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EXHIBIT 4.33
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THE CERPLEX GROUP, INC.
WARRANT AGREEMENT
DATED AS OF AUGUST 20, 1997
WARRANTS TO PURCHASE
SHARES OF COMMON STOCK
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TABLE OF CONTENTS
(NOT A PART OF THE AGREEMENT)
PAGE
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Form of Warrant Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Execution of Warrant Certificates; Registration Books etc. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Transfer, Split Up, Combination and Exchange of Warrant Certificates; Lost or Stolen Warrant
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Subsequent Issuance of Warrant Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Exercise of Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Issuance of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Unexercised Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Cancellation and Destruction of Warrant Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. REPRESENTATIONS AND COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Reservation of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Common Stock to be Duly Authorized and Issued, Fully Paid and Nonassessable. . . . . . . . . . . . . . . . 6
3.4 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Common Stock Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Financial and Business Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK ISSUABLE PER WARRANT . . . . . . . . . . . . . . 9
4.1 Mechanical Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Special Agreements of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. INTERPRETATION OF THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Terms Defined. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Directly or Indirectly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Section Headings and Table of Contents and Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Communications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 Reproduction of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.5 Amendment and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Right of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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6.9 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11 Duplicate Originals, Execution in Counterpart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Annex 1 -- Information as to Initial Holders
Exhibit A -- Form of Warrant Certificate
Exhibit B -- Determination of Fair Market Share Price
Exhibit C -- Confidentiality
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WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of August 20, 1997 (as may be amended from
time to time, this "AGREEMENT"), among THE CERPLEX GROUP, INC., a Delaware
corporation (together with its successors and assigns, the "COMPANY"), and each
of the Persons identified as an Initial Holder in Annex 1 (individually, an
"INITIAL HOLDER" and, collectively, the "INITIAL HOLDERS").
RECITALS:
A. Certain capitalized terms used in this Agreement have the
meanings assigned to them in Section 5.1 hereof.
B. The Company has entered into those certain separate Amended
and Restated Note Purchase Agreements, each dated as of April 9, 1997 (as
amended and, as may be further amended, modified or restated from time to time,
individually, a "NOTE PURCHASE AGREEMENT" and, collectively, the "NOTE PURCHASE
AGREEMENTS") with each of the Initial Holders. The Note Purchase Agreement
amended and restated those certain separate Note Purchase Agreements, each
dated as of November 19, 1993, with each of the Initial Holders, as amended,
pursuant to which the Company originally issued and sold to the Initial Holders
an aggregate principal amount of $17,250,000 of the Company's Series A 9.00%
Senior Subordinated Notes Due November 19, 2001 (the "SERIES A NOTES") and an
aggregate principal amount of $5,750,000 of the Company's Series B 9.00% Senior
Subordinated Notes Due November 19, 2001 (the "SERIES B NOTES"). Pursuant to
the terms of the Note Purchase Agreement, the Series A Notes were amended and
restated (such notes, together with any notes issued in substitution therefor,
as amended and, as may be further amended, modified or restated from time to
time, the "NOTES"). The Company has prepaid the Series B Notes and the Series
B Notes are no longer issued and outstanding.
C. In consideration of certain amendments set forth in the First
Amendment Agreement, dated as of August 20, 1997, among the Company and the
Initial Holders, the Company has agreed to issue five hundred thousand
ninety-six (500,096) Warrants of the Company to the Initial Holders, and, under
certain circumstances set forth therein, to issue to the holders of the
Warrants Additional Warrants, each Warrant representing the right to purchase,
upon the terms and subject to the conditions set forth in this Agreement, and
subject to adjustment as set forth herein, one (1) share of Common Stock.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties to this Agreement hereby agree as
follows:
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1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES
1.1 FORM OF WARRANT CERTIFICATES.
The warrant certificates (individually, a "WARRANT CERTIFICATE" and,
collectively, the "WARRANT CERTIFICATES") evidencing the Warrants, and the
forms of assignment and of election to purchase shares to be attached to such
certificates, shall be substantially in the form set forth in Exhibit A and may
have such letters, numbers or other marks of identification or designation as
may be required to comply with any law or with any rule or regulation of any
governmental authority, stock exchange or self-regulatory organization made
pursuant thereto. Each Warrant Certificate shall be dated as of the date of
issuance thereof by the Company, either upon initial issuance or upon transfer
or exchange, and on its face shall initially entitle the holder thereof to
purchase the number of shares of Common Stock equal to the number of Warrants
represented by such Warrant Certificate at a price per share equal to the
Purchase Price, but the number of such shares and the Purchase Price shall be
subject to adjustment as provided herein.
1.2 EXECUTION OF WARRANT CERTIFICATES; REGISTRATION BOOKS ETC.
(a) EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by its
President, one of its Vice Presidents or any other officer of the
Company authorized by the Board of Directors, which execution shall be
attested by the Secretary or an Assistant Secretary of the Company.
In case any officer of the Company who shall have signed any Warrant
Certificate shall cease to be such officer of the Company before
issuance and delivery by the Company of such Warrant Certificate, such
Warrant Certificate nevertheless may be issued and delivered with the
same force and effect as though the individual who signed such Warrant
Certificate had not ceased to be such officer of the Company, and any
Warrant Certificate may be signed on behalf of the Company by any
individual who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this
Agreement any such individual was not such an officer.
(b) REGISTRATION BOOKS, ETC. The Company will keep or
cause to be kept at its office maintained at the address of the
Company set forth in Section 6.1 hereof, or at such other office of
the Company in the United States of America of which the Company shall
have given notice to each holder of Warrant Certificates, books for
registration and transfer of the Warrant Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Warrant Certificates, the registration
number and the number of Warrants evidenced on its face by each of the
Warrant Certificates and the date of each of the Warrant Certificates.
Every holder of a Warrant Certificate by accepting the same consents
and agrees with the Company and with every other holder of a Warrant
Certificate that:
(i) the Warrant Certificates are transferable
only on the registry books of the Company if surrendered at
the office of the Company referred to
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in this Section 1.2(b), duly endorsed or accompanied by an
instrument of transfer (substantially in the form attached to
Exhibit A); and
(ii) the Company may deem and treat the Person in
whose name each Warrant Certificate is registered as the
absolute owner thereof and of the Warrants evidenced thereby
(notwithstanding any notations of ownership or writing on the
Warrant Certificates made by anyone other than the Company)
for all purposes whatsoever, and the Company shall not be
affected by any notice to the contrary.
(c) ACQUISITION FOR INVESTMENT. Each Initial Holder
represents that it is acquiring the Warrants for its own account for
investment and not with a view to any resale or distribution thereof,
within the meaning of the Securities Act, but without prejudice to its
right at all times to sell or otherwise dispose of all or any part of
the Warrants or the shares of Common Stock issuable upon the exercise
of such Warrant under a registration statement filed under the
Securities Act or in a transaction exempt from the registration
requirements of the Securities Act. Each Initial Holder agrees that
each outstanding Warrant Certificate (and each certificate
representing a share or shares of Common Stock issued upon the
exercise of a Warrant) which it owns shall, unless the Securities
represented by such certificate have been registered or have been sold
in accordance with Rule 144 (or any successor regulation thereto)
under the Securities Act, bear an endorsement reading substantially as
follows:
The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended, or
any state securities law. These securities
may not be sold, transferred, pledged or
hypothecated in any transaction unless first
registered under such laws or unless such
transaction is exempt from the registration
requirements of such laws. The securities
represented by this certificate are subject
to certain market holdback provisions set
forth in that certain registration rights
agreement dated November 19, 1993, as
amended, among The Cerplex Group, Inc. and
the other parties thereto.
1.3 TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF WARRANT
CERTIFICATES; LOST OR STOLEN WARRANT CERTIFICATES.
(a) TRANSFER, SPLIT UP, ETC. Any Warrant Certificate,
with or without other Warrant Certificates, may be transferred, split
up, combined or exchanged for another Warrant Certificate or Warrant
Certificates, entitling the registered holder or transferee thereof to
purchase a like number of shares of Common Stock as the Warrant
Certificate or Warrant Certificates surrendered then entitled such
registered holder to
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purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Warrant Certificate shall make such request in
writing delivered to the Company, and shall surrender the Warrant
Certificate or Warrant Certificates to be transferred, split up,
combined or exchanged at the office of the Company referred to in
Section 1.2(b) hereof, whereupon the Company shall deliver promptly
to the Person entitled thereto a Warrant Certificate or Warrant
Certificates, as the case may be, as so requested. Each holder of
Warrants after any such transfer or exchange shall, by its acceptance
of the Warrants and Warrant Certificates being so transferred, be
deemed to have agreed to the terms and provisions of confidentiality
set forth on Exhibit C.
(b) LOSS, THEFT, ETC. Upon receipt of written notice
from the holder of any Warrant Certificate of the loss, theft,
destruction or mutilation of such Warrant Certificate and, in the case
of any such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement, or, in the case of any such mutilation,
upon surrender and cancellation of such Warrant Certificate, the
Company will make and deliver a new Warrant Certificate, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant
Certificate.
1.4 SUBSEQUENT ISSUANCE OF WARRANT CERTIFICATES.
Subsequent to their original issuance, no Warrant Certificates shall
be issued except:
(a) Warrant Certificates issued upon any transfer,
combination, split up or exchange of Warrants pursuant to Section
1.3(a) hereof;
(b) Warrant Certificates issued in replacement of
mutilated, destroyed, lost or stolen Warrant Certificates pursuant to
Section 1.3(b) hereof; and
(c) Warrant Certificates issued pursuant to Section 2.3
hereof upon the partial exercise of any Warrant Certificate to
evidence the unexercised portion of such Warrant Certificate.
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE
2.1 EXERCISE OF WARRANTS.
(a) PURCHASE PRICE PAYMENT UPON EXERCISE. At any time on
or after August 20, 1998 and prior to 5:00 p.m. (Los Angeles,
California time) on the Termination Date, the holder of any Warrant
Certificate may exercise the Warrants evidenced thereby in whole or in
part, by surrender of such Warrant Certificate, with an election to
purchase (a form of which is attached as part of the form of Warrant
Certificate attached as Exhibit A) attached thereto duly executed, to
the Company at its office referred to in Section 1.2(b) hereof,
together with payment of the Purchase Price, payable as set forth
below in this Section 2.1, for each share of Common Stock as to which
the Warrants are exercised. The Purchase Price shall be (i) payable
in cash, by certified or official bank check payable to the order of
the Company or by wire transfer of immediately available funds to the
account of the Company or (ii)
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satisfied by the delivery of Warrant Certificates to the Company for
cancellation in accordance with the formula set forth in Section
2.1(b).
