file reports
in compliance with either section 13 or section 15(d) of the Exchange
Act, the Company at its expense will, forthwith upon the written request
of the holder of any Restricted securities, make available adequate
current public information with respect to the Company within the meaning
of paragraph (c)(2) of Rule 144 of the General Rules and Regulations
promulgated under the Securities Act.
10. AVAILABILITY OF INFORMATION. The Company will cooperate
with each holder of any Restricted Securities in supplying such
information as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any Restricted Securities. The Company
will furnish to each holder of any Warrants, promptly upon their becoming
available, copies of all financial statements, reports, notices and proxy
statements sent or made available generally by the Company to its
stockholders, and copies of all regular and periodic reports and all
registration statements and prospectuses filed by the Company with any
securities exchange or with the commission.
11. RESERVATION OF STOCK, ETC. The Company will at all
times reserve and keep available, solely for issuance and delivery upon
exercise of the Warrants, the number of shares of Common Stock (or Other
Securities) from time to time issuable upon exercise of all Warrants at
the time outstanding. All shares of Common Stock (or Other Securities)
shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and nonassessable
with no liability on the part of the holders thereof.
12. LISTING ON SECURITIES EXCHANGE. The Company will list
on each national securities exchange on which any Common Stock may at any
time be listed, subject to official notice of issuance upon exercise of
the Warrants, and will maintain such listing of, all shares of Common
Stock from time to time issuable upon exercise of the Warrants. The
Company will also so list on each national securities exchange, and will
maintain such listing of, any other securities if at the time any
securities of the same class shall be listed on such national securities
exchange by the Company.
25
13. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS. 13.1.
OWNERSHIP OF WARRANTS. The Company may treat the person in whose name
any Warrant is registered on the register kept at the principal office of
the Company as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, except that, if and when any
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer thereof as the owner of such Warrant for
all purposes, notwithstanding any notice to the contrary. Subject to
section 8, a Warrant, if properly assigned, may be exercised by a new
holder without first having a new Warrant issued.
13.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon the surrender
of any Warrant, properly endorsed, for registration of transfer or for
exchange at the principal office of the Company, the Company at its
expense will (subject to compliance with section 8, if applicable)
execute and deliver to or upon the order of the holder thereof a new
Warrant or Warrants of like tenor, in the name of such holder or as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the
Warrant or Warrants so surrendered.
13.3. REPLACEMENT OF WARRANTS. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction of any Warrant held by a Person other than any institutional
investor, upon delivery of indemnity reasonably satisfactory to the
Company in form and amount or, in the case of any such mutilation, upon
surrender of such Warrant for cancellation at the principal office of the
Company, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
14. DEFINITIONS. As used herein, unless the context
otherwise requires, the following terms have the following respective
meanings:
Acquiring Person: the continuing or surviving corporation of
a consolidation or merger with the Company (if other than the Company),
the transferee of substantially all of the properties and assets of the
Company, the corporation consolidating with or merging into the Company
in a consolidation or merger in connection with which the Common Stock is
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or, in the case of a capital reor-
ganization or reclassification, the Company.
Acquisition Price: as applied to the Common Stock, with
respect to any transaction to which section 3 applies, (a) the price per
share equal to the greater of the following, determined in each case as
of the date immediately preceding the date of consummation of such
transaction: (i) the Market Price of the Common Stock and (ii) the
highest amount of cash plus the Fair Value of the highest amount of
securities or other property which the holder of this Warrant would have
been entitled as a shareholder to receive upon such consummation if such
holder had exercised this Warrant immediately prior thereto, or (b) if a
purchase, tender or an exchange offer is made by the Acquiring Person (or
by any of its affiliates) to the holders of the Common Stock and such
offer is accepted by the holders of more than 50% of the outstanding
26
shares of Common Stock, the greater of (i) the price determined in
accordance with the foregoing, subdivision (a) and (ii) the price per
share equal to the greater of the following, determined in each case
as of the date immediately preceding the acceptance of such offer by
the holders of more than 50% of the outstanding shares of Common Stock:
(x) the Market Price of the Common Stock and (y) the highest amount of
cash plus the Fair Value of the highest amount of securities or other
property which the holder of this Warrant would be entitled as a
shareholder to receive pursuant to such offer if such holder had
exercised this Warrant immediately prior to the expiration of such offer
and accepted the same.
