WARRANT AGREEMENT
March 15, 1995
WARRANT AGREEMENT dated as of March 15, 1995 between
Scandinavian Broadcasting System SA, a corporation organized and existing under
the laws of Luxembourg (the "Company"), and Paramount Communications B.V. (the
"Holder"), a corporation organized and existing under the laws of the
Netherlands.
WHEREAS, the Company wishes to sell, and the Holder desires
to purchase, warrants to acquire Common Shares, $1.50 par value ("Common
Shares"), of the Company;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Issue of Securities. This Agreement relates to
the purchase by the Holder and the sale by the Company of a warrant as
hereinafter described (the "Warrant") to purchase an aggregate of 1,000,000
Common Shares. The Common Shares issuable upon exercise of the Warrant are
hereinafter collectively referred to as the "Warrant Shares." The exercise
price for each Warrant Share is Thirty-Five United States Dollars ($35.00).
SECTION 2. Warrant Certificate. The certificate evidencing
the Warrant (the "Warrant Certificate") to be delivered pursuant to this
Agreement shall be in registered form only and shall be in the form set forth in
Exhibit A attached hereto.
SECTION 3. Sale and Purchase of the Warrant; Closing. In
reliance upon the Holder's representations made in Section 4 hereof and subject
to the terms and conditions set forth herein, the Company hereby agrees to sell
the Warrant to the Holder for an aggregate purchase price of Four Million United
States Dollars ($4,000,000.00) (the "Purchase Price"). Subject to the terms and
conditions set forth herein and in the Warrant Certificate, the Holder hereby
agrees to purchase the Warrant from the Company for the Purchase Price.
The closing of the purchase of the Warrant hereunder will
occur on such date and take place at such location as the parties may mutually
agree. The closing will take place concurrently with the closing of the
transaction pursuant to that certain Television License Agreement dated as of
September 1, 1992 by and between on the one hand Paramount Television, a
subdivision of Paramount Pictures International Division of Holder, and Viacom
SA, and on the other hand the Company (the "License Agreement"). At such
closing, the Company will deliver to the Holder the Warrant Certificate, dated
the date of the closing, and the Holder will pay the Purchase Price to the
Company, via a wire transfer to an account designated by the Company.
SECTION 4. Holder's Representations. The Holder represents
and warrants to the Company as follows:
a. The Holder is purchasing the Warrant (and any
securities receivable upon the exercise thereof) solely for its own account and
not as nominee or agent for any other person and not with a view to, or for
offer or sale in connection with, any distribution thereof (within the meaning
of the Securities Act of 1933, as amended (the "Securities Act")).
b. The Holder is knowledgeable, sophisticated and
experienced in business and financial matters; it has previously invested in
securities similar to the Warrant and Warrant Shares; it is able to bear the
economic risk of its investment in the Warrant and Warrant Shares and is
presently able to afford the complete loss of such investment; and it has been
afforded access to information about the Company and the Company's financial
condition, results of operations, business, property, management and prospects
sufficient to enable the Holder to evaluate its investment in the Warrant.
c. The Holder is an "accredited investor" (as such
term is defined in Rule 501(a) of Regulation D under the Securities Act).
d. The Holder has the requisite power and authority
to enter into this Agreement, and the execution and delivery of this Agreement
have been duly authorized by all necessary action.
e. The Holder understands that the Company will rely
upon the accuracy and truth of the foregoing representations and the Holder
hereby consents to such reliance.
SECTION 5. Governing Law. This Agreement shall be deemed
to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the internal laws of said state.
SECTION 6. Benefits of this Agreement. The rights of
Holder under this Agreement may not be assigned or transferred by Holder to any
other person (except to an Affiliate of Holder) without the prior written
consent of the Company. Nothing in this Agreement shall be construed to give to
any person or corporation other than the Company, and Holder and its Affiliates,
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and Holder
and its Affiliates.
SECTION 7. Approval of Purchase and Right of First
Negotiation. Until the second anniversary of the Issue Date, the Holder agrees
not to transfer the Warrant or any Warrant Shares, except (i) in a public
offering upon exercise of
- 2 -
registration rights under the rights granted in the Warrant
Certificate; or (ii) to an affiliate of Holder. After the second
anniversary of the Issue Date, if Holder proposes to sell the Warrant or any
Warrant Shares other than pursuant to a registration statement under the
Securities Act, the Company shall have a right of first negotiation with respect
to the acquisition of the Warrant or those shares proposed to be sold. Said
right of first negotiation must be asserted by the Company within five days of
its receipt of written notice from Holder of its intention to sell the Warrant
or any Warrant Shares other than pursuant to a registration statement. Such
notice shall specify the general terms and conditions on which Holder intends to
sell. If the Company and Holder are unable to agree on the terms and conditions
of the Company's acquisition of the Warrant or such Shares within ten business
days of Holder's notification to the Company of its intention to sell, Holder
may sell the Warrant or such Shares at any time within the next 180 days on
terms and conditions no less favorable to Holder than those proposed to the
Company.
SECTION 8. Counterparts, Facsimile Execution. 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. The
parties are entitled to rely, for purposes of executing this Agreement, on the
faxed signature of the other party hereto.
SECTION 9. Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning thereof.
SECTION 10. Severability. In the event that any one or
more of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired or affected, it being intended that all of the Holder's rights and
privileges shall be enforceable to the fullest extent permitted by law.
SECTION 11. Defined Terms. Capitalized terms not defined
in this Agreement shall have the meanings set forth in the Warrant Certificate.
- 3 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
Scandinavian Broadcasting System SA
By:
--------------------------------
Paramount Communications B.V.
By:
--------------------------------
EXHIBIT A
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD
ONLY IF REGISTERED OR QUALIFIED, AS THE CASE MAY BE, PURSUANT TO THE RELEVANT
PROVISIONS OF THE FEDERAL AND STATE SECURITIES LAWS OR IF AN EXEMPTION FROM SUCH
REQUIREMENTS IS APPLICABLE.
No. of Common Shares: Initially, Warrant No. 5
1,000,000, and subject to adjustment
as provided below
WARRANT
To Purchase Common Shares of
Scandinavian Broadcasting System SA
Exercisable until March 14, 2000
THIS WARRANT CERTIFIES THAT, as of March 15, 1995 (the
"Issue Date"), for value received, the registered holder hereof, Paramount
Communications B.V., or its registered assigns, is entitled to purchase from
Scandinavian Broadcasting System SA, a corporation organized and existing under
the laws of Luxembourg (the "Company"), the number of Common Shares (as
hereinafter defined) equal to the Warrant Shares (as hereinafter defined),
initially 1,000,000 and subject to adjustment as hereinafter provided, at the
Exercise Price (as hereinafter defined) in lawful money of the United States of
America or as otherwise provided herein, at any time on or before 5 P.M., New
York City time on March 14, 2000 (the "Expiration Date").