(b) NET EXERCISE PRICE. In lieu of any holder of a
Warrant Certificate exercising the Warrants (or any portion thereof)
evidenced by such Warrant Certificate for cash, as contemplated by
Section 2.1(a), such holder may, in connection with such exercise,
elect to receive shares of Common Stock equal to the product of (i)
the number of shares of Common Stock issuable upon such exercise of
such Warrant Certificate (or, if only a portion of such Warrant
Certificate is being exercised, issuable upon the exercise of such
portion) multiplied by (ii) a fraction, the numerator of which is the
Market Price per share of Common Stock at the time of such exercise
minus the Purchase Price per share of Common Stock at the time of such
exercise, and the denominator of which is the Market Price per share
of Common Stock at the time of such exercise.
2.2 ISSUANCE OF COMMON STOCK.
Upon timely receipt on or after August 20, 1998 of a Warrant
Certificate, with the form of election to purchase duly executed, accompanied
by payment of the Purchase Price for each of the shares to be purchased in the
manner provided in Section 2.1 hereof and an amount equal to any applicable
transfer tax (if not payable by the Company as provided in Section 3.4 hereof),
the Company shall thereupon promptly cause certificates for the number of whole
shares of Common Stock then being purchased to be delivered to or upon the
order of the registered holder of such Warrant Certificate, registered in such
name or names as may be designated by such holder, and, promptly after such
receipt deliver the cash, if any, to be paid in lieu of fractional shares
pursuant to Section 4.2 hereof to or upon the order of the registered holder of
such Warrant Certificate.
2.3 UNEXERCISED WARRANTS.
In case the registered holder of any Warrant Certificate shall
exercise less than all the Warrants evidenced thereby, a new Warrant
Certificate evidencing Warrants equal in number to the number of Warrants
remaining unexercised shall be issued by the Company to the registered holder
of such Warrant Certificate or to its duly authorized assigns.
2.4 CANCELLATION AND DESTRUCTION OF WARRANT CERTIFICATES.
All Warrant Certificates surrendered to the Company for the purpose of
exercise, exchange, substitution or transfer shall be cancelled by it, and no
Warrant Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall cancel
and retire any other Warrant Certificates purchased or acquired by the Company
otherwise than upon the exercise thereof.
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3. REPRESENTATIONS AND COVENANTS OF THE COMPANY
3.1 REPRESENTATIONS AND WARRANTIES.
(a) CORPORATE AUTHORITY. The Company has the corporate
power and authority to:
(i) authorize, execute, deliver and enter into
this Agreement and the Warrant Certificates;
(ii) issue and sell the Warrants;
(iii) perform its obligations under this Agreement
and the Warrants; and
(iv) authorize, execute, deliver, issue and sell
the shares of the Common Stock issuable upon exercise of the
Warrants.
(b) ENFORCEABILITY OF OBLIGATIONS. This Agreement and
the Warrant Certificates issued on the date hereof have been, and any
Warrants issued after the date hereof will be, duly authorized,
executed and delivered by the Company. This Agreement, the Warrant
Certificates and the Warrants constitute, or upon execution and
delivery will constitute, the legal, valid and binding obligations of
the Company, enforceable in accordance with their respective terms,
except:
(i) as such enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors' rights generally; and
(ii) as such enforceability may be subject to the
availability of equitable remedies.
The holders of the Warrants are entitled to the benefits of this
Agreement.
3.2 RESERVATION OF COMMON STOCK.
The Company represents and warrants that it has reserved for issuance
a sufficient number of shares of Common Stock to permit the exercise of all the
Warrants, and all other rights, options or warrants exercisable into Common
Stock. The Company covenants and agrees that it will at all times cause to be
reserved and kept available out of its authorized and unissued shares of Common
Stock such number of shares of Common Stock as will be sufficient to permit the
exercise in full of all Warrants outstanding hereunder.
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3.3 COMMON STOCK TO BE DULY AUTHORIZED AND ISSUED, FULLY PAID AND
NONASSESSABLE.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Common Stock delivered upon the
exercise of any Warrants, at the time of delivery of the certificates for such
shares, shall be duly and validly authorized and issued and fully paid and
nonassessable, free of any preemptive rights and free of any pledge, security
interest, lien or other encumbrance.
3.4 TRANSFER TAXES.
The Company covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and charges that may be payable in
respect of
(a) the execution and delivery of this Agreement;
(b) the initial issuance and delivery of each Warrant
Certificate hereunder;
(b) the issuance and delivery of each Warrant Certificate
issued in exchange for any other Warrant Certificate pursuant to
Section 1.3 or Section 2.3 hereof; and
(c) the issuance and delivery of each share of Common
Stock issued upon the exercise of any Warrant.
The Company shall not, however, be required to
(i) pay any transfer tax that may be payable in respect
of the transfer or delivery of Warrant Certificates or the issuance or
delivery of certificates for shares of Common Stock in a name other
than that of the registered holder of the Warrant Certificate
evidencing any Warrant surrendered for exercise (any such tax being
payable by the holder of such Warrant Certificate at the time of
surrender) or
(ii) issue or deliver any such certificates referred to in
the foregoing clause (i) for shares of Common Stock upon the exercise
of any Warrant until any such tax referred to in the foregoing clause
(i) shall have been paid.
3.5 COMMON STOCK RECORD DATE.
Each Person in whose name any certificate for shares of Common Stock
is issued upon the exercise of Warrants shall for all purposes be deemed to
have become the holder of record of the Common Stock represented thereby on,
and such certificate shall be dated, the date upon which the Warrant
Certificate evidencing such Warrants was duly surrendered with an election to
purchase attached thereto duly executed and payment of the aggregate Purchase
Price (and any applicable transfer taxes, if payable by such Person) was made.
Prior to the exercise of the Warrants evidenced thereby, the holder of a
Warrant Certificate shall not be entitled to any rights of a shareholder in the
Company with respect to shares for which the Warrants shall be exercisable,
including, without limitation, any right to vote, to receive
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dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein or in any other applicable agreement between the
Company and such holder.
3.6 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Warrants:
(a) QUARTERLY STATEMENTS -- as soon as practicable after
the end of each quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly fiscal period of each such
fiscal year), and in any event within forty-five (45) days thereafter,
duplicate copies of
(i) a consolidated balance sheet of the Company
and the Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and cash
flows of the Company and the Subsidiaries for such quarter and
(in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the immediately preceding fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally (provided that such financial
statements need not contain footnotes), and certified as complete and
correct, subject to changes resulting from year-end adjustments, by a
Senior Financial Officer;
(b) ANNUAL STATEMENTS -- as soon as practicable after the
end of each fiscal year of the Company, and in any event within ninety
(90) days thereafter, duplicate copies of
(i) consolidated and consolidating balance sheets
of the Company and the Subsidiaries, as at the end of such
year, and
(ii) consolidated and consolidating statements of
income, shareholders' equity and cash flows of the Company and
the Subsidiaries for such year,
setting forth in each case in comparative form the figures for the
immediately preceding fiscal year, all in reasonable detail, prepared
in accordance with GAAP, and accompanied by
(A) in the case of such consolidated statements,
a report thereon of independent certified public accountants
of recognized national standing, which report shall express an
opinion in the form of the standard auditor's report under
generally accepted auditing standards which shall state that
such financial statements present fairly, in all material
respects, the financial position
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of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity
with GAAP, and that the examination of such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion
in the circumstances,
(B) a statement from such independent certified
public accountants that such consolidating statements were
prepared using the same work papers as were used in the
preparation of such consolidated statements, and
(C) a certification by a Senior Financial Officer
that such consolidated and consolidating statements are
complete and correct;
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, a copy of each financial statement, report (including,
without limitation, each Quarterly Report on Form 10-Q, each Annual
Report on Form 10-K and each Current Report on Form 8-K), notice or
proxy statement sent by the Company or any Subsidiary to shareholders
generally and of each regular or periodic report and any registration
statement, prospectus or written communication (other than transmittal
letters), and each amendment thereto, in respect thereof filed by the
Company or any Subsidiary with, or received by, such Person in
connection therewith from, the National Association of Securities
Dealers, any securities exchange or the SEC; and
(d) REQUESTED INFORMATION -- with reasonable promptness,
such other data and information as from time to time may be reasonably
requested, including, without limitation, information required by 17
C.F.R. Section 230.144A, as amended from time to time.
Each of the Initial Holders hereby agrees to the terms of
confidentiality set forth on Exhibit C.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK
ISSUABLE PER WARRANT
4.1 MECHANICAL ADJUSTMENTS.
The number of shares of Common Stock purchasable upon the exercise of
each Warrant, and the Purchase Price, shall be subject to adjustment as
follows:
(a) DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In the
event that the Company shall
(i) pay a dividend in shares of Common Stock or
make a distribution in shares of Common Stock,
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(ii) subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its
outstanding shares of Common Stock into a smaller number of
shares,
then the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision or
combination shall be adjusted to the price determined by multiplying
the Purchase Price in effect immediately prior to such event by the
quotient of:
(A) the total number of shares of Adjusted
Outstanding Common Stock immediately prior to such event;
divided by
(B) the total number of Adjusted Outstanding
Common Stock immediately after such event.
An adjustment made pursuant to this Section 4.1(a) shall become
effective on the effective date of such event.
(b) RIGHTS, OPTIONS, WARRANTS AND CONVERTIBLE OR
EXCHANGEABLE SECURITIES. In the event that the Company shall issue
any rights, options, warrants or convertible or exchangeable
Securities to all holders of its shares of Common Stock, without
charge to such holders, entitling such holders to subscribe for or
purchase shares of Common Stock at a price per share (or having a
conversion or exchange price per share, in the case of a Security
convertible or exchangeable into shares of Common Stock) that is (or
to amend or modify any provision of any thereof such that the
conversion, exchange or exercise price becomes) lower at the record
date in respect of which such rights, warrants, options or Securities
were issued or amended than the Reference Price on such record date,
then the Purchase Price in effect immediately after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by the quotient of:
(i) the sum of
(A) the number of shares of Adjusted
Outstanding Common Stock as of such record date, plus
(B) the quotient of
(I) the Aggregate Consideration
Receivable in respect of such rights,
options, warrants or convertible or
exchangeable Securities, divided by
(II) the Reference Price on such
record date;
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divided by
(ii) the sum of
(A) the number of shares of Adjusted
Outstanding Common Stock as of such record date, plus
(B) the number of additional shares of
Common Stock initially issuable pursuant to such
rights, options or warrants or into which such
convertible or exchangeable Securities are initially
convertible or exchangeable.
