WARRANT
AGREEMENT dated as of
September 20, 1999, among
EAGLE PACIFIC INDUSTRIES,
INC., a Minnesota
corporation (the
"Company"), and the initial
warrant holders listed on
Schedule I hereto (the
"Initial Holders").
Preamble
The Company is entering into a Securities Purchase Agreement
dated as of the date hereof with the Initial Holders (the "Securities Purchase
Agreement") pursuant to which the Company is issuing to the Initial Holders
$32.5 million aggregate principal amount of its Senior Subordinated Notes due
2007 (the "Notes"). In order to induce the Initial Holders to enter into the
Securities Purchase Agreement and to purchase the Notes, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company is willing to issue the Warrants (as defined below) to
the Initial Holders. This Agreement sets forth terms and conditions applicable
to the Warrants.
NOW, THEREFORE, the parties to this Agreement hereby agree as
follows:
Article I
DEFINITIONS
1.1 Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Accruing Liability" has the meaning, given to such term in
Section 6.4.
"Affiliate" means, with respect to any specified Person, any
other Person that directly or indirectly through one or more intermediaries
Controls, is Controlled by or is under common Control with such Person.
"Allocable Number" has the meaning given to such term in
Section 4.2.
"Applicable Law" means all provisions of laws, statutes,
ordinances, rules, regulations, permits, certificates or orders of any
Governmental Authority applicable to the Person in question or any of its assets
or property, and all judgments, injunctions, orders and decrees of all courts
and arbitrators in proceedings or actions in which the Person in question is a
party or by which any of its assets or properties are bound.
"Assignment Form" means the assignment form attached as Annex
C to a Warrant.
"Board" means the board of directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or
a day on which banks are authorized or required to be closed in New York, New
York; provided, however, that any determination of a Business Day relating to a
securities exchange or other securities market means a Business Day on which
such exchange is open for trading.
"Change of Control" means the occurrence of any of the
following events: (i) all or substantially all of the Company's assets, on a
consolidated basis, are sold as an entirety to any Person or related group of
Persons or there shall be consummated any consolidation or merger of the Company
(A) in which the Company is not the continuing or surviving company (other than
a consolidation or merger with a wholly-owned Subsidiary in which all shares of
Common Stock outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant to which
the Common Stock would be converted into cash, securities or other property, in
any case, other than a sale of assets or consolidation or merger of the Company
in which the holders of the Common Stock immediately prior to the sale of assets
or consolidation or merger have, directly or indirectly, at least a majority of
the Common Stock of the transferee or continuing or surviving company
immediately after such sale of assets or consolidation or merger, (ii) any
"person" (as such term is used in Sections 13(d) and 14 (d) of the Exchange Act)
other than the Spell Group, is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 of the Exchange Act provided that such person shall be
deemed to have "beneficial ownership" of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the total
voting power of the outstanding voting securities of the Company; or (iii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board (together with any new directors whose
election by such members of the Board or whose nomination for election by the
shareholders of the Company, as the case may be, was approved by a vote of at
least a majority of the directors of the Company then still in office) cease for
any reason to constitute a majority of the Board then in office.
"Chase Holders" means, collectively, CB Capital Investors,
L.P. or its transferees who hold Warrants or Warrant Shares.
"Class B Common Stock" means the Class B Common Stock, $.01
par value, of the Company.
"Closing Date" has the meaning given to such term in the
Securities Purchase Agreement.
"Commission" means the Securities and Exchange Commission (or
a successor thereto).
"Common Stock" means (i) the Common Stock, $.01 par value of
the Company, (ii) the Class B Common Stock and (iii) any other class of capital
stock of the Company hereafter authorized that is not limited to a fixed sum or
percentage of par or stated or liquidation value with respect to the rights of
the holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the Company.
"Company" has the meaning given to such term in the Preamble.
"Company Notice Date" has the meaning given to such term in
Section 6.4.
"Compliance Sideletter" has the meaning given to such term in
the Securities Purchase Agreement.
"Control" means, with respect to any Person, 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, by contract or otherwise.
"Convertible Securities" has the meaning given to such term in
Section 5.3(b)(i).
"Delivery Date" has the meaning given to such term in Section
4.3(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Form" means the exchange form attached as Annex B to
a Warrant.
"Excluded Securities" means:
(i) shares of capital stock issued pursuant to a stock
dividend or a stock split or other subdivision of shares;
(ii) Common Stock issued upon exercise of any Warrant;
(iii) Common Stock obtained upon conversion of Class B Common
Stock;
(iv) securities issued by the Company in a Public Offering;
(v) securities issued upon exercise of conversion or exchange
rights, options or subscription calls, warrants, commitments or claims,
provided that the foregoing are issued and outstanding on the date
hereof and are listed on Schedule 2.4(g) or are issued hereafter in
compliance with Section 5.3; and
(vi) Common Stock or Options to purchase Common Stock issued
to employees, officers or, directors of the Company or any Subsidiary
or the issuance of Common Stock upon the exercise of any such Options;
provided, however, that the aggregate amount of all such Common Stock
or Common Stock which may be acquired upon the exercise of such Options
shall not exceed an aggregate of 5% of the Common Stock outstanding on
the date of issuance of such Common Stock or Options, as the case may
be.
"Excluded Transaction" means, with respect to any member of
the Spell Group, any sale or pursuant to a Public Offering or any sale or other
transfer to a majority-controlled Affiliate of such member of the Spell Group
(other than the Company or any Subsidiary) or to a member of the Family Group of
such member of the Spell Group.
"Exercise Form" means the exercise form attached as Annex A
to a Warrant.
"Exercise Price" means $.01 per Warrant Share, subject to
adjustment from time to time in the manner provided in Article V.
"Expiration Time" means 5:00 p.m., Eastern time, on September
20, 2009.
"Family Group" means an individual's spouse and descendants
(whether natural or adopted) and any trust established solely for the benefit of
such individual or such individual's spouse and descendants (whether natural or
adopted) for estate planning purposes and any partnership in which all of the
partners consist of the such individual and/or such individual's spouse and/or
such individuals descendants (whether natural or adopted).
"Financing" means the borrowing of money by the Company
(including in connection with any refinancing of existing Indebtedness of the
Company), the sale or issuance of capital stock, a recapitalization of the
Company, a revaluation of the Company's assets (to the extent permitted under
applicable law and GAAP), transfers by the Company from its capital to its
surplus accounts, effecting the sale of the Warrants and/or the Warrant Shares
required to be purchased by the Company under Section 6.4 to one or more third
parties or any other transaction (other than a sale of a majority of the assets
of the Company) pursuant to which the Company makes available funds in an amount
sufficient to satisfy in cash all its obligations under Section 6.4.
"Fiscal Year" means, with respect to the Company, the one-year
period ending on December 31 of any year; provided, however, that with respect
to the fiscal period ending on December 31, 1999 the Fiscal Year of the Company
shall be the fiscal period commencing on the Closing Date and ending on December
31, 1999.
"Fully Diluted Basis" means, with respect to the Common Stock
at any time of determination, the number of shares of Common Stock that would be
issued and outstanding at such time, assuming full conversion, exercise and
exchange of all issued and outstanding Convertible Securities and Options that
shall be (or may become) exchangeable for, or exercisable or convertible into,
Common Stock, including the Warrants, except that the number of shares of Common
Stock outstanding on a Fully Diluted Basis shall not include the number of
shares of Common Stock issuable upon exercise, conversion or exchange of Options
or Convertible Securities that, at the time of determination, are Out of the
Money.
"GAAP" means generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" means any federal, state, municipal
or other government, governmental department, commission, board, bureau, agency
or instrumentality, or any court, in each case whether of the United States of
America or any political subdivision thereof, or of any other country.
"Holder" means with respect to any Warrant, the holder of such
Warrant as set forth in the Warrant Register.
"Indebtedness" has the meaning given to such term in the
Securities Purchase Agreement.
"IRC" has the meaning given to such term in Section 2.2(b).
"Market Price" means, for any security as of any date of
determination:
(a) if such security is Publicly Traded as of the date of
determination, the price determined by computing the average, over a period
consisting of the most recent twenty-one (21) Business Days occurring on or
prior to the date of determination, of the applicable price set forth below (but
excluding any trades or quotations that are not bona fide, arm's length
transactions):
(i) the average of the closing prices for such security on
such Business Day on all domestic securities exchanges on which such
security may be listed, or
(ii) if there have been no sales on any such exchange on such
Business Day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such Business Day, or
(iii) if on any Business Day such security is not so listed,
the average of the representative bid and asked prices quoted on the
Nasdaq National Market or Nasdaq Small-Cap Market as of 4:00 P.M., New
York time, on such Business Day, or
(iv) if on any Business Day such security is not quoted in the
Nasdaq National Market or Nasdaq Small-Cap Market, the average of the
highest bid and lowest asked prices on such Business Day in the
domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization.
(b) if such security is not Publicly Traded as of the date of
determination, (i) in the case of the Common Stock, the Market Value Per Share,
determined in accordance with the Valuation Procedure, and (ii) in the case of
any other security, the fair market value of one share or other applicable unit
of such security, determined in accordance with the Valuation Procedure, except
that if the Market Price of the Common Stock is being determined for purposes of
Section 4.3(c), such determination shall be made in good faith by the Board
exercising reasonable business judgment.
"Market Value" means the highest price that would be paid for
the entire common equity interest in the Company on a going-concern basis in a
single arm's-length transaction between a willing buyer and a willing seller
(neither acting under compulsion), using valuation techniques then prevailing in
the securities industry and assuming full disclosure of all relevant information
and a reasonable period of time for effectuating such sale. For the purposes of
determining the Market Value, (i) the exercise price of Options to acquire
Common Stock that are not Out of the Money shall be deemed to have been received
by the Company and (ii) the liquidation preference or indebtedness, as the case
may be, represented by Convertible Securities that are not Out of the Money
shall be deemed to have been eliminated or cancelled.
"Market Value Per Share" means the price per share of Common
Stock obtained by dividing (A) the Market Value by (B) the number of shares of
Common Stock outstanding (on a Fully-Diluted Basis) at the time of
determination.
"MassMutual Holders" means, collectively, Massachusetts Mutual
Life Insurance Company, MassMutual Corporate Investors, MassMutual Participation
Investors, MassMutual Corporate Value Partners Limited or any of their
respective transferees who hold Warrants or Warrant Shares.
"Notes" has the meaning given to such term in the Preamble.
"Options" has the meaning given to such term in Section
5.3(b)(i).
"Organizational Documents" means, with respect to any Person,
each instrument or other document that (a) defines the existence of such Person,
including its articles or certificate of incorporation, as filed or recorded
with an applicable Governmental Authority, or (b) governs the internal affairs
of such Person, including its by-laws, in each case as amended, supplemented or
restated.
"Other Equity Documents" means the Team Agreement dated as of
February 23, 1998 by and among Xxxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxx and
Xxxxxxx Xxxxxxx.
"Out of the Money" means, at any date of determination (a) in
the case of an Option, that the aggregate fair market value as of such date of
the shares of Common Stock issuable upon the exercise of such Option is less
than the aggregate exercise price payable upon such exercise and (b) in the case
of a Convertible Security, that the quotient resulting from dividing the fair
market value as of such date of such Convertible Security by the number of
shares issuable as of such date upon conversion or exchange of such Convertible
Security is greater than the fair market value of a share of Common Stock.
