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EXHIBIT 10.14
WARRANTHOLDERS RIGHTS AGREEMENT
WARRANTHOLDERS RIGHTS AGREEMENT dated as of June 27, 1997 among Let's
Talk Cellular & Wireless, Inc., a Florida corporation (together with its
successors, "Holdings"), H.I.G. Fund V, Inc., a Cayman Islands corporation
(together with its successors, the "Fund"), Texas Cellular Partners, L.P., a
Delaware limited partnership (together with its successors, "TCP"), and
NationsCredit Commercial Corporation ("NationsCredit") (the Fund, TCP, together
with any holder of Conversion Shares (as defined herein) and such other
stockholders of Holdings as may, from time to time, become parties to this
Agreement in accordance with the provisions hereof, the "Stockholders"; and
NationsCredit and such other warrantholders of Holdings as may, from time to
time, become parties to this Agreement in accordance with the provisions hereof,
the "Warrantholders").
WHEREAS, as of the date hereof, the Fund is the beneficial owner of
650,000 shares of Common Stock (as defined herein), TCP is the beneficial owner
of 552,590 shares of Common Stock, and NationsCredit is the beneficial owner of
Warrants (as defined herein) to purchase 32,410 shares of Common Stock; and
WHEREAS, Holdings and each Stockholder (other than the holders of the
Conversion Shares) wish to provide to the Warrantholders and the holders of the
Conversion Shares the rights described herein;
NOW THEREFORE the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Unless otherwise defined herein, the following
terms used in this Agreement shall have the meanings specified below.
"Adjustment Event" has the meaning set forth in Section 2.10 thereof.
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"Affiliate" means, with respect to any Person, any of (i) a director or
executive officer of such Person, (ii) a spouse, parent, sibling or descendant
of such Person (or a spouse, parent, sibling or descendant of any director or
executive officer of such Person), (iii) any general or limited partner of such
Person, (iv) any holder of 10% or more of any class of equity securities of such
Person and (v) any other Person that, directly or indirectly, controls, or is
controlled by or is under common control with such Person. For the purpose of
this definition, "control" (including the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by contract or agency or otherwise.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Closing Date" means December 31, 1996.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock" means the Common Stock, par value $0.0001 per share,
of Holdings.
"Conversion Shares" means (i) any shares of Common Stock or other
securities issued upon the exercise of any Warrants and (ii) any securities
issued with respect to any of such shares or other securities referred to in
clause (i) upon the conversion thereof into other securities or by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise;
provided that any of such securities shall cease to be Conversion Shares when
such securities shall have (x) been disposed of pursuant to a Public Sale or (y)
ceased to be outstanding.
"Credit Agreement" means the Credit Agreement dated as of December 31,
1996, as amended and restated as of June 27, 1997, among Telephone Warehouse,
Inc., National Cellular, Incorporated, Holdings, TCP, the lenders named therein
and NationsCredit, as agent, as further amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such successor Federal statute.
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"Fund" has the meaning set forth in the introductory paragraph.
"Indemnified Party" has the meaning set forth in Section 3.5(a) hereof.
"Initial Public Offering" means the first registration of an offering
of shares of Common Stock under the Securities Act which becomes effective
(other than by a registration on Form X-0, X-0, X-00 or S-15 or any successor or
similar forms).
"Initiating Holders" has the meaning set forth in Section 3.1 hereof.
"Majority Holders" means Holders holding a majority in interest of the
outstanding Conversion Shares and Warrants (such majority determined, for
purposes of this definition, by calculating the number of Conversion Shares for
which such Warrants are then exercisable).
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Other Securities" has the meaning set forth in Section 3.1.
"Person" means a corporation, an association, a partnership, a trust, a
limited liability company, an organization, a business, an individual, a
government or a subdivision thereof or a governmental agency.
"Preferred Stock Purchase Agreement" means the Series A Preferred Stock
Purchase Agreement dated as of June 25, 1996 between the Fund and Holdings, as
amended by the Conversion Agreement dated as of June 27, 1997 by and between
Holdings, the Fund and TCP, as further amended from time to time.
"Public Sale" means any sale of Common Stock to the public pursuant to
an offering registered under the Securities Act or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 (or any
successor provision then in effect) adopted under the Securities Act.
"Registrable Securities" means any Conversion Shares until the earlier
of (i) the date (if any) on which such Conversion Shares shall have been
exchanged for new equity securities of Holdings not bearing a legend restricting
transfer, the subsequent disposition of which shall not require registration or
qualification under the Securities Act or any similar state law then in force
and (ii) the date on
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which such Conversion Shares may be sold pursuant to Rule 144(k) under the
Securities Act.
"Registration Expenses" means all expenses incident to Holdings'
performance of or compliance with Sections 3.1 through 3.5 hereof, including (i)
all registration, filing and NASD fees, (ii) all fees and expenses of complying
with securities or blue sky laws, (iii) all word processing, duplicating and
printing expenses, (iv) all messenger and delivery expenses, (v) the fees and
disbursements of counsel for Holdings and of its independent public accountants,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, (vi) the fees and
disbursements of any one counsel retained by the holder or holders of more than
50% of the Registrable Securities being registered (or, in the case of any
registration effected pursuant to Section 3.1, as the Initiating Holders shall
have selected to represent all holders of the Registrable Securities being
registered), (vii) premiums and other costs of policies of insurance (if any)
against liabilities arising out of the public offering of the Registrable
Securities being registered if Holdings desires such insurance and (viii) any
fees and disbursements of underwriters customarily paid by issuers or sellers of
securities, but not including underwriting discounts and commissions and
transfer taxes, if any; provided that, in any case where Registration Expenses
are not to be borne by Holdings, such expenses shall not include (i) salaries of
Holdings personnel or general overhead expenses of Holdings, (ii) auditing fees,
(iii) premiums or other expenses relating to liability insurance required by
underwriters of Holdings or (iv) other expenses for the preparation of financial
statements or other data, to the extent that any of the foregoing either is
normally prepared by Holdings in the ordinary course of its business or would
have been incurred by Holdings had no public offering taken place.
"Regulation Y Holder" means any Warrant Securityholder that is a bank
holding company within the meaning of the BHC Act, or a subsidiary thereof
subject to Regulation Y under the BHC Act.
"Regulatory Change" means, with respect to any Regulation Y Holder, (i)
any change on or after the date hereof in United States federal or state or
foreign laws or regulations (including the BHC Act and Regulation Y thereunder);
(ii) the adoption on or after the date hereof of any interpretation or ruling
applying to such Regulation Y Holder, individually or as a member of a class,
under any United States federal or state or foreign laws or regulations by any
court or governmental or regulatory authority charged with the interpretation or
administration thereof; or (iii) the modification on or after the date hereof of
any agreement with or commitment of any such governmental or regulatory
authority that is applicable to or binding upon such Regulation Y Holder.
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"Restricted Securities" means the Warrants, the Conversion Shares and
any securities obtained upon exchange for or upon conversion or transfer of or
as a distribution on Warrants, the Conversion Shares or any such securities;
provided that particular securities shall cease to be Restricted Securities when
such securities shall have (x) been disposed of pursuant to a Public Sale, (y)
been otherwise transferred or exchanged and new certificates for them not
bearing a legend restricting further transfer shall have been delivered by
Holdings and subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state law then in
force or (z) ceased to be outstanding. Whenever any particular securities cease
to be Restricted Securities, the holder thereof shall be entitled to receive
from the issuer thereof or its transfer agent, without expense (other than
transfer taxes, if any), new securities of like tenor not bearing a legend of
the character set forth in Section 2.2.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
"Stockholder" has the meaning set forth in the introductory paragraph.
"Shareholders' Agreement" means the Shareholders' Agreement dated as of
June 27, 1997 by and among Holdings and the shareholders listed on the signature
page thereof, as amended and in effect from time to time.
"Warrant Securityholder" means at any time any Warrantholder or any
holder of Conversion Shares.
"Warrantholders" has the meaning set forth in the introductory
paragraph.
"Warrants" means the Warrant or Warrants originally issued to
NationsCredit on June 27, 1997 to purchase 32,410 shares of Common Stock, as
such Warrants may be transferred or otherwise assigned, but only to the extent
not theretofore exercised, redeemed or expired in accordance with their
respective terms.
All references herein to "days" shall mean calendar days unless
otherwise specified.
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ARTICLE II
TRANSFER AND CONVERSION OF SHARES;
PAYMENTS TO WARRANT SECURITYHOLDERS
SECTION 2.1 General. Except as otherwise provided in this Agreement and
the Shareholders' Agreement or by law, each Stockholder may transfer its shares
of Common Stock at any time to any Person.
SECTION 2.2 Restrictions on Transfer and Conversion; Legend on
Certificates. (a) Except as otherwise provided in this Agreement, Restricted
Securities shall not be transferable except (i) pursuant to an effective
registration statement under the Securities Act, (ii) pursuant to Rule 144 or
144A (or any successor provisions) under the Securities Act or (iii) pursuant to
a transaction that is otherwise exempt from the registration requirements of the
Securities Act.
(b) Unless otherwise expressly provided herein, each certificate for
Restricted Securities and each certificate issued in exchange for or upon
transfer of any thereof shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO AND HAVE THE BENEFIT OF A WARRANTHOLDERS RIGHTS AGREEMENT
DATED AS OF JUNE 27, 1997, AMONG LET'S TALK CELLULAR & WIRELESS, INC.
AND THE STOCKHOLDERS AND WARRANTHOLDERS PARTIES THERETO, COPIES OF
WHICH ARE ON FILE WITH LET'S TALK CELLULAR & WIRELESS, INC."
(c) Any other provision of this Agreement to the contrary
notwithstanding, no transfer of any Restricted Securities other than pursuant to
a Public Sale may be made to any Person unless such Person shall have agreed in
writing that such Person, as a holder of Restricted Securities, and the
Restricted Securities it acquires shall be bound by and be entitled to the
benefits of all the provisions of this Agreement applicable to such Restricted
Securities (and upon
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such agreement such Person shall be entitled to such benefits). Any purported
transfer of Restricted Securities without compliance with the applicable
provisions of this Agreement shall be void and of no effect, and the purported
transferee shall have no rights as a Warrantholder or Shareholder (as
applicable) or under this Agreement. In the event of such non-complying
transfer, Holdings shall not transfer any such Restricted Securities on its
books or recognize the purported transferee as a shareholder or warrantholder,
as the case may be, for any purpose, until all applicable provisions of this
Agreement have been complied with.
(d) Holdings and each Stockholder agree to cause each transferee from
them of any shares of Common Stock (other than pursuant to a Public Sale or sale
to employees of Holdings; provided that the aggregate amount of all such shares
of Common Stock transferred to employees who are not a party hereto does not
exceed 5% of all shares of Common Stock outstanding on the date hereof) to
execute and deliver an instrument in form and substance satisfactory to Holdings
and the Majority Holders pursuant to which such transferee agrees to be bound by
the provisions of this Agreement applicable to holders of shares of Common Stock
of the type transferred.