Such adjustment shall be made whenever such rights, options, or
warrants or convertible or exchangeable Securities are issued or
amended, and shall become effective on the date of issuance or
amendment of such rights, options, warrants or convertible or
exchangeable Securities.
(c) DISTRIBUTIONS OF PROPERTY. In the event that the
Company shall distribute to holders of shares of Common Stock
(including, without limitation, any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) shares of stock (other than Common Stock) or
evidences of its indebtedness or assets (excluding (x) cash dividends
paid out of retained earnings after November 19, 1998, (y) Regular
Cash Dividends paid after the date hereof and on or prior to November
19, 1998 and (z) dividends payable solely in additional shares of the
Common Stock) or rights, options or warrants or convertible or
exchangeable Securities (excluding those referred to in Section 4.1(b)
and Section 4.1(d) hereof), then in each case the Purchase Price in
effect immediately after the record date in respect of which such
stock, indebtedness, assets, rights, options, warrants or Securities
were issued shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by the quotient of:
(i) the result of
(A) the Reference Price on such record
date, minus
(B) the quotient of
(I) the then fair value (as
determined in good faith and on a reasonable
basis by the Board of Directors, whose
determination, if so made, shall be
conclusive) of the shares of stock or assets
or evidences of indebtedness so distributed
or of such rights, options or warrants, or of
such convertible or exchangeable Securities,
divided by
(II) the number of shares of
Adjusted Outstanding Common Stock as of the
record date;
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divided by
(ii) the Reference Price on such record date.
Such adjustment shall be made whenever any such distribution is made,
and shall become effective on the date of such distribution.
(d) ISSUANCES OF COMMON STOCK AND OTHER SECURITIES.
(i) In the event that the Company shall issue or
sell shares of Common Stock, or rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock (excluding
Excluded Securities, as defined in Section 4.1(d)(ii) hereof)
at a price per share of Common Stock lower than the Reference
Price in effect on the date (the "ADJUSTMENT DATE") of such
issuance or sale, then the Purchase Price in effect
immediately after the Adjustment Date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such Adjustment Date by the quotient of:
(A) the sum of
(I) the number of shares of
Adjusted Outstanding Common Stock outstanding
immediately prior to such issuance or sale,
plus
(II) the quotient of (1) the
Aggregate Consideration Receivable in respect
of such rights, options, warrants or
convertible or exchangeable Securities,
divided by (2) the Reference Price on the
Adjustment Date;
divided by
(B) the sum of
(I) the number of shares of
Adjusted Outstanding Common Stock outstanding
immediately prior to such issuance or sale,
plus
(II) the number of additional shares
of Common Stock so issued or sold (or
initially issuable pursuant to such rights,
options or warrants or into which such
convertible or exchangeable Securities are
initially convertible or exchangeable).
For purposes of this clause (i), "Adjustment Date"
may, in connection with certain consolidations and
mergers, have the meaning provided for in Section
4.1(e).
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(ii) "EXCLUDED SECURITIES" shall mean and include:
(A) shares of Common Stock, rights,
options, warrants or convertible or exchangeable
Securities issued in any of the transactions
described in Section 4.1(a), Section 4.1(b), Section
4.1(c) or Section 4.1(e) hereof and with respect to
which an adjustment to the Purchase Price has been
made in accordance with any of such Sections;
(B) shares of Common Stock issuable upon
exercise of the Warrants (including, without
limitation, the Additional Warrants);
(C) shares of Common Stock issuable upon
exercise of rights, options or warrants or conversion
or exchange of convertible or exchangeable Securities
issued or sold under circumstances which caused an
adjustment pursuant to this Section 4.1(d);
(D) rights to acquire shares of Common
Stock ,and shares of Common Stock issuable upon
exercise of such rights, issued to employees of the
Company and it Subsidiaries pursuant to any employee
stock purchase plan maintained by the Company or any
of its Subsidiaries, provided that any such rights
issued pursuant to any such plan and any shares of
Common Stock issuable upon the exercise thereof
which, in the aggregate, exceed, at the time of the
issuance thereof, two percent (2%) of the Fully
Diluted Outstanding Common Stock, determined at such
time, shall not constitute Excluded Securities;
(E) shares of Common Stock and/or
rights, options, warrants or convertible or
exchangeable Securities (and the shares of Common
Stock issuable upon the exercise of such rights,
options, warrants or convertible or exchangeable
Securities), provided that (1) such shares of Common
Stock and/or rights, options, warrants or convertible
or exchangeable Securities are issued in connection
with one or more private placements of equity
Securities of the Company effected on or prior to
July 15, 1996, (2) the total aggregate consideration
paid in cash in respect of such shares of Common
Stock and/or rights, options, warrants or convertible
or exchangeable Securities is not more than
$8,000,000, (3) all such shares of Common Stock
together with all shares of Common Stock issuable
upon the exercise of any of such rights, options,
warrants or convertible or exchangeable Securities
shall not, in the aggregate, exceed 12% of Fully
Diluted Outstanding Common Stock, determined as of
April 16, 1996, and (4) the sale of such shares of
Common Stock and/or rights, options, warrants or
convertible or exchangeable Securities is done on an
arm's-length basis and the setting of the exercise,
strike or conversion prices in respect of such
rights, options, warrants or convertible or
exchangeable Securities is done on an arm's-length
basis;
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(F) warrants issued on or prior to the
date hereof to any holder of the senior or
subordinated indebtedness, warrants issued on or
after the date hereof pursuant to provisions
comparable to Section 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof contained in any agreement
between the Company and such holders pursuant to
which such senior or subordinated indebtedness is
issued and shares of Common Stock issuable upon the
exercise of any such Warrants; and
(G) shares of Common Stock, rights,
options, warrants or convertible or exchangeable
Securities issued in any of the transactions
described in Sections 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof and with respect to which
additional Warrants have been issued in accordance
with any of such Sections.
(iii) In the case of rights, options, warrants or
convertible or exchangeable Securities, the "price per share
of Common Stock" referred to in Section 4.1(d)(i) hereof shall
be equal to the quotient of
(A) the Aggregate Consideration
Receivable in respect of such rights, options,
warrants or convertible or exchangeable Securities,
divided by
(B) the total number of shares of Common
Stock covered by such rights, options, warrants or
convertible or exchangeable Securities.
(iv) "AGGREGATE CONSIDERATION RECEIVABLE" shall
mean, in the case of a sale of shares of Common Stock, the
aggregate gross amount paid (without deduction for fees and
expenses, underwriting discounts or investment banking fees
associated therewith) in connection therewith and, in the case
of an issuance or sale of rights, options, warrants or
convertible or exchangeable Securities, the sum of
(A) the aggregate gross amount paid for
such rights, options, warrants or convertible or
exchangeable Securities, plus
(B) the aggregate consideration or
premiums stated in such rights, options, warrants or
convertible or exchangeable Securities to be payable
for the shares of Common Stock covered thereby.
(v) In the event that the Company shall issue and
sell shares of Common Stock, or rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock, for a
consideration consisting, in whole or in part, of Property
other than cash, then in determining the "price per share of
Common Stock" referred to in Section 4.1(d)(i) and Section
4.1(d)(iii) hereof and the "Aggregate Consideration
Receivable" referred to in Section 4.1(d)(i), Section
4.1(d)(iii) and Section 4.1(d)(iv) hereof, the Board of
Directors shall determine, in good faith
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and on a reasonable basis, the fair value of such Property,
and such determination, if so made, shall be binding upon all
holders of Warrants.
(e) CONSOLIDATION; MERGER; SALE OF THE COMPANY. In the
event that there shall be:
(i) any consolidation of the Company with, or
merger of the Company with or into, another corporation (other
than a merger in which the Company is the surviving
corporation and that does not result in any reclassification
or change of shares of Common Stock outstanding immediately
prior to such merger);
(ii) any sale or conveyance to another corporation
of the Property of the Company substantially as an entirety;
or
(iii) any reclassification of the Common Stock that
results in the issuance of other Securities of the Company;
then lawful provision shall be made as a part of the terms of such
transaction or otherwise so that the holders of Warrants shall
thereafter have the right to purchase the number and kind of shares of
stock, other Securities, cash, Property and rights receivable upon
such consolidation, merger, sale, conveyance or reclassification by a
holder of such number of shares of Common Stock as the holder of a
Warrant would have had the right to acquire upon the exercise of such
Warrant immediately prior to such consolidation, merger, sale or
conveyance, at the Purchase Price then in effect, provided that
nothing in this clause (e) shall entitle any holder of Warrants to
acquire or have the right to purchase any of the foregoing in
connection with any sale or conveyance referred to in clause (ii)
above if, with respect to such sale or conveyance, no holder of Common
Stock would have the right to acquire or purchase any of the foregoing
and none of the foregoing were in fact distributed to holders of
Common Stock and provided further that nothing in the foregoing
proviso in this clause (e) shall restrict the rights of the holders of
Warrants under Section 4.1(c). To the extent that
(A) the Company shall issue any shares of Common
Stock or rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for
or purchase shares of Common Stock (other than Excluded
Securities) in connection with any consolidation or merger of
the Company and
(B) such issuance of such shares, rights,
options, warrants or convertible or exchangeable Securities
would otherwise cause an adjustment under Section 4.1(d),
the Adjustment Date in respect of such adjustment, notwithstanding the
definition of such term, shall be the business day immediately
preceding the date of the public announcement by the Company of such
merger or consolidation or, if such merger or consolidation shall have
been generally known to the public prior to such announcement date,
the date on which the Required Warrantholders and the Company
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shall mutually agree upon in good faith and in accordance with the
essential intent and principles of this Section 4 of fairly protecting
the exercise rights of the holders of Warrants and, if no such date
can be so mutually agreed upon, the Company shall appoint (at its
expense) a firm of independent certified public accountants of
recognized national standing, which may not be the regular auditors of
the Company and which are reasonably acceptable to the Required
Warrantholders, which shall give their opinion as to the appropriate
date for such adjustment (after giving effect to the aforesaid intent
and principles of this Section 4); upon receipt of such opinion, the
Company will promptly mail a copy of such opinion to the holders of
Warrants and make the adjustments required under this Section 4 as of
the date stipulated therein. For purposes of determining the number
of shares subject to any Warrant with respect to any adjustments made
pursuant to this Section 4.1(e), the Company shall make the
adjustments provided for in Section 4.4 in respect of any issuances of
Employee Options or Director Options that occurred during the period
from the date of the last determination pursuant to such Section to
the date immediately prior to such consolidation, merger, sale or
conveyance.