SECTION 1. DEFINITIONS.
For all purposes of this Warrant, the following terms have
the following meanings:
"Business Day" means any day other than a Saturday or Sunday
on which the New York Stock Exchange is open for trading on a regular basis.
"Convertible Securities" means evidences of indebtedness,
shares of stock, warrants or other securities that are convertible into or
exchangeable for, with or without payment
A-1
of additional consideration, Common Shares or rights to acquire Common Shares,
either immediately or upon the arrival of a specified date or the happening of
a specified event.
"Commission" means the Securities and Exchange Commission
and any other similar or successor agency of the federal government then
administering the Securities Act or the Exchange Act.
"Common Shares" shall have the meaning ascribed to it in
Section 6A(7).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Exercise Date" means the date on which the Holder exercises
this Warrant, in whole or in part, as provided in Section 3 hereof.
"Exercise Price," with respect to one Common Share, means
Thirty-Five United States Dollars ($35.00).
"Holder" means the registered holder hereof at the time
referenced.
"Issue Date" shall mean the date hereof.
"Options" means any warrants, options or other rights to
subscribe for, purchase or otherwise acquire any Common Shares or any
convertible Securities.
"Paramount Communications B.V." means Paramount
Communications B.V., a corporation organized and existing under the laws of the
Netherlands and a subsidiary of Viacom International, Inc.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or agency or political subdivision thereof.
"Registrable Securities" means the Warrant Shares or any
securities issued or issuable with respect to the Warrant or Warrant Shares by
way of a stock dividend or stock split or in connection with a combination of
shares, reclassification, recapitalization, merger, consolidation,
reorganization or other similar transaction or transaction with similar effect,
but in no event shall the Warrant be Registrable Securities. As to any
A-2
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when:
(w) a registration statement with
respect to the sale of such securities has become effective
under the Act and such securities shall have been disposed
of in accordance with such registration statement; or
(x) they shall have been distributed to
the public pursuant to Rule 144 (or any successor provision)
under the Act and shall no longer be deemed to be
"restricted securities" thereunder.
Except as set forth in the preceding sentence, no transfer
of Registrable Securities shall cause such Registrable Securities to lose such
status.
"Registrable Securities Holder" means the holder of
Registrable Securities at the time referenced.
"Securities Act" or "Act" means the Securities Act of 1933,
as amended, and any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Warrantholders" means, as of any date, the then registered
holders of the Warrants (including the Holder) and the then registered holders
of the Warrant Shares.
"Warrants" means this Warrant and any Warrants issued in
exchange, transfer or replacement of this Warrant as provided herein.
"Warrant Shares" means, as of a particular date, the Common
Shares that the Holder has purchased or is entitled to purchase upon exercise of
this Warrant. The number of Warrant Shares shall be subject to adjustment from
time to time in accordance with Section 6 below.
All terms used in this Warrant that are not defined in this
Section 1 have the meaning respectively set forth elsewhere in this Warrant.
SECTION 2. EXCHANGE, TRANSFER AND REPLACEMENT.
This warrant is exchangeable at any time, and from time to
time, subject to the provisions of Section 7 of the Warrant Agreement, upon the
surrender hereof by the Holder to the Company at its office, for new Warrants of
like tenor, representing in the aggregate the right to purchase the number of
Common Shares
A-3
purchasable hereunder. Each such new Warrant shall represent the right
to purchase such number of Common Shares as shall be designated by the
Holder at the time of such surrender, not to exceed the aggregate number of
Warrant Shares then subject to this Warrant. This Warrant and all rights
hereunder are freely transferable subject to the provisions of Section 7 of the
Warrant Agreement, in whole or in part, subject only to compliance by the Holder
with applicable United States federal and state securities laws, by the Holder
in person or by its duly authorized attorney, and a new Warrant or Warrants
shall be made and delivered by the Company, of the same tenor as this Warrant
but registered in the name of the transferee or transferees, upon surrender of
this Warrant with the Assignment Form attached hereto duly completed, at the
above referenced office of the Company; provided, however, that Holder shall not
transfer this Warrant prior to the second anniversary of the Issue Date, except
to an affiliate of Holder. In the event of a partial transfer of this Warrant,
the Company shall, at its expense, make and deliver to the Holder a new Warrant,
of the same tenor as this Warrant, for the remaining Warrant Shares covered
hereby. Upon receipt by the Company at its office of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of an agreement of
indemnity reasonably satisfactory to it, and upon surrender of this Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor in
replacement of this Warrant. This Warrant shall be promptly cancelled by the
Company upon the surrender hereof in connection with any exchange, transfer or
replacement. The Company shall pay all taxes (other than securities transfer
taxes (but not including issuance taxes) or any taxes based upon the gross or
net income of the Holder) and all other expenses and charges (except for any
expenses and charges incurred directly by Holder incident to such transfer)
payable in connection with the preparation, execution and delivery of Warrants
pursuant to this Section 2.
SECTION 3. EXERCISE OF WARRANT.
A. Procedure for Exercise. The Holder shall be
entitled to exercise this Warrant in whole, or in no more than ten parts of no
less than 100,000 Warrant Shares each. In order to exercise this Warrant in
whole or in part, the Holder shall complete the Subscription Form attached
hereto and deliver this Warrant to the Company at its office together with a
cashier's or certified check or wire transfer in an amount equal to the
aggregate Exercise Price of the Common Shares then being purchased. The
exercise of this Warrant shall be deemed to have been effected, and the Exercise
Price and the number of Common Shares issuable in connection with such exercise
shall be determined, as of the close of business on the Business Day on the date
A-4
on which such completed Subscription Form and check or wire transfer have been
delivered at the Company's office (the "Exercise Date"). Upon receipt of such
Subscription Form, the Company shall, as promptly as practicable, execute or
cause to be executed and deliver to the Holder or such Person as may be directed
in writing by such Holder a certificate or certificates representing the
aggregate number of Common Shares to which the Holder is entitled as specified
in the Subscription Form. Each stock certificate so delivered shall be in such
denomination as may be requested by the Holder and shall be registered in the
name of the Holder or such other name as shall be designated by the Holder. To
the extent permitted by United States law, the person in whose name any such
stock certificate is issued shall be deemed to have become the holder of record
of the shares represented thereby as of the Exercise Date. If this Warrant is
exercised only in part, the Company shall, at its expense, at the time of
delivery of such stock certificate or certificates, deliver to the Holder a new
Warrant of like tenor evidencing the rights of the Holder to purchase the
remaining Warrant Shares covered by this Warrant. The Company shall pay all
taxes, other expenses and charges payable in connection with the preparation,
execution and delivery of stock certificates pursuant to this Section 3, except
that, in case such stock certificates shall be registered in a name or names
other than the name of the Holder, funds sufficient to pay all stock transfer
taxes that may be payable upon the execution and delivery of such stock
certificate or certificates shall be paid by the Holder to the Company at the
time of delivery of such stock certificates by the Company.
