WARRANT AGREEMENT (XXXXXXXX)
WARRANT AGREEMENT (the "Agreement") dated as of August 8, 1996 between
Xxxxxxxx Industries, a California corporation (the "Company"), and Wyle
Electronics, a California corporation (the "Venture Partner").
WHEREAS, the Company and the Venture Partner have entered into that
certain Limited Liability Company Agreement of Accord Contract Services, LLC of
even date herewith (the "LLC Agreement") establishing a joint venture (the "LLC
Venture") between the Company and the Venture Partner;
WHEREAS, the LLC Venture is intended to benefit the Company, the
Venture Partner and their respective shareholders by allowing the Company and
the Venture Partner to achieve, among other things, increased sales and reduced
operating costs, to improve efficiency in certain areas of their respective
businesses and to increase their respective capabilities in providing value
added materials management programs to their respective customers;
WHEREAS, the benefits expected to be derived by the Company and the
Venture Partner from the LLC Venture are based upon the unique characteristics
of the other party and each of the Company and the Venture Partner believes that
a material change in the ownership of the other party would significantly
disrupt the operation of the LLC Venture and jeopardize the value derived by the
respective parties therefrom;
WHEREAS, the Company wishes to provide a means to compensate the
Venture Partner in the event that certain events affecting the Company result in
a termination of the LLC Venture and therefore proposes to issue to the Venture
Partner, certain warrants (the "Warrants") to purchase shares of the Company's
common stock, having a par value of $1.00 per share (the "Common Stock") which
will become exercisable upon the occurrence of certain events, as hereinafter
described;
WHEREAS, the Venture Partner has also entered into a Warrant Agreement
of event date herewith (the "Venture Partner Warrant Agreement") pursuant to
which the Venture Partner has issued certain warrants to the Company on terms
substantially identical to the terms of the Warrants granted herein;
WHEREAS, the Company and the Venture Partner have entered into (i)
that certain Standstill Agreement of even date herewith (the "Standstill
Agreement") providing for certain limitations on the conduct of the Venture
Partner as a shareholder of the Company and (ii) that certain Registration
Rights Agreement of even date herewith (the "Registration Rights Agreement")
providing for certain registration rights with respect to the shares of Common
Stock issuable upon exercise of the Warrants (the "Warrant Shares");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. ISSUANCE OF WARRANTS. Concurrently with the execution
of this Agreement, the Company will issue and deliver to the Venture Partner a
certificate (the "Warrant Certificate") evidencing right to acquire 1,299,841
shares of the Company's Common Stock. Such
certificate shall be in registered form only and shall be in form set forth as
Exhibit A attached hereto. The Warrant Certificate shall be dated the date of
issuance by the Company.
SECTION 2. EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificate shall be signed on behalf of the Company by its Chairman of the
Board or its Chief Executive Officer, President or a Vice President. Each such
signature upon the Warrant Certificate may be in the form of a facsimile
signature of the present or any future Chairman of the Board, Chief Executive
Officer, President or Vice President, and may be imprinted or otherwise
reproduced on the Warrant Certificate and for that purpose the Company may adopt
and use the facsimile signature of any person who shall have been Chairman of
the Board, Chief Executive Officer, President or Vice President, notwithstanding
the fact that at the time the Warrant Certificate shall be delivered or disposed
of such person shall have ceased to hold such office. Each Warrant Certificate
shall also be manually signed on behalf of the Company by its Secretary or an
Assistant Secretary under its corporate seal. The seal of the Company may be in
the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificate.
SECTION 3. REGISTRATION. The Company shall number and register
the Warrant Certificates in a register as they are issued. The Company may deem
and treat the registered holder(s) of the Warrant Certificate(s) (the
"Holder(s)") as the absolute owner(s) thereof (notwithstanding any notation of
ownership or other writing thereon made by anyone) for all purposes and shall
not be affected by any notice to the contrary. The Warrants shall be registered
initially in the name of the Venture Partner.
SECTION 4. RESTRICTIONS ON TRANSFER; REGISTRATION OF TRANSFERS AND
EXCHANGES.
The Warrants (and any Warrant Shares issued upon the exercise of the
Warrants) shall not be transferable except in accordance with the terms of this
Agreement and the Standstill Agreement.
Prior to the commencement of the Exercise Period (as defined in
Section 5 below) the Warrants will not be transferable by the Venture Partner to
any person other than a wholly-owned subsidiary of the Venture Partner;
provided, however, that if, at any time prior to the commencement of the
Exercise Period, the Warrants are held by any person other than the Venture
Partner or a wholly-owned subsidiary of the Venture Partner, then the Warrants
will be deemed to have been transferred in contravention of the terms of this
Agreement and such Warrants shall be automatically cancelled and of no further
force or effect.
From and after the commencement of the Exercise Period, no transfer of
the Warrants or the Warrant Shares shall be made unless either (i) such transfer
is either made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act") or pursuant to Rule
144 promulgated thereunder (or any similar rule or regulation) or, (ii) prior to
any such transfer, the transferring Holder shall have delivered to the Company,
if so requested by the Company, an opinion of counsel reasonably satisfactory in
form and substance to the Company, to the effect that the Warrants or Warrant
Shares, as applicable, may be sold or otherwise transferred without registration
under the Securities Act. Upon original issuance thereof, and until such time
as the same shall have been registered under the Securities Act or sold pursuant
to Rule 144 promulgated thereunder (or any similar rule or regulation) each
Warrant Certificate and any certificates evidencing Warrant Shares shall bear
any legend required by the Securities Act or pursuant to the Standstill
Agreement, unless in the opinion of such counsel, such legend is no longer
required by the Securities Act or such legend required by the Standstill
Agreement is no longer required thereunder.
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Subject to the limitations set forth above, the Company shall from
time to time register the transfer of any outstanding Warrant Certificate in a
Warrant register to be maintained by the Company upon surrender thereof,
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company, duly executed by the registered Holder or Holders
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee(s) and the surrendered Warrant
Certificate shall be canceled and disposed of by the Company.