(f) DE MINIMIS CHANGES IN PURCHASE PRICE. No adjustment
in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided that any adjustments that, at the time of the
calculation thereof, are less than one percent (1%) of the Purchase
Price at such time and by reason of this Section 4.1(f) are not
required to be made at such time shall be carried forward and added to
any subsequent adjustment or adjustments for purposes of determining
whether such subsequent adjustment or adjustments, as so supplemented,
exceed the one percent (1%) amount set forth in this Section 4.1(f)
and, if any such subsequent adjustment, as so supplemented or
otherwise, should exceed such one percent (1%) amount, all adjustments
deferred prior thereto and not previously made shall then be made. In
any case, all such adjustments being carried forward pursuant to this
Section 4.1(f) shall be given effect upon the exercise of any Warrants
by any holder thereof for purposes of determining the Purchase Price
thereof. All calculations shall be made to the nearest ten-thousandth
of a Dollar ($0.0001).
(g) ADJUSTMENT OF NUMBER OF SHARES ISSUABLE PURSUANT TO
WARRANTS. Upon each adjustment of the Purchase Price as a result of
the calculations made in this Section 4.1, each Warrant outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that
number of shares of Common Stock (calculated to the nearest
one-thousandth) obtained by multiplying the number of shares of Common
Stock covered by such Warrant immediately prior to such adjustment by
the quotient of:
(i) the Purchase Price in effect immediately
prior to such adjustment, divided by
(ii) the Purchase Price in effect immediately
after such adjustment.
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All Warrants originally issued by the Company hereunder shall,
subsequent to any adjustment made to the Purchase Price hereunder,
evidence the right to purchase, at the adjusted Purchase Price, the
number of shares of Common Stock determined to be purchasable from
time to time hereunder upon exercise of such Warrants, all subject to
further adjustment as provided herein. Each such adjustment shall be
valid and binding upon the Company and the holders of Warrants
irrespective of whether the Warrant Certificates theretofore and
thereafter issued express the Purchase Price per share of Common Stock
and the number of shares of Common Stock that were expressed upon the
initial Warrant Certificates issued hereunder.
(h) MISCELLANEOUS.
(i) Adjustments shall be made pursuant to this
Section 4.1 successively whenever any of the events referred
to in Section 4.1(a) through Section 4.1(e), inclusive, hereof
shall occur.
(ii) Shares of Common Stock owned by or held for
the account of the Company, including shares acquired by the
Company during any time any Warrants are outstanding, shall
not, for purposes of the adjustments set forth in this Section
4.1, be deemed outstanding.
(i) EXPIRATION OF RIGHTS, OPTIONS, ETC.
(i) Upon the expiration of any rights, options,
warrants or conversion or exchange privileges referred to
above in this Section 4.1 without the exercise thereof, the
Purchase Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be
readjusted and shall thereafter be such as such Purchase Price
and such number of shares of Common Stock would have been had
they been originally adjusted (or had the original adjustment
not been required, as the case may be) as if:
(A) the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually
issued or sold upon the exercise of such rights, options,
warrants or conversion or exchange privileges; and
(B) such shares of Common Stock, if any,
were issued or sold for the consideration actually received by
the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for
the issuance, sale or grant of all of such rights, options,
warrants or conversion or exchange privileges whether or not
exercised;
provided that no such readjustment shall have the effect of increasing
the Purchase Price by an amount in excess of the amount of the
reduction initially made in respect of the issuance, sale, or grant of
such rights, options, warrants or conversion or exchange privileges.
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(ii) In the event that during any calendar quarter
after the date hereof, any Employee Option, Director Option or
portion thereof expires without the exercise thereof and the
issuance of any such Employee Option or Director Option had
resulted in the issuance of Additional Warrants pursuant to
Section 4.4(a) hereof, the number of shares of Common Stock
purchasable upon the exercise of the Additional Warrants shall
be reduced as of the first day of the next succeeding calendar
quarter by the number of shares of Common Stock subject to
such terminated or expired Employee Option, Director Option or
portion thereof.
(j) OTHER SECURITIES. In the event that at any time, as
a result of an adjustment made pursuant to this Section 4.1, each
holder of Warrants shall become entitled to purchase any Securities of
the Company other than shares of Common Stock, the number or amount of
such other Securities so purchasable and the Purchase Price of such
Securities shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions contained in Section 4.1(a) through Section 4.1(e),
inclusive, hereof, and all other relevant provisions of this Section
4.1, and the definitions used in this Section 4.1, that are applicable
to shares of Common Stock shall be applicable to such other
Securities.
(k) NOTICE OF ADJUSTMENT. Whenever the number of shares
of Common Stock issuable upon the exercise of Warrants is adjusted or
the Purchase Price in respect thereof is adjusted, as herein provided,
the Company shall promptly give to each holder of Warrants notice of
such adjustment or adjustments and shall promptly deliver to each
holder of Warrants a certificate of the Company's chief financial
officer setting forth:
(i) the number of shares of Common Stock issuable
upon the exercise of each Warrant and the Purchase Price of
such shares after such adjustment;
(ii) a brief statement of the facts requiring such
adjustment; and
(iii) the computation by which such adjustment was
made.
So long as any Warrant is outstanding and an adjustment in respect of
the number of shares issuable upon the exercise of Warrants or the
Purchase Price in respect thereof shall have occurred in any fiscal
year of the Company, within ninety (90) days of the end of such fiscal
year of the Company, the Company shall deliver to each holder of
Warrants a certificate of independent certified public accountants of
recognized national standing selected by the Company (which may be the
regular auditors of the Company) setting forth
(A) the number of shares of Common Stock issuable
upon the exercise of each Warrant and the Purchase Price of
such shares as of the end of such fiscal year,
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(B) a brief statement of the facts requiring each
such adjustment required to be made in such fiscal year and
(C) the computation by which each such adjustment
was made.
(l) NOTICE OF CERTAIN EVENTS. Whenever the Company shall
authorize any Notice Event, the Company shall, not less than thirty
(30) days prior to the record date with respect to such event, give to
each holder of Warrants, notice of such event setting forth any change
in the number of shares of Common Stock the Company estimates will be
issuable upon the exercise of such holder's Warrants, the estimated
Purchase Price of such shares after any adjustment required to be made
hereunder and a brief statement of the facts requiring such adjustment
and the computation by which the Company expects such adjustment will
be made. "NOTICE EVENT" shall mean any of the following:
(i) any event that would require an adjustment
pursuant to this Section 4.1;
(ii) any distribution of cash or other Property in
respect of Common Stock (including, without limitation, a cash
dividend payable out of retained earnings);
(iii) any consolidation, merger or sale, transfer
or other disposition of all or substantially all of the
Property of the Company, provided that, if as a result of the
circumstances concerning such consolidation, merger, sale,
transfer or other disposition, it shall be impossible for the
Company to give the thirty (30) days' prior notice referred to
above, the Company shall give such notice as far in advance of
the record date in respect of such consolidation, merger,
sale, transfer or other disposition as reasonably feasible
and, in any case, no later than two (2) business days prior to
such record date; and
(iv) the liquidation, dissolution or winding up of
the Company.
The Company shall, not less than thirty (30) days prior to the
issuance of any Preferred Stock, give to each holder of Warrants
notice of such issuance setting forth any change in the number of
shares of Common Stock the Company estimates will be issuable upon the
exercise of such holder's Warrants, the estimated Purchase Price of
such shares after any adjustment required to be made hereunder and a
brief statement of the facts requiring such adjustment and the
computation by which the Company expects such adjustment will be made.
4.2 FRACTIONAL SHARES.
The Company shall not be required to issue fractional shares of Common
Stock upon the exercise of any Warrant. Upon the exercise of any Warrant,
there shall be paid to the holder thereof, in lieu of any fractional share of
Common Stock resulting therefrom, an amount of cash equal to the product of:
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(a) the fractional amount of such share; multiplied by
(b) the Market Price with respect to the Common Stock
determined as of the date of exercise of such Warrant.
4.3 SPECIAL AGREEMENTS OF THE COMPANY.
The Company covenants and agrees that:
(a) The Company shall not, by amendment to the
Certificate of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issuance or sale of
Securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Company, but shall at all times in good
faith assist in the carrying out of all the provisions of this Section
4 and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the holders of the
Warrant Certificates against dilution or other impairment.
(b) Before taking any action that would result in an
adjustment to the then current Purchase Price to a price that would be
below the then current par value of Common Stock issuable upon
exercise of any Warrant, the Company will take or cause to be taken
any and all necessary corporate or other action that may be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon payment of such Purchase
Price as so adjusted.
4.4 ISSUANCE OF ADDITIONAL WARRANTS.
(a) GRANT OF EMPLOYEE OPTIONS AND DIRECTOR OPTIONS. In
the event that, during any calendar quarter after August 20, 1997:
(i) Employee Options (other than Employee Options
issued in a transaction described in Section 4.1(d) hereof)
are issued and the aggregate number of such Employee Options
plus all other Employee Options issued on or prior to the date
of such issuance, other than Terminated Employee Options,
exceeds the then effective Employee Option Threshold; or
(ii) Director Options (other than Director Options
issued in a transaction described in Section 4.1(d) hereof)
are issued and the aggregate number of such Director Options
plus all other Director Options issued on or prior to the date
of such issuance, other than Terminated Director Options,
exceeds the Director Option Threshold;
then the Company shall, as of the first day of the next succeeding
calendar quarter, issue Additional Warrants to the holders of the
Warrants on a pro rata basis covering that number of shares equal to
the product of the Dilution Percentage multiplied by the number of the
Employee Options or Director Options, as the case may be, issued
during such period (or, with respect to the first calendar quarter in
which the number
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of Employee Options or Director Options issued during such quarter
plus the aggregate number of Employee Options and Director Options, as
the case may be, issued on or prior to the date of such issuance other
than Terminated Employee Options or Terminated Director Options, as
the case may be, exceeds the then effective Employee Option Threshold
or the Director Option Threshold, as the case may be, the amount such
excess).