B. Transfer Restriction Legend. Each certificate
representing Warrant Shares issued upon exercise of this Warrant, unless at the
time of such exercise the Warrant Shares are registered under the Securities
Act, shall bear the following legend:
The Shares represented by this
Certificate have not been registered under the
Securities Act of 1933 or registered or qualified
under the securities laws of any state and may be
offered and sold only if registered and qualified
pursuant to the relevant provisions of the federal
and state securities laws or if an exemption from
such registration and qualification requirements
is applicable.
Any certificate issued at any time upon transfer of, or in
exchange for or replacement of, any certificate bearing such legend shall also
bear such legend unless such legend is no longer required under the Securities
Act.
A-5
C. Character of Warrant Shares. All Common Shares
issuable upon the exercise of this Warrant shall, when issued, be duly
authorized, validly issued, fully paid and non-assessable.
SECTION 4. RESTRICTION ON TRANSFER; REPRESENTATIONS AND
WARRANTIES OF THE HOLDER.
A. This Warrant and the related Warrant Shares shall
not be transferable except upon registration and qualification under the
relevant provisions of the United States federal and state securities laws or if
an exemption from such requirements is applicable. The Company may require an
opinion of counsel (from counsel reasonably acceptable to, and in form and
substance reasonably acceptable to, the Company) with respect to the
availability of such exemption.
B. By accepting this Warrant, the Holder represents
and warrants that it is acquiring the warrant and, if exercised, the Warrant
Shares, for its own account for investment and not with a view to the
distribution or sale thereof.
SECTION 5. REGISTRATION RIGHTS.
Each Registrable Securities Holder has the following
registration rights:
A. Registration Rights. If the Company proposes to
file a registration statement under the Securities Act (other than a
registration statement on Form F-4 or S-8), the Company shall give written
notice of such proposed filing to each Registrable Securities Holder at least 20
days before the anticipated effective date of the registration statement. Such
notice shall offer to each such Registrable Securities Holder the opportunity to
register in such registration statement such number of Registrable Securities as
any such Registrable Securities Holder may request in a written notice to the
Company (which notice shall specify the Registrable Securities to be disposed of
by such Registrable Securities Holder) within 10 days after the receipt of such
notice. The Company will use its best efforts to effect the registration under
the Securities Act of all Registrable Securities that the Company has been so
requested to register by each such Registrable Securities Holder in accordance
with the provisions of subsection F of this Section 5 and to the extent required
to permit the disposition (in accordance with the intended methods set forth in
such registration statement) of the Registrable Securities so to be registered.
Registrable Securities Holders participating in any underwritten registered
offering under this Section 5A shall be required to distribute their registered
Registrable Securities in
A-6
accordance with the terms of the underwritten offering. The
Company shall permit, or shall cause the managing underwriter of
any such proposed offering to permit, the Registrable Securities requested to be
included in the registration to be included on the same terms and conditions as
applicable to the other securities of the Company included in such registration
statement; and (ii) use its best efforts to maintain the effectiveness of the
registration statement until the earlier to occur of (a) six months after the
effective date of the registration statement or (b) the consummation of the
distribution of all shares included in such registration statement. If the
securities proposed to be registered by the Company are to be disposed of in an
underwritten public offering, the notice hereunder from the Company to each
Registrable Securities Holder shall designate the proposed underwriters for such
offering and shall contain the Company's agreement to use its best efforts
subject to the provisions of subsection C of this Section 5, if requested to do
so by any such Registrable Securities Holder, to arrange for such underwriters
to include in such underwriting the Registrable Securities that the Company has
been so requested to register hereunder.
B. Underwritten Offerings. Notwithstanding the
foregoing, if any requested registration pursuant to this Section 5 involves an
underwritten offering by the Company, and the managing underwriter shall advise
the Company in writing (with a copy to the Registrable Securities Holder) that,
in its opinion, the distribution of all or a portion of the Registrable
Securities requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect the
distribution of such securities by the Company for its own account, then (i) the
number of shares of Registrable Securities so requested to be included in such
registration shall be reduced to that number of shares which, in the good faith
judgment of the managing underwriter, can be sold in such offering, and this
reduced number shall be allocated pro rata among such Registrable Securities
Holders and holders of other securities of the Company to be included in the
offering, on the basis of the number of Registrable Securities and other
securities of the Company requested to be so registered by such Registrable
Securities Holders and other holders, and (ii) if the requesting Registrable
Securities Holders are participating in a primary offering by the Company, the
Company will include in such registration, to the extent of the number of
securities which the Company is so advised can be sold in such offering, first,
securities that the Company proposes to issue and sell for its own account, and
second, Registrable Securities and other securities requested to be registered
by the Registrable Securities Holders and other holders thereof, allocated pro
rata among such Registrable
A-7
Securities Holders and other holders on the basis of the number of Registrable
Securities and other securities requested to be so registered by such
Registrable Securities Holders.