"Own" means, with respect to any security, to own, hold or
Control. Owns and Ownership shall have correlative meanings.
"Person" shall be construed as broadly as possible and
includes natural person, corporation, limited liability company, partnership,
joint venture, trust, unincorporated association or other organization and a
Governmental Authority.
"Proportionate Percentage" means, with respect to any Holder
at any time, the quotient obtained by dividing (a) the aggregate number of
Warrant Shares then held by such Holder by (b) the total number of shares of
Common Stock then outstanding (on a Fully-Diluted Basis).
"Publicly Traded" means, with respect to any security, that
such security is (a) listed on a domestic securities exchange, (b) quoted on
Nasdaq Small-Cap Market or (c) traded in the domestic over-the-counter market,
which trades are reported by the National Quotation Bureau, Incorporated.
"Public Offering" means an offering of Common Stock under an
effective registration statement under the Securities Act.
"Put Closing Date" has the meaning given to such term in
Section 6.4.
"Put Notice" has the meaning given to such term in Section 6.4
"Put Notice Date" has the meaning given to such term in
Section 6.4
"Put Postponement" has the meaning given to such term in
Section 6.4.
"Put Price Per Share" means, as at any date, the Market Price
for a share of Common Stock.
"Put Reactivation Date" has the meaning given to such term in
6.4.
"Put Response Notice" has the meaning given to such term in
Section 6.4 .
"Put Right" means the right of a Holder to require the Company
to purchase Warrants and Warrant Shares pursuant to, and in accordance with,
Section 6.4.
"Put Withdrawal Notice" has the meaning given to such term in
Section 6.4.
"Refused Securities" has the meaning given to such term in
Section 6.2(c).
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof, substantially in the form of Exhibit A
hereto.
"Requisite Holders" means, as of any date of determination,
Holders holding Warrants or Warrant Shares representing at least 75% of the
Warrant Shares (i) previously issued or (ii) issuable upon exercise of Warrants
then outstanding.
"Section 6.2 Notice of Acceptance" has the meaning given to
such term in Section 6.2.
"Section 6.2 Offer" has the meaning given to such term in
Section 6.2.
"Section 6.2 Offer Notice" has the meaning given to such term
in Section 6.2.
"Section 6.2 Securities" has the meaning given to such term in
Section 6.2(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" has the meaning given to such
term in the Preamble.
"Senior Debt" has the meaning given to such term in the
Securities Purchase Agreement.
"Spell Group" means Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxx X.
Xxxxxxx and Xxxxxxx X. Xxxxxxx.
"Subsidiary" means, with respect to any Person, any other
Person of which more than fifty percent (50%) of the shares of stock or other
interests entitled to vote in the election of directors or comparable Persons
performing similar functions (excluding shares or other interests entitled to
vote only upon the failure to pay dividends thereon or other contingencies) are
at the time owned or controlled, directly or indirectly through one or more
Subsidiaries, by such Person.
"Transfer" means any sale, transfer, assignment, or other
disposition of any interest in, with or without consideration, any security,
including any disposition of any security or of any interest therein which would
constitute a sale thereof within the meaning of the Securities Act.
"Valuation Procedure" means, with respect to the determination
of any amount or value required to be determined in accordance with such
procedure (the "valuation amount"), a determination (which shall be final and
binding on the Company and the Holders) made (i) by agreement among the Company
and the Requisite Holders within thirty (30) days following the event requiring
such determination or (ii) in the absence of such an agreement, by an Appraiser
(as defined below) selected in accordance with the further provisions of this
definition. If the Board and the Requisite Holders are unable to agree upon an
acceptable Appraiser within ten (10) days after the date either party proposed
that one be selected, the Appraiser will be selected by an arbitrator located in
New York City, New York, selected by the American Arbitration Association (or if
such organization ceases to exist, the arbitrator shall be chosen by a court of
competent jurisdiction). The arbitrator shall select the Appraiser (within ten
(10) days of his appointment) from a list, jointly prepared by the Board and the
Requisite Holders, of not more than six Appraisers of national standing in the
United States, of which no more than three may be named by the Board and no more
than three may be named by the Requisite Holders. The arbitrator may consider,
within the ten-day period allotted, arguments from the parties regarding which
Appraiser to choose, but the selection by the arbitrator shall be made in its
sole discretion from the list of six. The Board and the Requisite Holders shall
submit to the Appraiser their respective determinations of the valuation amount,
and any supporting arguments and other data as they may desire, within ten (10)
days of the appointment of the Appraiser, and the Appraiser shall as soon as
practicable thereafter make its own determination of the valuation amount. The
final valuation amount for purposes hereof shall be the average of the two
valuation amounts closest together, as determined by the Appraiser, from among
the valuation amounts submitted by the Board and the Requisite Holders and the
valuation amount calculated by the Appraiser. The Company shall pay the fees and
expenses of the Appraiser and arbitrator (if any) used to determine the
valuation amount. If required by any Appraiser or arbitrator, the Company shall
execute a retainer and engagement letter containing reasonable terms and
conditions, including, without limitation, customary provisions concerning the
rights of indemnification and contribution by the Company in favor of such
Company or arbitrator and its officers, directors, partners, employees, agents
and Affiliates. As used herein, "Appraiser" means (a) with respect to a
determination of Market Value or the fair market value of any security, an
investment banking firm and (b) with respect to a determination of other
valuation required hereunder, a firm of the type generally considered to be
qualified in making determinations of the type required.
"Warrant" has the meaning given to such term in Section
3.1(a).
"Warrant Register" has the meaning given to such term in
Section 3.1(b).
"Warrant Shares" means (a) the shares of Common Stock issued
or issuable upon exercise of a Warrant in accordance with Section 4.1 or upon
exchange of a Warrant in accordance with Section 4.2, (b) all other securities
or other property issued or issuable upon any such exercise or exchange in
accordance with this Agreement and (c) any securities of the Company distributed
with respect to the securities referred to in the preceding clauses (a) and (b).
As used in this Agreement, the phrase "Warrant Shares then held" by any Holder
or Holders means Warrant Shares held at the time of determination by such Holder
or Holders and Warrant Shares issuable upon exercise of Warrants held at the
time of determination by such Holder or Holders.
1.2 Accounting Terms and Determinations.
Except as otherwise may be expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Holders hereunder and under the Warrants shall be prepared, in accordance with
GAAP. All calculations made for the purposes of determining compliance with the
terms of this Agreement and the Warrants shall (except as otherwise may be
expressly provided herein) be made by application of GAAP.
ARTICLE II
PURCHASE AND SALE OF WARRANTS
2.1 Authorization and Issuance of Shares and Warrants.
The Company has authorized (i) the issuance of the Warrants to the
Initial Holders pursuant to this Agreement and (ii) the issuance of such number
of shares of Common Stock as shall be necessary to permit the Company to comply
with its obligations, as of the date hereof, to issue Warrant Shares pursuant to
the Warrants.
2.2 Issuance of the Warrants.
(a) Issuance. On the Closing Date, the Company shall (i) issue to each
Initial Holder Warrants representing the right to acquire the number of shares
of Common Stock set forth opposite such Initial Holder's name on Schedule I
hereto against delivery by such Initial Holders of the consideration provided in
Section 2.1(b) of the Securities Purchase Agreement, (ii) deliver to each
Initial Holder a single certificate for the Warrants to be acquired by such
Initial Holder hereunder, registered in the name of such Initial Holder, except
that, if an Initial Holder shall notify the Company in writing prior to such
issuance that it desires certificates for Warrants to be issued in other
denominations or registered in the name or names of any Affiliate, nominee or
nominees of such Initial Holder for its or their benefit, then the certificates
for Warrants for such Initial Holder shall be issued to such Initial Holder in
the denominations and registered in the name or names specified in such notice,
(iii) deliver to each Initial Holder a legal opinion from counsel to the Company
in form and substance satisfactory to the Initial Holders and (iv) deliver to
each Initial Holder the additional documents listed on the Schedule of Documents
attached to the Securities Purchase Agreement.
(b) Allocation of Price. The Initial Holders and the Company hereby
acknowledge and agree that the Warrants are part of an "investment unit" within
the meaning of Section 1273(c)(2) of the Internal Revenue Code of 1986, as
amended ("IRC"), which includes the Notes. Notwithstanding anything to the
contrary contained herein or in the Securities Purchase Agreement, the Initial
Holders and the Company hereby further acknowledge and agree that for United
States federal income tax purposes the aggregate "issue price" of the Warrants
and the Notes under Section 1273(b) of the IRC (and for purposes of comparable
state and local income tax laws) shall equal $3,500,000 and $29,000,000,
respectively. The Initial Holders and the Company agree to use the foregoing
issue prices for all income tax purposes with respect to this transaction.
2.3 Representations by Initial Holders.
Each Initial Holder, annually as to itself only, represents and
warrants to the Company as follows:
(a) Purchase for its Own Account. Such Initial Holder is purchasing the
Warrants for its own account, without a view to the distribution thereof in
violation of the Securities Act, all without prejudice, however, to the right of
such Initial Holder at any time, in accordance with this Agreement or the
Registration Rights Agreement, lawfully to sell or otherwise to dispose of all
or any part of the Warrants or the Warrant Shares held by it.
(b) Accredited Investor. Such Initial Holder is an "accredited
investor" within the meaning of Regulation D under the Securities Act.
(c) Authority, Etc. Such Initial Holder has the power and authority to
enter into and perform this Warrant Agreement and the execution and performance
hereof have been duly authorized by all proper and necessary action; this
Warrant Agreement constitutes the valid and legally binding obligation of such
Initial Holder, enforceable against it in accordance with its terms, except as
limited by bankruptcy, insolvency or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights and the application of
equitable principles.
(d) Securities Act Compliance. Such Initial Holder understands that the
Company has not registered the Warrants or the Warrant Shares under the
Securities Act, and each Initial Holder agrees that neither the Warrants nor the
Warrant Shares shall be sold or transferred or offered for sale or transfer by
it without registration under the Securities Act or the availability of an
exemption therefrom, all as more fully provided in Section 3.3.
2.4 Representations and Warranties of the Company.
As a material inducement to the Initial Holders to accept the Warrants
as additional consideration therefor, the Company represents and warrants as
follows:
(a) Existence; Qualification. Each of the Company and the Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each of the Company and the
Subsidiaries is duly qualified, licensed or admitted to do business and is in
good standing as a foreign corporation in every jurisdiction where the failure
to be so qualified would have a material adverse effect on the business,
financial condition, operations, assets, liabilities or capitalization of the
Company and the Subsidiaries taken as a whole and has all requisite corporate
power and authority to transact its business in all such jurisdictions.
(b) No Breach. The execution, delivery and performance of this
Agreement, the Warrants and the Registration Rights Agreement by the Company and
the consummation by it of the transactions contemplated hereby and thereby will
not (a) violate the articles of incorporation or by-laws of the Company, (b)
violate, or result in a breach of or default under, any other instrument or
agreement to which the Company is a party or is bound, (c) violate any judgment,
order, injunction, decree or award against or binding upon the Company, (d)
result in the creation of any Lien upon any of the properties or assets of the
Company, or (e) violate any law, rule or regulation relating to the Company.