(b) ISSUANCES IN CONNECTION WITH CONVERSION OF SENIOR
DEBT. In the event that, on or after August 20, 1997:
(i) all or any portion of the principal amount of
the Senior Debt is converted into shares of Common Stock, or
Securities convertible into or exchangeable for shares of
Common Stock; and
(ii) the Post-Conversion Market Price per share of
Common Stock following such conversion is less than the
Measurement Price per share of Common Stock prior to such
conversion;
the Company shall issue Additional Warrants to the holders of the
Warrants on a pro rata basis covering that number of shares equal to:
(A) the product of:
(1) the difference between the
Post-Conversion Market Price per share of Common
Stock and the Measurement Price per share of Common
Stock; multiplied by
(2) the total number of shares of Common
Stock issuable upon exercise of the Warrants held by
such holders immediately prior to such issuance;
divided by
(B) the Post-Conversion Market Price per share of
Common Stock;
provided, however, that in no event shall the number of Warrants
issued pursuant to this Section 4.4(b) as a result of any single
issuance of shares of Common Stock, or Securities convertible into or
exchangeable for shares of Common Stock to the holders of the Senior
Debt exceed the product of:
(y) the aggregate number of shares of Common
Stock issued or issuable pursuant to such convertible or
exchangeable Securities to the holders of the Senior Debt
Warrants with respect to such single issuance; multiplied by
(z) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants
outstanding immediately prior to such
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issuance and the denominator of which is the Fully Diluted
Outstanding Common Stock;
and provided further that no Warrants shall be issued pursuant to this
provision in connection with any transaction in which both the holders
of the Senior Debt convert all or any portion of the aggregate
principal amount of the Senior Debt into shares of Common Stock, or
Securities convertible into or exchangeable for shares of Common
Stock, and the holders of the Warrants convert all or a portion of the
aggregate principal amount of indebtedness then outstanding under the
Notes into shares of Common Stock or Securities convertible into or
exchangeable for shares of Common Stock. The Initial Purchase Price
of such Warrants shall be the Post-Conversion Market Price per share.
(c) ISSUANCE OF OTHER SECURITIES TO HOLDERS OF SENIOR
DEBT. In the event that, on or after August 20, 1997, rights, options
or warrants containing the right to subscribe for or purchase shares
of Common Stock are issued to the holders of the Senior Debt Warrants
(other than in a transaction described in Section 4.1(d) hereof), the
Company shall issue Additional Warrants to the holders of the Warrants
on a pro rata basis covering that number of shares equal to the
product of:
(i) the aggregate number of shares of Common
Stock underlying the rights, options or warrants issued to the
holders of the Senior Debt Warrants; multiplied by
(ii) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants
outstanding immediately prior to such issuance and the
denominator of which is the Fully Diluted Outstanding Common
Stock;
and provided further that no Warrants shall be issued pursuant to this
provision in connection with any transaction in which both the holders
of the Senior Debt Warrants and the holders of the Warrants are issued
shares of Common Stock or rights, options or warrants containing the
right to subscribe for or purchase shares of Common Stock pursuant to
a negotiated transaction as opposed to pursuant to this Section
4.4(c). The Initial Purchase Price of such Warrants shall be the per
share exercise price of the rights, options or warrants in respect of
which such Additional Warrants are being issued.
(d) EXCLUDED ISSUANCES OF SECURITIES TO HOLDERS OF SENIOR
DEBT WARRANTS. Notwithstanding the foregoing, no Warrants shall be
issued pursuant to Sections 4.4(a), 4.4(b) or 4.4(c) hereof as result
of any issuance of additional Warrants to the holders of the Senior
Debt Warrants pursuant to provisions comparable to Section 4.4(a),
Section 4.4(b) or Section 4.4(c) hereof contained in any agreement
between the Company and such holders pursuant to which such Senior
Debt Warrants are issued.
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5. INTERPRETATION OF THIS AGREEMENT
5.1 TERMS DEFINED.
ADDITIONAL WARRANTS -- means any additional Warrants issued
pursuant to the terms of Section 4.4 hereof.
ADJUSTED OUTSTANDING COMMON STOCK -- means, at any time, the
number of shares of Common Stock outstanding at such time (excluding
all shares constituting "treasury stock" and all shares held or
beneficially owned by a Subsidiary) together with the number of shares
of additional Common Stock that would be outstanding at such time
assuming:
(a) the conversion immediately prior to such time
of all then outstanding Securities that are convertible into
shares of Common Stock or that are issuable upon exercise of
any warrants, options and other rights, whether or not the
conditions for such conversion or exercise then exist,
provided that no such Securities shall be included in this
clause (a) unless such Securities were issued and outstanding
on the date hereof or are derived through transfers and/or
exchanges from Securities that were issued and outstanding on
the date hereof; and
(b) the exercise immediately prior to such time
of all then outstanding warrants, options and similar rights
to acquire shares of Common Stock (including, without
limitation, the Warrants), whether or not the conditions for
such exercise then exist, provided that no such warrants,
options and similar rights shall be included in this clause
(b) unless they were issued and outstanding on the date hereof
or are derived through transfers and/or exchanges from
Securities that were issued and outstanding on the date
hereof.
ADJUSTMENT DATE -- Section 4.1(d)(i) hereof.
AGGREGATE CONSIDERATION RECEIVABLE -- Section 4.1(d)(iv) hereof.
AGREEMENT -- introductory paragraph hereof.
AFFILIATE -- means, at any time, a Person (other than a Subsidiary):
(a) that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Company;
(b) that beneficially owns or holds five percent (5%) or
more of any class of the voting capital stock of the Company;
(c) five percent (5%) or more of the voting capital stock
(or in the case of a Person that is not a corporation, five percent
(5%) or more of the equity interest) of which is beneficially owned or
held by the Company or any Subsidiary; or
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(d) that is an officer or director (or a member of the
immediate family of an officer or director) of the Company or any
Subsidiary;
at such time.
As used in this definition,
"control" -- means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
APPRAISER -- means and includes one or more nationally recognized
investment banking firms or appraisers that shall be experienced in evaluating
companies in the same or similar lines of business as the Company and the
Subsidiaries.
AVERAGE CLOSING BID PRICE -- means, with respect to any period and any
class of Common Stock, the per share price of such class determined as follows:
(a) the average daily closing bid prices of such class of
Common Stock on each trading day during such period, as officially
reported on the principal national securities exchange on which such
class of Common Stock is then listed or admitted to trading; or
(b) if such class of Common Stock is not then listed or
admitted to trading on any national securities exchange, the average
of the last reported bid prices for each trading day during such
period of such class of Common Stock.
BOARD OF DIRECTORS -- means, at any time, the board of directors of
the Company or any committee thereof that, in the instance, shall have the
lawful power to exercise the power and authority of such board of directors.
CERTIFICATE OF INCORPORATION -- means the restated certificate of
incorporation of the Company, as may be amended by the Company from time to
time after the Effective Date.
CLOSING BID PRICE - means, with respect to any date and any class of
Common Stock, the per share price determined as follows:
(a) the closing bid prices on such date, as officially
reported on the principal national securities exchange on which such
class of Common Stock is then listed or admitted to trading; or
(b) if such class of Common Stock is not then listed or
admitted to trading on any national securities exchange, the last
reported bid price of such class of Common Stock on such date.
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COMMON STOCK -- means:
(a) on the date hereof, the Company's $0.001 par value
capital stock designated as "Common Stock"; and
(b) on any other date, any capital stock into which such
"Common Stock" shall have been changed or any capital stock resulting
from any reclassification of such "Common Stock", and all other
capital 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 of any shares thereof entitled to preference.
COMPANY -- introductory paragraph hereof.
DILUTION PERCENTAGE -- means the percentage interest in the
fully-diluted equity of the Company represented by all Warrants on August 21,
1997; provided however, that in the event that any of the Warrants are
exercised after the date hereof, the Dilution Percentage shall be reduced by
multiplying the then-effective Dilution Percentage by a fraction, the numerator
of which is the number of Warrants remaining immediately following such
exercise and the denominator of which is the number of Warrants outstanding
immediately prior to such exercise.
DIRECTOR OPTIONS -- means rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for or purchase
shares of Common Stock issued to any directors of the Company or any of its
Subsidiaries who were members of the Board of Directors of the Company or any
of its Subsidiaries as of the date hereof; provided, however, that:
(a) rights, warrants, options or convertible or
exchangeable Securities purchased from the Company to acquire shares
of the Common Stock in a bona fide arm's-length transaction for
consideration at least equal to the Reference Price;
(b) any rights, options, warrants or convertible or
exchangeable securities purchased from Persons other than the Company
or its Subsidiaries to acquire shares of Common Stock; and
(c) any shares of the Series B Preferred Stock held by
any employees, officers or directors of the Company or any of its
Subsidiaries on the date hereof;
shall not constitute Director Options.
DIRECTOR OPTION THRESHOLD -- means 1,460,424 shares, as such number
may be adjusted from time to time to reflect any subdivision or combination of
shares of Common Stock.
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EFFECTIVE DATE -- means the date of the first issuance of any Warrants
pursuant to this Agreement.
EMPLOYEE OPTIONS -- means rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for or purchase
shares of Common Stock issued to any employees, officers or directors of
Company or any of its Subsidiaries, including, without limitation, Employee
Options issued to Xxxxxxx Xxxxxxx as consideration for his services as
President and Chief Executive Officer of the Company; provided, however, that:
(a) rights, warrants, options or convertible or
exchangeable Securities purchased from the Company to acquire shares
of Common Stock in a bona fide arm's-length transaction for
consideration at least equal to the Reference Price;
(b) any rights, options, warrants or convertible or
exchangeable securities acquired from Persons other than the Company
or its Subsidiaries to acquire shares of Common Stock; and
(c) any shares of the Series B Preferred Stock held by
any employees, officers or directors of the Company or any of its
Subsidiaries on the date hereof;
shall not constitute Employee Options.
EMPLOYEE OPTION THRESHOLD -- means 7,302,121 shares, as such number
may be adjusted from time to time to reflect any subdivision or combination of
shares of Common Stock; provided, however, that in the event that Additional
Warrants are issued pursuant to Section 4.4(a) during any calendar quarter
after the date hereof, the Employee Option Threshold shall be increased by the
number of Director Options issued during the immediately preceding calendar
quarter (or, with respect to the first calendar quarter during which the number
of Director Options exceeds the Director Option Threshold, the amount of such
excess).