Any Warrant Certificate may be exchanged at the option of the
Holder(s) thereof, when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificate of like series and tenor and
representing in the aggregate a like number of Warrants. Warrant Certificates
surrendered for exchange shall be canceled and disposed of by the Company.
SECTION 5. WARRANTS; EXERCISE OF WARRANTS. Subject to the
conditions set forth in Section 6 below and the other terms of this Agreement,
each Holder shall have the right, which may be exercised at any time or from
time to time during the Exercise Period (as defined below) to receive from the
Company the number of fully paid and nonassessable Warrant Shares (and such
other consideration) as the Holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price then in effect for
such Warrant Shares. In the alternative, each Holder may exercise its right,
during the Exercise Period, to receive Warrant Shares on a net basis, such that,
without the exchange of any funds, the Holder receives that number of Warrant
Shares (and such other consideration) otherwise issuable (or payable) upon
exercise of its Warrants less that number of Warrant Shares having an aggregate
Current Market Value (as defined in Section 11, but based on the average Market
Price for the Common Stock for the twenty trading days ending on the day
immediately preceding the date on which the notice of exercise is delivered to
the Company) at the time of exercise equal to the aggregate Exercise Price that
would otherwise have been paid by the Holder for the Warrant Shares. Each
Warrant not exercised during the Exercise Period shall become void and all
rights thereunder and all rights in respect thereof under this Agreement shall
cease as of such time. No adjustments as to dividends will be made upon
exercise of the Warrants, except as otherwise expressly provided herein.
The Warrants shall be exercisable during a period (the "Exercise
Period") which shall commence upon the Exercise Date (as defined below) and
expire, at 5:00 p.m., Los Angeles time, on the first anniversary of the
commencement of such Exercise Period.
"EXERCISE DATE" shall mean such time as each of the following events
shall have occurred (i) the occurrence of an Exercise Event (as defined below);
and (ii) the termination of the LLC Venture pursuant to Article 11 of the LLC
Agreement.
"EXERCISE EVENT" shall mean the occurrence of any of the following
events with respect to the Company:
(1) The approval by the shareholders of the Company of the
dissolution or liquidation of the Company;
(2) The consummation by any person (other than the Company or
the Venture Partner) of a tender offer or exchange offer to purchase any
shares of the Company's Common Stock such that, upon the consummation of
such offer, such person owns or controls 20% or more of the then
outstanding Common Stock of the Company;
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(3) The execution by the Company or any subsidiary of the
Company of an agreement with any person (other than the Venture Partner) to
(i) merge, consolidate or otherwise reorganize with or into one or more
entities that are not subsidiaries of the Company, as a result of which
less than 50% of the outstanding voting securities of the surviving or
resulting entity immediately after the consummation of such transaction
are, or will be, owned by shareholders of the Company immediately before
such reorganization (assuming for purposes of such determination that there
is no change in the record ownership of the Company's securities from the
record date for such approval until such transaction is consummated and
that such record holders hold no securities of the other party or parties
to such a transaction), (ii) sell, lease or otherwise dispose of assets of
the Company or its subsidiaries representing 50% or more of the
consolidated assets of the Company and its subsidiaries or (iii) issue,
sell or otherwise dispose of (including by way of merger, consolidation,
share exchange or any similar transaction) securities representing 50% or
more of the voting power of the Company;
(4) The acquisition by any person (other than the Venture
Partner) of beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act) or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the then outstanding Common Stock of the
Company; or
(5) The failure at any time, during any period of two
consecutive years, of individuals who at the beginning of such period
constituted the Board of Directors of the Company, for any reason, to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of each new Board
member was approved by a vote of at least three-fourths of the Board
members then still in office who were Board members at the beginning of
such period (including for these purposes, new members whose election or
nomination was so approved).
The price at which each Warrant shall be exercisable shall initially
be $27.85 (representing an amount per share equal to the average Market Price
per share for the 30 trading days ending on August 5, 1996). Such initial
exercise price of $27.85, as such amount may be adjusted from time to time in
accordance with the provisions of Section 11 hereof, is referred to herein as
the "Exercise Price."
A Warrant may be exercised upon surrender to the Company at its office
address set forth in Section 12 hereof) of the Warrant Certificate or
Certificate to be exercised with the form of election to purchase attached
thereto duly filled in and signed, and upon payment to the Company of the
Exercise Price for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of immediately available funds to an account
designated by the Company or in the manner provided in the first paragraph of
this Section 5.
Subject to the provisions of Section 6 and 8 hereof, upon such
surrender of Warrants and payment of the Exercise Price the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the Holder and in such name or names as such Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants (and such other consideration as may be
deliverable upon exercise of
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such Warrants) together with cash for fractional Warrant Shares as provided in
Section 12. Such certificate or certificates shall be deemed to have been
issued and the person so named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price, irrespective of the date of delivery
of such certificate or certificates for Warrant Shares.
Each Warrant shall be exercisable during the Exercise Period, at the
election of the Holder thereof, either in full or from time to time in part and,
in the event that a Warrant Certificate is exercised in respect of fewer than
all of the Warrant Shares issuable on such exercise at any time prior to the
date of expiration of the Warrants, a new certificate evidencing the remaining
Warrant or Warrants will be issued and delivered pursuant to the provisions of
this Section and of Section 2 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the Holders during normal business hours at its office.
SECTION 6. CONDITIONS TO EXERCISE. The right of the Venture
Partner to exercise the Warrants as contemplated by Section 5 above shall be
subject to the prior satisfaction of each of the following conditions precedent:
(a) The Holder shall not be in material breach of its obligations
under this Agreement, the LLC Agreement or the Standstill Agreement;
(b) The applicable waiting period, and any extensions thereof, under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, to the
extent applicable to the acquisition by the Holder of the Warrant Shares, shall
have terminated, and such termination shall have been confirmed by the Federal
Trade Commission and/or the Department of Justice; and
(c) No injunction shall have been entered, and not vacated, by any
court which enjoins or prohibits the issuance of the Warrant Shares to the
Holder pursuant to the terms of this Agreement.