C. Company's Obligations in Registration. Whenever
the Company is obligated, by the provisions of this Section 5, to effect the
registration of any Registrable Securities under the Securities Act, the Company
shall:
(1) furnish to the Registrable Securities
Holders for whom such Registrable Securities are registered or are to be
registered and to the underwriter, if any, such numbers of copies of a
prospectus, including a preliminary prospectus and any amendments or supplements
thereto, in conformity with the requirements of the Securities Act, and such
other documents and information as such Registrable Securities Holders or
underwriter may reasonably request in order to facilitate the disposition of
such Registrable Securities or in order to conduct any investigation of the
Company in connection with the registration of such Registrable Securities,
provided that the Registrable Securities Holders shall maintain the
confidentiality of all such information that is not, or does not become (as a
result of such registration or otherwise), public information;
(2) register or qualify the Registrable
Securities covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as the Registrable Securities Holders for
whom such Registrable Securities are registered or are to be registered shall
reasonably request in light of any distribution being then contemplated, and do
any and all other acts and things that may be reasonably necessary or advisable
to enable such Registrable Securities Holders to consummate the disposition in
such jurisdictions of such Registrable Securities, except that the Company shall
not for any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified;
(3) notify each seller of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and, at the request of any such seller, the Company will
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit
A-8
to state any fact necessary to make the statements therein not misleading;
(4) cause all such Registrable Securities to
be listed on each securities exchange on which securities of the same class as
the Registrable Securities are then listed;
(5) provide a transfer agent and registrar
for all such Registrable Securities not later than the effective date of such
registration statement;
(6) make available for inspection by each
seller of Registered Securities, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement, provided that the Registrable Securities Holders shall maintain the
confidentiality of all such information that is not, or does not become (as a
result of such registration or otherwise), public information; and
(7) use its best efforts to cause such
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities governing
the operations of the Company in the United States as may be necessary to enable
the sellers thereof to consummate the disposition of such Registrable Securities
and cooperate with the Registrable Securities Holder to the extent the
Registrable Securities Holder is required to make any filing with or obtain any
approval from a governmental agency or authority in connection with such
disposition.
D. Payment of Registration Expenses. Except for
underwriting discounts, commissions, counsel fees of any separate counsel of
Registrable Securities Holders and any fees or expenses related to any due
diligence incurred by the Registrable Securities Holders requesting registration
of Registrable Securities, the costs and expenses of all registrations and
qualifications under the Securities Act and the securities or blue sky laws of
those jurisdictions for which registration or qualification is requested under
Section 5 hereof (in each case whether or not completed), and of all other
actions that the Company is required to take or effect pursuant to this Section
5, shall be paid by the Company (including, without limitation, all registration
and filing fees, printing expenses, auditing costs
A-9
and expenses, and the reasonable fees and disbursements of counsel of the
Company with respect to such registration proceedings).
E. Information from Registrable Securities Holders.
The Registrable Securities Holders shall furnish to the Company such information
concerning the Registrable Securities Holders and the distribution contemplated
by them as shall reasonably be required in connection with the actions to be
taken by the Company pursuant to this Section 5.
F. Indemnification.
(1) In the event of any registration under the
Securities Act of any Registrable Securities pursuant to this Section 5, the
Company hereby agrees to indemnify and hold harmless each Registrable Securities
Holder disposing of such Registrable Securities, such Registrable Securities
Holder's officers, directors, partners, legal counsel and accountants and each
other Person, if any, that controls (within the meaning of the Securities Act)
such Registrable Securities Holder, and any underwriter (as defined in the
Securities Act), and any Person who controls such underwriter, from and against
any losses, claims, damages or liabilities, joint or several, to which such
Registrable Securities Holder or controlling person or participating person may
become subject under the Securities Act or otherwise, to the extent that such
losses, claims, damages or liabilities (or proceedings in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act, in any
preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse such Registrable Securities Holder and each such controlling person or
participating person for any legal or any other expenses reasonably incurred by
such Registrable Securities Holder or such controlling person or participating
person in connection with investigating or defending any such loss, claim,
damage, liability or proceeding; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or proceeding arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary or final prospectus or such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by or on behalf of such
Registrable
A-10
Securities Holder or such controlling or participating person, as
the case may be, specifically stated to be used in the preparation thereof;
provided further, that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable Securities
or any other Person, if any, who controls such underwriter within the meaning of
the Act, in any such case to the extent that any such loss, claim, damage or
liability arises out of such Person's failure to send or give a copy of the
final prospectus to the Person claiming an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was completely corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any such director, officer, partner,
underwriter or controlling person and shall survive the transfer of such
securities by such seller.
(2) Each such Registrable Securities Holder
and each such underwriter of Registrable Securities will, if requested by the
Company prior to the initial filing of any such registration statement, agree in
writing to indemnify and hold harmless the Company against all losses, claims,
damages and liabilities to which the Company may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement of any material
fact contained on the effective date thereof, in any registration statement
under which such Registrable Securities were registered under the Securities
Act, or in any preliminary prospectus or final prospectus contained therein, or
in any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such statement or omission made in such registration statement,
such preliminary or final prospectus or such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Registrable Securities Holder or such
underwriter, as the case may be, and specifically stated to be for use in the
preparation thereof.
(3) Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 5, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party, give written notice to the latter of the commencement of
such
A-11
action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 5, except to the
extent that the indemnifying party is actually materially prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. Without the written consent of the indemnified party, which
shall not be unreasonably withheld, no indemnifying party shall consent to entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(4) If the indemnification provided for in
the foregoing paragraph is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any claims, actions,
demands, losses, damages, liabilities, costs or expenses referred to therein,
then each indemnifying party under any such subsection, in lieu of indemnifying
such indemnified party thereunder, hereby agrees to contribute to the amount
paid or payable by such indemnified party as a result of such claims, actions,
demands, losses, damages, liabilities, costs or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such claims, actions, demands, losses,
damages, liabilities, costs or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing, the amount
any Registrable Securities Holder of Registrable Securities shall
A-12
be obligated to contribute pursuant to this Section 5 shall in no event exceed
the amount equal to the per share public offering price (less any underwriting
discount and commissions and other expenses of such Registrable Securities
Holder) multiplied by the number of shares of Registrable Securities sold by
such Registrable Securities Holder pursuant to the registration statement that
gives rise to such obligation to contribute, less the aggregate amount of any
damages that such Registrable Securities Holder has otherwise been required to
pay in respect of such claim, action, demand, loss, damage, liability, cost or
expense or any substantially similar claim, action, demand, loss, damage,
liability, cost or expense arising from the sale of such Registrable Securities.
G. Additional Registration Procedures.
(1) The Company will immediately notify each
Registrable Securities Holder whose Registrable Securities are covered by a
registration statement filed pursuant to this Section 5 (which shall include for
purposes of this Section 5G, all prior Registrable Securities Holders who sold
all their Registrable Securities pursuant to such registration statement), at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and at
the request of any such holder, as soon as practicable, prepare and furnish to
such holder, a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made.