EXCLUDED SECURITIES -- Section 4.1(d)(ii) hereof.
FAIR MARKET SHARE PRICE -- means, at any time, the sale value of a
single share of Common Stock, as determined by an Appraiser in accordance with
the provisions of Exhibit B attached hereto.
FULLY DILUTED OUTSTANDING COMMON STOCK -- means, at any time, the
number of shares of Common Stock outstanding at such time (excluding all shares
constituting "treasury stock" and all shares held or beneficially owned by a
Subsidiary) together with the number of shares of additional Common Stock that
would be outstanding at such time assuming:
(a) the conversion immediately prior to such time of all
Securities convertible into shares of Common Stock outstanding at such
time or issuable upon exercise of any warrants, options and other
rights outstanding at such time, whether or not the conditions for
such conversion or exercise then exist; and
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(b) the exercise immediately prior to such time of all
then outstanding warrants, options and similar rights to acquire
shares of Common Stock (including, without limitation, the Warrants),
whether or not the conditions for such exercise then exist.
INDEPENDENT INVESTOR -- means a corporation, limited liability or
other company that is neither an Affiliate nor a Subsidiary.
INITIAL HOLDER -- introductory paragraph hereof.
INITIAL PURCHASE PRICE -- means:
(a) with respect to the Warrants issued on the date
hereof, Fifty-Nine Cents ($0.59) per share;
(b) with respect to any Warrants issued pursuant to
Section 4.4(a), the Average Closing Bid Price of a share of Common
Stock during the calendar quarter in respect of which the adjustment
is being made;
(c) with respect to any Warrants issued pursuant to
Section 4.4(b), the Post-Conversion Market Price per share; and
(d) with respect to any Warrants issued pursuant to
Section 4.4(c) hereof, the per share exercise price of the rights,
options or warrants in respect of which the Additional Warrants are
being issued.
MARKET PRICE -- means, with respect to any date and any class of
Common Stock, the per share price of such class equal to the product of (a)
ninety-five percent (95%) times (b) the average of the daily Closing Prices of
Common Stock for fifteen (15) consecutive trading days commencing twenty (20)
trading days before such date, provided that, if the Closing Prices referred to
in clause (b) are not then available for such class of Common Stock in order to
make the determination in said clause (b), "Market Price" shall mean the Fair
Market Share Price.
As used in this definition,
Closing Price -- means, with respect to any date and any class
of Common Stock, the per share price of such class determined as
follows:
(a) the last sale price, regular way, on such
date or, if no such sale takes place on such date, the average
of the closing bid and asked prices on such date, in each case
as officially reported on the principal national securities
exchange on which such class of Common Stock is then listed or
admitted to trading; or
(b) if such class of Common Stock is not then
listed or admitted to trading on any national securities
exchange, but is designated as a national
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market system security by the National Association of
Securities Dealers, the last trading price of such class of
Common Stock on such date, or if there shall have been no
trading on such date or if such class of Common Stock is not
so designated, the average of the reported closing bid and
asked prices on such date as shown by the NASDAQ.
MEASUREMENT PRICE - means, with respect to any date and any class of
Common Stock, the average of the daily Closing Bid Prices of such class of
Common Stock for five (5) consecutive trading days prior to the public
announcement of any conversion of any Senior Debt; provided, however, that the
date on which such public announcement is made shall not be considered a
trading day.
NASDAQ -- means the National Association of Securities Dealers
Automated Quotation System.
NOTE PURCHASE AGREEMENTS -- Recital paragraph B hereof.
NOTES -- Recital paragraph B hereof.
NOTICE EVENT -- Section 4.1(l) hereof.
PERSON -- means an individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
POST-CONVERSION MARKET PRICE - means, with respect to any date and any
class of Common Stock, the average of the daily Closing Bid Prices of such
class of Common Stock for five (5) consecutive trading days after the filing of
a Current Report on Form 8-K with respect to any conversion of any Senior Debt;
provided, however, that the date on which such Current Report on Form 8-K is
filed shall not be considered a trading day.
PREFERRED STOCK -- means the class of capital stock of the Company
designated as "Preferred Stock," having a par value $.001 per share, and
enjoying the rights and preferences set forth in, and subject to the
restrictions of, the Certificate of Incorporation as in effect on November 19,
1993.
PROPERTY -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
PURCHASE PRICE -- means, prior to any adjustment pursuant to Section
4.1 hereof, the Initial Purchase Price and thereafter, the Initial Purchase
Price as adjusted and readjusted from time to time.
REFERENCE PRICE -- means, in respect of any date, the Market Price of
one share of Common Stock as of such date.
REGULAR CASH DIVIDENDS -- means cash dividends paid by the Company out
of its retained earnings, provided that any such cash dividends paid during any
fiscal year of the
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Company shall be deemed to constitute Regular Cash Dividends to the extent, and
only to the extent, that immediately after giving effect to the payment of such
cash dividends the aggregate amount of all cash dividends paid by the Company
out of its retained earnings during such fiscal year does not exceed five
percent (5%) of the product of (a) the Market Price determined as of the record
date in respect of such payment multiplied by (b) the aggregate number of
shares of Common Stock outstanding as of such record date (after assuming that
all then outstanding Warrants had been exercised).
REQUIRED WARRANTHOLDERS -- means, at any time, any holder or holders
(other than the Company, any Subsidiary or any Affiliate) then holding more
than fifty percent (50%) of the Warrants (excluding any Warrants directly or
indirectly held by the Company or any Subsidiary or Affiliate) then
outstanding.
SEC -- means, at any time, the Securities and Exchange Commission or
any other federal agency at such time administering the Securities Act.
SECURITIES ACT -- means the Securities Act of 1933, as amended.
SECURITY -- means "security" as defined in section 2(1) of the
Securities Act.
SENIOR DEBT -- has the meaning set forth in the Note Purchase
Agreement.
SENIOR DEBT WARRANTS -- means all warrants initially issued to the
holders of the Senior Debt and any additional warrants issued pursuant to any
agreement between the Company and the holders of the Senior Debt pursuant to
which such warrants were issued.
SENIOR FINANCIAL OFFICER -- means the chief financial officer, the
principal accounting officer, the controller or the treasurer of the Company.
SERIES A NOTES -- Recital paragraph B hereof.
SERIES B NOTES -- Recital paragraph B hereof.
SERIES B PREFERRED STOCK -- means the Series B Preferred Stock of the
Company as provided for in its certificate of incorporation.
SOP -- means the Company's 1990 Stock Option Plan (as amended from
time to time).
SUBSIDIARY -- means, at any time, any corporation more than fifty
percent (50%) of the total combined voting power of all classes of the voting
capital stock of which shall, at the time as of which any determination is
being made, be owned by the Company either directly or indirectly through any
one or more Subsidiaries.
TERMINATED DIRECTOR OPTIONS -- means any Director Options issued on or
prior to the date hereof that have been exercised or have terminated or expired
prior to the date hereof.
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33
TERMINATED EMPLOYEE OPTIONS -- means any Employee Options issued on or
prior to the date hereof that have been exercised or have terminated or expired
prior to the date hereof.
TERMINATION DATE -- means the earlier of (a) May 19, 2002 and (b) the
satisfaction of the conditions set forth in Section 4.1(e) of the Note Purchase
Agreements.
WARRANTS -- all Warrants issued under this Agreement and any Warrant
issued after the date hereof, including, without limitation, all Additional
Warrants.
WARRANT CERTIFICATE -- Section 1.1 hereof.
5.2 DIRECTLY OR INDIRECTLY.
Where any provision herein refers to action to be taken by any Person,
or that such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any partnership in which such Person
is a general partner.
5.3 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.
(a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The
titles of the Sections and the Table of Contents appear as a matter of
convenience only, do not constitute a part hereof and shall not affect
the construction hereof. The words "herein," "hereof," "hereunder"
and "hereto" refer to this Agreement as a whole and not to any
particular Section or other subdivision. Unless otherwise specified,
references to Sections are to Sections of this Agreement, references
to Annexes are to Annexes to this Agreement and references to Exhibits
are to Exhibits to this Agreement.
(b) CONSTRUCTION. Each covenant contained herein shall
be construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance
with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with one or more other
covenants.
5.4 GOVERNING LAW.
THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
6. MISCELLANEOUS
6.1 COMMUNICATIONS.
(a) METHOD; ADDRESS. All communications hereunder or
under the Warrants shall be in writing, shall be hand delivered,
deposited into the United States mail (registered or certified mail),
postage prepaid, or sent by overnight courier of national or
international reputation, and shall be addressed,
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34
(i) if to the Company,
The Cerplex Group, Inc.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
(with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx
0000 XxxXxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Xx.,
Esq. Facsimile: (000) 000-0000
provided that the failure to provide
any such copy shall in no way affect
the validity or effectiveness of any
communication to the Company for
purposes of this Agreement)
or at such other address as the Company shall have furnished in
writing to all holders of the Warrants at the time outstanding; and
(ii) if to any of the holders of the Warrants:
(A) if such holders are the Initial
Holders, at their respective addresses set forth on
Annex 1, and further including any parties referred
to on such Annex 1 that are required to receive
notices in addition to such holders of the Warrants;
and
(B) if such holders are not the Initial
Holders, at their respective addresses set forth in
the register for the registration and transfer of
Warrants maintained pursuant to Section 1.2(b)
hereof;
or to any such party at such other address as such party may designate
by notice duly given in accordance with this Section 6.1 to the
Company (which other address shall be entered in such register).
(b) WHEN GIVEN. Any communication so addressed and
deposited in the United States mail, postage prepaid, by registered or
certified mail (in each case, with return receipt requested) shall be
deemed to be received on the third (3rd) succeeding business day after
the day of such deposit (not including the date of such deposit). Any
notice so addressed and otherwise delivered shall be deemed to be
received when actually received at the address of the addressee.
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35
6.2 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Initial Holder at the closing of the
issuance of Warrants (except the Warrant Certificates themselves) and (c)
financial statements, certificates and other information previously or
hereafter furnished to any Initial Holder or any other holder of Warrants, may
be reproduced by any holder of Warrants by any photographic, photostatic,
microfilm, micro-card, miniature photographic, digital or other similar process
and each holder of Warrants may destroy any original document so reproduced.