(c) Corporate Action. The Company has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement,
the Warrants and the Registration Rights Agreement; the execution, delivery and
performance by the Company of this Agreement, the Warrants and the Registration
Rights Agreement have been duly authorized by all necessary corporate action
(including any stockholder action) on the part of the Company; this Agreement,
the Warrants and the Registration Rights Agreement have been duly executed and
delivered by the Company and constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (regardless of
whether enforcement is sought in equity or at law); the shares of Common Stock
constituting the Warrant Shares initially covered by the Warrants have been duly
and validly authorized and reserved for issuance and will, when paid for and
issued and delivered in accordance with the Warrants, be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens; and none
of the Warrant Shares issued pursuant to the terms hereof will be in violation
of any preemptive or similar rights of any Person.
(d) Approvals. Except in connection with the registration of the
Warrant Shares pursuant to the Registration Rights Agreement and relevant
securities law filings, no authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority or any other Person
are necessary for the execution, delivery or performance by the Company of this
Agreement, the Warrants or the Registration Rights Agreement or for the validity
or enforceability thereof. Any such action required to be taken as a condition
to the execution and delivery of this Agreement and the Registration Rights
Agreement, or the execution, issuance and delivery of the Warrants, has been
duly (or will be) taken by all such Governmental Authorities or other Persons,
as the case may be.
(e) Investment Company Act. The Company is not an "investment company,"
or a company "controlled by" an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(f) Public Utility Holding Company Act. The Company is not a "holding
company," or an "affiliate" of a "holding company" or a "subsidiary company" of
a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(g) Capitalization.
(i) Schedule 2.4(g) hereto correctly sets forth the
authorized, issued and outstanding capital stock of the Company. Upon
the issuance of the Warrants under this Agreement, other than (x) the
Warrants to be issued pursuant to this Agreement, and (y) as described
on Schedule 2.4(g), the Company shall not have outstanding any
Convertible Securities or Options or any warrants, options, other
securities or other rights exercisable or convertible into or
exchangeable for any shares of capital stock of the Company, nor shall
it have outstanding any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, any capital stock or any warrants, options,
other securities or other rights exercisable or convertible into or
exchangeable for any capital stock of the Company.
(ii) Except as set forth on Schedule 2.4(g), there is not in
effect on the date hereof any agreement by the Company pursuant to
which any holders of securities of the Company have a right to cause
the Company to register such securities under the Securities Act, other
than the Registration Rights Agreement, or any agreement to which the
Company or (to its knowledge) any of its stockholders is a party
relating to the voting, transfer or sale of such securities.
(h) Private Offering. Assuming the truth and accuracy of each Initial
Holder's representations and warranties contained in Section 2.3 hereof, the
issuance and sale of the Warrants to such Initial Holder hereunder are exempt
from the registration and prospectus delivery requirements of the Securities
Act. The Company agrees that neither the Company nor any Person acting on its
behalf has offered or will offer the Warrants or Warrant Shares or any part
thereof or any similar securities for issuance or sale to, or has solicited or
will solicit any offer to acquire any of the same from, any Person so as to
bring the issuance and sale of the Warrants or Warrant Shares within the
provisions of the registration and prospectus delivery requirements of the
Securities Act.
(i) No Litigation. There is no action, suit, proceeding or
investigation pending or, to the best of the Company's knowledge after due
inquiry, threatened against the Company or any of its Subsidiaries before any
Governmental Authority with respect to or seeking to enjoin the transactions
contemplated by this Agreement, the Warrants or the Registration Rights
Agreement.
ARTICLE III
FORM; REGISTER; EXCHANGE FOR WARRANTS; TRANSFER
3.1 Form of Warrant; Register.
(a) Form. Each Warrant issued hereunder shall be in the form of Exhibit
B (each, a "Warrant") and shall be executed on behalf of the Company by its
Chairman or its Chief Executive Officer and by its Chief Financial Officer, its
Treasurer or its Assistant Treasurer, except that a Warrant need not bear any
legend appearing on the first page of such form from and after such time as all
the restrictions to which such legend relates no longer apply. Upon initial
issuance, each Warrant shall be dated as of the date of signature thereof by the
Company.
(b) Register. Each Warrant issued, exchanged or transferred hereunder
shall be registered in a warrant register (the "Warrant Register"). The Warrant
Register shall set forth the number of each Warrant, the name and address of the
Holder thereof and the original number of Warrant Shares purchasable upon the
exercise thereof. The Warrant Register will be maintained by the Company and
will be available for inspection by any Holder at the principal office of the
Company or such other location as the Company may designate to the Holders in
the manner set forth in Section 8.1. The Company shall be entitled to treat the
Holder of any Warrant as the owner in fact thereof for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in such
Warrant on the part of any other Person.
3.2 Exchange of Warrants for Warrants.
(a) Exchange. The Holder may exchange any Warrant or Warrants issued
hereunder for another Warrant or Warrants of like kind and tenor representing in
the aggregate the right to purchase the same number of Warrant Shares that could
be purchased pursuant to the Warrant or Warrants being so exchanged. In order to
effect an exchange permitted by this Section 3.2, the Holder shall deliver to
the Company such Warrant or Warrants accompanied by a written request signed by
the Holder thereof specifying the number and denominations of Warrants to be
issued in such exchange and the names in which such Warrants are to be issued.
As promptly as practicable but in any event within ten (10) Business Days of
receipt of such a request, the Company shall, without charge, issue, register
and deliver to the Holder thereof each Warrant to be issued in such exchange.
(b) Replacement. Upon receipt of evidence reasonably satisfactory to
the Company (an affidavit of the Holder being satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any Warrant, and in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company (if the Holder is a financial institution or other
institutional investor, its own agreement being satisfactory) or, in the case of
any such mutilation, upon surrender of such Warrant, the Company shall, without
charge, issue register and deliver in lieu of such Warrant a new Warrant of like
kind representing the same rights represented by and dated the date of such
lost, stolen, destroyed or mutilated Warrant. Any such new Warrant shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time
enforceable by any Person.
(c) Expenses. The Company shall pay all expenses and taxes (other than
any applicable income or similar taxes payable by a Holder of a Warrant)
attributable to an exchange of a Warrant pursuant to this Section 3.2; provided,
however, that the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance of any Warrant in a
name other than that of the Holder of the Warrant being exchanged.
3.3 Transfer of Warrant.
(a) Transfer. Subject to the further provisions of this Section 3.3
(which are intended to ensure compliance with the Securities Act), each Warrant
may be transferred, in whole or in part, by the Holder thereof by delivering to
the Company such Warrant accompanied by a properly completed, duly executed,
Assignment Form. As promptly as practicable but in any event within ten (10)
Business Days of receipt of such Assignment Form, the Company shall, without
charge, issue, register and deliver to the Holder thereof a new Warrant or
Warrants of like kind and tenor representing in the aggregate the right to
purchase the same number of Warrant Shares that could be purchased pursuant to
the Warrant being transferred. In all cases of transfer by an attorney, the
original power of attorney, duly approved, or a copy thereof, duly certified,
shall be deposited and remain with the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced and may be required
to be deposited and remain with the Company in its discretion. The Company shall
not be liable for complying with a request by a fiduciary or nominee of a
fiduciary to register a transfer of any Warrant which is registered in the name
of such fiduciary or nominee, unless made with the actual knowledge that such
fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with knowledge of such facts that the Company's
participation therein amounts to bad faith.
(b) Legend. Each certificate for Warrants or Warrant Shares shall
(unless otherwise permitted by the further provisions of this Section 3.3) be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM. IN ADDITION, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO
THE CONDITIONS SPECIFIED IN SECTION 3.3 OF THE WARRANT AGREEMENT DATED AS OF
SEPTEMBER 20, 1999, AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AMONG THE
ISSUER OF THESE SECURITIES AND THE INITIAL HOLDERS NAMED THEREIN. NO TRANSFER OF
THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. A COPY OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT
THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE
WARRANT AGREEMENT."
(c) Opinion. Each Holder shall, prior to any Transfer of any Warrants
or Warrant Shares, give written notice to the Company of such Holder's intention
to effect such Transfer and to comply in all other respects with the provisions
of this Section in making such proposed Transfer. Each such notice shall
describe the manner and circumstances of the proposed Transfer. Upon request by
the Company, the Holder delivering such notice shall deliver a written opinion,
addressed to the Company, of counsel for such Holder (which may be one of its
internal counsels), stating that in the opinion of such counsel (which opinion
shall be reasonably satisfactory to the Company) such proposed Transfer does not
involve a transaction requiring registration of such Warrants or Warrant Shares
under the Securities Act. Such Holder shall thereupon be entitled to Transfer
Warrants or Warrant Shares, as the case may be, in accordance with the terms of
the notice delivered to the Company, if the Company does not reasonably object
to such Transfer and request such opinion, within ten (10) days after delivery
of such notice or, if the Company does request such opinion, upon its receipt
thereof. Each certificate or other instrument evidencing the securities issued
upon the Transfer of any Warrants or Warrant Shares (and each certificate or
other instrument evidencing any untransferred balance of such Warrants or
Warrant Shares) shall bear the legend set forth in Section 3.3(b) above unless
(i) such opinion of counsel is to the effect that registration of any future
Transfer is not required by the applicable provisions of the Securities Act or
(ii) the Company shall have waived the requirement of such legend.
(d) Removal of Restrictions. Notwithstanding the foregoing provisions
of this Section 3.3, the restrictions imposed by this Section 3.3 upon the
transferability of any Warrants or Warrant Shares shall cease and terminate when
(i) any such Warrants or Warrant Shares are sold or otherwise disposed of
pursuant to an effective registration statement under the Securities Act or as
otherwise contemplated by paragraph (c) above in a manner that does not require
that the Warrants or Warrant Shares so transferred continue to bear the legend
set forth in Section 3.3(b) above or (ii) the holder of such Warrants or Warrant
Shares has met the requirements for Transfer of such Warrants or Warrant Shares
under Rule 144(k). Whenever the restrictions imposed by this Section shall
terminate, upon the written request of the holder of any Warrants or Warrant
Shares as to which such restrictions have terminated, as promptly as practicable
but in any event within ten (10) Business Days of receipt of such request, the
Company shall, without charge, issue, register and deliver a new certificate not
bearing the restrictive legend set forth in Section 3.3(b) above and not
containing any other reference to the restrictions imposed by this Section.
(e) Financial Information. The Company shall provide (and authorize any
Holder to provide) any readily-available financial and other information
concerning the Company to any prospective purchaser of the Warrants or Warrant
Shares owned by such Holder as such purchaser may reasonably request; provided
that, upon request of the Company, such purchaser shall enter into a
confidentiality agreement, in a form reasonably requested by the Company, with
respect to any such information that is non-public.
ARTICLE IV
EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES
4.1 Exercise of Warrants.
On any Business Day on or prior to the Expiration Time, a Holder may
exercise a Warrant, in whole or in part, by delivering to the Company such
Warrant accompanied by a properly completed Exercise Form and a check or wire
transfer in an aggregate amount equal to the product obtained by multiplying (a)
the Exercise Price times (b) the number of Warrant Shares being purchased. Any
partial exercise of a Warrant shall be for a whole number of Warrant Shares
only.