(2) Each Registrable Securities Holder
agrees that:
(a) upon receipt of any notice
from the Company of the happening of any event of the kind described in
subdivision (1) of this Section 5G, such holder will forthwith discontinue such
holder's disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's receipt of
the copies of the supplemented or amended prospectus contemplated by subdivision
(1) of this Section 5G, and, if so directed by the Company, will deliver to the
A-13
Company (at the Company's expense) all copies, other than permanent file copies,
then in such holder's possession of the prospectus relating to such Registrable
Securities at the time of receipt of such notice, and
(b) that it will immediately
notify the Company, at any time when a prospectus relating to the registration
of such Registrable Securities is required to be delivered under the Securities
Act, of the happening of any event as a result of which information previously
furnished by such holder to the Company in writing for inclusion in such
prospectus contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made. In the event the Company or any such holder shall give any such notice,
the period during which the Company must file a registration statement after the
receipt of a request to do so shall be extended by a number of days equal to the
number of days during the period from and including the giving of notice
pursuant to subdivision (1) of this Section 5J to and including the date when
each seller of any Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by subdivision (1) of Section 5G.
(3) The Registrable Securities Holder
agrees, if so required by the managing underwriter, not to effect any public
sale or distribution of Registrable Securities or sale of such securities
pursuant to Rule 144 under the Securities Act, during the seven days prior to
and the 90 days after any firm commitment underwritten registration of
securities of the Company has become effective, except as part of such
underwritten registration, whether or not the Holder participates in such
registration.
SECTION 6. SHARE ADJUSTMENT PROVISIONS.
The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of the events described below.
A. Mechanical Adjustments. The number of Warrant
Shares purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment as follows:
(1) In case the Company shall at any time
after the date of this Warrant (i) declare or pay a dividend in Common Shares or
make a distribution in Common Shares, (ii) subdivide its outstanding Common
Shares into a greater number of shares, (iii) combine its outstanding Common
Shares into a smaller number of Common Shares, (iv) make a distribution on its
A-14
Common Shares in shares of capital stock or securities exercisable for or
convertible into capital stock other than Common Shares, or (v) issue any shares
of capital stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing entity), the number of Warrant Shares purchasable upon
exercise of this Warrant immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive upon exercise of the Warrant the kind and
number of Warrant Shares or other securities of the Company that the Holder
would have owned or have been entitled to receive after the happening of any of
the events described above, had this Warrant been exercised immediately prior to
the happening of such an event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. Such adjustment shall be made successively
whenever any event listed above shall occur.
(2) In case the Company shall (i) issue
Common Shares, Options or Convertible Securities to any Person entitling such
Person to subscribe for or purchase Common Shares at a price per share that is
lower than the then current Fair Market Value (as defined below) per Common
Share on the date the Company agrees to issue such Common Shares, Options or
Convertible Securities, or (ii) fix a record date for the issuance of Options or
Convertible Securities to all holders of Common Shares entitling them to
subscribe for or purchase Common Shares at a price (or having a conversion or
exercise price per share) less than the Fair Market Value on such record date,
the number of Warrant Shares thereafter purchasable upon the exercise of this
Warrant shall be determined by multiplying the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior to the date of such
issuance (which date in the event of a distribution to all holders of Common
Shares shall be deemed to be the record date set by the Company to determine the
holders of Common Shares entitled to participate in such distribution) by a
fraction, of which the numerator shall be the number of Common Shares
outstanding on the date of issuance of such Options or Convertible Securities
plus the number of additional Common Shares offered for subscription or
purchase, and of which the denominator shall be the number of Common Shares
outstanding on the date of issuance of such Options or Convertible Securities
plus the number of shares that the aggregate offering price of the total number
of Common Shares, the exercise price of the Options (which shall be deemed to
include the purchase price for such Options), or the conversion price of the
Convertible Securities, as the case may be, so offered would purchase at the
current Fair Market Value per Common Share on the date of such
A-15
issuance. Such adjustment shall be made whenever such Options or Convertible
Securities are issued, and shall become effective immediately upon the date of
issuance; provided, however, that this Section 6.A.2 shall not apply to up to
two hundred thousand (200,000) Options or Convertible Securities issued by the
Company for executive/employee compensation purposes or to the issuance of
Convertible Securities or Common Shares upon the exercise of such Options or
conversion or exchange of such Convertible Securities and; provided further,
however, that in any such case in which Options or Convertible Securities are
deemed to be issued:
(A) no further
adjustment shall be made hereunder upon
the subsequent issuance of Convertible
Securities or Common Shares upon the
exercise of such Options or conversion
or exchange of such Convertible
Securities;
(B) if such
Options or Convertible Securities by
their terms provide, with the passage of
time or otherwise, for any increase or
decrease in the consideration payable to
the Company, or decrease or increase in
the number of Common Shares issuable,
upon the exercise, conversion or
exchange thereof, the adjustment made
upon the issuance of such Option or
Convertible Securities, and any
subsequent adjustments based thereon,
shall, upon any such increase or
decrease becoming effective (except to
the extent such increase or decrease
results from a change in the Fair Market
Value of the Common Shares), be
recomputed to reflect such increase or
decrease insofar as it affects such
Options or the rights of conversion or
exchange under such Convertible
Securities that are outstanding at such
time; provided, however, that no
adjustment shall be made with respect to
any Warrant Shares that shall have been
issued prior thereto upon the exercise
of this Warrant;
(C) upon the
expiration of any such Options or any
rights of conversion or exchange under
such Convertible Securities that have
not been exercised, the adjustments
hereunder upon the original issuance
thereof (or upon the occurrence of a
record date with respect thereto), and
any subsequent adjustments based
thereon, shall, upon such expiration, be
A-16
recomputed as if, in the case of
Convertible Securities or Options for
Common Shares, the only Common Shares
issued were the Common Shares, if any,
actually issued upon exercise of such
Options, and the cash consideration
received by the Company for the Common
Shares deemed to have been then issued
was the consideration actually received
by the Company for the issuance of all
such Options, whether or not exercised,
plus the cash consideration received by
the Company upon the issuance of the
Convertible Securities or upon the
actual exercise of such Options; and
(D) in the
case of any Options that expire by their
terms not more than 30 days after the
date of issuance thereof, no adjustment
hereunder shall be made until the
expiration or exercise of all or any
such Options, whereupon such adjustment
shall be made in the same manner
provided above with respect to the
Options so exercised based on the Fair
Market Value at the time of exercise.