SECTION 7. REPRESENTATIONS AND WARRANTIES. (a) The Company hereby
represents and warrants to the Venture Partner as follows:
(1) The Company has all requisite corporate power and authority
to enter into this Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms.
(2) The Company has taken all necessary corporate and other
action to authorize and reserve for issuance, upon exercise of the
Warrants, a number of shares of Common Stock sufficient to permit the
Warrants to be exercised in full and the Company will take all necessary
corporate action to authorize and reserve for issuance all additional
shares
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of Common Stock or other securities which may become issuable upon exercise of
the Warrants pursuant to the provisions of Section 11 hereof. The shares of
Common Stock to be issued upon exercise of the Warrants, including all
additional shares of Common Stock or other securities that may become issuable
pursuant to Section 11, will be duly and validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of the Company.
(3) The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, conflict
with or violate any provision of the Articles of Incorporation or Bylaws of
the Company or any material agreement or obligation of the Company.
The Venture Partner hereby represents and warrants to the Company
that:
(1) The Venture Partner has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby.
(2) The Venture Partner is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act and is
acquiring the Warrants for its own account and without a view to any
distribution thereof.
SECTION 8. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes and other governmental charges (excluding all foreign, federal or
state income, franchise, property, estate, inheritance, gift or similar taxes)
in connection with the issuance or delivery of the Warrants hereunder, as well
as all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. The
Company shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
SECTION 9. MUTILATED OR MISSING WARRANT CERTIFICATE. If any
Warrant Certificate or certificate evidencing Warrant Shares shall be mutilated,
lost, stolen or destroyed, the Company shall issue, in exchange and substitution
therefor and upon cancellation of the mutilated Warrant Certificate or other
certificate, or in lieu of and substitution for the Warrant Certificate or other
certificate lost, stolen or destroyed, a new Warrant Certificate or other
certificate of like tenor and representing an equivalent number of Warrants or
Warrant Shares.
SECTION 10. RESERVATION OF WARRANT SHARES. The Company shall at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
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The Company or, if appointed, the transfer agent for the Common Stock
and each transfer agent for any shares of the Company's capital stock issuable
upon the exercise of any of the Warrants (collectively, the "Transfer Agent")
will be irrevocably authorized and directed at all times to reserve such number
of authorized shares as shall be required for such purpose. The Company shall
keep a copy of this Agreement on file with the Transfer Agent. The Company will
supply the Transfer Agent with duly executed certificates for such purposes and
will provide or otherwise make available all other consideration that may be
deliverable upon exercise of the Warrants. The Company will furnish such
Transfer Agent a copy of all notices of adjustments and certificates related
thereto, transmitted to each Holder pursuant to Section 13 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 11 hereof to reduce the Exercise Price below the then par value of the
Warrant Shares, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
The Company covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof (subject to the provisions of the
Standstill Agreement and the Registration Rights Agreement).
The Company shall from time to time take all action which may be
necessary or appropriate so that the Common Stock issuable upon conversion of
Warrant Shares following an exercise of Warrants, will be listed on the
principal securities exchanges and markets within the United States of America,
if any, on which other shares of the same class of Common Stock of the Company
are then listed.
SECTION 11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES ISSUABLE. The Exercise Price and the number of shares of Common Stock
issuable upon the exercise of each Warrant (the "Warrant Number") are subject to
adjustment from time to time upon the occurrence of the events enumerated in, or
as otherwise provided in, this Section 11.
(a) ADJUSTMENT FOR CHANGE IN COMMON STOCK
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(2) subdivides or reclassifies its outstanding shares of Common
Stock into a greater number of shares; or
(3) combines or reclassifies its outstanding shares of Common
Stock into a smaller number of shares;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of
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shares of capital stock of the Company which he or it would have owned
immediately following such action if such Warrant had been exercised immediately
prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed
above shall occur. If the occurrence of any event listed above results in an
adjustment under subsections (b) or (c) below, no further adjustment shall be
made under this subsection (a).
(b) ADJUSTMENT FOR RIGHTS ISSUE
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them (for a period expiring within 60 days
after the date fixed for determination of shareholders entitled to receive such
rights, options or warrants) to purchase shares of Common Stock at a price per
share less than the Current Market Value per share on the record date relating
to such distribution, the Exercise Price shall be adjusted in accordance with
the formula:
O + N x P
-----
E' = E x M
----------
O + N
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares of Common Stock outstanding on the
record date for any such distribution.
N = the number of additional shares of Common Stock issuable
upon exercise of such rights, options or warrants.
P = the exercise price per share of such rights, options or
warrants.
M = the Current Market Value per share of Common Stock on the
record date for any such distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
opening of business on the day following the record date for the determination
of shareholders entitled to receive the rights, options or warrants. If at the
end of the period during which such rights, options or warrants are exercisable,
not all rights, options or warrants shall have been exercised, the Exercise
Price shall be immediately readjusted to what it would have been if "N" in the
above formula had been the number of shares actually issued. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Current Market Value, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any
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consideration received for such rights, options or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS
If the Company distributes to all holders of its Common Stock (i) any
evidences of indebtedness of the Company or any of its subsidiaries, (ii) any
assets of the Company or any of its subsidiaries (other than dividends or
distributions paid exclusively in cash), (iii) any shares of capital stock of
the Company other than Common Stock, and (iv) any rights, options or warrants to
acquire any of the foregoing or to acquire any Common Stock of the Company (the
items referred to in the foregoing clauses (i)-(iv) being hereinafter
collectively referred to as the "Distributed Property"), the Exercise Price
shall be adjusted in accordance with the formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
M = the Current Market Value per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date mentioned below of
the Distributed Property, distributable to the holder of one
share of Common Stock (as reasonably determined in good
faith by the Board of Directors of the Company).
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive the distribution.