4.2 Exchange for Warrant Shares.
On any Business Day on or prior to the Expiration Time, a Holder may
exchange a Warrant, in whole or in part, for Warrant Shares by delivering to the
Company such Warrant accompanied by a properly completed Exchange Form. The
number of shares of Common Stock to be received by a Holder upon such exchange
shall be equal to (a) the number of Warrant Shares allocable to the portion of
the Warrant being exchanged (the "Allocable Number"), as specified by such
Holder in the Exchange Form less (b) the number of shares equal to the quotient
obtained by dividing (i) the product obtained by multiplying (A) the Exercise
Price times (B) the Allocable Number by (ii) the Market Price as of the Delivery
Date (as defined below). The Allocable Number need not be a whole number, but in
the case of any partial exchange of a Warrant under this Section 4.2, the
Allocable Number shall be determined so that the number of Warrant Shares to be
issued in such exchange shall be a whole number only.
4.3 Issuance of Common Stock.
(a) Issuance of Common Stock. As promptly as practicable but in any
event within ten (10) Business Days following the delivery date (the "Delivery
Date") of (i) an Exercise Form or Exchange Form in accordance with Section 4.1
or 4.2, (ii) the related Warrant and (iii) any required payment of the Exercise
Price, the Company shall, without charge, issue, register and deliver one or
more stock certificates representing the aggregate number of shares of Common
Stock to which the Holder of such Warrant is entitled and transfer to such
Holder appropriate evidence of ownership of other securities or property
(including any cash) to which such Holder is entitled, in such denominations,
and registered or otherwise placed in, or payable to the order of, such name or
names, as may be directed in writing by such Holder. The Company shall deliver
such stock certificates, evidence of ownership and any other securities or
property (including any cash) to the Person or Persons entitled to receive the
same, together with an amount in cash in lieu of any fraction of a share (or
fractional interest in any other security), as hereinafter provided.
(b) Partial Exercise or Exchange. If a Holder shall exercise or
exchange a Warrant for less than all of the Warrant Shares that could be
purchased or received thereunder, the Company shall issue, register and deliver
to the Holder, as promptly as practicable but in any event within ten (10)
Business Days of the Delivery Date, a new Warrant evidencing the right to
purchase the remaining Warrant Shares. In the case of an exchange pursuant to
Section 4.2, the number of remaining Warrant Shares shall be the original number
of Warrant Shares subject to the Warrant so exchanged reduced by the Allocable
Number. Each Warrant surrendered pursuant to Section 4.1 or 4.2 shall be
canceled.
(c) Fractional Shares. The Company shall not be required to issue
fractional shares of Common Stock or fractional units of any other security upon
the exercise or exchange of a Warrant. If any fraction of a share of Common
Stock or fractional unit of any other security would be issuable on the exercise
or exchange of any Warrant, the Company may, in lieu of issuing such fractional
share or unit, pay to such Holder for any such fraction an amount in cash equal
to the product obtained by multiplying (i) such fraction times (ii) the Market
Price for the Common Stock or for a unit of such other security, as the case may
be, as of the Delivery Date.
(d) Expenses. The Company shall pay all expenses and taxes (other than
any applicable income or similar taxes payable by a Holder of a Warrant)
attributable to the initial issuance of Warrant Shares upon the exercise or
exchange of a Warrant; provided, however, that the Company shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issuance of any Warrant or any certificate for, or any other evidence of
ownership of, Warrant Shares in a name other than that of the Holder of the
Warrant being exercised or exchanged.
(e) Record Ownership. To the extent permitted by Applicable Law, the
Person in whose name any certificate for shares of Common Stock or other
evidence of ownership of any other security is issued upon exercise or exchange
of a Warrant shall for all purposes be deemed to have become the holder of
record of such shares or other security on the Delivery Date, irrespective of
the date of delivery of such certificate or other evidence of ownership
(subject, in the case of any exercise to which Section 4.3(g) applies, to the
consummation of a transaction upon which such exercise is conditioned),
notwithstanding that the transfer books of the Company shall then be closed or
that such certificates or other evidence of ownership shall not then actually
have been delivered to such Person.
(f) Approvals. If any securities constituting Warrant Shares or any
portion thereof to be issued upon exercise or exchange of a Warrant require
registration or approval under any Applicable Law, or require listing on any
national securities exchange or national market system before such securities
may be so issued, the Company will as expeditiously as possible cause such
securities to be registered, approved or listed, as applicable. The Company may
suspend the exercise of any Warrant so affected for the period during which such
registration, approval or listing is required but not in effect.
(g) Conditional Exercise or Exchange. Any Exercise Form or Exchange
Form delivered under Section 4.1 or 4.2 may condition the exercise or exchange
of any Warrant on the consummation of a transaction being undertaken by the
Company or the Holder of such Warrant, and such exercise or exchange shall not
be deemed to have occurred except concurrently with the consummation of such
transaction, except that, for purposes of determining whether such exercise or
exchange is timely it shall be deemed to have occurred on the Delivery Date. If
any exercise of a Warrant is so conditioned, then, subject to delivery of the
items required by Section 4.3(a), the Company shall deliver the certificates and
other evidence of ownership of other securities or other property in such manner
as such Holder shall direct as required in connection with the consummation such
transaction upon which the exercise is conditioned. At any time that such Holder
shall give notice to the Company that such transaction has been abandoned or
such Holder has withdrawn from participation in such transaction, the Company
shall return the items delivered pursuant to Section 4.3(a), and such Holder's
election to exercise such Warrant shall be deemed rescinded.
(h) Regulatory Problem. No Holder shall exercise or exchange any
Warrant for shares of Common Stock if after giving effect to such Holder
reasonably determines that such exercise would cause such Holder and its
Affiliates to have a Regulatory Problem (as defined in the Compliance
Sideletter).
ARTICLE V
ADJUSTMENT OF EXERCISE PRICE AND SHARES.
5.1 General.
The Exercise Price and the number and kind of Warrant Shares issuable
upon exercise of each Warrant shall be subject to adjustment from time to time
in accordance with this Article V.
5.2 Stock Dividends, Subdivisions and Combinations.
If, at any time after the Closing Date, the Company shall:
(i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock; or
(ii) subdivide, split or reclassify its outstanding shares of
Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then (A) the number of Warrant Shares issuable upon exercise of each Warrant
shall be adjusted so as to equal the number of Warrant Shares that the Holder of
such Warrant would have held immediately after the occurrence of such event if
the Holder had exercised such Warrant immediately prior to the occurrence of
such event and (B) the Exercise Price shall be adjusted to be equal to (x) the
Exercise Price immediately prior to the occurrence of such event multiplied by
(y) a fraction (1) the numerator of which is the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to the adjustment in
clause (A) and (2) the denominator of which is the number of Warrant Shares
issuable upon exercise of this Warrant immediately after the adjustment in
clause (A). An adjustment made pursuant to this Section 5.2 shall become
effective immediately after the occurrence of such event retroactive to the
record date, if any, for such event.
5.3 Issuance of Common Stock.
(a) General. If, at any time after the Closing Date, the Company shall
issue or sell (or, in accordance with Section 5.3(b), shall be deemed to have
issued or sold) any shares of Common Stock without consideration or for a
consideration per share less than the Market Price for the Common Stock
determined as of the date of such issuance or sale, then, effective immediately
upon such issuance or sale, the Exercise Price and the number Warrant Shares
issuable upon exercise of each Warrant shall be adjusted as follows:
(i) The Exercise Price shall be reduced to an amount equal to
the product obtained by multiplying (A) the Exercise Price in effect
immediately prior to such issuance or sale times (B) a fraction, (I)
the numerator of which shall be the sum of (x) the product of (1) the
number of shares of Common Stock outstanding (on a Fully-Diluted Basis)
immediately prior to such issuance or sale times (2) the Market Price
for the Common Stock as of the date of such issuance or sale plus (y)
the consideration, if any, received by the Company upon such issuance
or sale, and (II) the denominator of which shall be the product of (x)
the number of shares of Common Stock outstanding (on a Fully-Diluted
Basis) immediately after such issuance or sale times (y) such Market
Price.
(ii) The number of Warrant Shares issuable upon exercise of
such Warrant shall be increased to the number of shares determined by
multiplying (A) the number of Warrant Shares issuable upon exercise of
such Warrant immediately prior to such issuance or sale by (B) a
fraction, (1) the numerator of which shall be the Exercise Price in
effect immediately prior to the adjustment in clause (i) of this
Section 5.3(a), and (2) the denominator of which shall be the Exercise
Price in effect immediately after such adjustment.
(b) Issuance of Options or Convertible Securities. The issuance or sale
of Options or Convertible Securities shall be deemed, in accordance with this
Section 5.3(b), to be the issuance of Common Stock.
(i) Definitions. For the purposes of this Section 5.3(b), the
term "Options" means any warrants, options or other rights to subscribe
for or to purchase (A) Common Stock or (B) Convertible Securities, and
the term "Convertible Securities" means any capital stock, evidence of
indebtedness or other securities or rights convertible into or
exchangeable for Common Stock.
(ii) Issuance of Options. If the Company in any manner issues
or grants any Options, then 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 Convertible
Securities issuable upon the exercise of such Options) shall be deemed,
for purposes of Section 5.3(a), to be outstanding and to have been
issued and sold by the Company. For purposes of Section 5.3(a), the
Common Stock issuable upon exercise of Options or upon conversion or
exchange of Convertible Securities issuable upon exercise of Options
for Convertible Securities shall be deemed to have been issued and sold
at a price per share equal to (A) the sum of (x) the total amount, if
any, received or receivable by the Company as consideration for the
issuance or granting of such Options plus (y) the minimum aggregate
amount of additional consideration payable to the Company upon the
exercise of all such Options plus (z) in the case of such Options for
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon issuance or sale of
such Convertible Securities and the conversion or exchange thereof
divided by (B) the total maximum number of shares of Common Stock
issuable upon exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise
of such Options.
(iii) Issuance of Convertible Securities. If the Company in
any manner issues or sells any Convertible Securities, then the maximum
number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities shall be deemed, for purposes
of Section 5.3(a) to be outstanding and to have been issued and sold by
the Company. For purposes of Section 5.3(a), the Common Stock issuable
upon conversion or exchange of Convertible Securities shall be deemed
to have been issued and sold at a price per share equal to (A) the sum
of (x) the total amount received or receivable by the Company as
consideration for the issuance or sale of such Convertible Securities
plus (y) the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof
divided by (B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible
Securities.