(3) (i) In case the Company shall
distribute to all holders of its Common Shares evidences of its indebtedness or
assets (excluding cash dividends or distributions from current earnings), or
Options or Convertible Securities, then in each case the number of Warrant
Shares thereafter purchasable upon the exercise of this Warrant shall be
determined by multiplying the number of Warrant Shares theretofore purchasable
upon the exercise of the Warrant by a fraction, of which the numerator shall be
the then current Fair Market Value per Common Share (as defined in clause (4)
below) on the date of such distribution, and of which the denominator shall be
the then current Fair Market Value per Common Share, less the then fair value
(as determined by the disinterested members of the Board of Directors of the
Company) of the portion of the assets or evidence of indebtedness so distributed
or of such Options or Convertible Securities, applicable to one Common Share.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to the record date for
the determination of shareholders entitled to receive such distribution.
(ii) In the event of a distribution
by the Company to all holders of its Common Shares of stock of a subsidiary or
securities convertible into or exercisable for such stock, then in lieu of an
adjustment in the number of Warrant Shares purchasable upon the exercise of this
A-17
Warrant, the Holder upon the exercise thereof at any time after such
distribution, shall be entitled to receive from the Company, such subsidiary or
both, as the Company shall determine, the stock or other securities to which the
Holder would have been entitled if the Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in this
subsection A.
(4) The term "Fair Market Value" means, as
of the date of any determination thereof, the lower of (i) the average of the
daily market prices per share for twenty consecutive Business Days ending on the
last Business Day before such date and (ii) the market price on the date Company
agrees to such transaction. The market price for each such business day shall
be (i) if the Common Shares shall at the time be listed or admitted to unlisted
trading privileges on the New York Stock Exchange, on the basis of the last
reported sale price regular way of the Common Shares on the Composite Tape (or
if the Common Shares at the time are not so listed or admitted to unlisted
trading privileges on the New York Stock Exchange but are listed or admitted to
unlisted trading privileges on another national securities exchange, on the
basis of the last reported sale price regular way on a national securities
exchange on which the Common Shares are at the time listed or admitted to
unlisted trading privileges) on such Business Day upon which such a sale shall
have been effected (or if no sale takes place on any such day on such exchange,
the average of the closing bid and asked prices on such day as officially quoted
on such exchange), or (ii) if the Common Shares are not at the time so listed or
admitted to unlisted trading privileges on a national securities exchange, on
the basis of the last reported sales price in the Nasdaq National Market System
on each such Business Day upon which such a sale shall have been effected (or if
no sale takes place on any such day on such Nasdaq National Market System, the
average of the closing bid and asked prices on such day as officially quoted on
such system), or (iii) if the Common Shares are not at the time so listed or
admitted to unlisted trading privileges on a national securities exchange or
traded on the Nasdaq National Market System, on the basis of the average of the
highest reported bid and lowest reported asked prices of the Common Shares in
the over-the-counter market on each such business day, as reported by the
National Association of Securities Dealers Automated Quotations System
("NASDAQ") or similar organization if NASDAQ is no longer reporting such
information or (iv) if none of the foregoing market information is available,
the fair market value shall be as agreed between Company and Warrantholders who
hold a majority of the unissued Warrant Shares within five (5) Business Days.
A-18
In the event that the Company and Warrantholders
who hold a majority of the unissued Warrant Shares are unable to agree on the
Fair Market Value within five Business Days, they shall jointly select an
independent appraiser who shall determine the Fair Market Value (the
"Independent Appraiser"). If the parties cannot agree on a single appraiser,
each such party shall select an appraiser and those two appraisers shall then
determine the Fair Market Value of the Common Shares. In the event that such
two appraisers cannot agree on the Fair Market Value, the two appraisers shall
jointly select a third appraiser who shall determine which of the appraisals
performed by the first two appraisers is most appropriate, and such appraisal
shall be binding on the Company and the Warrantholders. The costs of all such
appraisals shall be borne by the Company.
(5) Whenever the number of Warrant Shares
purchasable upon the exercise of this Warrant is adjusted, as herein provided,
the number of Warrant Shares purchasable hereunder shall also be increased to
account for the Exercise Price of any additional Warrant Shares that may be
issued as a result of any such adjustment. The number of additional Warrant
Shares shall equal (i) the number of additional Warrant Shares issuable as a
result of the adjustment made pursuant to this subsection (5) multiplied by the
Exercise Price of a Warrant Share; (ii) divided by the Fair Market Value of a
share less the Exercise Price of a Warrant Share.
(6) No adjustment in the number of Warrant
Shares purchasable hereunder shall be required unless such adjustment would
result in an increase or decrease of at least one percent (1%) of the Exercise
Price; provided, however, that any adjustments that by reason of this paragraph
(6) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations shall be made to the nearest cent
or to the nearest one-thousandth of a share, as the case may be.
(7) The term "Common Shares" means (i) the
class of stock designated as the common shares of the Company on the date
hereof, or (ii) any other class of stock resulting from successive changes or
reclassifications 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 6,
the Holder shall become entitled to purchase any securities of the Company other
than Common Shares, thereafter the number of such other shares so purchasable
upon exercise of this Warrant and the Exercise Price 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
A-19
paragraphs (1) through (6), inclusive, above, and the other provisions of this
Section 6, shall apply on like terms to any such other securities; provided,
however, that the Exercise Price shall at no time be less than the par value of
the Common Shares; provided, further, that the Company shall reduce the par
value of its Common Shares, to the extent permitted by law, from time to time as
necessary so that such par value shall not be less than the Exercise Price then
in effect.