Additional Shares of Common Stock: all shares (including
treasury shares) of Common Stock issued or sold (or, pursuant to section
2.3 or 2.4, deemed to be issued) by the Company after the Initial Date
hereof, whether or not subsequently reacquired or retired by the Company,
other than (a) shares of Common Stock issued upon the exercise of
Warrants and (b) shares of Common Stock, not in excess of 20% the number
of shares of Common Stock issued and outstanding on the Initial Date,
issued upon the exercise of certain stock options granted from time to
time to certain directors, officers and other employees of the Company
and its Subsidiaries.
Base Price: on any date specified herein, the greater of (i)
the Current Market Price and (ii) the Warrant Price.
Business Day: any day other than a Saturday or a Sunday or a
day on which commercial banking institutions in the City of New York are
authorized by law to be closed, provided that, in determining the period
within which certificates or Warrants are to be issued and delivered
pursuant to section 1.3 at a time when shares of Common Stock (or Other
Securities) are listed or admitted to trading on any national securities
exchange or in the over-the-counter market and in determining the Market
Price of any securities listed or admitted to trading on any national
securities exchange or in the over-the-counter market, "Business Day"
shall mean any day when the principal exchange in which securities are
then listed or admitted to trading is open for trading or, if such
securities are traded in the over-the-counter market in the United
States, such market is open for trading, and provided, further, that any
reference to "days" (unless Business Days are specified) shall mean
calendar days.
Commission: the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act or the
Exchange Act, whichever is the relevant statute for the particular
purpose.
Common Stock: the Company's Common Stock, par value $1.00
per share, as constituted on the date hereof, any stock into which such
Common Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any class
or classes (however designated) of the Company the holders of which have
the right, without limitation as to amount, either to all or to a share
of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to
preference.
27
Company: Xxxxx Ticonderoga Company, a Delaware corporation.
Convertible Securities: any evidences of indebtedness,
shares of stock (other than Common Stock) or other securities directly or
indirectly convertible into or exchangeable for Additional Shares of
Common Stock.
Current Market Price: on any date specified herein, (a) with
respect to Common Stock or to Voting Common Stock (or equivalent equity
interests) of an Acquiring Person or its Parent, (i) the average daily
Market Price during the period of the most recent 20 consecutive Business
Days ending on such date, or (ii) if shares of Common Stock or such
Voting Common Stock (or equivalent equity interests), as the case may be,
are not then listed or admitted to trading on any national securities
exchange and if the closing bid and asked prices thereof are not then
quoted or published in the over-the-counter market, the Market Price on
such date; and (b) with respect to any other securities, the Market Price
on such date.
Exchange Act: the Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the commission
thereunder, all as the same shall be in effect at the time. Reference to
a particular section of the Securities Exchange Act of 1934 shall include
a reference to the comparable section, if any, of any such similar
Federal statute.
Fair Value: with respect to any securities or other
property, the Fair Value thereof as of a date which is within 15 days of
the date as of which the determination is to be made (a) determined by an
agreement between the Company and the Requisite Holders of Warrants or
(b) if the Company and the Requisite Holders of Warrants fail to agree,
determined jointly by an independent investment banking firm retained by
the Company and by an independent investment banking firm retained by the
Requisite Holders of Warrants, either of which firms may be an
independent investment banking firm regularly retained by the Company or
any such holder or (c) if the Company or such holders shall fail so to
retain an independent investment banking firm within five Business Days
of the retention of such firm by such holders or the Company, as the case
may be, determined solely by the firm so retained or (d) if the firms so
retained by the Company and by such holders shall be unable to reach a
joint determination within 15 Business Days of the retention of the last
firm so retained, determined by another independent investment banking
firm which is not a regular investment banking firm of the Company or any
such holder chosen by the first two such firms.