(iv) Superseding Adjustment. If, at any time after any
adjustment of the Exercise Price and the number of Warrant Shares
issuable upon exercise of the Warrants shall have been made pursuant to
Section 5.3(a) as a result of the issuance of Options or Convertible
Securities, or after any new adjustment of the Exercise Price and the
number of Warrant Shares shall have been made pursuant to this Section
5.3(b)(iv) (each of the foregoing, a "previous adjustment"):
(A) such Options or the right of conversion or
exchange of such Convertible Securities shall expire, or be
terminated or surrendered, and all or a portion of such
Options or the right of conversion or exchange with respect to
all or a portion of such Convertible Securities, as the case
may be, shall not have been exercised or treated as having
been exercised or otherwise canceled or acquired by the
Company in connection with any settlement, including any cash
settlement, of such Options or the rights of conversion or
exchange of such Convertible Securities; or
(B) there has been any change in the number of shares
of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible Securities
(including as a result of a change in the number of
Convertible Securities issuable upon the exercise of such
Options or the operation of antidilution provisions applicable
thereto); or
(C) the consideration per share for which shares of
Common Stock are issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible
Securities, or the maturity of such Convertible Securities,
shall be changed;
then the previous adjustment shall be rescinded and annulled and the
shares of Common Stock which were deemed to have been issued and that
gave rise to the previous adjustment shall no longer be deemed to have
been issued. Thereupon, a recomputation shall be made of the
adjustment, if any, of the Exercise Price and the number of Warrant
Shares issuable upon exercise of the Warrants as a consequence of such
Options or Convertible Securities on the basis of:
(D) treating the number of shares of Common Stock, if
any, theretofore actually issued or issuable pursuant to the
previous exercise of such Options or such right of conversion
or exchange (including Options or rights treated as exercised,
otherwise cancelled or acquired in connection with any
settlement), as having been issued on the date or dates of
such issuance as determined for purposes of the previous
adjustment and for the total amount of consideration actually
received and receivable therefor (determined in the manner
described in Section 5.3(b)(ii) or (iii), as the case may be);
(E) treating the maximum number of shares of Common
Stock (1) issuable upon the exercise (or upon the conversion
or exchange of Convertible Securities issuable upon the
exercise) of all Options which then remain outstanding and (2)
issuable upon the conversion or exchange of all Convertible
Securities which then remain outstanding, as having been
issued; and
(F) making the computations called for in Section
5.3(a) hereof on the basis of the revised terms of such
outstanding Options or Convertible Securities, as the case may
be, as if they were newly issued at the time of such revision.
Any adjustment of the Exercise Price and the number of Warrant Shares
issuable upon exercise of the Warrants resulting from such
recomputation shall supersede the previous adjustment.
(v) No Further Adjustments. Any adjustment of the Exercise
Price or the number of Warrant Shares issuable upon the exercise of
Warrants to be made pursuant to this Section 5.3 with respect to the
issuance of (A) any Options (whether for Common Stock or Convertible
Securities), (B) any Convertible Securities issuable upon the exercise
of such Options or (C) any shares of Common Stock issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities shall be made effective upon the issuance of
such Options. Any adjustment of the Exercise Price or the number of
Warrant Shares issuable upon the exercise of Warrants to be made
pursuant to this Section 5.3 with respect to the issuance of (x) any
Convertible Securities (other than Convertible Securities issuable upon
the exercise of Options) or (y) any shares of Common Stock issuable
upon the conversion or exchange of such Convertible Securities shall be
made effective upon the issuance of such Convertible Securities. No
further adjustment of the Exercise Price or the number of Warrant
Shares issuable upon the exercise of Warrants shall be made upon the
actual issuance of Common Stock or of Convertible Securities upon the
exercise of such Options or upon the actual issuance of Common Stock
upon conversion or exchange of Convertible Securities.
5.4 Issuance of Other Equity Securities.
If, at any time after the Closing Date, the Company shall issue or sell
any of its equity securities other than any class or series of Common Stock,
Convertible Securities or Options ("Other Securities") without consideration or
for a consideration per share (or other similar unit) of such Other Securities
that is less than the Market Price per share (or other similar unit) of such
Other Securities determined as of the date of such issuance or sale, then,
effective immediately upon such issuance or sale, the Exercise Price and the
number of Warrant Shares issuable upon exercise of each Warrant shall be
adjusted as follows:
(i) The Exercise Price shall be reduced to an amount equal to
the product of (A) the Exercise Price in effect immediately prior to
such issuance or sale times (B) a fraction (I) the numerator of which
shall be the (x) the product obtained by multiplying (1) the number of
shares of Common Stock outstanding (on a Fully-Diluted Basis) on the
date of such issuance or sale times (2) the Market Price for the Common
Stock as of the date of such issuance or sale less (y) the amount by
which (1) the aggregate Market Price for the total number of such Other
Securities sold or issued exceeds (2) the aggregate consideration
received by the Company for the total number of such Other Securities
sold or issued, and (II) the denominator of which shall be the product
obtained by multiplying (x) the number of shares of Common Stock
outstanding (on a Fully-Diluted Basis) on the date of such issuance or
sale, by (y) such Market Price.
(ii) The number of Warrant Shares issuable upon exercise of
such Warrant shall be increased to the number of shares determined by
multiplying (A) the number of Warrant Shares issuable upon exercise of
such Warrant immediately prior to such issuance or sale of Other
Securities times (B) a fraction (1) the numerator of which shall be the
Exercise Price in effect immediately prior to the adjustment in clause
(i) of this Section 5.4 and (2) the denominator of which shall be the
Exercise Price in effect immediately after such adjustment.
5.5 Capital Reorganization, Capital Reclassifications, Merger, Etc.
If, at any time after the Closing Date, there shall be any capital
reorganization or any reclassification of the capital stock of the Company
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares to which Section 5.2 applies) or the Company
shall consolidate with, merge with or into, or sell all or substantially all of
its assets or property to, another Person, then in each case the Company shall
cause effective provision to be made so that each Warrant shall, effective as of
the effective date of such event retroactive to the record date, if any, of such
event, be exercisable for the kind and number of shares of stock, other
securities, cash or other property to which a holder of the number of Warrant
Shares issuable upon exercise of such Warrant would have been entitled upon such
event. In any such case, if necessary, the provisions of this Agreement and the
Warrants with respect to the rights and interests thereafter of the Holders of
the Warrants shall be appropriately adjusted so as to be applicable, as nearly
as may reasonably be, to any shares of stock, other securities, cash or other
property thereafter deliverable upon the exercise of the Warrants.
5.6 Other Actions Affecting Common Stock.
(a) Equitable Equivalent. If at any time or from time to time the
Company shall take any action affecting its Common Stock, other than any action
otherwise described in this Article V, then the number of Warrant Shares
issuable upon exercise of each Warrant shall be adjusted in such manner and at
such time as the Board shall in good faith determine (such determination to be
reasonably acceptable to the Majority Holders) to be equitable in the
circumstances, but no such adjustment shall decrease the number of Warrant
Shares issuable upon exercise of this Warrant.
(b) No Avoidance. The Company will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company. The Company
shall at all times in good faith assist in the carrying out of all the
provisions of this Article V and in the taking of all such action as may be
necessary or appropriate in order to protect the exercise rights of the Holders
against impairment.
5.7 Miscellaneous
(a) Calculation of Consideration Received. If any Common Stock,
Options, Convertible Securities or Other Securities are issued or sold or deemed
to have been issued or sold for cash, then the consideration received therefor
shall be deemed to be the net amount received by the Company therefor. If any
Common Stock, Options, Convertible Securities or Other Securities are issued or
sold for consideration other than cash, then the amount of the consideration
other than cash received by the Company shall be the fair market value of such
consideration, as of the date of receipt, determined in accordance with the
Valuation Procedure.
(b) Treasury Shares. The number of shares of Common Stock outstanding
at any given time does not include shares owned or held by or for the account of
the Company or any Subsidiary, and the disposition of any shares so owned or
held shall be considered an issuance of Common Stock.
(c) Record Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in Common Stock, Options or Convertible Securities or (B)
to subscribe for or purchase Common Stock, Options or Convertible Securities,
then such record date shall be deemed to be the date of the issuance or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be. If the Company shall take any such record of the holders of its Common Stock
and shall, thereafter and before the taking of the action for which such record
was taken, legally abandon its plan to take much action, then thereafter no
adjustment shall be required by reason of the taking of such record and any such
adjustment previously made in respect thereof shall be rescinded and annulled.
(d) Deferral of Issuance. In any case in which this Article V shall
require that any adjustment in the number of Warrant Shares purchasable
hereunder or in the Exercise Price be made effective as of immediately after a
record date for a specified event, the Company may elect to defer, until the
occurrence of such event, the issuing to the Holder of any Warrant exercised
after such record date of the shares of Common Stock and other capital stock of
the Company, if any, issuable upon such exercise over and above the number of
shares of Common Stock and other capital stock of the Company, if any, that
would have been issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment. In such case, the Company shall deliver to
the Holder a due xxxx or other appropriate instrument evidencing the Holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(e) Notice; Adjustment Rules. Whenever the Exercise Price and the
number of Warrant Shares shall be adjusted as provided in this Article V, the
Company shall provide to each Holder a statement, signed by the Chairman, the
President or the Chief Financial Officer of the Company, describing in detail
the facts requiring such adjustment and setting forth a calculation of the
Exercise Price and the number of Warrant Shares applicable to each Warrant after
giving effect to such adjustment. All calculations under this Article V shall be
made to the nearest one hundredth of a cent ($.0001) or to the nearest one-tenth
of a share, as the case may be. Adjustments pursuant to this Article V shall
apply to successive events or transactions of the types covered thereby.
Notwithstanding any other provision of this Article V, no adjustment shall be
made to the number of shares of Common Stock 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.
(f) Certain Adjustments. The Company may make such reductions in the
Exercise Price or increase in the number of Warrant Shares to be received by any
Holder upon the exercise or exchange of a Warrant, in addition to those
adjustments required by this Article V, as it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Common Stock, or any issuance wholly for cash of any shares of Common Stock, or
any issuance wholly for cash of shares of Common Stock or Convertible
Securities, or any stock dividend, or any issuance of Options hereinafter made
by the Company to the holders of its Common Stock shall not be taxable to such
holders.
(g) Excluded Issuances. Notwithstanding any other provision of this
Article V, no adjustment shall be made pursuant to this Article V in respect of
(a) the issuance of Common Stock or Options to purchase Common Stock issued to
employees, officers or directors of the Company or any Subsidiary, or the
issuance of Common Stock upon the exercise of any such Options, provided,
however, that the aggregate amount of all such Common Stock or Common Stock
which may be acquired upon the exercise of such Options shall not exceed an
aggregate of 5% of the Common Stock outstanding on the date of the issuance of
such Common Stock or Options, as the case may be, (b) the issuance from time to
time of shares of Common Stock upon the exercise of any of the Warrants, (c) the
issuance of Common Stock obtained upon conversion of the Class B Common Stock
and (d) securities issued upon exercise of conversion or exchange rights,
options or subscription calls, warrants, commitments or claims, provided that
the foregoing are issued and outstanding on the date hereof and are listed on
Schedule 2.4(g).
(h) Par Value. The Company shall not increase the par value of any
shares of Common Stock or other securities issuable upon the exercise of the
Warrants to an amount that exceeds the Exercise Price. Before taking any action
that would cause an adjustment pursuant to this Article V that would reduce the
Exercise Price below the par value per share of the Common Stock, the Company
shall be required to take any corporate action which may be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares at the Exercise Price as so adjusted.