The Company agrees and stipulates that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by such holder of Warrants in the regular course of
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. Nothing in this Section
6.2 shall prohibit the Company or any holder of Warrants from contesting the
accuracy of any such reproduction.
6.3 SURVIVAL.
All warranties, representations, certifications and covenants made by
the Company herein or in any certificate or other instrument delivered by it or
on its behalf hereunder shall be considered to have been relied upon by the
Initial Holders and shall survive the delivery to the Initial Holders of the
Warrants regardless of any investigation made by the Initial Holders or on
their behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Company hereunder.
6.4 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof
are intended to be for the benefit of all holders, from time to time, of
Warrants, and shall be enforceable by any such holder, whether or not an
express assignment to such holder of rights hereunder shall have been made by
any successor or assign of any Initial Holder.
6.5 AMENDMENT AND WAIVER.
This Agreement may be amended, and the observance of any term of this
Agreement may be waived, with and only with the written consent of the Company
and the Required Warrantholders, provided that no change in, or waiver of
performance under, Section 1, Section 2, Section 4 or this Section 6.5 (or any
definition used in connection with any of such sections) shall be effected
without the written consent of all holders of Warrants.
6.6 RIGHT OF ACTION.
All rights of action in respect of the Warrants are vested in the
respective registered holders of the Warrant Certificates or, in lieu thereof,
the beneficial owner thereof (to the extent such beneficial owner is a party to
this Agreement or disclosed to the Company in
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36
writing), and any registered holder or beneficial owner (to the extent such
beneficial owner is a party to this Agreement or disclosed to the Company in
writing) of any Warrant Certificate, without the consent of the holder of any
other Warrant Certificate, may, in its own behalf and for its own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, its right to exercise
the Warrants evidenced by such Warrant Certificate in the manner provided in
such Warrant Certificate and in this Agreement.
6.7 EXPENSES.
The Company will promptly (and in any event within thirty (30) days of
receiving any statement or invoice therefor) pay all fees, expenses and costs
relating hereto, including, but not limited to:
(a) the cost of reproducing this Agreement and the
Warrants;
(b) the fees and disbursements of the special counsel to
the Initial Holders;
(c) the cost of delivering to the home office or
custodian bank of each Initial Holder, insured to such party's
satisfaction, the Warrant Certificates acquired by such party on the
Effective Date; and
(d) all fees, expenses, costs and disbursements
(including, without limitation, the reasonable fees and the
disbursements of the attorneys, accountants and other expert, legal
and financial advisers of each holder of Warrant Certificates)
relating to (i) the consideration, evaluation, analysis, assessment,
negotiation, preparation and/or execution of any amendments, waivers
or consents pursuant to the provisions hereof, whether in the ordinary
course of performance hereof or in connection with any controversy or
potential controversy hereunder or resulting from any work-out,
restructuring or other similar proceedings relating to such
performance and whether or not any such amendments, waivers or
consents are executed or otherwise consummated and/or (ii) the
enforcement of the rights of such holder hereunder.
6.8 FILINGS.
The Company shall, at its own expense, promptly execute and deliver,
or cause to be executed and delivered, to any holder of Warrants all
applications, certificates, instruments, registration statements, and all other
documents and papers that such holder of Warrants may reasonably request in
connection with the obtaining of any consent, approval, registration,
qualification, or authorization of any federal, state or local government (or
any agency or commission thereof) necessary or appropriate in connection with,
or for the effective exercise of, any Warrants then held by such holder.
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6.9 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of the
terms hereof and is a complete and exclusive statement of those terms.
6.10 TERM.
All unexercised Warrants will be void and not exercisable after 5:00
p.m. (Los Angeles, California time) on the Termination Date and the Warrant
Certificates in respect thereof shall after such time be deemed cancelled for
all purposes of this Agreement. Shares of Common Stock issuable upon the
exercise of a Warrant shall be issued after the Termination Date if such
Warrant is exercised, as provided in Section 2.1, on or prior to 5:00 p.m. (Los
Angeles, California time) on the Termination Date.
6.11 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument. This Agreement may be executed in one or more
counterparts and shall be effective when at least one counterpart shall have
been executed by each party hereto, and each set of counterparts which,
collectively, show execution by each party hereto shall constitute one
duplicate original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; NEXT PAGE IS SIGNATURE PAGE.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered by one of its duly authorized
officers or representatives.
THE CERPLEX GROUP, INC.
By___________________________________
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By___________________________________
Name:
Title:
XXXX XXXXXXX MUTUAL LIFE
INSURANCE COMPANY
By___________________________________
Name:
Title:
NORTH ATLANTIC SMALLER COMPANIES
INVESTMENT TRUST PLC
By___________________________________
Name:
Title:
[Signature page to the WARRANT AGREEMENT among THE CERPLEX GROUP, INC. and
the Initial Holders listed in Annex 1]
39
ANNEX 1
INFORMATION AS TO INITIAL HOLDERS
=======================================================================================
INITIAL HOLDER NAME THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
---------------------------------------------------------------------------------------
Name in which to register Warrant The Northwestern Mutual Life Insurance Company
Certificate(s)
---------------------------------------------------------------------------------------
Warrant Certificate registration WR-1; 239,176 Warrants
number;
Number of Warrants (PPN for the Warrants: 15678@ 13 1)
---------------------------------------------------------------------------------------
Address for notices The Northwestern Mutual Life Insurance Company
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Securities Department
=======================================================================================
Annex 1-1
40
============================================================================================
INITIAL HOLDER NAME XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------------------
Name in which to register Warrant Xxxx Xxxxxxx Mutual Life Insurance Company
Certificate(s)
--------------------------------------------------------------------------------------------
Warrant Certificate registration WR-2; 86,972 Warrants
number; WR-3; 152,204 Warrants
Number of Warrants
(PPN for the Warrants: 15678@ 13 1)
--------------------------------------------------------------------------------------------
Address for notices Xxxx Xxxxxxx Mutual Life Insurance Company
Xxxx Xxxxxxx Place
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Bond and Corporate Finance Department T-57
Fax No.: (000) 000-0000
============================================================================================
Annex 1-2
41
=======================================================================================
INITIAL HOLDER NAME NORTH ATLANTIC SMALLER COMPANIES TRUST PLC
---------------------------------------------------------------------------------------
Name in which to register Warrant Bank of Scotland London Nominees Ltd.
Certificate(s)
---------------------------------------------------------------------------------------
Warrant Certificate registration WR-4; 21,744 Warrants
number;
Number of Warrants (PPN for the Warrants: 15678@ 13 1)
---------------------------------------------------------------------------------------
Address for notices North Atlantic Smaller Companies Trust PLC
c/o X.X. Xxxxxx & Co., Ltd.
00 Xxxx Xxxxx
Xxxxxx, Xxxxxxx XX0X0XX
Attention: Mr. Xxxxxxxxxxx Xxxxx
Facsimile: 011-44-171-233-1503
=======================================================================================
Annex 1-3
42
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN ANY
TRANSACTION UNLESS FIRST REGISTERED UNDER SUCH LAWS OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.
[THE HOLDER OF THIS WARRANT CERTIFICATE IS A [[NORTHWESTERN GROUP
HOLDER]][[XXXXXXX GROUP HOLDER]] FOR PURPOSES OF THAT CERTAIN REGISTRATION
RIGHTS AGREEMENT DATED NOVEMBER 19, 1993, AS AMENDED, AMONG THE CERPLEX GROUP,
INC. AND THE OTHER PARTIES THERETO.]
WARRANT CERTIFICATE
THE CERPLEX GROUP, INC.
No. WR-______ ____________ Warrants
Date: ____________ PPN: 15678@ 13 1
This WARRANT CERTIFICATE certifies that ________________________, or
registered assigns, is the registered holder of ________________________
(____________) Warrants. Each Warrant entitles the owner thereof to purchase,
at any time on or after August 20, 1998 and prior to 5:00 p.m. (Los Angeles,
California time) on the Termination Date (as such term is defined in the
Warrant Agreement referred to below), one fully paid and nonassessable share of
Common Stock (as such term is defined in the Warrant Agreement referred to
below) of THE CERPLEX GROUP, INC., a Delaware corporation (the "COMPANY"), at
the Initial Purchase Price of ___________________ per share of Common Stock
(the "PURCHASE PRICE") upon (i) presentation and surrender of this Warrant
Certificate with a form of election to purchase duly executed and (ii)
satisfaction of the Purchase Price in the manner set forth in the Warrant
Agreement. The number of shares of Common Stock that may be purchased upon
exercise of each Warrant, and the Purchase Price, are the number and the
Purchase Price as of the date hereof and are subject to adjustment under
certain circumstances as provided in the Warrant Agreement referred to below.
The Warrants are issued pursuant to the Warrant Agreement, dated as of
August 20, 1997 (as amended from time to time, the "WARRANT AGREEMENT"), among
the Company and certain initial holders named therein, and are subject to all
of the terms, provisions and conditions thereof, which Warrant Agreement is
hereby incorporated herein by reference and made a part hereof and to which
Warrant Agreement reference is hereby made for a full description of the
rights, obligations, duties and immunities of the Company and the holders
Exhibit A-1
43
of the Warrant Certificates. Capitalized terms used, but not defined, herein
have the meanings assigned to them in the Warrant Agreement.
This Warrant Certificate shall be exercisable, at the election of the
holder, either as an entirety or in part from time to time. If this Warrant
Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Warrant Certificate or Warrant
Certificates for the number of Warrants not exercised. This Warrant
Certificate, with or without other Warrant Certificates, upon surrender at the
office of the Company referred to in Section 1.2(b) of the Warrant Agreement,
may be exchanged for another Warrant Certificate or Warrant Certificates of
like tenor evidencing Warrants entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Warrants evidenced by the
Warrant Certificate or Warrant Certificates surrendered shall have entitled
such holder to purchase.
Except as expressly set forth in the Warrant Agreement, no holder of
this Warrant Certificate shall be entitled to any right to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other Securities of the Company that may at any time be issued upon the
exercise hereof, nor shall anything contained in the Warrant Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a holder of a share of Common Stock in the Company or any right to
vote upon any matter submitted to holders of shares of Common Stock at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
Securities, change of par value, consolidation, merger, conveyance, or
otherwise) or, except as provided in the Warrant Agreement, to receive notice
of meetings, or to receive dividends or subscription rights, or otherwise,
until the Warrant or Warrants evidenced by this Warrant Certificate shall have
been exercised as provided in the Warrant Agreement.