Initial Date: the meaning specified in section 2.2.
Initial Exercise Date: the earlier of (a) September 26, 1997
and (b) the date of the first occurrence of an event of the type
described in clause (a), (b), (c) or (d) of section 3.1.
Market Price: on any date specified herein, (a) with respect
to Common Stock or Voting Common Stock (or equivalent equity interests)
of an Acquiring Person or its Parent, the amount per share equal to (i)
the last sale price of shares of such security, regular way, on such date
or, if no such sale takes place on such date, the average of the closing
bid and asked prices thereof on such date, in each case as officially
28
reported on the principal national securities exchange on which the same
are then listed or admitted to trading, or (ii) if no shares of such
security are then listed or admitted to trading on any national securities
exchange but such security is designated as a national market system
security by the NASD, the last trading price of such security on such
date, or if such security is not so designated, the average of the
reported closing bid and asked prices thereof on such date as shown
by the NASD automated quotation system or, if no shares thereof are
then quoted in such system, as published by the National Quotation
Bureau, Incorporated or any successor organization, and in either case as
reported by any member firm of the New York Stock Exchange selected by
the Company, or (iii) if no shares of such security are then listed or
admitted to trading on any national exchange or designated as a national
market system security and if no closing bid and asked prices thereof are
then so quoted or published in the over-the-counter market, the higher of
(x) the book value thereof as determined by agreement between the Company
and the Requisite Holders of Warrants, or if the Company and the
Requisite Holders of Warrants fail to agree, by any firm of independent
public accountants of recognized standing selected by the Board of
Directors of the Company, as of the last day of any month ending within
60 days preceding the date as of which the determination is to be made or
(y) the fair value thereof determined in good faith by the Board of
Directors of the issuer thereof as of a date which is within 15 days of
the date as of which the determination is to be made; and (b) with
respect to any other securities, the fair value thereof determined in
good faith by the Board of Directors of the Company as of a date which is
within 15 days of the date as of which the determination is to be made.
NASD: the National Association of Securities Dealers.
Notes: the meaning specified in the opening paragraphs of
this Warrant.
Options: rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible securities.
Other Securities: any stock (other than Common Stock) and
other securities of the Company or any other Person (corporate or
otherwise) which the holders of the Warrants at any time shall be
entitled to receive, or shall have received, upon the exercise of the
Warrants, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to section 3 or
otherwise.
Parent: as to any Acquiring Person, any corporation which
(a) controls the Acquiring Person directly or indirectly through one or
more intermediaries, (b) is required to include the Acquiring Person in
its consolidated financial statements under generally accepted accounting
principles and (c) is not itself included in the consolidated financial
statements of any other Person (other than its consolidated
subsidiaries).
29
Person: an individual, a partnership, an association, a
joint venture, a corporation, a limited liability company, a business, a
trust, an unincorporated organization or a government or any department,
agency or subdivision thereof.
Public Offering: any offering of Common Stock to the public
pursuant to an effective registration statement under the Securities Act.
Purchase Agreement: the meaning specified in the opening
paragraphs of this Warrant.
Registrable Securities: (a) the Warrants, (b) any shares of
Common Stock or other Securities issued or issuable upon exercise of the
Warrants and (c) any securities issued or issuable with respect to any
common Stock or Other Securities referred to in subdivision (b) by way of
stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization
or otherwise. As to any particular Registrable Securities, once issued
such securities shall cease to be Registrable Securities when (x) a
registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (y)
they shall have been distributed to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act, or (z) they shall have
ceased to be outstanding.
Registration Expenses: all expenses incident to the
Company's performance of or compliance with section 9, including, without
limitation, all registration, filing and NASD fees, all fees and expenses
of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the
fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of a single counsel and
single firm of accountants retained by the holders of the Registrable
Securities being registered, premiums and other costs of policies of
insurance against liabilities arising out of the public offering of the
Registrable Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but
excluding underwriting discounts and commissions and transfer taxes, if
any.