If an adjustment is made pursuant to this subsection (c) as a result of the
issuance of rights, options or warrants and at the end of the period during
which any such rights, options or warrants are exercisable, not all such rights,
options or warrants shall have been exercised, the Exercise Price shall be
immediately readjusted as if "F" in the above formula was the fair market value
on the record date of the indebtedness, assets or capital stock actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date.
This subsection does not apply to any dividend or distribution
referred to in subsections (a) or (b) of this Section 11.
Notwithstanding the foregoing, in the event that the fair market value
of the Distributed Property so distributed exceeds such Current Market Value per
share of Common Stock, or such Current Market Value exceeds such fair market
value by less than $0.10 per share, the Exercise Price shall not be adjusted
pursuant to this subsection (c) and, in lieu of such an adjustment, adequate
provision will be made so that each Holder will be entitled to receive upon
exercise of the Warrants the amount of Distributed Property such Holder would
have received had such Warrants been exercised immediately prior to the Record
Date for such distribution.
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In addition, notwithstanding the foregoing provisions of this
subsection (c), no adjustment shall be made hereunder for any distribution of
Distributed Property if the Company makes proper provision so that each Holder
who exercises a Warrant (or any portion thereof) after the date fixed for
determination of shareholders entitled to receive such distribution shall be
entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion, the amount and kind of Distributed Property
that such Holder would have been entitled to receive if such Holder had,
immediately prior to such determination date, exercised such Warrant; provided
that, with respect to any Distributed Property that is convertible, exchangeable
or exercisable, the foregoing provision shall only apply to the extent (and so
long as) the Distributed Property receivable upon exercise of such Warrant would
be convertible, exchangeable or exercisable, as applicable, without any loss of
rights or privileges for a period of at least 60 days following exercise of such
Warrant.
Rights or warrants distributed by the Company to all Holders of its
Common Stock (whether before or after the date hereof) entitling the Holders
thereof to subscribe for or purchase shares of the Company's capital stock
(either initially or under certain circumstances), which rights or warrants,
until the occurrence of a specified event or events (the "Trigger Event") (i)
are deemed to be transferred with such shares of Common Stock, (ii) are not
exercisable and (iii) are also issued in respect of future issuances of Common
Stock, shall be deemed to be distributed for purposes of this subsection (c)
(and the appropriate adjustment to the Exercise Price shall be required) only
upon the occurrence of the earliest Trigger Event. In addition, in the event of
any distribution of rights or warrants, or any Trigger Event with respect
thereto, that shall have resulted in an adjustment to the Exercise Price under
this subsection (c), (1) in the case of any such rights or warrants that shall
all have been redeemed or repurchased without exercise by any Holders thereof,
the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder of Common Stock with respect to such
rights or warrants (assuming such holder had retained such rights or warrants),
made to all Holders of Common Stock as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants all of which shall
have expired or been terminated without exercise by any Holder thereof, the
Exercise Price shall be readjusted as if such distribution had not occurred.
If after an adjustment a holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section.
(d) In case the Company or any Subsidiary of the Company shall make
any distribution consisting exclusively of cash (excluding any cash portion of
distributions for which an adjustment is required to be made in accordance with
subsection (c) above, or cash distributed upon a merger or consolidation to
which subsection (n) applies) to all holders of Common Stock in an aggregate
amount that, combined together with (i) all other such all-cash distributions
made within the then preceding 12 months in respect of which no adjustment to
the Exercise Price has been made and (ii) any cash and the fair market value of
other consideration paid or payable in respect of any tender offer by the
Company or any of its Subsidiaries for Common Stock concluded within the
preceding 12 months in respect of which no adjustment has been made pursuant to
subsection (e) below, exceeds 10% of the Company's market capitalization
(defined as being the product of the then Current Market Value per share of the
Common Stock (determined as provided in subsection (h) below) times the
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number of shares of Common Stock then outstanding) on the record date of such
distribution, then in each such case the Exercise Price shall be adjusted in
accordance with the following formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
M = the Current Market Value per share of Common Stock on the
record date for such distribution.
F = the total combined amount of cash so distributed per share
of Common Stock (determined by dividing such total amount by
the number of shares of Common Stock outstanding on such
record date).
Notwithstanding the foregoing, in the event that the cash so distributed
applicable to one share of Common Stock equals or exceeds such current market
price per share of Common Stock, or such current market price exceeds such
amount of cash by less than $0.10 per share, the Exercise Price shall not be
adjusted pursuant to this subsection (d) and, in lieu of such an adjustment,
adequate provision will be made so that each Holder will be entitled to receive
upon exercise of the Warrants the amount of cash such Holder would have received
had such Warrants been exercised immediately prior to the record date for such
distribution.
In addition, notwithstanding the foregoing provisions of this
subsection (c), no adjustment shall be made hereunder for any distribution of
such cash if the Company makes proper provision so that each Holder who
exercises a Warrant (or any portion thereof) after the date fixed for
determination of shareholders entitled to receive such distribution shall be
entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion, the amount of cash that such Holder would
have been entitled to receive if such Holder had, immediately prior to such
determination date, exercised such Warrant.
(e) In case there shall be completed a tender or exchange offer made
by the Company or any Subsidiary of the Company for all or any portion of the
Common Stock (any such tender or exchange offer being referred to as an "Offer")
that involves an aggregate consideration having a fair market value as of the
expiration of such Offer (the "Expiration Time") that, together with (i) any
cash and the fair market value of any other consideration payable in respect of
any other Offer, as of the expiration of such other Offer, expiring within the
12 months preceding the expiration of such Offer and in respect for which no
Conversion Price adjustment pursuant to this subsection (e) has been made and
(ii) the aggregate amount of any all-cash distributions referred to in
subsection (d) of this Section 11 to all holders of Common Stock within the 12
months preceding the expiration of such Offer for which no conversion price
adjustment pursuant to such subsection (d) has been made, exceeds 10% of the
product of the then Current Market Value per share (determined as provided in
subsection (h) below) of the Common Stock on the Expiration Time times the
number of shares of Common Stock outstanding (including any tendered shares) on
the Expiration Time, then unless the Company elects to reserve a ratable portion
of such cash for distribution upon exercise of the Warrants, the Exercise Price
shall be adjusted in accordance with the following formula:
11
E' = E x (M x O) - F
-----------
M x (O - P)
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
M = the Current Market Value per share of Common Stock
immediately prior to the Expiration Time.