SECTION 2.3 Permitted Transfers. The restrictions on transfer provided
in Section 2.2(a) shall not be applicable to any transfer in compliance with
federal and all applicable state securities laws (i) to an Affiliate of the
holder of Restricted Securities, from an Affiliate of such holder to such holder
or between Affiliates of such holder (if any such Affiliate to whom shares of
Restricted Securities have been transferred by a holder thereof ceases to be an
Affiliate of such holder of Restricted Securities, such Restricted Securities
shall immediately be transferred back to the transferor thereof), (ii) upon the
death of any holder of Restricted Securities to such holder's executors,
administrators or testamentary trustees or (iii) to a trust the beneficiaries of
which include only the holder of such Restricted Securities or such holder's
spouse, parents, siblings or descendants (any transferee referred to in (i),
(ii) or (iii) above being referred to herein as a "Permitted Transferee");
provided that no such transfer shall be made to any Permitted Transferee unless
such Permitted Transferee shall have agreed in writing that such Permitted
Transferee, as a Stockholder or Warrantholder (as the case may be), and the
shares of Common Stock or Warrants it acquires shall be bound by and be entitled
to the benefits of all the provisions of this Agreement applicable to Common
Stock or Warrants (as the case may be), and upon such agreement such Permitted
Transferee shall be entitled to such benefits.
SECTION 2.4 Tag-Along Rights. (a) If any Stockholder (other than the
Warrant Securityholders) (any such Person for purposes of this Section 2.4, the
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"Transferor") wishes to transfer at any time all or a portion of its shares of
Common Stock to any Person (the "Transferee"), the Transferor shall first give
to Holdings and each Warrant Securityholder (pursuant to a list provided by
Holdings) a written notice (a "Transfer Notice"), executed by it and the
Transferee and containing (i) the number of shares of Common Stock that the
Transferee proposes to acquire from the Transferor, (ii) the name and address of
the Transferee, (iii) the proposed purchase price, terms of payment and other
material terms and conditions of such proposed transfer, (iv) an estimate, in
the Transferor's reasonable judgment, of the fair market value of any non-cash
consideration offered by the Transferee and (v) an offer by the Transferee or
Transferor to purchase, upon the purchase by the Transferee of any shares of
Common Stock owned by the Transferor and for the same per share consideration,
that number of Conversion Shares (or if such number is not an integral number,
the next integral number which is greater than such number) of each Warrant
Securityholder which shall be the product of (x) the aggregate number of
Conversion Shares either then owned, or issuable upon exercise of Warrants then
owned, by such Warrant Securityholder and (y) a fraction, the numerator of which
shall be the number of shares of Common Stock indicated in the Transfer Notice
as subject to purchase by the Transferee and the denominator of which shall be
the sum of (A) the total number of shares of Common Stock then owned by the
Transferor and its Affiliates plus (B) the total number of Conversion Shares
either then owned, or issuable upon exercise of Warrants then owned, by each
Warrant Securityholder transferring shares to the Transferee. Each Warrant
Securityholder shall have the right, for a period of 15 days after the Transfer
Notice is given, to accept such offer in whole or in part, exercisable by
delivering a written notice to the Transferor and Holdings within such 15-day
period, stating therein the number of Conversion Shares such Warrant
Securityholder wishes to sell to the Transferor or Transferee, as the case may
be. Prior to the earlier of (x) the end of such 15-day period or (y) the
acceptance or rejection by each Warrant Securityholder of the Transferee's or
Transferor's offer, as the case may be, the Transferor will not complete any
sale of shares of Common Stock to the Transferee. Thereafter, for a period of 60
days after the prohibition under the preceding sentence shall have terminated,
the Transferor may sell to the Transferee for the consideration stated and on
terms set forth in the Transfer Notice the shares of Common Stock stated in the
Transfer Notice as subject to purchase by the Transferee; provided that the
Transferor or Transferee, as the case may be, shall simultaneously purchase from
those Warrant Securityholders who have accepted the Transferor's or Transferee's
offer, as the case may be, the number of Conversion Shares with respect to which
such offer was accepted (or, if such number exceeds the number of Conversion
Shares for which the offer was made, such number of Conversion Shares from each
Warrant Securityholder as shall result in a ratable allocation to all accepting
Warrant Securityholders based on the number of Conversion Shares with respect
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to which such offer was accepted by the Warrant Securityholders). The provisions
of this Section 2.4 shall not apply to transfers (i) between the Transferor and
any of its Affiliates or between Affiliates of the Transferor, (ii) to employees
of Holdings (provided that the aggregate amount of all shares of Common Stock so
transferred does not exceed 5% of all shares of Common Stock outstanding on the
date hereof) or (iii) transfers to any Current Shareholder (as defined therein)
existing on the date hereof pursuant to Section 3 of the Shareholders'
Agreement.
SECTION 2.5 Drag-Along Rights. If at any time prior to an Initial
Public Offering, any Stockholder (other than the Warrant Securityholders) (any
such Person for purposes of this Section 2.5, the "Transferor") wishes to
transfer all of the shares of Common Stock owned by it and its Affiliates
(provided that such shares of Common Stock constitute more than 50% of all
shares of Common Stock on a Fully Diluted Basis (as determined in the Warrants)
at such time) in a bona fide sale to any Person (the "Proposed Transferee")
pursuant to which the consideration to be paid by the Proposed Transferee
consists solely of cash, freely tradeable securities with an active public
market or securities of a company in the same or substantially similar business
of Holdings at such time and the Transferor and its Affiliates will not receive,
in connection with the transactions contemplated at the time of such transfer,
any other securities or options to acquire securities of Holdings unless also
received by the Warrant Securityholders, then the Transferor shall have the
right (the "Drag-Along Right") to require each Warrant Securityholder to sell to
the Proposed Transferee for the same per share consideration received by the
Transferor all of the Conversion Shares and Warrants (calculated, in the case of
the Warrants, on the number of Conversion Shares for which such Warrant is
exercisable at such time) held by such Warrant Securityholder; provided that (a)
such price per share is not less than the Fair Market Value (as defined in the
Warrants) of Holdings per share of outstanding Common Stock on a Fully Diluted
Basis and (b) each Warrant Securityholder shall not be obligated to make any
representation or warranty, or incur any liability in connection with any such
transfer, other than as to its ownership of the Conversion Shares or Warrants
being transferred by it. To exercise the Drag-Along Right, the Transferor shall
first give to Holdings and each other Warrant Securityholder (pursuant to a list
provided by Holdings) a written notice (a "Drag-Along Notice") executed by the
Transferor and the Proposed Transferee and containing (a) the name and address
of the Proposed Transferee, (b) the proposed purchase price of each share of
Common Stock (certifying that such price per share is not less than the Fair
Market Value of outstanding Common Stock on a Fully Diluted Basis), terms of
payment and other material terms and conditions of the Proposed Transferee's
offer, and (c) the aggregate number of Conversion Shares or Warrants owned by
each Warrant
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Securityholder with respect to which the Transferor wishes to exercise its
Drag-Along Right pursuant to this Section 2.5. Each Warrant Securityholder shall
thereafter be obligated to sell to the Proposed Transferee the Conversion Shares
and Warrants subject to such Drag-Along Notice; provided that the sale to the
Proposed Transferee is consummated within 180 days of delivery of the Drag-Along
Notice. If the sale is not consummated within such 180-day period, then each
affected Warrant Securityholder may sell, but shall no longer be obligated to
sell, such Warrant Securityholder's Conversion Shares or Warrants pursuant to
such Drag-Along Notice. The provisions of this Section 2.5 shall not apply to
transfers between the Transferor and any of its Affiliates or between Affiliates
of the Transferor.
SECTION 2.6 Shareholders' Agreement. In addition to any other
restrictions on transfer provided for herein, the transfer of shares of Common
Stock owned by the Stockholders shall be subject to the terms and provisions of
the Shareholders' Agreement.
SECTION 2.7 Restrictions on Transfer by Regulation Y Holders. (a) No
Regulation Y Holder may transfer any Warrant or any Conversion Shares; provided
that such Regulation Y Holder may transfer such Warrant or Conversion Shares (i)
to Holdings; (ii) to the public in an offering registered under the Securities
Act; (iii) in a transaction pursuant to Rule 144 or Rule 144A (or any successor
provisions) under the Securities Act or otherwise exempt from the registration
requirements of the Securities Act in which no single purchaser receives an
interest (treating any such Warrant as exercised) equivalent to more than two
percent of the outstanding Common Stock; or (iv) in a single transaction to a
third party who acquires at least a majority of the Common Stock without regard
to the transfer of such Warrant or Conversion Shares. In the event of a
Regulatory Change, the effect of which is to permit such Regulation Y Holder to
transfer such Warrant or Conversion Shares in any other manner, the foregoing
proviso shall be deemed modified to permit a transfer of such Warrant or
Conversion Shares in such other manner.
(b) Nothing in Sections 2.4, 2.5 or 2.6 of this Agreement shall require
any Regulation Y Holder to make a transfer of Warrants or Conversion Shares in a
manner not permitted by Section 2.7(a) (an "Impermissible Transfer"). If
Sections 2.4, 2.5 or 2.6 of this Agreement would otherwise require any
Regulation Y Holder to make an Impermissible Transfer as a condition precedent
to making a transfer of Warrants or Conversion Shares in a manner permitted by
Section 2.7(a) (a "Permissible Transfer"), then such Regulation Y Holder shall
not be required to make such Impermissible Transfer as a condition precedent to
making such Permissible Transfer.
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SECTION 2.8 Adjustment Event Fee. If on or prior to the first
anniversary of the date of any redemption of the Warrants pursuant to Section
5.3 of the Warrants, (i) Holdings completes an Initial Public Offering or (ii)
more than 25% of the Common Stock (on a Fully Diluted Basis) are sold to any
Person or Persons (other than a Person that is an Affiliate of Holdings prior to
the consummation of such sale or sales) as part of a single sale or series of
sales (each of the foregoing events being herein called an "Adjustment Event"),
then Holdings shall pay to each Warrantholder as additional compensation (such
compensation to be in cash or, to the extent and in the same proportion as the
proportion of non-cash consideration paid by Persons purchasing shares of Common
Stock in connection with such Adjustment Event, such non-cash consideration) an
amount equal to the product of (x) the difference between the highest price per
share paid or to be paid by Persons purchasing shares of Common Stock in
connection with such Adjustment Event (less underwriting commissions and other
appropriate costs and expenses) less the Optional Redemption Price (as defined
in the Warrants) (determined on a per share basis) paid to such Warrantholder
multiplied by (y) the number of shares of Common Stock issuable upon exercise of
the Warrants of such Warrantholder that were redeemed.
SECTION 2.9 No Inconsistent Agreements. Holdings has not entered into
and will not enter into any registration rights agreements or similar
arrangements the performance by Holdings of which would in any manner conflict
with, restrict or be inconsistent with the performance by Holdings of its
obligations under this Agreement.