Requisite Holders of Warrants: the holders of at least 66
2/3% of all the Warrants at the time outstanding determined on the basis
of the number of shares of Common Stock or Other Securities deliverable
upon exercise thereof.
Restricted Securities: (a) any Warrants bearing the
applicable legend set forth in section 8.1, (b) any shares of Common
Stock (or Other Securities) which have been issued upon the exercise of
Warrants and which are evidenced by a certificate or certificates bearing
the applicable legend set forth in such section, and (c) unless the
context otherwise requires, any shares of Common Stock (or Other
Securities) which are at the time issuable upon the exercise of Warrants
and which, when so issued, will be evidenced by a certificate or
certificates bearing the applicable legend set forth in such section.
30
Securities Act: the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to
a particular section of the Securities Act of 1933 shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
Subsidiary: any corporation, association or other business
entity at least 50% (by number of votes) of the Voting Common Stock of
which is at the time owned by the Company or by one or more Subsidiaries
or by the Company and one or more Subsidiaries.
Transfer: unless the context otherwise requires, any sale,
assignment, pledge or other disposition of any security, or of any
interest therein, which could constitute a "sale" as that term is defined
in section 2(3) of the Securities Act.
Voting Common Stock: with respect to any corporation,
association or other business entity, stock of any class or classes (or
equivalent interest) , if the holders of the stock of such class or
classes (or equivalent interests) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of such corporation,
association or business entity, even if the right so to vote has been
suspended by the happening of such a contingency.
Warrant Price: the meaning specified in section 2.1.
Warrants: the meaning specified in the opening paragraphs of
this Warrant.
15. REMEDIES. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or compliance
with any of the terms of this Warrant are not and will not be adequate
and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
16. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing
contained in this Warrant shall be construed as conferring upon the
holder hereof any rights as a stockholder of the Company or as imposing
any liabilities on such holder to purchase any securities or as a
stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors or stockholders of the Company or otherwise.
17. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be delivered by hand or courier
service, or mailed by registered or certified mail, return receipt
requested, addressed (a) if to any holder of any Warrant or any holder of
any Common Stock (or Other Securities), at the registered address of such
holder as set forth in the register kept at the principal office of the
Company, or (b) if to the Company, to the attention of its Chief
Financial Officer, at its principal office, provided that the exercise of
any Warrant shall be effected in the manner provided in section 1.
31
18. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change,
waiver, discharge or termination is sought. The agreements of the
Company contained in this Warrant, other than those applicable solely to
the Warrants and the holders thereof, shall inure to the benefit of and
be enforceable by any holder or holders at the time of any Common Stock
(or Other Securities) issued upon the exercise of Warrants, whether so
expressed or not. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of New York. The
section headings in this Warrant are for purposes of convenience only and
shall not constitute a part hereof.
19. EXPIRATION. The right to exercise this Warrant shall
expire at 3 P.M., New York City time, on September 26, 2003.
XXXXX TICONDEROGA COMPANY
By: __________________________
Name:
Title:
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To _________________
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder,
_____________ shares of Common Stock of XXXXX TICONDEROGA COMPANY,
a Delaware corporation, and herewith makes payment of $_______ therefor
[by application pursuant to section 1.5 of such Warrant of $_______
aggregate principal amount of Notes (as defined in such Warrant) plus
$________ accrued interest thereon], and requests that the certificates
for such shares be issued in the name of, and delivered to
__________________ whose address is __________________.
[The undersigned hereby instructs you to credit the principal
amount of each Note so applied against the installments of principal
remaining unpaid on such Note in the ______________ order of their
maturity dates.]
Dated: ______________
_____________________
(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant)
[insert address]
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the
within Warrant hereby sells, assigns and transfers unto
____________________ the right represented by such Warrant to purchase
shares ____________ of Common Stock of XXXXX TICONDEROGA COMPANY, a
Delaware corporation, 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
this Warrant)
[insert address]
Signed in the presence of:
_________________________