ARTICLE VI
CERTAIN OTHER RIGHTS
6.1 Payments in Respect of Dividends and Distributions.
If, at any time prior to the Expiration Date, the Company pays any
dividend or makes any distribution (whether in cash, property or securities of
the Company) on its capital stock which does not result in an adjustment under
Article V, then the Company shall simultaneously pay to the Holder of each
Warrant, the dividend or distribution which would have been paid to such Holder
on the Warrant Shares receivable upon the exercise in full of such Warrant had
such Warrant been fully exercised immediately prior to the record date for such
dividend or distribution or, if no record is taken, the date as of which the
record holders of Warrant Shares entitled to such dividend or distribution are
to be determined.
6.2 Right of First Offer.
(a) Offer. The Company shall not issue, sell or exchange, agree to
issue, sell or exchange, any (i) Common Stock, (ii) any Options or (iii) any
Convertible Securities unless, in each case, the Company shall have first
offered (the "Section 6.2 Offer") to sell to each Holder its Proportionate
Percentage of such securities (the "Section 6.2 Securities"), at a price and on
such other terms as shall have been specified by the Company in a written notice
(the "Section 6.2 Offer Notice") delivered to such Holder. Each Section 6.2
Offer by its terms shall remain open and irrevocable for a period of twenty (20)
Business Days from the date it is delivered by the Company to the Holders.
(b) Acceptance Procedure. Notice of each Holder's intention to accept,
in whole or in part, a Section 6.2 Offer shall be evidenced by a writing signed
by such Holder and delivered to the Company prior to the end of the 20 -
Business - Day period of such Section 6.2 Offer, setting forth such portion of
the Section 6.2 Offered Securities as such Holder elects to purchase (the
"Section 6.2 Notice of Acceptance").
(c) Sale of Refused Securities. In the event that Section 6.2 Notices
of Acceptance are not given by the Holders in respect of all the Section 6.2
Securities offered to the Holders pursuant to Section 6.2(a), the Company shall
have ninety (90) days from the expiration of the offer and reoffer process
described in Section 6.2(b), to sell all or any part of such Section 6.2
Securities as to which Section 6.2 Notices of Acceptance have not been given by
the Holders (the "Refused Securities") to any other Person or Persons, but only
upon terms and conditions in all respects, including, without limitation, unit
price and interest rates, which are no more favorable, in the aggregate, to such
other Person or Persons or less favorable to the Company than those set forth in
the Section 6.2 Offer. Upon the closing of the sale of the Section 6.2
Securities, the Holders shall purchase from the Company, and the Company shall
sell to the Holders, the Section 6.2 Securities in respect of which Section 6.2
Notices of Acceptance were delivered to the Company, at the terms specified in
the Section 6.2 Offer.
(d) Exclusions. The provisions of this Section 6.2 shall not apply to
the issuance or sale of Excluded Securities.
6.3 Tag-Along Rights.
(a) Right to Sell. With respect to any proposed Transfer of Common
Stock by any member of the Spell Group (including, without limitation, (i) any
Transfer by a majority-controlled Affiliate of any such Person or any member of
such Person's Family Group and (ii) any Transfer to the Company or any of its
Subsidiaries but in each case excluding any Excluded Transaction), such member
of the Spell Group (or such majority-controlled Affiliate or Family Group
member, as the case may be) shall have the obligation, and each Holder shall
have the right, to require the proposed Transferee to offer to purchase from
such Holder, at the same price per share (less, in the case of a purchase of
Warrants, the Exercise Price) and upon the same terms and conditions of sale
offered to such member of the Spell Group (or such majority-controlled Affiliate
or Family Group member, as the case may be), up to a number of Warrant Shares
(issued or represented by outstanding Warrants) equal to the product (rounded to
the nearest whole number) obtained by multiplying (i) a fraction, the numerator
of which is the number of shares of Common Stock proposed to be transferred by
such member of the Spell Group (or such majority-controlled Affiliate or Family
Group member, as the case may be) and the denominator of which is the total
number of shares of Common Stock held by such member of the Spell Group (or such
majority-controlled Affiliate or Family Group member, as the case may be) by
(ii) the aggregate number of Warrant Shares then (issued or represented by
outstanding Warrants) held by such Holder. At least twenty (20) Business Days
prior to any Transfer of Common Stock (other than an Excluded Transaction) by
any member of the Spell Group (or a majority-controlled Affiliate or Family
Group member of any Spell Group member, as the case may be), such member of the
Spell Group (or such majority-controlled Affiliate or Family Group member, as
the case may be) shall provide notice to each Holder specifying (A) the maximum
number of shares of Common Stock to be transferred, (B) the name and address of
the proposed transferee, (C) the form of consideration and terms and conditions
thereof, (D) the number of shares which such Holder may require the proposed
purchaser to purchase from it in accordance with this Section 6.3 and (E) a
representation and warranty by such member of the Spell Group (or such
majority-controlled Affiliate or Family Group member, as the case may be) that
the proposed transferee has been informed of the "tag-along" rights provided
herein and that such member of the Spell Group (or such majority-controlled
Affiliate or Family Group member, as the case may be) will not Transfer shares
unless such transferee has agreed to purchase all shares required to be
purchased from Holders hereunder. Any Transfer of Common Stock by any member of
the Spell Group ( a majority-controlled Affiliate or Family Group member of such
Spell Group Member, as the case may be) shall not be consummated until (and
shall be void ab initio unless) the provisions of this Section 6.3 shall have
been complied with.
(b) Exercise. Any Holder may exercise its rights under Section 6.3(a)
by delivering at least 5 Business Days prior to the end of such 20-Business-Day
period, a written notice to such member of the Spell Group indicating the desire
of such Holder to exercise its rights under this Section 6.3 and the number of
shares such Holder wishes to Transfer, if less than the number which the Holder
is entitled to Transfer under Section 6.3(a). The rights of a Holder under this
Section 6.3 in connection with any proposed Transfer shall not be adversely
affected by a Holder's failure to exercise such rights in connection with any
prior proposed Transfer.
(c) Additional Sales. If at any time prior to a proposed Transfer such
member of the Spell Group wishes to Transfer a greater number of shares than
that originally proposed, such member of the Spell Group shall notify each
Holder immediately of the additional number of shares being proposed for
Transfer. Each Holder may require the proposed transferee to purchase from such
Holder a number of additional Warrant Shares (issued or represented by
outstanding Warrants) determined in accordance with 6.3(a) above but based upon
the number of additional shares the proposed transferee desires to purchase. The
additional tag-along rights provided by this Section 6.3(c) shall be exercised
by any Holder within ten (10) Business Days following the date of the giving of
the supplementary notice by such member of the Spell Group by delivery of
written notice indicating its desire to exercise its additional rights under
this Section 6.3(c) and the number of shares such Holder wishes to Transfer, if
less than the number which such Holder is entitled to Transfer under Section
6.3(a) and this Section 6.3(c).
(d) Closing. At the closing of any purchase of shares pursuant to this
Section 6.3, each participating Holder shall deliver certificates representing
the Warrant Shares (or Warrants) being purchased by the transferee, duly
endorsed for transfer. At such closing, all of the parties to the transaction
shall execute such customary documentation as may reasonably be requested by the
parties thereto; provided, however, that any Holder may withdraw from such
transaction if the documentation is not in form and substance satisfactory to
such Holder.
(e) Spell Group Undertaking. Simultaneously with the execution and
delivery hereof, the Company is delivering an undertaking from all the members
of the Spell Group in the form attached hereto as Exhibit C.
6.4 Put Rights.
(a) Put Rights.
(i) At any time on or after the occurrence of a Change of
Control, but prior to the Expiration Date, each Holder will have the
right to require the Company to purchase all or any part of the
Warrants and the Warrant Shares owned by such Holder.
(ii) Any Holder may exercise a Put Right by delivering a
notice to the Company stating that such Holder will require the Company
to purchase the Warrants or Warrant Shares specified in such notice (a
"Put Notice"). Within 15 days after the first date of receipt of a Put
Notice by the Company (the "Put Notice Date"), the Company shall give a
notice to all other Holders advising them of the receipt by the Company
of such Put Notice, together with a copy of such Put Notice. The date
upon which the Company shall so advise such other Holders is herein
called the "Company Notice Date". Within 15 days after the Company
Notice Date, each such other Holder also may give a Put Notice to the
Company and each such Put Notice shall be deemed given as of the date
of the Put Notice given by the Holder initially exercising the Put
Right.
(b) Procedures.
(i) The purchase and sale of the Warrants and the Warrant
Shares pursuant to a Put Right shall be consummated on a date selected
by the Company upon at least 15 days' prior written notice to the
Holders which have given the relevant Put Notice(s), which date in no
event shall be earlier than the date 30 days, nor later than the date
60 days, after the determination of the Market Price of a share of
Common Stock (the "Put Closing Date"). On the Put Closing Date, the
Company shall purchase from the Holder or Holders which have given such
Put Notice(s), and such Holder or Holders shall sell to the Company,
the Warrants and/or the Warrant Shares specified in such Put Notice(s):
(A) in the case of each Warrant Share so purchased, at a purchase price
equal to the Put Price Per Share as of the Put Notice Date; and (B) in
the case of each Warrant so purchased at a purchase price equal to (1)
the product of (x) the Put Price Per Share as of the Put Notice Date
and (y) the number of Warrant Shares for which such Warrant is
exercisable as of the Put Notice Date, minus (2) an amount equal to the
aggregate Exercise Price as of the Put Notice Date for such number of
Warrant Shares. Payment of the purchase price for the Warrants and/or
the Warrant Shares so purchased by the Company shall be made by wire
transfer in immediately available funds.
(ii) If the Company is prohibited from purchasing the Warrants
and/or Warrant Shares put to it pursuant to a Put Notice because (A) of
the existence of a contractual restriction as in effect on the Closing
Date or contained in any agreement or instrument governing or
evidencing Senior Debt or (B) the Company does not have sufficient
funds legally available therefor under applicable law or such purchase
otherwise violates applicable law, then the Company shall give notice
(a "Put Response Notice") to each Holder which has delivered such Put
Notice of (x) the reason that it is unable to purchase all Warrants and
Warrant Shares put to it pursuant to a Put Notice, including (1) if due
to a deficiency, the computation thereof, and/or (2) if due to such a
contractual restriction, the nature of the provisions which have been
or would be breached and if such provisions are financial covenants, a
computation of the amounts or ratios setting forth the deficiencies
with respect to such covenants, and (y) the aggregate amount of such
Warrants and Warrant Shares, if any, which it will be able to lawfully
purchase, which Put Response Notice shall be delivered within 30 days
of the determination of the Market Price of a share of Common Stock and
shall be given together with the notice of the Put Closing Date, if
any, given by the Company pursuant to the first sentence of Section
6.4(b)(i). Each such Holder shall have the right to withdraw its Put
Notice by delivering a notice (a "Put Withdrawal Notice") to the
Company at any time prior to the 10th day immediately preceding the Put
Closing Date or if none is set in the Put Response Notice, prior to the
10th day immediately preceding the last day on which a Put Closing
could occur pursuant to the first sentence of Section 6.4(b)(i) hereof.
If any such Holders have not timely delivered Put Withdrawal Notices,
unless prohibited by a contractual restriction which has not been
waived by the requisite Persons, the Company thereupon shall purchase
from such Holders the aggregate amount of Warrants and Warrant Shares,
if any, it may purchase on such date with funds legally available under
applicable law for such purpose. Such purchase shall be allocated among
the Holders which have not timely delivered Put Withdrawal Notices pro
rata, based on the ratio of the number of Warrant Shares put to the
Company (including Warrant Shares issuable upon the exercise of
Warrants put to the Company) by each such Holder to the number of
Warrant Shares put to the Company (including Warrant Shares issuable
upon the exercise of Warrants put to the Company) by all such Holders.