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1 Registration on Request. (a) At any time or from time to
time beginning 180 days after the date of consummation of an Initial Public
Offering (or after such shorter period as the underwriter or underwriters, if
any, distributing Common Stock in such Initial Public Offering may permit), upon
the written request of the Majority Holders (the "Initiating Holders"),
requesting that Holdings effect the registration under the Securities Act of all
or part of (but not less than 50% of) such Initiating Holders' Registrable
Securities and specifying the intended method of disposition thereof, Holdings
will promptly give written notice of such requested registration to all holders
of Warrants and Registrable Securities, and thereupon Holdings will use its best
efforts to effect the registration under the Securities Act of:
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(i) the Registrable Securities which Holdings has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request;
(ii) all other Registrable Securities the holders of which
shall have made a written request to Holdings for registration thereof
within 30 days after the giving of such written notice by Holdings
(which request shall specify the intended method of disposition of such
Registrable Securities); and
(iii) all shares of Common Stock which Holdings may elect to
register in connection with the offering of Registrable Securities
pursuant to this Section 3.1, whether for its own account or for the
account of a holder of Common Stock,
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any, to be so registered; provided that
(x) the Warrant Securityholders as a class shall be entitled to not more than
two registrations upon request pursuant to this Section 3.1 and (y) if at the
time of the Initiating Holders' request to effect a registration under this
Section 3.1, the Warrant Securityholders' shares of Registrable Securities are
subject to a lockup pursuant to Section 3.4(b), until such time as such shares
are no longer subject to such lockup, Holdings shall not be obligated to file
any registration statement pursuant to this Section 5.1.
(b) Registrations under this Section 3.1 shall be on such appropriate
registration form of the Commission (i) as shall be selected by Holdings and
(ii) as shall permit the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition specified in their
request for such registration. Holdings agrees to include in any such
registration statement all information which holders of Registrable Securities
being registered shall reasonably request.
(c) Holdings will pay all Registration Expenses in connection with one
registration requested pursuant to this Section 3.1; provided that, in addition,
Holdings shall pay all Registration Expenses in connection with any registration
upon request pursuant to which less than 50% of the Registrable Securities
requested to be registered by such Initiating Holders are registered, but no
such registration shall be counted as a requested registration for purposes of
this Section 3.1. The underwriting discounts and commissions and transfer taxes,
if any, allocable to the Registrable Securities requested to be registered by
the
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Initiating Holders in connection with each registration requested under this
Section 3.1 shall be paid for by the Initiating Holders requesting such
registration.
(d) A registration requested pursuant to this Section 3.1 shall not be
deemed to have been effected (i) unless a registration statement with respect
thereto has become effective; provided that a registration which does not become
effective after Holdings has filed a registration statement with respect thereto
solely by reason of the refusal to proceed by the Initiating Holders (other than
a refusal to proceed based upon the advice of counsel relating to a matter with
respect to Holdings) shall be deemed to have been effected by Holdings at the
request of the Initiating Holders unless the Initiating Holders shall have
elected to pay all Registration Expenses in connection with such registration,
(ii) if, after it has become effective, such registration is interfered with by
any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason, other than by reason of some
act or omission by the Initiating Holders, or (iii) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied, other than by reason of
some act or omission by the Initiating Holders.
(e) If a requested registration pursuant to this Section 3.1 involves
an underwritten offering, the underwriter or underwriters thereof shall be
selected by the holders of at least a majority (by a number of shares) of the
Registrable Securities as to which registration has been requested and shall be
reasonably acceptable to Holdings; provided that, if Holdings is obligated to
pay Registration Expenses in connection with such registration, the holders
selecting such underwriter or underwriters shall not select any underwriter or
underwriters that will charge fees in connection with such registration without
Holdings' consent.
(f) If a requested registration pursuant to this Section 3.1 involves
an underwritten offering, and the managing underwriter shall advise Holdings
(with a copy of any such notice to each holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration (including securities proposed to
be sold for the account of Holdings) exceeds the number which can be sold in
such offering within a price range acceptable to the Initiating Holders,
Holdings will include in such registration, to the extent of the number which
Holdings is so advised can be sold in such offering, (i) first, Registrable
Securities requested to be included in such registration by the holder or
holders of Registrable Securities, (ii) second, all securities other than
Registrable Securities (any such shares with respect to any registration, "Other
Securities") requested to be included by the holder or holders thereof, and
(iii) third, all securities proposed to be included by Holdings in such
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registration, in each case if less than all such securities or shares, then pro
rata among such holders requesting such registration on the basis of the number
of such securities requested to be included by such holders.
SECTION 3.2 Incidental Registration. (a) If Holdings at any time
proposes to register any of its securities under the Securities Act (other than
(x) by a registration on Form X-0, X-0, X-00 or S-15 or any successor or similar
forms or (y) pursuant to Section 3.1) whether for its own account or for the
account of the holder or holders of any Other Securities, it will each such time
give prompt written notice to all Warrant Securityholders of its intention to do
so and of such holders' rights under this Section 3.2. Upon the written request
of any such holder made within 20 days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such holder and the intended method of disposition thereof), Holdings will
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities which Holdings has been so requested to register by the
holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such Registrable Securities in
the registration statement which covers the securities which Holdings proposes
to register; provided that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, Holdings
shall determine for any reason either not to register or to delay registration
of such securities, Holdings may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any Warrant
Securityholder entitled to do so to request that such registration be effected
as a registration under Section 3.1, and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities, for the same period as the delay in registering such other
securities. No registration effected under this Section 3.2 shall relieve
Holdings of its obligation to effect any registration upon request under Section
3.1, nor shall any such registration hereunder be deemed to have been effected
pursuant to Section 3.1. Holdings will pay all Registration Expenses in
connection with each registration of Registrable Securities pursuant to this
Section 3.2.
(b) If Holdings at any time proposes to register any of its securities
under the Securities Act as contemplated by Section 3.2(a) and such securities
are to be distributed by or through one or more underwriters, Holdings will, if
requested by
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any holder of Registrable Securities as provided in this Section 3.2, use its
best efforts to arrange for such underwriters to include all the Registrable
Securities to be offered and sold by such holder among the securities to be
distributed by such underwriters; provided that if the managing underwriter of
such underwritten offering shall inform Holdings and holders of the Registrable
Securities requesting such registration and all other holders of any Other
Securities which shall have exercised, in respect of such underwritten offering,
registration rights comparable to the rights under this Section 3.2 by letter of
its belief that inclusion in such distribution of all or a specified number of
such securities proposed to be distributed by such underwriters would interfere
with the successful marketing of the securities being distributed by such
underwriters (such letter to state the basis of such belief and the approximate
number of such Registrable Securities and such Other Securities proposed so to
be registered which may be distributed without such effect), then Holdings may,
upon written notice to all holders of such Registrable Securities and holders of
such Other Securities, include in such registration, if and to the extent stated
by such managing underwriter to be necessary to eliminate such effect, (i)
first, securities requested to be included in such registration for the account
of Holdings ("Holdings Shares"), (ii) second, if such registration shall be in
connection with a request for registration by the Fund and/or TCP pursuant to
Section 7.2 of the Preferred Stock Purchase Agreement, securities requested to
be included in such registration by the Fund and TCP, (iii) third, Registrable
Securities and Other Securities (unless included pursuant to subsection (ii)
above) requested to be included in such registration by the holder or holders
thereof, pro rata among such holders requesting such registration on the basis
of the number of such securities or shares requested to be included by such
holders; provided that (x) if such registration shall be in connection with an
Initial Public Offering, Holdings shall include only Registrable Securities and
Other Securities requested to be included in such registration by the holders
thereof, pro rata among such holders on the basis of the number of such
securities requested to be included by such holders, such that the resultant
aggregate number of such Registrable Securities and Other Securities so included
in such registration, together with the number of securities to be included in
such registration for the account of Holdings, shall be equal to the number of
shares stated in such managing underwriter's letter, and (y) if the managing
underwriter indicates that the inclusion of a greater percentage of Registrable
Securities (and a lesser percentage of Other Securities) than the inclusion of
such shares on a pro rata basis would permit a greater number of shares of its
securities to be registered in a manner that would not interfere with the
successful marketing of the securities being distributed by such underwriters,
then Registrable Securities and Other Securities shall be included in such
registration in the proportions so determined by the managing underwriter to
permit inclusion of such greater number.
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SECTION 3.3 Registration Procedures. (a) If and whenever Holdings is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 3.1 and 3.2, Holdings shall, as
expeditiously as possible:
(i) prepare and (within 60 days after the end of the period
within which requests for registration may be given to Holdings or in
any event as soon thereafter as possible; provided that, in the case of
a registration pursuant to Section 3.1, such filing to be made within
60 days after the initial request of an Initiating Holder or in any
event as soon thereafter as possible) file with the Commission the
requisite registration statement to effect such registration (including
such audited financial statements as may be required by the Securities
Act) and thereafter use its best efforts to cause such registration
statement to become and remain effective as provided in clause (ii)
below; provided however that Holdings may discontinue any registration
of its securities which are not Registrable Securities at any time
prior to the effective date of the registration statement relating
thereto; provided further that before filing such registration
statement or any amendments thereto, Holdings will furnish to the
counsel selected by the holders of Registrable Securities which are to
be included in such registration copies of all such documents proposed
to be filed, which documents will be subject to the review of such
counsel;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until the earlier of (x) in the case of a
registration pursuant to Section 3.1, the expiration of 120 days after
such registration statement becomes effective, or (y) in the case of a
registration pursuant to Section 3.2, the expiration of 90 days after
such registration statement becomes effective;
(iii) furnish to each seller of Registrable Securities covered
by such registration statement and each underwriter, if any, of the
securities being sold by such seller such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
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with the requirements of the Securities Act, and such other documents,
as such seller and underwriter, if any, may reasonably request in order
to facilitate the public sale or other disposition of the Registrable
Securities owned by such seller;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under blue sky or similar laws of such
jurisdictions as any seller thereof and any underwriter of the
securities being sold by such seller shall reasonably request, to keep
such registrations or qualifications in effect for so long as such
registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable such seller
and underwriter to consummate the disposition in such jurisdictions of
the securities owned by such seller, except that Holdings shall not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for
the requirements of this subdivision (iv) be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller and the underwriters, if
any, of
(x) an opinion of counsel for Holdings, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, an
opinion dated the date of the closing under the underwriting
agreement), reasonably satisfactory in form and substance to
such seller, and
(y) a "comfort" letter, dated the effective date of
such registration statement (and, if such registration
includes an underwritten public offering, a letter dated the
date of the closing under the underwriting agreement), signed
by the independent public accountants who have certified
Holdings' financial statements included in such registration
statement,
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covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten public offerings of securities;
(vii) notify the holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly and confirm such
advice in writing promptly thereafter:
(A) when the registration statement, the prospectus
or any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed, and,
with respect to the registration statement or any
post-effective amendment thereto, when the same has become
effective;
(B) of any request by the Commission for amendments
or supplements to the registration statement or the prospectus
or for additional information;
(C) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration or the
initiation of any proceedings by any Person for that purpose;
and
(D) of the receipt by Holdings of any notification
with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue
sky laws of any jurisdiction or the initiation or threat of
any proceeding for such purpose;
(viii) notify each seller of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon
Holdings' discovery that, or upon 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 then existing, and at the request of any
such seller promptly prepare and furnish to such seller and each
underwriter, if any, a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be
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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 then existing;
(ix) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at
the earliest possible moment;
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(xi) make available for inspection by a representative of the
sellers of Registrable Securities participating in the offering, any
underwriter participating in any disposition pursuant to the
registration and any attorney or accountant retained by such sellers or
underwriter (each, an "Inspector"), all financial and other records,
pertinent corporate documents and properties of Holdings (the
"Records"), and cause Holdings' officers, directors and employees to
supply all information reasonably requested by any such Inspector in
connection with such registration; provided that Holdings shall not be
required to comply with this subdivision (xi) if there is a reasonable
likelihood, in the judgment of Holdings, that such delivery could
result in the loss of any attorney-client privilege related thereto;
and provided further that Records which Holdings determines, in good
faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors (other than to
any holder of Registrable Securities participating in the offering)
unless (x) such Records have become generally available to the public
or (y) the disclosure of such Records may be necessary or appropriate
(A) to comply with any law, rule, regulation or order applicable to any
such Inspectors or seller of Registrable Securities, (B) in response to
any subpoena or other legal process or (C) in connection with any
litigation to which such Inspectors or any seller of Registrable
Securities is a party (provided that Holdings is provided with
reasonable notice of such proposed disclosure and a reason able
opportunity to seek a protective order or other appropriate remedy with
respect to such Records);
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(xii) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such Registration Statement;
(xiii) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on
which any of the Common Stock is then listed and, if not so listed, to
be listed on the NASD automated quotation system and, if listed on the
NASD automated quotation system, use its best efforts to secure
designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security"
within the meaning of Rule 11Aa2-1 of the Securities and Exchange
Commission or, failing that, to secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as
such with respect to such Registrable Securities with the NASD; and
(xiv) use its best efforts to provide a CUSIP number for the
Registrable Securities, not later than the effective date of the
registration.