O = the number of shares of Common Stock outstanding at the
Expiration Time (including any tendered shares).
F = the fair market value of the aggregate consideration payable
to shareholders based on the acceptance (up to any maximum
specified in the terms of the Offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted being defined as the "Purchased
Shares").
P = the number of Purchased Shares.
Any such adjustment shall become effective immediately prior to the opening of
business on the day following the Expiration Time.
For purposes of this subsection (e), the fair market value of any
consideration with respect to an Offer shall be reasonably determined in good
faith by the Board of Directors of the
Company and described in a Board Resolution.
(f) ADJUSTMENT FOR COMMON STOCK ISSUE
If the Company issues shares of Common Stock for a consideration per
share less than the Current Market Value per share on the date the Company fixes
the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the formula:
O + P
---
E' = E x M
-------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares of Common
Stock.
12
P = the aggregate consideration received for the issuance of
such additional shares of Common Stock.
M = the Current Market Value per share of Common Stock on the
date of issuance of such additional shares.
A = the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares of Common
Stock.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (f) does not apply to:
(1) any of the transactions described in subsection (a) of this
Section 11; or
(2) Common Stock issued to the Company's employees, directors or
consultants under BONA FIDE benefit plans adopted by the Board of
Directors, or in connection with the acquisition of a business approved by
the Board of Directors, if such Common Stock would otherwise be covered by
this subsection (f) (but only to the extent that the aggregate number of
shares excluded hereby and issued after the date of this Warrant Agreement
(plus the number of shares of Common Stock issuable upon the exercise of
options, warrants or other securities referred to in subsection (g)(3)
below) shall not exceed 10% of the number of shares of Common Stock
outstanding on the date of this Agreement (as such number may be adjusted
from time to time to reflect stock splits, stock dividends and other
similar events)); or
(3) the issuance of Common Stock in connection with (i) the
exercise of Warrants, or (ii) the conversion, exchange or exercise of any
options, warrants, or other securities convertible into or exchangeable or
exercisable for Common Stock; or
(4) the issuance of Common Stock in any BONA FIDE underwritten
public offering.
(g) ADJUSTMENT FOR CONVERTIBLE SECURITIES ISSUE
If the Company issues any options, warrants or other securities
convertible into or exchangeable or exercisable for Common Stock for a
consideration per share of Common Stock initially deliverable upon conversion,
exchange or exercise of such securities less than the Current Market Value per
share on the date of issuance of such securities, the Exercise Price shall be
adjusted in accordance with this formula:
13
O + P
---
E' = E x M
-------
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such securities.
P = the aggregate consideration received for the issuance of
such securities.
M = the Current Market Value per share of Common Stock on the
date of issuance of such securities.
D = the maximum number of shares of Common Stock deliverable
upon conversion or in exchange for or upon exercise of such
securities at the initial conversion, exchange or exercise
rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion, exchange or
exercise of such securities has not been issued when such securities are no
longer outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion, exchange or exercise of such
securities.
This subsection (g) does not apply to:
(1) any transaction described in subsection (b) of this
Section 11; or
(2) the issuance of the Warrants; or
(3) any such options, warrants or other securities issued to the
Company's employees, directors or consultants under BONA FIDE benefit
plans adopted by the Board of Directors, or in connection with the
acquisition of a business approved by the Board of Directors, if such
options, warrants or other securities would otherwise be covered by
this subsection (g) (but only to the extent that the aggregate number
of shares excluded hereby and issued after the date of this Warrant
Agreement (plus the number of shares of Common Stock referred to in
subsection (f)(2) above) shall not exceed 10% of the number of shares
of Common Stock outstanding on the date of this Agreement (as such
number may be adjusted from time to time to reflect stock splits,
stock dividends and other similar events)); or
(4) the issuance of any such options, warrants or other
securities in any BONA FIDE underwritten public offering.
14
(h) CURRENT MARKET VALUE
"Current Market Value" per share of Common Stock or of any other
security (herein collectively referred to as a "Security") at any date shall be
the average of the daily Market Prices for a share of Common Stock for the 10
consecutive trading days selected by the Company commencing not more than 20
trading days before, and ending not later than, the earlier of the date in
question and the date immediately prior to the " ex date," with respect to the
issuance, distribution or Offer requiring such computation. For purposes of
this paragraph, the term "'ex' date," when used with respect to any issuance,
distribution or payments with respect to an Offer, means the first date on which
the Common Stock trades regular way on the New York Stock Exchange (or if not
listed or admitted to trading thereon, then on the principal national securities
exchange on which the Common Stock is listed or admitted to trading) without the
right to receive such issuance, distribution or Offer.
The "Market Price" for any Security on each business day means:
(A) if such Security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal exchange
on which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) if such Security is
not then listed or admitted to trading on any securities exchange, the last
reported sale price on such day, or if there is no such last reported sale price
on such day, the average of the closing bid and the asked prices on such day, as
reported by a reputable quotation source designated by the Company, or (C) if
neither clause (A) nor (B) is applicable, the average of the reported high bid
and low asked prices on such day, as reported by a reputable quotation service,
or a newspaper of general circulation in the Borough of Manhattan, City of New
York, customarily published on each business day, designated by the Company. If
there are no such prices on a business day, then the Market Price shall not be
determinable for such business day.
(i) CONSIDERATION RECEIVED
For purposes of any computation respecting consideration received
pursuant to subsections (f) and (g) of this Section 11, the following shall
apply:
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof (irrespective
of the accounting treatment thereof) as determined in good faith by the
Board of Directors; and
(3) in the case of the issuance of options, warrants or other
securities convertible into or exchangeable or exercisable for shares of
Common Stock, the aggregate consideration received therefor shall be deemed
to be the consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to be
received by the Company upon the conversion, exchange or exercise thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
15
(j) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. No
adjustment in the Warrant Number need be made unless the adjustment would
require an increase or decrease of at least 0.5% in the Warrant Number. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment, provided that no such adjustment shall be deferred
beyond the date on which a Warrant is exercised.