If the Company is prohibited from purchasing any Warrants
and/or Warrant Shares upon the exercise by a Holder of a Put Right for
any of the reasons described in the first sentence of this Section
6.4(b)(ii), then the Company shall use its commercially reasonable best
efforts to increase its legally available funds under applicable law to
an amount sufficient to enable it to purchase legally all Warrants and
Warrant Shares put to it pursuant to a Put Notice and/or to obtain
relief from any contractual or legal restriction in order to enable it
to make the required payments, including through effecting a Financing,
obtaining the consent of requisite number of holders of Indebtedness or
otherwise, in each case, as soon as possible.
(iii) If the Company is prohibited from purchasing some or all
Warrants and/or Warrant Shares upon the exercise by a Holder of a Put
Right for any of the reasons described in the first sentence of Section
6.4(b)(ii) and such Holder shall not have timely delivered a Put
Withdrawal Notice, then: (A) the Put Price Per Share for such Holder
with respect to such unpurchased Warrants and/or Warrant Shares shall
become accruing liability of the Company with interest thereon
commencing on the date of exercise of such Put Right through the date
on which the related Warrants and/or Warrant Shares are purchased by
the Company at a rate per annum equal to the 14%, compounded quarterly
(such liability and interest being herein called the "Accruing
Liability"); and (B) such obligation of the Company to purchase the
Warrants and/or Warrant Shares of such Holder shall otherwise be deemed
suspended for so long as and only to the extent that the Company is
unable to repurchase such Warrants and/or Warrant Shares after taking
all the action described in the last paragraph of Section 6.4(b)(ii) (a
"Put Postponement"); provided that, notwithstanding Section 6.1 of this
Agreement, so long as the Accruing Liability shall remain outstanding
the Holders shall not be entitled to receive any dividends or other
distributions under Section 6.1. On any Put Reactivation Date (as
defined below), the Accruing Liability shall become due and payable as
to the Warrants and the Warrant Shares which may then be purchased. As
used herein, "Put Reactivation Date" shall mean a date when the Put
Postponement lapses in whole or in part and the obligation of the
Company to purchase Warrants and Warrant Shares shall no longer be
deemed suspended to the same extent pursuant to clause (B) of this
Section 6.4(b)(iii)
(iv) If on the Expiration Date any Holder is prevented from
exercising its rights under this Section 6.4 for any of the reasons
described in the first sentence of Section 6.4(b)(ii), the Company's
obligation to purchase Warrants and/or Warrant Shares shall be extended
until 5:00 p.m., New York City time, on the last day of the calendar
month next following by at least 30 days the date upon which the
Company shall notify the Holders that such reason or reasons no longer
exist.
(v) If the Company is unable, by reason of the condition
described in the first sentence of Section 6.4(b)(ii) hereof, to
purchase Warrants and/or Warrant Shares within six months after the
exercise by a Holder of the Put Right, then such Holder may request
registration of all or any part of the Warrants and Warrant Shares
owned by such Holder (or, in the case of a put affecting all of the
Warrants and Warrant Shares, by all of the Holders) (which request
shall state the intended method of disposition of such Warrants and
Warrant Shares). Upon such request, the Company shall use its
reasonable efforts to effect the registration and qualification of such
Warrants and/or Warrant Shares under the Securities Act and under
applicable state securities laws, all in accordance with the applicable
provisions of the Registration Rights Agreement; provided that such
registration shall be subject to, and governed by, the provisions of
the Registration Rights Agreement except for the provisions of Sections
2.1 and 2.2 thereof. Upon the effectiveness of the registration
statement with respect to such registration and the sale of such
Securities thereunder, the rights of the Holders under this Section 6.4
shall cease and terminate and any unpaid Accruing Liability shall be
extinguished.
(vi) Each Holder agrees, for the benefit of the holders of the
Senior Debt, that any Accruing Liability shall be subordinated in right
of payment to the prior payment in full in cash of all Senior Debt and
that no payment shall be made or accepted in respect of the principal
of or interest on the Accruing Liability until the earlier to occur of
(i) the date on which the Senior Debt shall have been paid in full in
cash and the commitments to extend credit in respect thereof have been
terminated and (ii) the date on which the requisite consent of the
holders of Senior Debt to such payment has been given.
(c) Other Put Rights. The Company shall not grant any other rights
similar to the Put Right that are exercisable prior to the time at which the Put
Right is exercised or that are not expressly subordinated to the Put Right, in
form and substance reasonably acceptable to the Holders, to the rights of
Holders pursuant to the Put Right.
ARTICLE VII
COVENANTS OF THE COMPANY
7.1 Notices of Certain Actions.
(a) Corporate Events. In the event that the Company:
(i) shall authorize issuance to all holders of Common Stock of
rights or warrants to subscribe for or purchase capital stock of the
Company or of any other subscription rights or warrants; or
(ii) shall authorize a dividend or other distribution to all
holders of Common Stock of evidences of its indebtedness, cash or other
property or assets; or
(iii) proposes to become a party to any consolidation or
merger for which approval of any stockholders of the Company will be
required, or to a conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any capital
reorganization or reclassification or change of the 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, or as a result of a subdivision or
combination); or
(iv) commences a voluntary or involuntary dissolution,
liquidation or winding up; or
(v) proposes to take any other action which would require an
adjustment pursuant to Article V;
then the Company shall provide a written notice to each Holder stating (i) the
date as of which the holders of record of Common Stock to be entitled to receive
any such rights, warrants or distribution are to be determined, (ii) the
material terms of any such consolidation or merger and the expected effective
date thereof, or (iii) the material terms of any such conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of record of Common Stock will be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, conveyance, transfer, dissolution,
liquidation or winding up. Such notice shall be given not later than twenty (20)
Business Days prior to the effective date (or the applicable record date, if
earlier) of such event. The failure to give the notice required by this Section
7.1 or any defect therein shall not affect the legality or validity of any
distribution, right, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any action.
(b) Change of Control. To the extent possible not less than 70 days
prior to any Change of Control, but in no event later than the third Business
Day following the Company becoming aware thereof, notice of the occurrence of
such Change of Control, together with a brief description thereof.
7.2 Financial Statements and Reports.
The Company shall furnish to each Holder:
(a) Annual Financial Statements. As soon as available but in any event
within ninety (90) days after the end of each Fiscal Year (commencing with the
Fiscal Year ending December 31, 1999), consolidated balance sheets, income
statements and cash flow statements of the Company and its Subsidiaries, showing
its financial condition as of the close of such Fiscal Year and the results of
its operations during such year, all the foregoing financial statements to be
audited by independent accountants of nationally-recognized standing and
prepared in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as available but in any
event within forty-five (45) days after the end of each Fiscal Quarter, the
unaudited consolidated balance sheets, income statements and cash flow
statements, showing the financial condition and results of operations of the
Company, as at the end of each such Fiscal Quarter and for the then elapsed
portion of the Fiscal Year, in each case prepared in accordance with GAAP; and
(c) SEC Filings. Promptly upon their becoming available, copies of any
statements, reports and other communications, if any, which the Company shall
have provided to its stockholders or filed with the Securities and Exchange
Commission or any national securities exchange.
(d) Special Information Rights. So long as the Initial Holders or any
of their respective Affiliates shall hold any Warrants or Warrant Shares, to
such Holders only, all other information required to be provided under Section
7.7 of the Securities Purchase Agreement as in effect on the date hereof
(whether or not the same shall remain in effect).
7.3 Information Rights.
The Company will, and will cause the Subsidiaries to, permit, upon
reasonable notice to the chief executive officer or any other designated
representative of the Company, officers and designated representatives of any
Holder designated by the Requisite Holders to visit and inspect any of the
properties or assets of the Company and any of the Subsidiaries in whomsoever's
possession, and to examine the books of accounts of the Company and any of its
Subsidiaries and discuss the affairs, finances and accounts of the Company and
of any of its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company), all at such reasonable times and intervals and to such reasonable
extent as the Holders may desire. The Company will give one representative of
each of the Chase Holders and the MassMutual Holders designated in writing by
such Holder (x) concurrently with the members of the Board at the same time and
in the same manner but in no event less than ten Business Days prior written
notice of each regular meeting of the Board and such prior notice of each
special meeting of the Board as is reasonable under the circumstances and (y) in
each case, the opportunity for each such representative to attend (or
participate by telephone in the case of a telephonic meeting), at the expense of
the Company, as a guest, each such meeting. Such representative shall be
provided with copies of all materials distributed to the members of the Board
including, without limitation, any materials distributed in connection with such
meeting and any documents intended to effect written action by the Board and any
related materials distributed in connection therewith at the same time that they
are distributed to the Board.
7.4 Transactions with Affiliates.
Except as expressly permitted by Section 8.3 of the Securities Purchase
Agreement, the Company shall not, and shall not permit any of the Subsidiaries
to, enter into any transaction with any Affiliate of the Company (including
without limitation, any member of the Spell Group), except in the ordinary
course of business on terms no less favorable to the Company or such Subsidiary
than would obtain in a comparable arm's-length transaction with an unrelated
third party.
7.5 Merger or Consolidation of the Company.
The Company will not merge or consolidate with or into, or sell,
transfer or lease all or substantially all of its property to, any other entity
unless the successor or purchasing entity, as the case may be (if not the
Company), is organized under the laws of the United States of America or any
state or political subdivision thereof and shall expressly agree to provide to
each Holder the securities, cash or property required by Section 5.5 hereof upon
the exercise or exchange of Warrants and expressly assumes, by supplemental
agreement reasonably satisfactory in form and substance to each Holder, the due
and punctual performance and observance of each and every covenant and condition
of this Agreement to be performed and observed by the Company; provided,
however, that the initial obligation of such successor with respect to the
exercise or exchange of Warrants shall be only as set forth in Section 5.5.
7.6 Reservation of Shares, Etc.
The Company will at all times have authorized, and reserve and keep
available, free from preemptive or similar rights, for the purpose of enabling
it to satisfy any obligation to issue Warrant Shares upon the exercise or
exchange of each Warrant, the number of authorized but unissued Warrant Shares
issuable upon exercise or exchange of all outstanding Warrants. The Company
shall as promptly as necessary take all actions necessary to ensure that Warrant
Shares shall be duly authorized and, when issued upon exercise or exchange of
any Warrant in accordance with the terms hereof, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except to the extent of
any applicable provisions set forth in this Agreement and the Registration
Rights Agreement) and free and clear of all preemptive or similar rights.