Holdings may require each seller of Registrable Securities as to which any
registration is being effected to furnish Holdings such information regarding
such seller and the distribution of such securities as Holdings may from time to
time reasonably request in writing for purposes of preparing the relevant
registration statement and amendments and supplements thereto.
(b) Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from Holdings of the
occurrence of any event of the kind described in subdivision (viii) of Section
3.3(a), 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 (viii) of Section
3.3(a). In the event Holdings shall give any such notice, the periods specified
in subdivision (ii) of Section 3.3(a) shall be extended by the length of the
period from and including the date when each seller of any Registrable
Securities covered by such registration statement shall have received such
notice to the date on which each such seller has received the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of Section
3.3(a).
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(c) If any such registration or comparable statement refers to any
holder of Registrable Securities by name or otherwise as the holder of any
securities of Holdings, then such holder shall have the right to require, in the
event that such reference to such holder by name or otherwise is not required by
the Securities Act or any similar federal statute then in force, the deletion of
the reference to such holder.
SECTION 3.4 Underwritten Offerings. (a) If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 3.1, Holdings will enter into
an underwriting agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to Holdings, each such holder
and the underwriters, and to contain such representations and warranties by
Holdings and such holders and such other terms as are generally prevailing in
agreements of such type, including, without limitation, indemnities to the
effect and to the extent provided in Section 3.5. The holders of the Registrable
Securities will cooperate with Holdings in the negotiation of the underwriting
agreement.
(b) Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities, and each of the Stockholders agrees, not to sell, make
any short sale of, loan, grant any option for the purchase of, effect any public
sale or distribution of or otherwise dispose of any equity securities of
Holdings, during the ten days prior to and the 180 days after the effective date
of any underwritten registration pursuant to Section 3.1 or 3.2, any
underwritten registration of securities requested by the Fund pursuant to
Section 7.2 or 7.3 of the Preferred Stock Purchase Agreement, as in effect on
the date hereof, or any underwritten registration of securities by TCP pursuant
to the Conversion Agreement dated as of June 27, 1997 by and between Holdings,
HIG Fund V, Inc. and TCP, as in effect on the date hereof, as the case may be,
has become effective (or such shorter period as the underwriter or underwriters
may permit), except as part of such underwritten registration, whether or not
such holder, the Fund or TCP participates in such registration, and except as
otherwise permitted by the managing underwriter of such underwriting (if any).
Each of the holders of Registrable Securities, the Fund and TCP agrees that
Holdings may instruct its transfer agent to place stop transfer notations in its
records to enforce this Section 3.4(b).
(c) Holdings agrees (x) not to sell, make any short sale of, loan,
grant any option for the purchase of, effect any public sale or distribution of
or otherwise dispose of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the ten days prior
to and the 180 days after any registration pursuant to Section 3.1 or 3.2 has
become effective, except
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(i) as part of such registration, (ii) pursuant to registrations on Form X-0,
X-0, X-00 or S-15 or any successor or similar forms thereto or (iii) as
otherwise permitted by the managing underwriter of such offering (if any), and
(y) to use all reasonable efforts to cause each holder of 5% or more of its
equity securities or any securities convertible into or exchangeable or
exercisable for any of such securities, in each case purchased from Holdings at
any time after the date of this Agreement (other than in a public offering) to
agree not to sell, make any short sale of, loan, grant any option for the
purchase of, effect any public sale or distribution of or otherwise dispose of
such securities during such period except as part of such underwritten
registration.
(d) No Person may participate in any underwritten offering hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved, subject to the terms and
conditions hereof, by the Person or a majority of the Persons entitled to
approve such arrangements and (ii) completes and executes all agreements,
questionnaires, indemnities and other documents (other than powers of attorney,
except a power of attorney with respect to the price at which such Person's
shares of Common Stock shall be sold to the underwriters of such offering and
the transfer of such shares to such underwriters; provided that such power of
attorney may include, at the sole discretion of such Person, a minimum price
below which such Person shall not be obligated to sell such shares) required
under the terms of such underwriting arrangements.
SECTION 3.5 Indemnification. (a) Holdings agrees to indemnify and hold
harmless each holder of Registrable Securities whose Registrable Securities are
covered by any registration statement, its directors and officers and each other
Person, if any, who controls such holder within the meaning of the Securities
Act or Exchange Act (each an "Indemnified Party"), against any losses, claims,
damages or liabilities, joint or several, to which such Indemnified Party may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
Holdings will reimburse each such Indemnified Party for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided that
Holdings shall not be liable in any such case
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to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to Holdings by or on behalf of
such holder specifically for use in the preparation thereof. In addition,
Holdings shall indemnify any underwriter of such offering and each other Person,
if any, who controls any such underwriter within the meaning of the Securities
Act or the Exchange Act in substantially the same manner and to substantially
the same extent as the indemnity herein provided to each Indemnified Party. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such
holder.
(b) Each prospective seller of Registrable Securities hereunder shall
indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 3.5) Holdings, each director of
Holdings, each officer of Holdings and each other person, if any, who controls
Holdings within the meaning of the Securities Act or Exchange Act, with respect
to any statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereof, if
such statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to Holdings
by or on behalf of such seller specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Any such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of
Holdings or any such director, officer or controlling person and shall survive
the transfer of such securities by such seller. The amount payable by any
prospective seller of a Registrable Security with respect to the indemnification
set forth in this subsection (b) in connection with any offering of securities
will not exceed the amount of net proceeds received by such prospective seller
pursuant to such offering.
(c) 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 3.5, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the
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indemnifying party of its obligations under the preceding subdivisions of this
Section 3.5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that the indemnifying
party 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. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement of any such action which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation. No indemnified party shall consent to entry of any judgment
or enter into any settlement of any such action the defense of which has been
assumed by an indemnifying party without the consent of such indemnifying party.
(d) If the indemnification provided for in the preceding subdivisions
of this Section 3.5 is unavailable to an indemnified party in respect of any
expense, loss, claim, damage or liability referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such expense, loss, claim, damage or liability (i) in such proportion as is
appropriate to reflect the relative benefits received by Holdings on the one
hand and the holder or underwriter, as the case may be, on the other from the
distribution of the Registrable Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of Holdings on the one hand and of the holder
or underwriter, as the case may be, on the other in connection with the
statements or omissions which resulted in such expense, loss, damage or
liability, as well as any other relevant equitable considerations. The relative
benefits received by Holdings on the one hand and the holder or underwriter, as
the case may be, on the other in connection with the distribution of the
Registrable Securities shall be deemed to be in the same proportion as the total
net proceeds received by Holdings from the initial sale of the Registrable
Securities by Holdings to the purchaser bear to the gain realized by the selling
holder or the underwriting discounts and commissions received by the
underwriter, as the case may be. The relative fault of Holdings on the one hand
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and of the holder or underwriter, as the case may be, on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission to state a material fact relates
to information supplied by Holdings, by the holder or by the underwriter and
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided that the foregoing
contribution agreement shall not inure to the benefit of any indemnified party
if indemnification would be unavailable to such indemnified party by reason of
the proviso contained in the first sentence of subdivision (a) of this Section
3.5, and in no event shall the obligation of any indemnifying party to
contribute under this subdivision (d) exceed the amount that such indemnifying
party would have been obligated to pay by way of indemnification if the
indemnification provided for under subdivisions (a) or (b) of this Section 3.5
had been available under the circumstances.
Holdings and the holders of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this subdivision (d) were
determined by pro rata allocation (even if the holders and any underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph and subdivision (c) of this Section 3.5. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 3.6 Rule 144; Rule 144A. (a) If Holdings shall have filed a
registration statement pursuant to Section 12 of the Exchange Act or a
registration statement pursuant to the Securities Act, Holdings will file the
reports required to
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be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder and will take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, Holdings will deliver to such holder a written statement
as to whether it has complied with such requirements.
(b) Holdings represents and warrants that the Common Stock is not, and
is not part of a class of securities that is, listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in an
automated inter-dealer quotation system. For so long as any shares of
Registrable Securities are restricted securities within the meaning of Rule
144(a)(3) under the Securities Act, Holdings covenants and agrees that it shall,
during any period in which it is not subject to Section 13 or 15(d) of the
Exchange Act, make available to any holder of Registrable Securities in
connection with the sale of such holder Registrable Securities and any
prospective purchaser of Registrable Securities from such, in each case upon
request, the information specified in, and meeting the requirements of, Rule
144A(d)(4) under the Securities Act.
SECTION 3.7 Consent to Registration Rights. Each of the Stockholders
and Holdings hereby consents to the provisions set forth in this Article III.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Notices. All notices and other communications provided for
hereunder shall be dated and in writing and shall be deemed to have been given
(i) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section and telephonic confirmation of receipt thereof
is obtained or (ii) if given by mail, prepaid overnight courier or any other
means, when received at the address specified in this Section or when delivery
at such address is refused. Such notices shall be addressed to the appropriate
party to the attention of the person who executed this Agreement at the address
or telecopy number set forth under such party's signature below (or to the
attention of such
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other person or to such other address or telecopy number as such party shall
have furnished to each other party in accordance with this Section 4.1).
SECTION 4.2 Binding Nature of Agreement. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto or their successors in interest, except as expressly otherwise provided
herein.
SECTION 4.3 Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
SECTION 4.4 Specific Performance. Without limiting the rights of each
party hereto to pursue all other legal and equitable rights available to such
party for the other parties' failure to perform their obligations under this
Agreement, the parties hereto acknowledge and agree that the remedy at law for
any failure to perform their obligations hereunder would be inadequate and that
each of them, respectively, shall be entitled to specific performance,
injunctive relief or other equitable remedies in the event of any such failure.
SECTION 4.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF LAW. EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH SUCH PARTY MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION
4.1. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY
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TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
SECTION 4.6 Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute one and the same instrument.
SECTION 4.7 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 contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
SECTION 4.8 Entire Agreement. This Agreement is intended by the parties
hereto as a final and complete expression of their agreement and understanding
in respect to the subject matter contained herein. This Agreement supersedes all
prior agreement and understandings, written or oral, between the parties with
respect to such subject matter.