B. Effect of Reclassification, Merger, Consolidation,
Reorganization and Asset Sales. Unless otherwise agreed to by the Holder, if
any reclassification, merger, consolidation or reorganization of the Company in
which the Company is not the surviving entity, or the sale (or a series of
related sales) of all or substantially all of its assets or the assets of its
subsidiaries to another corporation, or a merger, consolidation, sale of assets,
or business combination in which the Company is the survivor, shall be effected
in such a way that holders of the Common Shares shall be entitled to receive
stock, securities or assets with respect to or in exchange for such capital
stock, then as a condition of such reclassification, merger, consolidation,
reorganization or sale, lawful and adequate provision shall be made whereby the
Holder shall thereafter have the right to receive, under the terms and
conditions herein contained, upon exercise of the Warrants in accordance with
Section 3 above, in lieu of the Common Shares of the Company immediately
theretofore receivable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding Common Shares equal to the number of such Common
Shares immediately theretofore had the Warrants been exercised prior to such
reclassification, merger, consolidation, reorganization, and in any such case
appropriate provision shall be made with respect to the rights and interests of
the Holder to the end that the provisions hereof (including, without limitation,
provisions for adjustment of the number of shares issuable upon exercise) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of the
Warrant; provided, however, that in an event of a reclassification, merger,
consolidation, reorganization or sale in which the consideration is not cash or
securities then tradable on an active trading market, the Company or the
acquiring entity must either (a) agree to provide to the Warrant Shares Holders
the same rights with respect to such non-cash consideration that exist with
respect to the Common Shares hereunder and otherwise, including without
limitation, the rights provided in Sections 5 and 6, or (b) purchase all of the
Warrants for cash in an amount equal to the fair market value of the Warrant
Shares less the Exercise Price as determined by an Independent Appraiser. In
A-20
such an event, the Company shall not effect any such reclassification, merger,
consolidation, reorganization or sale unless prior to or simultaneously with the
consummation thereof the successor corporation resulting from such
reclassification, merger, consolidation, reorganization or the corporation
purchasing such assets shall assume by written instrument executed and mailed or
delivered to Holder, the obligation to deliver to the Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions, the
Holder may be entitled to receive, and containing an express assumption by the
successor corporation of the due and punctual performance and observance of each
provision of this Warrant to be performed and observed by the Company and of all
liabilities and obligations of the Company, if any, as provided herein.
C. Accountants' Certificate. Upon each change in the
number of Common Shares issuable upon the exercise in whole or in part of this
Warrant, and in the event of any change in the rights of the Holder of this
Warrant by reason of other events herein set forth, then and in each such case,
the Company will promptly deliver to the Holder a notice of such adjustment duly
executed by the chief financial officer of the Company setting forth in detail
the particulars thereof and the method of calculating the same and, at least one
time during each calendar quarter during which any such change shall have
occurred, shall obtain a certificate of independent certified public accountants
of recognized national standing stating the new number of shares so issuable, or
specifying the other shares of stock, securities or assets and the amount
thereof receivable as a result of such change in rights, and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company will promptly mail a copy of such
accountants' certificate to the Holder. The certificate of such firm of
independent public accountants shall be conclusive evidence of the correctness
of the computation with respect to any such change in the number of such shares
so issuable.
D. Fractional Shares; Fair Market Value. No fraction
of a Common Share shall be issued upon exercise of this Warrant. If a fraction
of a Common Share would, except for the provisions of this paragraph, be
issuable upon exercise of this Warrant, the Company shall, in lieu of issuing
such fractional share, pay to the Holder of this Warrant an amount in cash equal
(to the nearest cent) to the fair market value of such fractional share on the
date of such exercise.
E. Other Shares. In the event that at any time, as a
result of any adjustment made pursuant to this Section 6, the Holder thereafter
shall become entitled to receive any shares of the Company other than the Common
A-21
Shares, thereafter the number of such other shares so receivable upon exercise
of this 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 Common Shares contained in this Section 6.
F. No Dilution or Impairment. The Company will not,
by amendment of its articles of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms hereof, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder hereunder. Without limiting the generality of the foregoing, the Company
(i) will not permit the par value of any Common Shares receivable upon the
exercise of this Warrant to exceed the amount payable therefor upon such
exercise, (ii) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock upon the exercise of any Warrants from time to
time outstanding, and (iii) will not take any action which results in any
adjustment of the Warrant Shares if the total number of Common Shares issuable
after the action upon the exercise of all of the Warrants would exceed the total
number of Common Shares then authorized by the Company's articles of
incorporation and available for the purpose of issue upon such exercise.
G. Other Dilutive Events. In case any event shall
occur as to which the provisions of Section 6 are not strictly applicable
(including a change in par value of the Common Shares) but as to which the
failure to make any adjustment would adversely effect, without diminution of the
proportionate interest in the Common Shares issuable upon the exercise of this
Warrant, the rights or value represented by the Warrants in accordance with the
essential intent and principles of this Section 6, then, in such case, the
Company shall appoint a firm of independent certified public accountants of
recognized national standing (which may be the regular auditors of the Company),
which shall give their opinion on the adjustment, if any, on a basis consistent
with the essential intent and principles established in this Section 6,
necessary to preserve, without dilution, the exercise rights represented by the
Warrants. Upon receipt of such opinion, the Company will mail a copy thereof to
the holders of the Warrants and shall make the adjustments described therein.
H. Form of Warrant After Adjustments. Unless
otherwise requested by the Holder, the form of this Warrant need not be changed
A-22
because of any adjustments in the Exercise Price or the number or kind of the
Warrant Shares, and Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in this
Warrant, as initially issued.
SECTION 7. SPECIAL AGREEMENTS OF THE COMPANY.
The Company covenants and agrees that:
A. Reservation of Shares. The Company shall at all
times authorize and reserve and have available for issuance at all times, free
from preemptive rights, other than those preemptive rights that have been
validly and effectively waived, that number of Common Shares that is deliverable
upon the exercise of the Warrants.
B. Par Value. Before taking any action which would
cause an adjustment pursuant to Section 6 hereof to reduce the Warrant Exercise
Price below the then par value of the Warrant Shares, the Company will take any
corporate action that may, in the opinion of its counsel (which may be counsel
employed by the Company), be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Warrant
Exercise Price as so adjusted.
C. Governmental Approvals. If any of the Common
Shares reserved for the purposes of exercise of the Warrant require registration
with or approval of any governmental authority (except for registrations or
approvals related solely to the Holder's ability to own the Warrant Shares)
under any foreign or United States federal law (other than the Securities Act)
or under any foreign or United States state law before such shares may be issued
upon exercise of this Warrant, the Company will, at its expense, as
expeditiously as possible cause such shares to be duly registered or approved,
as the case may be.
D. Binding Successors. This Warrant shall be binding
upon any successor of the Company by merger, consolidation, acquisition of all
or substantially all of the Company's assets or otherwise.
E. Reporting Recruitments Under the Exchange Act. If
at any time the Company is not required to file reports in compliance with
either Section 13 or Section 15(d) of the Exchange Act, the Company at its
expense will, forthwith upon the written request of the Holder, make available
adequate current public information with respect to the Company within the
meaning of paragraph (c)(2) of Rule 144 of the General Rules and Regulations
promulgated under the Securities Act ("Rule 144"). In addition, the Company
A-23
agrees to take such other measures and file such other information, documents
and reports (or otherwise to provide information to the Holders or their
prospective transferees), as shall be required by the Commission as a condition
to the availability of Rule 144 or 144A under the Securities Act (or any similar
exemptive provisions hereafter in effect).