All calculations under this Section 11 shall be made to the nearest
1/1000th of a share.
(k) WHEN NO ADJUSTMENT REQUIRED
If an adjustment is made upon the establishment of a record date or
issuance date for a distribution or issuance subject to subsections (a), (b) or
(c) or (d) hereof and such distribution or issuance is subsequently cancelled,
the Exercise Price then in effect shall be readjusted, effective as of the date
when the Board of Directors determines to cancel such distribution, to that
which would have been in effect if such record date had not been fixed.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the amount of cash into which such Warrants are
exercisable. Interest will not accrue on the cash.
(l) NOTICE OF ADJUSTMENT
Whenever the Exercise Price or the Warrant Number is adjusted, the
Company shall provide the notices required by Section 13 hereof.
(m) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED
In any case in which this Section 11 shall require that an adjustment
in the Exercise Price and Warrant Number be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event (i) issuing to the Holder of any Warrant exercised after such record
date the Warrant Shares and other capital stock of the Company, if any, issuable
upon such exercise over and above the Warrant Shares and other capital stock of
the Company, if any, issuable upon such exercise on the basis of the Warrant
Number prior to such adjustment, and (ii) paying to such Holder any amount in
cash in lieu of a fractional share pursuant to Section 11; PROVIDED, HOWEVER,
that the Company shall deliver to such Holder a due xxxx or other appropriate
instrument evidencing such Holder's right to receive such additional Warrant
Shares, other capital stock and cash upon the occurrence of the event requiring
such adjustment.
(n) REORGANIZATIONS
In case of any capital reorganization, other than in the cases
referred to in Sections 11(a), (b), (c) hereof, or the consolidation or merger
of the Company with or into another corporation (other than a merger or
consolidation which does not result in any reclassification of the outstanding
shares of Common Stock into shares of other stock or other securities or
property), or the sale of the property of the Company as an entirety or
substantially as an entirety (collectively such
16
actions being hereinafter referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise of any Warrant (in lieu of the number of
shares of Common Stock theretofore deliverable) the number of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock that would otherwise have been deliverable upon the exercise of such
Warrant would have been entitled upon such Reorganization if such Warrant had
been exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a duly
adopted resolution certified by the Company's Secretary or Assistant Secretary,
shall be made in the application of the provisions herein set forth with respect
to the rights and interests of Holders so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to any shares
or other property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior to
or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such Reorganization or the corporation
purchasing or leasing such assets or other appropriate corporation or entity
shall expressly assume, by a supplemental Warrant Agreement or other
acknowledgement executed and delivered to the Holder(s), the obligation to
deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase, and all other obligations and liabilities under this Agreement.
(o) ADJUSTMENT IN NUMBER OF SHARES.
Upon each adjustment of the Exercise Price pursuant to this Section
11, each Warrant outstanding prior to the making of the adjustment in the
Exercise Price shall thereafter evidence the right to receive upon payment of
the adjusted Exercise Price that number of shares of Common Stock (calculated to
the nearest thousandth) obtained from the following formula:
N' = N x E
---
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price prior
to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(p) FORM OF WARRANTS
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
(q) ADJUSTMENTS IN OTHER SECURITIES
17
If as a result of any event or for any other reason, any adjustment is
made which increases the number of shares of Common Stock issuable upon
conversion, exercise or exchange of, or in the conversion or exercise price or
exchange ratio applicable to, any outstanding securities of the Company that are
convertible into, or exercisable or exchangeable for, Common Stock of the
Company, then a corresponding adjustment shall be made hereunder to increase the
number of shares of Common Stock issuable upon exercise of the Warrants, but
only to the extent that no such adjustment has been made pursuant to Sections
11(a), (b), (c) or (d) hereof with respect to such event or for such other
reason.
(r) MISCELLANEOUS
For purpose of this Section 11 the term "shares of Common Stock" shall
mean (i) shares of any class of stock designated as Common Stock of the Company
at the date of this Agreement, and (ii) shares of any other class of stock
resulting from successive changes or reclassification of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to this Section 11, the holders of Warrants shall
become entitled to purchase any securities of the Company other than, or in
addition to, shares of Common Stock, thereafter the number or amount of such
other securities so purchasable upon exercise of each Warrant shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
subsections (a) through (r) of this Section 11, inclusive, and the provisions of
Sections 5, 8, 10 and 12 with respect to the Warrant Shares or the Common Stock
shall apply on like terms to any such other securities.
SECTION 12. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same time
by the same holder, the number of full Warrant Shares which shall be issuable
upon the exercise thereof shall be computed on the basis of the aggregate number
of Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 12,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the fair market value of the
Warrant Share so issuable (as determined in good faith by the Board of
Directors), multiplied by such fraction.
SECTION 13. NOTICES TO WARRANT HOLDERS. Upon any adjustment
pursuant to Section 9 hereof, the Company shall promptly thereafter (i) cause to
be filed with the Company a certificate of an officer of the Company setting
forth the Warrant Number and Exercise Price after such adjustment and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculations are based, and (ii) cause to be given to each of the
registered holders of the Warrant Certificate at his or its address appearing on
the Warrant register written notice of such adjustments by first class mail,
postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section 13.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
18
(b) the Company shall authorize the distribution to all holders
of shares of Common Stock of assets, including cash, evidences of its
indebtedness, or other securities; or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets of
the Company substantially as an entirety, or of any reclassification or
change of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or a
tender offer or exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action that would require
an adjustment to the Warrant Number or the Exercise Price pursuant to
Section 11 hereof;
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificate at his or its address appearing on the Warrant register,
at least 20 days prior to the applicable record date hereinafter specified, or
20 days prior to the date of the event in the case of events for which there is
no record date, by first-class mail, postage prepaid, a written notice stating
(i) the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 13 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any Warrant Certificate
shall be construed as conferring upon the Holders of Warrants (prior to the
exercise of such Warrants) the right to vote or to consent or to receive notice
as shareholder in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company; provided that nothing in the foregoing provision is
intended to detract from any rights explicitly granted to any Holder hereunder.