SECTION 4.9 Amendment and Waiver. Any provision of this Agreement may
be amended if, but only if, such amendment is in writing and is signed by
Holdings and the Majority Holders; provided that no such amendment may adversely
affect the rights or obligations hereunder of any Warrant Securityholder unless
signed by such Warrant Securityholder. Any provision may be waived if, but only
if, such waiver is in writing and is signed by the party or parties waiving such
provision and for whose benefit such provision is intended.
SECTION 4.10 No Third Party Beneficiaries. Nothing in this Agreement
shall convey any rights upon any person or entity which is not a party or an
assignee of a party to this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
LET'S TALK CELLULAR & WIRELESS, INC.
By /s/ Xxxxx Xxxxxxxxx
--------------------------------
Title: President
Address: 0000 XX 00xx Xxxxx
Xxxxx, XX 00000
Telefax: (000) 000-0000
HIG FUND V, INC.
By /s/ Xxxxxxx Xxxxx
--------------------------------
Title: President
Address: c/o HIG Capital Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, XX 00000
Telefax: (000) 000-0000
TEXAS CELLULAR PARTNERS, L.P.
By HIG Texas Cellular Company, as Managing
General Partner
By /s/ Xxxxxxx Xxxxx
--------------------------------
Title: President
Address: c/o HIG Capital Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Telefax: (000) 000-0000
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NATIONSCREDIT COMMERCIAL
CORPORATION
By /s/ Xxxxxx Alt
--------------------------------
Title: Authorized Signatory
Address: Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Telefax: 000-000-0000
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THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OFFERED FOR
SALE UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE
SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO AND HAVE THE BENEFIT
OF A WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF JUNE 27, 1997 AMONG LET'S TALK
CELLULAR & WIRELESS, INC. AND THE STOCKHOLDERS AND WARRANTHOLDERS LISTED ON THE
SIGNATURE PAGES THEREOF, A COPY OF WHICH IS ON FILE WITH LET'S TALK CELLULAR &
WIRELESS, INC.
June 27, 1997
Cert. No. W-1
WARRANT
TO PURCHASE 32,410 SHARES OF COMMON STOCK OF
LET'S TALK CELLULAR & WIRELESS, INC.
EXPIRING DECEMBER 31, 2006
THIS IS TO CERTIFY THAT, for value received, NATIONSCREDIT COMMERCIAL
CORPORATION or registered assigns ("Holder") is entitled to purchase from LET'S
TALK CELLULAR & WIRELESS, INC., a Florida corporation ("Holdings"), at any time
or from time to time after 9:00 a.m., New York City time, on the date hereof and
prior to 5:00 p.m., New York City time, on the earlier of December 31, 2006 and
the Business Day preceding the date of redemption of this Warrant, at the place
where the Warrant Agency is located, at the Exercise Price, the number of shares
of Common Stock, par value $0.0001 per share (the "Common Stock"), of Holdings
shown above, all subject to adjustment and upon the terms and conditions
hereinafter provided, and is entitled also to exercise the other appurtenant
rights, powers and privileges hereinafter described.
This Warrant is one of one or more warrants (the "Warrants") of the
same form and having the same terms as this Warrant, entitling the holders
initially to purchase up to an aggregate of 32,410 shares of Common Stock. The
Warrants have been issued pursuant to the Credit Agreement dated as of December
31,
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32
1996, as amended and restated as of June 27, 1997 (as further amended from time
to time, the "Credit Agreement"), among Telephone Warehouse, Inc., a Delaware
corporation ("TWI"), National Cellular, Incorporated, a Texas corporation ("NCI"
and, together with TWI, the "Companies", Holdings, Texas Cellular Partners,
L.P., the Lenders listed on the signature pages thereof and NationsCredit
Commercial Corporation ("NationsCredit"), as Agent, and the Holder is entitled
to certain benefits and is subject to certain restrictions, including
restrictions on transfers, as set forth therein and to certain benefits
described in the Warrantholders Rights Agreement. Holdings shall keep a copy of
the Credit Agreement and the Warrantholders Rights Agreement, and any amendments
thereto, at the Warrant Agency and shall furnish, without charge, copies thereof
to the Holder upon request.
Certain terms used in this Warrant are defined in Article VI.
ARTICLE I
EXERCISE OF WARRANTS
1.1. Method of Exercise. To exercise this Warrant in whole or in part,
the Holder shall deliver on any Business Day to Holdings, at the Warrant Agency,
(a) this Warrant, (b) a written notice of such Holder's election to exercise
this Warrant, which notice shall specify the number of shares of Common Stock to
be purchased (which shall be a whole number of shares if for less than all the
shares then issuable hereunder), the denominations of the share certificate or
certificates desired and the name or names in which such certificates are to be
registered, and (c) payment of the Exercise Price with respect to such shares.
Such payment may be made, at the option of the Holder, either (a) by cash,
certified or bank cashier's check or wire transfer in an amount equal to the
product of (i) the Exercise Price times (ii) the number of Warrant Shares as to
which this Warrant is being exercised or (b) by receiving from Holdings the
number of Warrant Shares equal to (i) the number of Warrant Shares as to which
this Warrant is being exercised minus (ii) the number of Warrant Shares having a
value, based on the Closing Price on the trading day immediately prior to the
date of such exercise, equal to the product of (x) the Exercise Price times (y)
the number of Warrant Shares as to which this Warrant is being exercised.
Holdings shall, as promptly as practicable and in any event within
seven days after receipt of such notice and payment, execute and deliver or
cause to be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice together with cash in lieu of any
fractions of a share as provided in Section 1.3. The share certificate or
certificates so delivered shall be in such
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denominations as may be specified in such notice, and shall be issued in the
name of the Holder or such other name or names as shall be designated in such
notice. This Warrant shall be deemed to have been exercised and such certificate
or certificates shall be deemed to have been issued, and such Holder or any
other Person so designated to be named therein shall be deemed for all purposes
to have become a holder of record of shares, as of the date the aforementioned
notice and payment is received by Holdings. If this Warrant shall have been
exercised only in part, Holdings shall, at the time of delivery of such
certificate or certificates, deliver to the Holder a new Warrant evidencing the
rights to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of the Holder and if Holdings so permits,
appropriate notation may be made on this Warrant which shall then be returned to
the Holder. Holdings shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of share certificates and
new Warrants, except that, if share certificates or new Warrants shall be
registered in a name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes payable as a result of such transfer shall
be paid by the Holder at the time of delivery of the aforementioned notice of
exercise or promptly upon receipt of a written request of Holdings for payment.
1.2. Shares to be Fully Paid and Nonassessable. All shares of Common
Stock issued upon the exercise of this Warrant shall be validly issued, fully
paid and nonassessable and, if such class of Common Stock is then listed on any
national securities exchange (as defined in the Exchange Act) or quoted on
NASDAQ, shall be duly listed or quoted thereon, as the case may be, to the
extent such shares are permitted to be transferred by applicable law at such
time.
1.3. No Fractional Shares Required to be Issued. Holdings shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon final exercise of this Warrant, in lieu of such fractional share Holdings
shall pay to the Holder, in cash, an amount equal to the same fraction of the
Fair Market Value of Holdings per share of outstanding Common Stock on the
Business Day immediately prior to the date of such exercise.
1.4. Share Legend. Each certificate for shares of Common Stock issued
upon exercise of this Warrant, unless at the time of exercise such shares are
registered under the Securities Act, shall bear the following legend:
"This security has not been registered under the Securities Act of 1933
and may not be sold or offered for sale unless registered under said Act and any
applicable state securities laws or unless an exemption from such registration
is available. This security is also subject to certain restrictions, including
restrictions
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34
on transfer, contained in and has the benefit of a Warrantholders Rights
Agreement dated as of June 27, 1997 among Let's Talk Cellular & Wireless, Inc.
and the Stockholders and Warrantholders listed on the signature pages thereof,
copies of which are on file with Let's Talk Cellular & Wireless, Inc."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued in connection
with a public offering pursuant to a registration statement under the Securities
Act) shall also bear such legend unless, in the opinion of counsel selected by
the holder of such certificate (who may be an employee of such holder) and
reasonably acceptable to Holdings, the securities represented thereby need no
longer be subject to restrictions on resale under the Securities Act.
1.5. Reservation. Holdings has duly reserved and will keep available
for issuance upon exercise of the Warrants the total number of Warrant Shares
deliverable from time to time upon exercise of all Warrants from time to time
outstanding. Holdings will not change the Common Stock from par value $.0001 per
share to any higher par value which exceeds the Exercise Price then in effect,
and will reduce the par value of the Common Stock upon any event described in
Article IV that provides for an increase in the number of shares of Common Stock
subject to purchase upon exercise of this Warrant, in inverse proportion to and
effective at the same time as such number of shares is increased, but only to
the extent that such increase in the number of shares, together with all other
such increases after the date hereof, causes the aggregate Exercise Price of all
Warrants (without giving effect to any exercise or redemption thereof) to be
greater than $1,000.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
2.1. Warrant Agency. As long as any of the Warrants remain outstanding,
Holdings shall perform the obligations of and be the warrant agency with respect
to the Warrants (the "Warrant Agency") at its address set forth in the Credit
Agreement or at such other address as Holdings shall specify by notice to all
Warrantholders.
2.2. Ownership of Warrant. Holdings may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any person
other than Holdings) for all purposes and shall not be affected by any notice to
the
4
35
contrary, until due presentment of this Warrant for registration of transfer as
provided in this Article II.
2.3. Transfer of Warrant. Holdings agrees to maintain at the Warrant
Agency books for the registration of transfers of the Warrants, and transfer of
this Warrant and all rights hereunder shall be registered, in whole or in part,
on such books, upon surrender of this Warrant at the Warrant Agency, together
with a written assignment of this Warrant duly executed by the Holder or its
duly authorized agent or attorney, with (if the Holder is a natural person)
signatures guaranteed by a bank or trust company or a broker or dealer
registered with the NASD, and funds sufficient to pay any transfer taxes payable
upon such transfer. Upon surrender and, if required, such payment, Holdings
shall execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees and in the denominations specified in the instrument of assignment
(which shall be whole numbers of shares only) and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled.
2.4. Division or Combination of Warrants. This Warrant may be divided
or combined with other Warrants upon presentment hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations (which
shall be whole numbers of shares only) in which the new Warrant or Warrants are
to be issued, signed by the holders hereof and thereof or their respective duly
authorized agents or attorneys. Subject to compliance with Section 2.3 as to any
transfer or assignment which may be involved in the division or combination,
Holdings shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.
2.5. Loss, Theft, Destruction of Warrant Certificates. Upon receipt of
evidence satisfactory to Holdings of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to
Holdings (it being understood and agreed that if the holder of such Warrant is
NationsCredit, then a written agreement of indemnity given by NationsCredit
alone shall be satisfactory to Holdings and no further security shall be
required) or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, Holdings will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of Common
Stock.
2.6. Expenses of Delivery of Warrants. Holdings shall pay all expenses,
taxes (other than transfer taxes) and other charges payable in connection with
the preparation, issuance and delivery of Warrants hereunder.