[Other than with respect to the original issuance of the Warrants
pursuant to the Warrant Agreement, if the Warrant Certificate of the immediate
transferor of the holder of this Warrant Certificate bore the second paragraph
of the legend set forth above, this Warrant Certificate shall also bear such
second paragraph.]
Exhibit A-2
44
THIS WARRANT CERTIFICATE AND THE WARRANT AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
WITNESS the signature of a proper officer of the Company as of the
date first above written.
THE CERPLEX GROUP, INC..
By__________________________________
Name:
Title:
ATTEST:
_______________________________
[Assistant] Secretary
Exhibit A-3
45
[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED, _______________________________________ hereby
sells, assigns and transfers unto
____________________________________________________________________________
(Please print name and address of transferee.)
the accompanying Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint:
_____________________________________________________________________________
attorney in fact, to transfer the accompanying Warrant Certificate on the books
of the Company, with full power of substitution.
Dated: ____________________, ________.
________________________________
By _____________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or
any change whatsoever.
Exhibit A-4
46
[FORM OF ELECTION TO PURCHASE]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO EXERCISE ANY WARRANTS REPRESENTED BY THE WARRANT
CERTIFICATE)
To THE CERPLEX GROUP, INC.:
The undersigned hereby irrevocably elects to exercise
______________________________ Warrants represented by the accompanying Warrant
Certificate to purchase the shares of Common Stock issuable upon the exercise
of such Warrants and requests that certificates for such shares be issued in
the name of:
_______________________________________________________________________________
(Please print name and address.)
___________________________________________________________
(Please insert social security or other identifying number.)
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
______________________________________________________________________________
(Please print name and address.)
___________________________________________________________
(Please insert social security or other identifying number.)
Dated: __________________, ______.
________________________________
By______________________________
NOTICE
The signature to the foregoing Election to Purchase must correspond to
the name as written upon the face of the accompanying Warrant Certificate or
any prior assignment thereof in every particular, without alteration or
enlargement or any change whatsoever.
Exhibit A-5
47
EXHIBIT B
DETERMINATION OF FAIR MARKET SHARE PRICE.
(a) Within two (2) days of the happening of any event
requiring a determination of the Fair Market Share Price, the Company
shall give written notice thereof to each holder of Warrants (which
notice shall contain a description of such event).
(b) Within ten (10) days of the happening of each event
requiring a determination of the Fair Market Share Price, each of the
Required Warrantholders (as a group) and the Company shall designate
an Appraiser for purposes of determining the Fair Market Share Price
and shall notify the other party or parties of such designation
(provided that, if the Company and such holders so agree, they may
jointly designate a single Appraiser, in which event the determination
of the Fair Market Share Price of the single Appraiser so jointly
designated shall be binding upon both the Company and the holders of
Warrants for the purposes of the determination of the Fair Market
Share Price hereunder). Each Appraiser will take such evidence, make
such investigations and examine such documents as it shall in its
discretion determine to be necessary and advisable to make a
determination with respect to the Fair Market Share Price. A detailed
report from each Appraiser setting forth such Appraiser's
determination with respect to the Fair Market Share Price shall be
delivered to the Company and to each of the holders of Warrants as
soon as possible following such determination and, in any event, not
later than thirty (30) days following the happening of the event
requiring determination of the Fair Market Share Price.
(c) If either:
(i) the Company or such holders shall fail,
neglect or refuse to designate an Appraiser within the time
period set forth in clause (b) above; or
(ii) either of the two Appraisers so designated
shall fail to deliver its detailed report within the time
period set forth in said clause (b);
then, in each such case, the determination of the Fair Market Share
Price of the single Appraiser actually designated or the single
Appraiser actually delivering its detailed report, as the case may be,
shall be binding upon both the Company and the holders of Warrants for
the purposes of the determination of the Fair Market Share Price
hereunder.
(d) If the determinations of the Fair Market Share Price
by both such Appraisers do not differ by more than fifteen percent
(15%) of the lower of the two determinations, then the Fair Market
Share Price shall be the arithmetic average of those two
determinations.
Exhibit B-1
48
(e) If the determinations of the Fair Market Share Price
by both such Appraisers differ by more than fifteen percent (15%) of
the lower of the two determinations, then the parties shall promptly
direct the two Appraisers to consult with one another for the purpose
of jointly designating a third Appraiser, which designation shall be
made not later than ten (10) days following the delivery of the
determinations pursuant to clause (b) above. The third Appraiser
shall review the first two appraisals and shall make an independent
determination with respect to the Fair Market Share Price.
(i) In the event that the third Appraiser's
determination is equal to or greater than the greater
determination made by the first two Appraisers, the Fair
Market Share Price shall equal the higher of the
determinations of the first two Appraisers.
(ii) In the event that the third Appraiser's
determination is equal to or less than the lesser
determination made by the first two Appraisers, the Fair
Market Share Price shall equal the lesser of the
determinations of the first two Appraisers.
(iii) In the event that the third Appraiser's
determination is between those of the first two Appraisers,
the Fair Market Share Price shall equal the arithmetic average
of the determinations of all three Appraisers.
A detailed report from the third Appraiser setting forth such
Appraiser's determination with respect to the Fair Market Share Price
shall be delivered to the Company and to each of the holders of
Warrants as soon as possible following such determination and, in any
event, not later than thirty (30) days following the earlier of (A)
the delivery of the reports referred to in clause (b) above, and (B)
the first date upon which such reports are due to be delivered
pursuant to clause (b) above.
(f) The Company agrees to cooperate with each Appraiser
to the full extent necessary to permit determination of the Fair
Market Share Price.
(g) All fees and expenses incurred in connection with the
foregoing determination of the Fair Market Share Price (including any
and all fees and expenses of each Appraiser) shall be borne by the
Company. Any determination made in accordance with this definition
shall be effective for a period of ninety (90) days immediately
following such determination, unless there has been a material
development in the business of the Company and the Subsidiaries, in
which case there shall be a redetermination in accordance with the
provisions of this Exhibit.
Exhibit B-2
49
EXHIBIT C
CONFIDENTIALITY
With respect to all data and information that has been or in the
future is furnished to or obtained by any holder of Warrant Certificates in
connection with this Agreement (excluding, in any case, any such data and
information that was or is available to the public or was not or is not treated
as confidential by any one or more of the Company, the Subsidiaries or the
Affiliates), such holder will hold such data and information in confidence in
accordance with the customary practices and standards of confidentiality
generally employed by such holder in respect of similar data and information
obtained in connection with other comparable investment transactions of such
holder. Notwithstanding the foregoing, any such holder may disclose any data
and information furnished to or obtained by it in connection with this
Agreement:
(a) the disclosure of which is, in such holder's sole
good faith business and/or legal judgment, reasonably required in
connection with regulatory requirements (including, without
limitation, the requirements of the National Association of Insurance
Commissioners but excluding, in any case, delivery of periodic
financial statements and information to the National Association of
Insurance Commissioners, the Securities Valuation Office thereof or
any other agency thereof in connection with the rating, evaluation or
other regulatory treatment of the Warrants or the Notes) or other
legal requirements related to such holder's affairs, including,
without limitation, the disclosure of such data and information in
connection with or in response to (i) compliance with any law,
ordinance or governmental order, regulation, rule, policy, subpoena,
investigation or request, or (ii) any order, decree, judgment,
subpoena, notice of discovery or similar ruling, or pleading issued,
filed, served or purported on its face to be issued, filed or served
(A) by or under authority of any court, tribunal, arbitration board or
any governmental agency, commission, authority, board or similar
entity or (B) in connection with any proceeding (including, without
limitation, any proceeding to enforce the obligations of the Company
under this Agreement), cause or matter pending (or on its face
purported to be pending) before any court, tribunal, arbitration board
or any governmental agency, commission, authority, board or similar
entity;
(b) to any one or more of the employees, officers,
directors, agents, attorneys, accountants, professional consultants or
trustees of such holder (or of any subsidiary or affiliate of such
holder) who would have access to such data and information in the
normal course of the performance of such Person's duties for such
holder (or for such subsidiary or affiliate);
(c) to Xxxxx'x Investors Service, Inc., Standard & Poor's
Corporation or any other nationally recognized financial rating
service that is reviewing the credit rating of any holder of Warrant
Certificates or is rating or reviewing the rating of the Warrants or
the Common Stock issuable upon the exercise thereof; and
Exhibit C-1
50
(d) to any prospective purchaser, securities broker or
dealer or investment banker in connection with the resale or proposed
resale, in accordance with the terms hereof, of all or any portion of
the Warrants or Common Stock issuable upon the exercise thereof by
such holder.
In connection with any disclosure by any holder of Warrant Certificates under
clause (a) above, such holder will use reasonable efforts to notify the Company
of any such pending disclosure, provided that (x) such holder shall in no case
be liable to the Company for its failure to effect such notification, (y) the
failure to effect such notification shall not affect the ability of such holder
to make the disclosures contemplated under said clause (a) and (z) this
sentence shall not apply to the delivery of periodic financial statements and
information to the National Association of Insurance Commissioners, the
Securities Valuation Office thereof or any other agency thereof in connection
with the rating, evaluation or other regulatory treatment of the Warrants or
the Notes. In connection with any disclosure by any holder of Warrant
Certificates under clause (d) above, such holder will use reasonable efforts to
cause any prospective purchaser, securities broker or dealer or investment
banker referred to in said clause (d) to enter into a written confidentiality
agreement with the Company containing terms of confidentiality substantially
similar to the terms of confidentiality set forth in this Exhibit prior to
effecting such disclosure, provided that (yy) such holder shall in no case be
liable to the Company if such prospective purchaser, securities broker or
dealer or investment banker shall for any reason not enter into any such
confidentiality agreement with the Company and (zz) the failure of such
prospective purchaser, securities broker or dealer or investment banker to
enter into any such confidentiality agreement with the Company shall not affect
the ability of such holder to make the disclosures contemplated under said
clause (d). No holder of Warrant Certificates will be liable for the breach of
the provisions of this Exhibit or of any provision in any aforesaid
confidentiality agreement by any other holder of Warrant Certificates or by any
Person to which any confidential data or information shall be delivered in
accordance with the provisions of this Exhibit C.
Exhibit C-2