F. Notification of Certain Events. To the extent
such information is not otherwise publicly available, the Company agrees to
notify Holder whenever (i) the Company grants warrants or options to any third
party or (ii) previously granted options are exercised or convertible securities
are converted by the holder thereof.
SECTION 8. NOTIFICATIONS BY THE COMPANY.
In case at any time:
(1) the Company shall declare upon the
Common Shares any dividend or other distribution to the holders of the Common
Shares;
(2) the Company shall offer to the holders
of the Common Shares a right of subscription for any additional shares of
capital stock of any class or other rights;
(3) the Board of Directors of the Company
shall authorize (whether definitively or subject to any conditions) any capital
reorganization, or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or substantially all
of its assets;
(4) the Board of Directors of the Company
shall authorize (whether definitively or subject to any conditions) a voluntary
dissolution, liquidation or winding-up of the Company; or
(5) the Company shall become subject to
involuntary dissolution, liquidation or winding-up; then, in any one or more of
such cases, the Company shall give written notice to the Holder of the date on
which (a) the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights or (b) reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up shall take place or be voted upon by the shareholders of the Company,
as the case may be. Such notice shall also specify the date as of which the
holders of record of the Common Shares shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
A-24
Common Shares or securities for other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such notice shall be given not
less than thirty (30) nor more than ninety (90) days prior to the record date or
the date on which the Company's transfer books are closed in respect thereto,
and such notice shall state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act, or to a favorable vote of the shareholders, if either is required. The
Company shall also mail to the Holder notices and other documentation of any
kind sent to the shareholders of the Company at the same time any such notice or
documentation is sent to such shareholders.
SECTION 9. NOTICES.
All notices and other communications required or which may
be given hereunder shall be in writing and shall be deemed effectively given or
received for all purposes only (i) when delivered personally, (ii) on receipt
when mailed by U.S. first class mail, registered or certified, postage prepaid,
return receipt requested, (iii) one day after being sent if sent by professional
overnight courier or messenger service guaranteeing one-day delivery with
receipt confirmed by the courier, or (iv) on the date of transmission if sent by
telegram, telex, telecopy or other means of electronic "hard copy" transmission,
with receipt confirmed by answer back, addressed as follows (or addressed as any
party may subsequently designate by notice in accordance with this Section 9):
If to the Holder:
Paramount Communications B.V.
c/o Paramount Pictures - Television Group
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Fax Telephone Number: (000) 000-0000
If to the Company:
Scandinavian Broadcasting System SA
0-00, xxx Xxxxxxx Xxxxx
XX 00 X-0000 Xxxxxxxxxx
Fax Telephone Number: 00-0-00-00-00
With a copy to:
A-25
O'Melveny & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax Telephone Number: (000) 000-0000
SECTION 10. RIGHTS OR LIABILITIES AS SHAREHOLDER.
This Warrant shall not entitle the Holder to any of rights
to vote or to consent as a shareholder of the Company. No provision hereof, in
the absence of affirmative action by the Holder to purchase the Common Shares,
and no mere enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the Exercise Price or as a
shareholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
SECTION 11. REPRESENTATIONS AND WARRANTIES.
As a material inducement to the Holder to acquire this
Warrant, the Company represents and warrants to the Holder that, as of the Issue
Date, the Common Shares of the Company are registered under Section 12(g) of the
Exchange Act and the Company is in full compliance with its reporting and filing
obligations thereunder. The reports filed under the Exchange Act do not (as of
their respective dates) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 12. GOOD FAITH AND BEST EFFORTS.
Neither the Company nor the Holder or its Affiliates shall
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant and the Warrant Agreement to be observed or performed by the parties,
and the respective parties shall at all times and in good faith carry out the
intent of each of this Warrant and the Warrant Agreement.
SECTION 13. GOVERNING LAW, CONSENT TO JURISDICTION.
This Warrant shall be governed by, and construed in
accordance with, the laws of the State of New York without reference to exercise
of conflict of law principles. Each party consents to exercise of personal and
exclusive venue and jurisdiction by the federal courts of the United States
located in New York state.
A-26
SECTION 14. MISCELLANEOUS.
This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party (or any predecessor in interest thereof) against which enforcement of the
same is sought. The headings in this Warrant are for purposes of reference only
and shall not affect the meaning or construction of any of the provisions
hereof.
SECTION 15. RIGHT TO FINANCIAL INFORMATION.
The Company shall provide the Holder copies of all
communications sent to shareholders of the Company concurrently with its
providing such communications to such shareholders.
SECTION 16. RIGHTS TO HOLDER TO INURE TO
BENEFIT OF WARRANT HOLDERS.
The rights of the Holder under this Warrant shall inure to
the benefit of all Warrant Shares Holders holding Common Shares as a result of
and following the exercise of this Warrant.
A-27
IN WITNESS WHEREOF, the Company has caused this Warrant
to be signed and delivered by its duly authorized officer, and to be effective
as of March 15, 1995.
Scandinavian Broadcasting System SA
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
A-28
SUBSCRIPTION FORM
To be Executed Upon
Exercise of the within Warrant of
Scandinavian Broadcasting System SA
The undersigned registered holder hereby exercises the right
to purchase _____________ Common Shares (the "Shares") covered by the within
Warrant, according to the conditions thereof, and herewith makes payment in full
of the Exercise Price for such Shares in the amount of $_____________. The
undersigned represents that it is purchasing the Shares for its own account and
not with a view to or for sale in connection with any distribution of
securities.
Please issue a certificate or certificates for such Shares
in the name of, and pay any cash for any fractional shares to:
Name:
-------------------------
Signature:
--------------------
Title:
-----------------------
Address:
---------------------
DATED:
----------------------
A-28
ASSIGNMENT FORM
To Be Executed by the Registered Holder
Desiring to Transfer the Within Warrant of
Scandinavian Broadcasting System SA
FOR VALUE RECEIVED, the undersigned registered
holder hereby sells, assigns and transfers unto ___________________, the
right to purchase ______________ shares of the Common Shares
covered by the within Warrant, and does hereby irrevocably
constitute and appoint Attorney to
transfer the such Warrant on the books of the Company (as defined in said
Warrant), with full power of substitution.
Name of Registered Holder
Name:
-------------------------
Signature:
--------------------
Title:
------------------------
Address:
----------------------
DATED:
--------------
NOTICE
The signature to the foregoing Assignment Form must
correspond to the name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change whatsoever.
A-29