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ARTICLE III
CERTAIN RIGHTS
3.1. Rights and Obligations under the Warrantholders Rights Agreement.
This Warrant is entitled to the benefits and subject to the terms of the
Warrantholders Rights Agreement dated as of June 27, 1997, among Holdings and
the Stockholders and Warrantholders listed on the signature pages thereof (as
amended from time to time, the "Warrantholders Rights Agreement"). Holdings
shall keep or cause to be kept a copy of the Warrantholders Rights Agreement,
and any amendments thereto, at the Warrant Agency and shall furnish, without
charge, copies thereof to the Holder upon request.
3.2. Determination of Fair Market Value. Subject to Section 3.3 hereof,
each determination of Fair Market Value hereunder shall be made in good faith by
Holdings. Upon each determination of Fair Market Value by Holdings hereunder,
Holdings shall promptly give notice thereof to all Warrantholders, setting forth
in reasonable detail the calculation of such Fair Market Value and the method
and basis of determination thereof (the "Holdings Determination").
3.3. Contest and Appraisal Rights. (a) If the holders of Warrants
entitling such holders to purchase a majority of the Common Stock subject to
purchase upon exercise of Warrants at the time outstanding (exclusive of
Warrants then owned by Holdings or any Subsidiary (as defined in the Credit
Agreement) or Affiliate (as defined in the Credit Agreement) thereof (the
"Required Interest") shall disagree with the Holdings Determination and shall by
notice to Holdings given within 30 days after Holdings' notice of the Holdings
Determination (an "Appraisal Notice") elect to dispute the Holdings
Determination, such dispute shall be resolved as set forth in subsection (b) of
this Section.
(b) Holdings shall within 30 days after an Appraisal Notice shall have
been given pursuant to subsection (a) of this Section engage an investment bank
or other qualified appraisal firm acceptable to the Required Interest (the
"Appraiser") to make an independent determination of Fair Market Value (the
"Appraiser Determination"). If the Holdings Determination and the Appraiser
Determination differ by an amount of 15% or less of the Holdings Determination,
then the costs of conducting the appraisal shall be borne equally by Holdings
and the Holders; if the Holdings Determination is greater than the Appraiser
Determination by more than 15% of the Holdings Determination, then the costs of
conducting the appraisal shall be borne entirely by the Holders; and if the
Appraiser Determination is greater than the Holdings Determination by more than
15% of the Holdings Determination, then the costs of conducting the appraisal
shall be borne entirely by
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Holdings; provided that in each case costs separately incurred by Holdings and
any Holders shall be separately borne by them.
3.4. Board Meetings. Holdings shall give to the Warrantholders notice
of all meetings and actions by written consent of its board of directors and
each committee thereof and of the board of directors and each committee thereof
of the Company, at the same time and in the same manner as notice of any
meetings of such board or committees is required to be given to directors who do
not waive such notice (or, if such action requires no notice, then two days
written notice thereof describing the matters upon which action is to be taken).
All meetings of the board of directors of the Company or each committee thereof
shall be held on the same day and in the same location as the analogous meeting
of the board of directors of Holdings or relevant committee thereof, as the case
may be. Warrantholders shall have the right at their cost to send two
representatives selected by them to each such meeting, who shall be permitted to
attend such meeting and any adjournments thereof (other than any portion of such
meeting devoted to discussion of the Warrantholders). The provisions of this
Section 3.4 shall be applicable only prior to the consummation of an IPO.
3.5. Financial Statements and Other Information. Holdings will, and
will cause each of its subsidiaries to, maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in accordance with generally accepted
accounting principles ("GAAP"), and will deliver to each of the Warrantholders:
(a) as soon as practicable and in any event within 30 days
after the end of each fiscal quarter, a consolidated balance sheet of
Holdings and its subsidiaries as at the end of such fiscal quarter and
the related consolidated statements of operations and cash flows for
such fiscal quarter and for the portion of the fiscal year ended at the
end of such fiscal quarter, setting forth in each case in comparative
form the figures for the corresponding periods of the previous fiscal
year, all in reasonable detail and certified by the chief financial
officer of Holdings as fairly presenting the financial condition and
results of operations of Holdings and its subsidiaries and as having
been prepared in accordance with GAAP applied on a basis consistent
with the audited financial statements of Holdings, subject to changes
resulting from audit and normal year-end adjustments;
(b) as soon as available and in any event within 120 days
after the end of each fiscal year, a consolidated balance sheet of
Holdings and its subsidiaries as of the end of such fiscal year and the
related consolidated statements of operations, stockholders' equity and
cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the
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38
previous fiscal year;
(c) promptly following the filing thereof with the Secretary
of State of the State of Delaware, a copy of each amendment to, or
restatement of, the Certificate of Incorporation of Holdings, and
promptly following the adoption thereof by Holdings, a copy of each
amendment to, or restatement of, the By-laws of Holdings;
(d) as promptly as practicable following each meeting of the
board of directors of Holdings, a copy of the minutes of such meeting,
and promptly following the execution by all of the directors on the
board of directors of Holdings, a copy of each unanimous written
consent of directors in lieu of a meeting of the board of directors of
Holdings, in each case, including all exhibits and attachments, if any,
to such minutes or unanimous written consents; and
(e) with reasonable promptness, such other information and
data with respect to Holdings or any of its subsidiaries as from time
to time may be reasonably requested by any Warrantholder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1. Adjustment Generally. The Exercise Price and the number of shares
of Common Stock (or other securities or property) issuable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events as provided in this Article IV; provided that notwithstanding
anything to the contrary contained herein, the Exercise Price shall not be less
than the par value of the Common Stock, as such par value is reduced from time
to time in accordance with Section 1.5.
4.2. Common Stock Reorganization. If Holdings shall subdivide its
outstanding shares of Common Stock (or any class thereof) into a greater number
of shares or consolidate its outstanding shares of Common Stock (or any class
thereof) into a smaller number of shares (any such event being called a "Common
Stock Reorganization"), then (a) the Exercise Price shall be adjusted, effective
immediately after the effective date of such Common Stock Reorganization, to a
price determined by multiplying the Exercise Price in effect immediately prior
to such effective date by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on such effective date before giving
effect to such Common Stock Reorganization and the denominator of which shall be
the
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39
number of shares of Common Stock outstanding after giving effect to such Common
Stock Reorganization, and (b) the number of shares of Common Stock subject to
purchase upon exercise of this Warrant shall be adjusted, effective at such
time, to a number determined by multiplying the number of shares of Common Stock
subject to purchase immediately before such Common Stock Reorganization by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such Common Stock Reorganization.
4.3. Common Stock Distribution. (a) If Holdings shall issue, sell or
otherwise distribute any shares of Common Stock, other than pursuant to a Common
Stock Reorganization (which is governed by Section 4.2 hereof) (any such event,
including any event described in paragraphs (b) and (c) below, being herein
called a "Common Stock Distribution"), for a consideration per share less than
the Exercise Price then in effect or less than the Fair Market Value of Holdings
per share of outstanding Common Stock on a Fully Diluted Basis on the date of
such Common Stock Distribution (before giving effect to such Common Stock
Distribution), then, effective upon such Common Stock Distribution, the Exercise
Price shall be reduced to the lower of the prices (calculated to the nearest
one-thousandth of one cent) determined as provided in clauses (i) and (ii) below
or:
(i) by dividing (A) an amount equal to the sum of (1) the
number of shares of Common Stock outstanding immediately prior to such
Common Stock Distribution multiplied by the then existing Exercise
Price, plus (2) the consideration, if any, received by Holdings upon
such Common Stock Distribution by (B) the total number of shares of
Common Stock outstanding immediately after such Common Stock
Distribution; and
(ii) by multiplying the Exercise Price in effect immediately
prior to such Common Stock Distribution by a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such Common Stock Distribution
multiplied by such Fair Market Value per share on the date of such
Common Stock Distribution, plus (B) the consideration, if any, received
by Holdings upon such Common Stock Distribution, and the denominator of
which shall be the product of (1) the total number of shares of Common
Stock outstanding immediately after such Common Stock Distribution
multiplied by (2) such Fair Market Value per share on the date of such
Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment to the
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40
Exercise Price pursuant to the foregoing provisions of this paragraph (a),
including by operation of paragraph (b) or (c) below, then, effective at the
time such adjustment is made, the number of shares of Common Stock subject to
purchase upon exercise of this Warrant shall be increased to a number determined
by multiplying the number of shares of Common Stock subject to purchase
immediately before such Common Stock Distribution by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
after giving effect to such Common Stock Distribution and the denominator of
which shall be the sum of the number of shares outstanding immediately before
giving effect to such Common Stock Distribution (both calculated on a Fully
Diluted Basis) plus the number of shares of Common Stock which the aggregate
consideration received by Holdings with respect to such Common Stock
Distribution would purchase at the Fair Market Value of Holdings per share of
outstanding Common Stock on a Fully Diluted Basis on the date of such Common
Stock Distribution (before giving effect to such Common Stock Distribution). In
computing adjustments under this paragraph, fractional interests in Common Stock
shall be taken into account to the nearest one-thousandth of a share.
The provisions of this paragraph (a), including by operation of
paragraph (b) or (c) below, shall not operate to increase the Exercise Price or
reduce the number of shares of Common Stock subject to purchase upon exercise of
this Warrant.
(b) If Holdings shall issue, sell, distribute or otherwise grant in any
manner (including by assumption) any rights to subscribe for or to purchase, or
any warrants or options for the purchase of Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (such rights,
warrants or options being herein called "Options" and such convertible or
exchangeable stock or securities being herein called "Convertible Securities"),
whether or not such Options or the rights to convert or exchange any such
Convertible Securities in respect of such Options are immediately exercisable,
and the price per share for which Common Stock is issuable upon the exercise of
such Options or upon conversion or exchange of such Convertible Securities in
respect of such Options (determined by dividing (i) the aggregate amount, if
any, received or receivable by Holdings as consideration for the granting of
such Options, plus the minimum aggregate amount of additional consideration
payable to Holdings upon the exercise of all such Options, plus, in the case of
Options to acquire Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issuance or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options) shall be less than the
Exercise Price then in effect or less than the Fair
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Market Value of Holdings per share of outstanding Common Stock on a Fully
Diluted Basis on the date of granting such Options (before giving effect to such
grant), then, for purposes of paragraph (a) above, the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to have
been issued as of the date of granting of such Options and thereafter shall be
deemed to be outstanding and Holdings shall be deemed to have received as
consideration of such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraph (d) below, no additional adjustment of
the Exercise Price shall be made upon the actual exercise of such Options or
upon conversion or exchange of such Convertible Securities.
(c) If Holdings shall issue, sell or otherwise distribute (including by
assumption) any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (i) the aggregate amount received or receivable by Holdings as
consideration for the issuance, sale or distribution of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to Holdings upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Exercise
Price then in effect or less than the Fair Market Value of Holdings per share of
outstanding Common Stock on a Fully Diluted Basis on the date of such issuance,
sale or distribution (before giving effect to such issuance, sale or
distribution), then, for purposes of paragraph (a) above, the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued as of the date
of the issuance, sale or distribution of such Convertible Securities and
thereafter shall be deemed to be outstanding and Holdings shall be deemed to
have received as consideration such price per share, determined as provided
above, therefor. Except as otherwise provided in paragraph (d) below, no
additional adjustment of the Exercise Price shall be made upon the actual
conversion or exchange of such Convertible Securities.