SECTION 14. TERMINATION. Notwithstanding any other provision
hereof, this Warrant Agreement will terminate, and all Warrants outstanding
hereunder shall be canceled and of no further force or effect, upon the first to
occur of the following events:
(a) The termination of the LLC Venture pursuant to the
provisions of Section 11.1(a) of the LLC Agreement or, if earlier, upon (i)
the delivery of a "Specified Termination Notice" (as defined) by the
Company (as the Venture Partner) pursuant to Section 14(a) of the Venture
Partner Warrant Agreement or (ii) the delivery by the Venture Partner of a
notice to terminate for convenience pursuant to Section 11(a)(vii) of the
LLC
19
Agreement; PROVIDED, HOWEVER, that upon the occurrence of a "Termination
Option Event" with respect to which the Venture Partner is the "TO Member"
(in each case, as defined in Section 11(c) of the LLC Agreement), this
Agreement shall remain operative and the Warrants shall remain outstanding
and enforceable in accordance with their terms until the first anniversary
of the date on which the "TO Member" delivers a notice of termination (a
"Specified Termination Notice") as a result of the occurrence of a an
"Uncured Default," a "Member Unlawful Event" or an "Improper Deadlock" (in
each case, as defined in Section 11(a) of the LLC Agreement) or, with
respect to any other "Termination Option Event," until the first
anniversary of the date of termination of the LLC Venture; and, PROVIDED
FURTHER, that (i) in the event that either party terminates the LLC
Agreement pursuant to Section 11(a)(vi) thereof, other than in the case
where an "Improper Deadlock" (as defined in the LLC Agreement) is found to
exist, which shall be governed by the first PROVISO of this paragraph when
the Venture Partner is the "TO Member" with respect to such "Improper
Deadlock," this Agreement shall remain operative and the Warrants shall
remain outstanding and enforceable in accordance with their terms only
until the first anniversary of the occurrence of the "Deadlock" (as defined
in the LLC Agreement), and (ii) in the event that either party terminates
the LLC Agreement pursuant to Section 11(a)(ix) thereof, this Agreement
shall remain operative and the Warrants shall remain outstanding and
enforceable in accordance with their terms only until the first anniversary
of the date of execution of this Agreement;
(b) The expiration of a period of five years commencing on the
date hereof; or
(c) The exercise of all Warrants outstanding under this
Agreement;
PROVIDED, HOWEVER, that if the Exercise Period has commenced less than one
year prior to the date on which this Agreement would otherwise terminate
pursuant to clauses (a) or (b) above, this Agreement shall remain
operative, and the Warrants shall remain outstanding and enforceable in
accordance with their terms, until the expiration of such Exercise Period.
SECTION 15. NOTICES TO THE COMPANY AND THE VENTURE PARTNER. All
notices, consents, requests, instructions, approvals and other communications
provided for herein and all legal process in regard hereto shall be in writing
and shall be decreed to be validly given, made or served when delivered
personally, transmitted by telex or telecopier, or deposited in the U.S. mail,
postage prepaid, for delivery by express, registered or certified mail, or
delivered to a recognized overnight courier service, addressed as follows:
If to the Company:
Xxxxxxxx Industries
0000 Xxxxxxx Xxxxxx
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
20
If to the Venture Partner:
Wyle Electronics
00000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
or to such other address as may be specified in a notice given pursuant to this
Section. All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back if telexed; when receipt acknowledged, if telecopied; and the next
business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. The parties may change the address to
which notices are to be given by giving five days' prior notice of such change
in accordance herewith.
SECTION 16. SUPPLEMENTS AND AMENDMENTS. The Company may from time
to time supplement or amend this Agreement without the approval of any Holders
of Warrant Certificate in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall not in any way adversely affect the interests of the
Holders of Warrant Certificate.
SECTION 17. SUCCESSORS AND ASSIGNS. All the covenants and
provisions of this Agreement by or for the benefit of the Company shall bind and
inure to the benefit of its respective successors and assigns hereunder.
SECTION 18. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing
contained herein shall be construed as conferring upon any Holder any rights as
a shareholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
shareholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
SECTION 19. GOVERNING LAW. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered Holders of the Warrant Certificate any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company and the registered Holders of the
Warrant Certificate.
SECTION 21. AMENDMENTS AND WAIVERS. No provision of this Agreement
may be amended or waived except by an instrument in writing signed by the party
sought to be bound or except as provided pursuant to Section 16 hereof; PROVIDED
that any amendment or waiver sought from the Holders of any provision of this
Agreement which affects Holders generally shall be given by Holders of at least
a majority of the Warrants outstanding and any amendment or waiver so given
shall be binding on all Holders. No failure or delay by any party in exercising
any right or remedy hereunder shall operate as a waiver thereof, and a waiver of
a particular right or remedy on one
21
occasion shall not be deemed a waiver of any other right or remedy or a waiver
of the same right or remedy on any subsequent occasion.
SECTION 22. CONSTRUCTION; INTERPRETATION. This Agreement shall not
be construed for or against any party by reason of the authorship or alleged
authorship of any provision hereof or by reason of the status of the respective
parties. This Agreement shall be construed reasonably to carry out its intent
without presumption against or in favor of any party. The natural persons
executing this Agreement on behalf of each party have the full right, power and
authority to do and affirm the foregoing warranty on behalf of each party and on
their own behalf. The captions on sections are provided for purposes of
convenience and are not intended to limit, define the scope of or aid in
interpretation of any of the provisions hereof. All pronouns and singular or
plural references as used herein shall be deemed to have interchangeably (where
the sense of the sentence requires) a masculine, feminine or neuter, and/or
singular or plural meaning, as the case may be.