(d) If (i) the purchase price provided for in any Option referred to in
paragraph (b) above or the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in paragraph
(b) or (c) above or the rate at which any Convertible Securities referred to in
paragraph (b) or (c) above are convertible into or exchangeable for Common Stock
shall change at any time (other than under or by reason of provisions designed
to protect against dilution upon an event which results in a related adjustment
pursuant to this Article IV), or (ii) any of such Options or Convertible
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Securities shall have terminated, lapsed or expired, the Exercise Price then in
effect shall forthwith be readjusted (effective only with respect to any
exercise of this Warrant after such readjustment) to the Exercise Price which
would then be in effect had the adjustment made upon the issuance, sale,
distribution or grant of such Options or Convertible Securities been made based
upon such changed purchase price, additional consideration or conversion rate,
as the case may be (in the case of any event referred to in clause (i) of this
paragraph (d)) or had such adjustment not been made (in the case of any event
referred to in clause (ii) of this paragraph (d)).
(e) If Holdings shall pay a dividend or make any other distribution
upon any capital stock of Holdings payable in Common Stock Options or
Convertible Securities, then, for purposes of paragraph (a) above, such Common
Stock, Options or Convertible Securities shall be deemed to have been issued or
sold without consideration.
(f) If any shares of Common Stock, Options or Convertible Securities
shall be issued, sold or distributed for cash, the consideration received
therefor shall be deemed to be the amount received by Holdings therefor. If any
shares of Common Stock, Options or Convertible Securities shall be issued sold
or distributed for a consideration other than cash, the amount of the
consideration other than cash received by Holdings shall be deemed to be the
Fair Market Value of such consideration, after deduction of any expenses
incurred in connection therewith. If any shares of Common Stock, Options or
Convertible Securities shall be issued in connection with any merger in which
Holdings is the surviving corporation, the amount of consideration therefor
shall be deemed to be the Fair Market Value of such portion of the assets and
business of the non-surviving corporation as shall be attributable to such
Common Stock, Options or Convertible Securities, as the case may be. If any
Options shall be issued in connection with the issuance and sale of other
securities of Holdings' together comprising one integral transaction in which no
specific consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued without consideration.
4.4. Special Dividends. If Holdings shall issue or distribute to any
holder or holders of shares of Common Stock evidences of indebtedness, any other
securities of Holdings or any cash, property or other assets (excluding a Common
Stock Reorganization or a Common Stock Distribution), whether or not accompanied
by a purchase, redemption or other acquisition of shares of Common Stock (any
such nonexcluded event being herein called a "Special Dividend"), (a) the
Exercise Price shall be decreased, effective immediately after the effective
date of such Special Dividend, to a price determined by multiplying the Exercise
Price then in effect by a fraction, the numerator of which shall be the Fair
Market Value of Holdings per share of outstanding Common Stock as of such
effective date less any cash and the then Fair Market Value of any evidences of
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indebtedness, securities or property or other assets issued or distributed in
such Special Dividend with respect to one share of Common Stock, and the
denominator of which shall be such Fair Market Value per share and (b) the
number of shares of Common Stock subject to purchase upon exercise of this
Warrant shall be increased to a number determined by multiplying the number of
shares of Common Stock subject to purchase immediately before such Special
Dividend by a fraction, the numerator of which shall be the Exercise Price in
effect immediately before such Special Dividend and the denominator of which
shall be the Exercise Price in effect immediately after such Special Dividend. A
reclassification of Common Stock (other than a change in par value, or from par
value to no par value or from no par value to par value) into shares of Common
Stock and shares of any other class of stock shall be deemed a distribution by
Holdings to the holders of such Common Stock of such shares of such other class
of stock and, if the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as part of such
reclassification, a Common Stock Reorganization.
4.5. Capital Reorganizations. If there shall be any consolidation or
merger to which Holdings is a party, other than a consolidation or a merger of
which Holdings is the continuing corporation and which does not result in any
reclassification of, or change (other than a Common Stock Reorganization) in,
outstanding shares of Common Stock, or any sale or conveyance of the property of
Holdings as an entirety or substantially as an entirety, or any recapitalization
of Holdings (any such event being called a "Capital Reorganization"), then,
effective upon the effective date of such Capital Reorganization, the Holder
shall no longer have the right to purchase Common Stock, but shall have instead
the right to purchase, upon exercise of this Warrant, the kind and amount of
shares of stock and other securities and property (including cash) which the
Holder would have owned or have been entitled to receive pursuant to such
Capital Reorganization if this Warrant had been exercised immediately prior to
the effective date of such Capital Reorganization. As a condition to effecting
any Capital Reorganization, Holdings or the successor or surviving corporation,
as the case may be, shall (a) execute and deliver to each Warrantholder and to
the Warrant Agency an agreement as to the Warrantholders' rights in accordance
with this Section 4.5, providing, to the extent of any right to purchase equity
securities hereunder, for subsequent adjustments as nearly equivalent as may be
practicable to the adjustments provided for in this Article IV and (b) provide
each Regulation Y Holder with an opinion of counsel reasonably satisfactory to
such Regulation Y Holder and such other assurances as any Regulation Y Holder
may reasonably request to the effect that the ownership and exercise by any
Regulation Y Holder of this Warrant after giving effect to such Capital
Reorganization shall not be prohibited by the BHC Act or the regulations
thereunder. The provisions of this Section 4.5 shall similarly apply to
successive Capital Reorganizations.
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4.6. Adjustment Rules. (a) Any adjustments pursuant to this Article IV
shall be made successively whenever an event referred to herein shall occur,
except that, notwithstanding any other provision of this Article IV, no
adjustment shall be made to the number of shares of Common Stock to be delivered
to each Holder (or to the Exercise Price) if such adjustment represents less
than 1% of the number of shares previously required to be so delivered, but any
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any adjustments
so carried forward shall amount to 1% or more of the number of shares to be so
delivered. No adjustment shall be made pursuant to this Article IV in respect of
the issuance from time to time of shares of Common Stock upon the exercise of
any of the Warrants. If Holdings shall take a record of the holders of its
Common Stock for any purpose referred to in this Article IV, then (i) such
record date shall be deemed to be the date of the issuance, sale, distribution
or grant in question and (ii) if Holdings shall legally abandon such action
prior to effecting such action, no adjustment shall be made pursuant to this
Article IV in respect of such action.
4.7. Proceedings Prior to Any Action Requiring Adjustment. As a
condition precedent to the taking of any action which would require an
adjustment pursuant to this Article IV, Holdings shall take any action which may
be necessary, including obtaining regulatory approvals or exemptions, in order
that (a) Holdings may thereafter validly and legally issue as fully paid and
nonassessable all shares of Common Stock which the holders of Warrants are
entitled to receive upon exercise thereof and (b) the ownership and exercise of
any Warrant by any Regulation Y Holder shall not be prohibited by the BHC Act or
the regulations thereunder.
4.8. Notice of Adjustment. Not less than 10 nor more than 30 days prior
to the record date or effective date, as the case may be, of any action which
requires or might require an adjustment or readjustment pursuant to this Article
IV, Holdings shall give notice to each Warrantholder of such event, describing
such event in reasonable detail and specifying the record date or effective
date, as the case may be, and, if determinable, the required adjustment and the
computation thereof. If the required adjustment is not determinable at the time
of such notice, Holdings shall give notice to each Warrantholder of such
adjustment and computation promptly after such adjustment becomes determinable.
ARTICLE V
PURCHASE, REDEMPTION AND CANCELLATION OF WARRANTS
5.1. Purchase of Warrants by Holdings. Holdings shall have the right or
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obligation to purchase or otherwise acquire Warrants at such times, in such
manner and for such consideration as set forth below.
5.2. Mandatory Redemption of Warrants. The Holder may (a) at any time
and from time to time on or after the earlier of (i) the fourth anniversary of
the Closing Date and (ii) the repayment in full of all principal of and premium
and interest on the Notes (as defined in the Credit Agreement) and the
termination of the Commitments under the Credit Agreement and (b) on or within
30 days after the date on which Holdings shall have delivered a Refinancing
Notice, by notice to Holdings (any such redemption pursuant to this clause (b),
a "Refinancing Redemption"), demand a determination of the Redemption Price (a
"Determination Notice") for purposes of this Section 5.2. Within 30 days (or, in
the case of a Refinancing Redemption, 5 days) after the receipt of any
Determination Notice from the Holder, Holdings shall give to the Holder notice
of the Redemption Price, including a reasonably detailed description of the
method of calculation thereof, determined as of the day preceding such notice of
the Redemption Price. At any time within 30 days (or, in the case of a
Refinancing Redemption, 15 days) after receipt of notice of the Redemption Price
the Holder may demand redemption of this Warrant, in whole or in part, at the
Redemption Price by notice to Holdings, payable on the third Business Day after
receipt of notice of such demand (or, in the case of a Refinancing Redemption,
on the closing date of such refinancing) (any such date, the "Redemption Due
Date") in immediately available funds to the Holder upon surrender of this
Warrant at the Warrant Agency or, if requested by the Holder, without surrender
of this Warrant, by wire transfer to any account in New York City specified by
notice to Holdings. Thereupon, the right to purchase shares of Common Stock
theretofore represented by this Warrant as to which the Holder has demanded (and
Holdings may effect) redemption shall terminate, and this Warrant shall
represent the right of the Holder to receive the full Redemption Price from
Holdings in accordance with this Section. The Holder's right to demand
redemption of this Warrant pursuant to this Section 5.2 shall be referred to
hereinafter as the Holder's "Mandatory Redemption Right".
5.3. Optional Redemption. At any time and from time to time after the
fifth anniversary of the Closing Date, Holdings shall have the right to redeem
all, but not less than all, of the outstanding Warrants at the Optional
Redemption Price, determined as of the day preceding the notice of redemption.
Irrevocable notice of such right of redemption shall be given by Holdings to all
Warrantholders not more than 30 days nor less than 15 days prior to the date
scheduled for redemption, stating the date and price, including a reasonably
detailed description of the method of calculation thereof, of redemption.
Warrantholders may exercise Warrants until 5:00 p.m., New York City time, on the
Business Day preceding the date of redemption set forth in a valid notice of
redemption, at which time the right to purchase shares of Common Stock
theretofore represented by this Warrant shall
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terminate, and this Warrant shall represent the right of the Holder to receive
the Optional Redemption Price from Holdings in immediately available funds upon
surrender of this Warrant at the Warrant Agency. If the Optional Redemption
Price shall be disputed pursuant to Section 3.3, Holdings shall pay to the
affected Warrantholders on the redemption date the Optional Redemption Price
initially determined by it and shall thereafter make supplemental payment of any
increase (and the affected Warrantholder shall remit to Holdings any decrease)
in the Optional Redemption Price upon resolution of such dispute.
5.4. Cancellation of Warrants. All Warrants purchased, redeemed or
otherwise acquired by Holdings shall thereupon be canceled and retired. The
Warrant Agency shall cancel any Warrant surrendered for exercise or registration
of transfer or exchange and deliver such canceled Warrants to Holdings.
5.5. Notice of Refinancing. Holdings shall give notice to each of the
Warrantholders of any intent by Holdings or the Company to refinance in their
entirety the Notes (as defined in the Credit Agreement) not less than 60 days
prior to the proposed closing date of such refinancing, setting forth such
proposed closing date and notifying each Warrantholder of its rights under
Section 5.2 (such notice, the "Refinancing Notice").
ARTICLE VI
DEFINITIONS
The following terms, as used in this Warrant, have the following
meanings:
"Affiliate" has the meaning specified in the Warrantholders Rights
Agreement.
"Appraisal Notice" has the meaning set forth in Section 3.3(a).
"Appraiser" has the meaning set forth in Section 3.3(b).
"Appraiser Determination" has the meaning set forth in Section 3.3(b).
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Business Day" means any day excluding Saturday, Sunday and any day on
which banking institutions located in New York are authorized by law or other
governmental action to be closed, unless there shall have been an offering of
Common Stock registered under the Securities Act, in which case "Business Day"
means (a) if Common Stock is listed or admitted to trading on a national
securities
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exchange, a day on which the principal national securities exchange on which the
Common Stock is listed or admitted to trading is open for business or (b) if
Common Stock is not so listed or admitted to trading, a day on which the New
York Stock Exchange is open for business.
"Capital Reorganization" has the meaning set forth in Section 4.5.
"Closing Date" means December 31, 1996.
"Closing Price" on any day means (a) if Common Stock is listed or
admitted for trading on a national securities exchange, the reported last sales
price regular way or, if no such reported sale occurs on such day, the average
of the closing bid and asked prices regular way on such day, in each case on the
principal national securities exchange on which Common Stock is listed or
admitted to trading, or (b) if Common Stock is not listed or admitted to trading
on any national securities exchange, the average of the closing bid and asked
prices in the over-the-counter market on such day as reported by NASDAQ or any
comparable system or, if not so reported, as reported by any New York Stock
Exchange member firm selected by Holdings for such purpose.
"Common Stock" means the common stock, par value $0.0001 per share, of
Holdings.
"Common Stock Distribution" has the meaning set forth in Section
4.3(a).
"Common Stock Reorganization" has the meaning set forth in Section 4.2.
"Consolidated Total Debt" has the meaning specified in the Credit
Agreement.
"Convertible Securities" has the meaning set forth in Section 4.3(b).
"Credit Agreement" has the meaning set forth in the second paragraph of
this Warrant.
"Determination Notice" has the meaning set forth in Section 5.2.
"EBITDA" has the meaning specified in the Credit Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
"Exercise Price" means $.0001 per share of the Common Stock, subject to
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adjustment pursuant to Article IV.
"Fair Market Value" as at any date of determination means the fair
market value of the business or property or services in question as of such
date, as determined in good faith by the Board of Directors of Holdings or
otherwise in accordance with Section 3.3 hereof. The Fair Market Value of
Holdings as at any date of determination shall be the sum of (i) the greatest of
(w) the Fair Market Value at such date of the common stockholders' equity of
Holdings and its Subsidiaries as a going concern, (x) the liquidation value at
such date of the common stockholders' equity of Holdings and its Subsidiaries,
(y) the consolidated net worth of Holdings and its Subsidiaries as shown on the
latest available consolidated balance sheet of Holdings and (z) the result of
(A) EBITDA for the twelve consecutive months most recently ended prior to such
date multiplied by four plus (B) cash and cash equivalents at such date minus
(C) Consolidated Total Debt at such date, and (ii) the amount by which any of
the foregoing amounts would have been increased had LTC not made any payments
pursuant to stock appreciation rights or other equity-based payments to
employees of LTC or any of its Subsidiaries. Notwithstanding the foregoing, if,
at any date of determination of the Fair Market Value of Holdings, the Common
Stock shall then be publicly traded, the Fair Market Value of Holdings on such
date shall be the Market Price on such date multiplied by the number of shares
of Common Stock then outstanding. Determination of the Fair Market Value of
Holdings per share of Common Stock, shall be made without giving effect to any
discount for (i) minority interest or (ii) any lack of liquidity of the Common
Stock due to the fact that there may be no public market for the Common Stock.
"Fully Diluted Basis" means at any time (i) as applied to any
calculation of the number of securities of Holdings, after giving effect to (x)
all shares of common stock of Holdings (including the Common Stock) outstanding
at the time of determination, (y) all shares of Holdings' common stock issuable
upon the exercise of any option, warrant (including the Warrants) or similar
right outstanding at the time of determination and (z) all shares of common
stock of Holdings issuable upon the exercise of any conversion or exchange right
contained in any security convertible into or exchangeable for shares of common
stock of Holdings; and (ii) as applied to any calculation of value, after giving
effect to the foregoing securities and the payment of any consideration payable
upon the exercise of any option, warrant or similar right referred to in clause
(y) above if such option, warrant or similar right were exercisable at such
time.
"Holder" has the meaning set forth in the first paragraph of this
Warrant.
"Holdings" has the meaning set forth in the first paragraph of this
Warrant.
"Holdings Determination" has the meaning set forth in Section 3.2(a).
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"IPO" means the initial sale of shares of Common Stock by and for the
account of Holdings pursuant to an underwritten public offering registered under
the Securities Act.
"Mandatory Redemption Right" has the meaning set forth in Section 5.2.
"Market Price" as at any date of determination means the average of the
daily Closing Prices of a share of Common Stock for the shorter of (i) the 20
consecutive Business Days ending on the most recent Business Day prior to the
Time of Determination and (ii) the period commencing on the date next succeeding
the first public announcement of the issuance, sale, distribution, grant or
exercise in question through such most recent Business Day prior to the Time of
Determination. "Time of Determination" means the time and date of the earliest
of (x) the determination of the stockholders entitled to receive such issuance,
sale, distribution or grant, (y) the determination of the Holders or Holdings to
exercise their respective rights set forth in Sections 5.2 or 5.3 hereof and (z)
the commencement of "ex-dividend" trading in respect thereof.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"NationsCredit" has the meaning set forth in the second paragraph of
this Warrant.
"Optional Redemption Price" means, as of any date of determination, a
price for each share of Common Stock issuable upon exercise of the Warrants
equal to 110% of the Redemption Price, determined as of such date.
"Options" has the meaning set forth in Section 4.3(b).
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and any government agency or political
subdivision thereof.
"Redemption Due Date" has the meaning set forth in Section 5.2 hereof.
"Redemption Price" means, as of any date of determination, a price for
each share of Common Stock issuable upon exercise of the Warrants equal to the
excess of (a)(i) the Fair Market Value of Holdings plus the aggregate Exercise
Price of all Warrants either being redeemed or then outstanding and not being
redeemed divided by (ii) the number of shares of Common Stock outstanding on a
Fully Diluted Basis over (b) the Exercise Price then in effect.
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"Refinancing Notice" has the meaning set forth in Section 5.5 hereof.
"Refinancing Redemption" has the meaning set forth in Section 5.2
hereof.
"Regulation Y Holder" means the Holder or a holder of Warrant Shares,
if such Holder or holder of Warrant Shares is a bank holding company within the
meaning of the BHC Act or a subsidiary thereof subject to Regulation Y under the
BHC Act.
"Required Interest" has the meaning set forth in Section 3.3(a).
"Securities Act" means the Securities Act of 1933, as amended, and
rules and regulations of the Securities and Exchange Commission thereunder.
"Special Dividend" has the meaning set forth in Section 4.4.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, association or other business entity of which more than 50% of the
total voting power of shares of stock or other interests therein entitled to
vote in the election of members of the board of directors, partnership
committee, board of managers or trustees or other managerial body thereof is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of such Person or a combination thereof. Unless
otherwise specified, "Subsidiary" means a Subsidiary of Holdings and
"Subsidiaries" means all Subsidiaries of Holdings.
"Warrant Agency" has the meaning set forth in Section 2.1.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the Warrants.
"Warrantholder" means a holder of a Warrant.
"Warrantholders Rights Agreement" has the meaning set forth in Section
3.1.
"Warrants" has the meaning set forth in the second paragraph of this
Warrant.
All references herein to "days" shall mean calendar days unless
otherwise specified.
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ARTICLE VII
MISCELLANEOUS
7.1. Notices. Notices and other communications provided for herein
shall be in writing and may be given by mail, courier, confirmed telex or
facsimile transmission and shall, unless otherwise expressly required, be deemed
given when received or, if mailed, four Business Days after being deposited in
the United States mail with postage prepaid and properly addressed. In the case
of the Holder, such notices and communications shall be addressed to its address
as shown on the books maintained by the Warrant Agency, unless the Holder shall
notify the Warrant Agency that notices and communications should be sent to a
different address (or telex or facsimile number), in which case such notices and
communications shall be sent to the address (or telex or facsimile number)
specified by the Holder.
7.2. Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice or demand on Holdings in any case shall entitle
Holdings to any other or future notice or demand in similar or other
circumstances. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of Holdings and the holders of Warrants entitling such
holders to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding (exclusive of Warrants then
owned by Holdings or any Subsidiary (as defined in the Credit Agreement) or
Affiliate (as defined in the Credit Agreement) thereof); provided, however, that
no such amendment, modification or waiver shall, without the written consent of
the holders of all Warrants at the time outstanding, (a) change the number of
shares of Common Stock subject to purchase upon exercise of this Warrant, the
Exercise Price or provisions for payment thereof or (b) amend, modify or waive
the provisions of this Section or Article III or IV or Section 1.5, 5.2, 5.3 or
5.5. The provisions of the Credit Agreement and the Warrantholders Rights
Agreement may be amended, modified or waived only in accordance with the
respective provisions thereof.
Any such amendment, modification or waiver effected pursuant to and in
accordance with the provisions of this Section or the applicable provisions of
the Credit Agreement or the Warrantholders Rights Agreement shall be binding
upon the holders of all Warrants and Warrant Shares, upon each future holder
thereof and upon Holdings. In the event of any such amendment, modification or
waiver Holdings shall give prompt notice thereof to all holders of Warrants and
Warrant
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Shares and, if appropriate, notation thereof shall be made on all Warrants
thereafter surrendered for registration of transfer or exchange.
7.3. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW).
7.4. Transfer; Covenants to Bind Successor and Assigns. All covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of Holdings or the Holder shall bind its successors and assigns, whether so
expressed or not. This Warrant shall be transferable and assignable by the
Holder hereof in whole or from time to time in part to any other Person and the
provisions of this Warrant shall be binding upon and inure to the benefit of the
Holder hereof and its successors and assigns.
7.5. Severability. In case any one or more of the provisions contained
in this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
7.6. Section Headings. The section headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
7.7. Tax Basis. Holdings and the Holder agree pursuant to Proposed
Treasury Regulation Section 1.1273-2 that, for Federal income tax purposes, the
aggregate issue price of the Term Loans (as defined in the Credit Agreement) and
the aggregate purchase price for the Lender Interest and the Warrants are those
set forth in Section 2.05 of the Credit Agreement. Neither Holdings nor the
Holder hereof shall voluntarily take (nor shall Holdings permit the Company
voluntarily to take) any action inconsistent with the agreement set forth in
this Section 7.7.
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IN WITNESS WHEREOF, Holdings has caused this Warrant to be executed in
its corporate name by one of its officers thereunto duly authorized, and its
corporate seal to be hereunto affixed, attested by its Secretary or an Assistant
Secretary, all as of the day and year first above written.
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
Attest:
/s/ Xxxxx Xxxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
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