SECTION 23. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
XXXXXXXX INDUSTRIES
By:
-------------------------------------
Name:
Title:
WYLE ELECTRONICS
By:
-------------------------------------
Name:
Title:
23
EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF REGISTRATION UNDER SAID ACT EXCEPT PURSUANT TO AN EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
VOTING AND TRANSFER AS SET FORTH IN A STANDSTILL AGREEMENT AND A WARRANT
AGREEMENT BETWEEN THE COMPANY AND THE HOLDER OF SUCH SECURITIES AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE THEREWITH. COPIES OF SAID STANDSTILL AGREEMENT AND WARRANT AGREEMENT
ARE ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF THE COMPANY.
No. 1996-LLC-1 1,299,841 Warrants
WARRANT CERTIFICATE
XXXXXXXX INDUSTRIES
This Warrant Certificate certifies that Wyle Electronics, or its
permitted assigns, is the registered holder of the number of Warrants (the
"Warrants") set forth above to purchase Common Stock, $1.00 par value (the
"Common Stock"), of Xxxxxxxx Industries, a California corporation (the
"Company"). Each Warrant entitles the holder upon exercise to receive from the
Company one fully paid and nonassessable share of Common Stock (a "Warrant
Share") at an initial exercise price of $27.85, subject to adjustment as
provided in the Warrant Agreement (the "Exercise Price") payable in lawful money
of the United States of America, upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office of the Company designated for such
purpose, but only subject to the conditions set forth herein and in the Warrant
Agreement referred to hereinafter. The Warrants may be exercised only during
the Exercise Period (as defined in the Warrant Agreement). Furthermore,
Warrants may be exercised during the Exercise Period without the exchange of
funds pursuant to the net exercise provisions of Section 5 of the Warrant
Agreement. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events, as set forth in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued pursuant to a Warrant Agreement
dated as of August 8, 1996 (the "Warrant Agreement"), duly executed and
delivered by the Company, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.
A copy of the Warrant Agreement may be obtained by the holder hereof upon
written request to the Company.
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The holder of Warrants evidenced by this Warrant Certificate may
exercise such Warrants during the Exercise Period under and pursuant to the
terms and conditions of the Warrant Agreement by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon (and by this
reference made a part hereof) properly completed and executed, together with
payment of the Exercise Price in cash or by certified or bank check at the
office of the Company designated for such purpose or by wire transfer of
immediately available funds to an account designated by the Company. In the
event that upon any exercise of warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued by the Company to the holder hereof or his or its
registered assignee a new Warrant Certificate evidencing the number of Warrants
not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrants and the Exercise Price set forth on the face
hereof may, subject to certain conditions, be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the Warrant Agreement.
Upon exercise of the Warrants, the holder of Common Stock issued upon
such exercise will be bound by and subject to the terms of that certain
Standstill Agreement dated as of the date hereof, by and between the Company
(the "Standstill Agreement"), unless such holder is not subject to the
provisions of said Standstill Agreement in accordance with its terms.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock issuable upon the exercise thereof.
Said registration rights are set forth in a Registration Rights Agreement
(Xxxxxxxx) dated as of August 8, 1996, by and between the Company and the
Venture Partner (the "Registration Rights Agreement"). By acceptance of this
Warrant Certificate, the holder hereof agrees that upon exercise of some or all
of the Warrants evidenced hereby, he or it will be bound by the Registration
Rights Agreement as a holder of Registrable Securities thereunder. A copy of
the Registration Rights Agreement may be obtained by the holder hereof upon
written request to the Company.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon due
presentation for registration of transfer of this Warrant Certificate at the
office of the Company a new Warrant Certificate or Warrant Certificate of like
tenor and evidencing in the aggregate a like number of Warrants shall be issued
to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a shareholder of the Company.
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IN WITNESS WHEREOF, Xxxxxxxx Industries has caused this Warrant
Certificate to be signed by its Chairman of the Board, Chief Executive Officer,
President or Vice President and by its Secretary or Assistant Secretary and has
caused its corporate seal to be affixed hereunto or imprinted hereon.
Dated: August 8, 1996 Xxxxxxxx Industries
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
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FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise Of Warrant)
The undersigned holder hereby represents that it is the registered
holder of this Warrant Certificate, and hereby irrevocably elects to exercise
the right, represented by this Warrant Certificate, to receive __________ shares
of Common Stock, $1.00 par value, of Xxxxxxxx Industries and herewith tenders
payment for such shares to the order of Xxxxxxxx Industries the amount of
$_______________ in accordance with the terms hereof (unless the holder is
exercising Warrants pursuant to the net exercise provisions of Section 5 of the
Warrant Agreement). The undersigned requests that a certificate for such shares
be registered in the name of the undersigned or nominee hereinafter set forth,
and further that such certificate be delivered to the undersigned at the address
hereinafter set forth or to such other person or entity as is hereinafter set
forth. If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
the undersigned or nominee hereinafter set forth, and further that such
certificate be delivered to the undersigned at the address hereinafter set forth
or to such other person or entity as is hereinafter set forth.
CERTIFICATE TO BE REGISTERED AS FOLLOWS:
Name: ________________________________________________
Address: ________________________________________________
________________________________________________
________________________________________________
Social Security or
Taxpayer Identification No.: _____________________________
CERTIFICATE TO BE DELIVERED AS FOLLOWS:
Name: ________________________________________________
Address: ________________________________________________
________________________________________________
________________________________________________
Date: ___________________ Signature: _____________________________
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ASSIGNMENT FORM
To assign this Warrant after the commencement of the Exercise Period (as defined
in the Warrant Agreement), fill in the form below:
(I) or (we) assign and transfer this Warrant to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
and irrevocably appoint _______________________________________________________
___________________________________________________ agent to transfer this
Warrant on the books of the Company. The agent may substitute another to act
for him.
Date: ____________ Your Signature: _________________________________
(Sign exactly as your name appears on
the other side of this Warrant)
Signature Guarantee:
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