7.7 Redemptions, Etc.
The Company shall not, nor shall it permit any Subsidiary to, declare
or make at any time any dividends (in cash, property or obligations) on, or
other payments or distributions on account of, or the setting apart of money for
a sinking or other analogous fund for, or the purchase, redemption, retirement
or other acquisition of, any shares of any class of capital stock of the Company
or of any warrants, options or other rights to acquire the same (or to make any
payments to any Person, such as "phantom stock" payments, where the amount
thereof is calculated with reference to the fair market or equity value of the
Company or any of its Subsidiaries), except for:
(i) the payment of dividends by any Subsidiary to the Company
or to any other Subsidiary;
(ii) the payment of dividends by the Company to the extent the
requirements of Section 6.1 are satisfied in connection therewith; and
(iii) the redemption or repurchase of the Company's capital
stock from officers, employees and directors (or their estates) of the
Company or any Subsidiary upon the death, permanent disability,
retirement or termination of employment of any such Person or otherwise
in accordance with any shareholder agreement, stock option plan or any
employee stock ownership plan, provided that (x) no Default or Event of
Default under the Securities Purchase Agreement is then in existence or
would arise therefrom, and (y) the aggregate amount of all cash paid in
respect of all such shares so redeemed or repurchased in any calendar
year does not exceed the sum of (A) $2,000,000 plus (B) all amounts
obtained by the Company from the sale of such stock (or a substantially
concurrent issuance of the Company's capital stock) to other officers,
employees and directors.
7.8 Restrictions on Performance.
The Company shall not at any time enter into, or permit to exist, an
agreement or other instrument restricting its ability to perform its obligations
under this Agreement, the Registration Rights Agreement or the Warrants, or
making such performance or the issuance of shares of Common Stock upon the
exercise of any Warrant a default under any such agreement or instrument other
than (x) the Senior Credit Agreement (as defined in the Securities Purchase
Agreement) and (y) the Securities Purchase Agreement.
7.9 Modification of Other Equity Documents.
The Company shall not amend or consent to any modification, supplement
or waiver of any provision of any Other Equity Documents in any manner which
would have an adverse effect on the Holders without the prior written consent of
the Requisite Holders.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices.
All notices, demands and requests of any kind to be delivered to any
party hereto in connection with this Agreement shall be in writing (i) delivered
personally, (ii) sent by nationally-recognized overnight courier, (iii) sent by
first class, registered or certified mail, return receipt requested or (iv) sent
by facsimile, in each case to such party at its address as follows:
(a) if to the Company, to:
Eagle Pacific Industries, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx West, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(b) if to any Holder, to such Holder's address as set forth on Schedule
I hereto.
Any notice, demand or request so delivered shall constitute valid notice under
this Agreement and shall be deemed to have been received (i) on the day of
actual delivery in the case of personal delivery, if delivered on a Business Day
(otherwise on the next Business Day), (ii) on the next Business Day after the
date when sent in the case of delivery by nationally-recognized overnight
courier, (iii) on the fifth Business Day after the date of deposit in the U.S.
mail in the case of mailing or (iv) upon receipt in the case of a facsimile
transmission. Any party hereto may from time to time by notice in writing served
upon the other as aforesaid designate a different mailing address or a different
Person to which all such notices, demands or requests thereafter are to be
addressed.
8.2 Expenses, Etc.
The Company agrees to pay or reimburse the Holders for: (a) all
reasonable out-of-pocket costs and expenses of each Holder (including the
reasonable fees and expenses of counsel to each Holder), in connection with (i)
the negotiation, preparation, execution and delivery of this Agreement and the
Registration Rights Agreement and the issuance of Warrants hereunder, and (ii)
any amendment, modification or waiver of (or consents in respect of) any of the
terms of this Agreement, the Registration Rights Agreement or the Warrants; and
(b) all reasonable costs and expenses of the Holders (including reasonable legal
fees and expenses of each Holder) in connection with (i) any default by the
Company hereunder or under the Warrants or the Registration Rights Agreement or
any enforcement proceedings resulting therefrom, and (ii) the enforcement of
this Section 8.2.
8.3 No Voting Rights; Limitations of Liability.
No Warrant shall entitle the holder thereof to any voting rights or,
except as otherwise provided herein, other rights of a stockholder of the
Company, as such. No provision hereof, in the absence of affirmative action by
the Holder to purchase Warrant Shares, and no enumeration herein of the rights
or privileges of the Holder shall give rise to any liability of such Holder for
the Exercise Price of Warrant Shares acquirable by exercise hereof or as a
stockholder of the Company.
8.4 Board Elections.
At all times prior to the earlier to occur of : (i) the second
anniversary of the Closing Date and (ii) the repayment in full of the Notes,
each Holder holding shares of Common Stock entitled to vote for the election of
directors agrees that such Holder shall vote such shares in favor of the
director nominees recommended to the shareholders by the Board.
8.5 Amendments and Waivers.
(a) Written Document. Any provision of this Agreement may be amended or
waived, but only pursuant to a written agreement signed by the Company and the
Requisite Holders, provided that no such amendment or modification shall without
the written consent of each Holder affected thereby (i) shorten the Expiration
Date of any Warrant, (ii) increase the Exercise Price of any Warrant, (iii)
change any of the provisions of this Section 8.5(a) or the definition of
"Requisite Holders" or any other provision hereof specifying the number or
percentage of Holders required to waive, amend, or modify any rights hereunder
or make any determination or grant any consent hereunder or otherwise act with
respect to this Agreement or any Warrants or (iv) increase the obligations of
any Holder or otherwise disproportionately adversely affect the rights and
benefits of any Holder under this Agreement.
(b) No Waiver; Cumulative Remedies. No failure on the part of any
Holder to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement, the Warrants or
the Registration Rights Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege under this
Agreement, the Warrant or the Registration Rights Agreement preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
8.6 Specific Performance.
Each Holder shall have the right to specific performance by the Company
of the provisions of this Agreement, in addition to any other remedies it may
have at law or in equity. The Company hereby irrevocably waives, to the extent
that it may do so under applicable law, any defense based on the adequacy of a
remedy at law which may be asserted as a bar to the remedy of specific
performance in any action brought against the Company for specific performance
of this Agreement by the Holders of the Warrants or Warrant Shares.
8.7 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, each Holder and their respective successors and permitted assigns.
8.8 Counterparts.
This Agreement may be executed in two or more counterparts each of
which shall constitute an original but all of which when taken together shall
constitute but one agreement.
8.9 Governing Law.
This Agreement and each Warrant shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
principles of conflicts of laws), except to the extent that the New York
conflicts of laws principles would apply the Minnesota Business Corporation Act
to matters relating to corporations organized thereunder
8.10 Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Company and each Holder of a Warrant or a Warrant Share any legal
or equitable right, remedy or claim hereunder.
8.11 Headings.
Section headings in this Agreement have been inserted for convenience
of reference only and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their authorized officers, all as
of the date and year first above written.
EAGLE PACIFIC INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc.,
its general partner
By: /s/ Xxxx X'Xxxxxx
Name: Xxxx X'Xxxxxx
Title: General Partner
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Managing Director
MASSMUTUAL CORPORATE INVESTORS
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Managing Director
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Managing Director
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
By: Massachusetts Mutual Life
Insurance Company, as Investment
Manager
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Managing Director
SCHEDULE I
Initial Holders
INVESTOR NUMBER OF SHARES OF COMMON STOCK
CB Capital Investors, L.P. 1,343,452
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
Massachusetts Mutual Life Insurance Company (LTP) 191,069
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Securities Investment Division
Payments
All payments on account of the Warrant shall
be made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as __________, interest and principal), to:
Citibank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA No. 000000000
For MassMutual Long-Term Pool
Account No. 4067-3488
Re: Description of security, principal and
interest split
With telephone advise of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (000) 000-0000
Notices
All notices and communications to be addressed
as first provided above, except
notices with respect to payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No.: 00-0000000
Massachusetts Mutual Life Insurance Company (IFM) 47,767
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Securities Investment Division
Payments
All payments on account of the Warrant shall
be made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as [insert name of issuer and
description of Warrant] interest and
principal), to:
Chase Manhattan Bank, N.A.
0 Xxxxx Xxxxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA No. 000000000
For MassMutual IFM Non-Traditional
Account No. 910-0000000
Re: Description of security, principal and
interest split
With telephone advise of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (000) 000-0000
Notices
All notices and communications to be addressed as
first provided above, except
notices with respect to payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. 00-0000000
MassMutual Corporate Investors 197,040
c/o Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Securities Investment Division
Payments
All payments on account of the Warrant shall
be made by crediting in the form of
bank wire transfer of Federal or other immediately
available funds, (identifying
each payment as [insert name of issuer and
description of Warrant], interest and
principal) to:
Chase/NYC/Cust
ABA No. 000000000
A/C *000-0-000000 for F/C/T MassMutual Corporate
Investors
A/C #G06109
Attn: Bond Interest
Re: Description of security (principal and
interest split, if applicable)
With telephone advise of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (000) 000-0000
Instruction for mailing checks
Mass Mutual Corporate Investors
(or Xxxx & Co., if securities are registered in the
nominee name)
c/o Chase Manhattan Bank, N.A.
Attn: Income Processing, Xxxxx 0X
X.X. Xxx 0000, Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Please include a/c #G06109 on the check
Instructions for delivery of securities
All securities should be delivered to the following address:
Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
Re: #G06109
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. 00-0000000
MassMutual Participation Investors 101,505
c/o Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Securities Investment Division
Payments
All payments on account of the Warrant shall
be made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as [insert name of issuer and
description of Warrant], interest and
principal), to:
Chase/NYC/Cust
ABA No. 000000000
A/C #000-0-000000 for F/C/T MassMutual
Participation Investors
A/C #G06110
Attn: Bond Interest
Re: Description of security (principal and
interest split, if applicable)
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (000) 000-0000
Instructions for mailing checks
MassMutual Participation Investors
(or Xxxx & Co., if the securities are registered in
nominee name)
c/o Chase Manhattan Bank, N.A.
Attn: Income Processing, Xxxxx 0X
X.X. Xxx 0000, Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Please include a/c #G06110 on the check.
Instructions for delivery of securities
All securities should be delivered to the following address:
Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
Re: #G06110
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. 00-0000000
MassMutual Corporate Value Partners Limited 59,709
(certificates registered in the name of Xxxxxxx &
Co.)
c/o Bank of America Trust and Banking Corporation
(Cayman) Limited
P.O. Box 1092
Xxxxxx Town
Grand Cayman
Cayman Island, B.W.I.
Payments
All payments on account of the Warrant shall
be made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as [insert name of issuer and
description of Warrant], interest and
principal), to:
Xxxxxxx & Co.
c/o Citibank, N.A.
ABA Number 000000000
Concentration Account 00000000
Re: MassMutual Corporate Value Partners Limited
Name of Security/CUSIP
With telephone advice of payment to the Securities Custody and Collection
Document of Massachusetts Mutual Life Insurance Company at (000) 000-0000
Registration of Securities
All securities should be registered in Citibank's
nominee name of Xxxxxxx & Co. and sent to the
following address:
Citibank
00 Xxxxxxxx Xxxxx - Xxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxx
Acct. #794309
Notices
All notices and communications to be addressed as first provided above.
with a copy to the Investment Manager at:
Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000 XXX
Attn: Xxxxx Xxxxxxxx
Xxxxxxx Xxxxxx
EXHIBIT A
Registration Rights Agreement
[see attached]
EXHIBIT B
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. IN
ADDITION, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS
SPECIFIED IN SECTION 3.3 OF THE WARRANT AGREEMENT DATED AS OF SEPTEMBER 20, 1999
AMONG THE ISSUER OF THESE SECURITIES AND THE INITIAL HOLDERS NAMED THEREIN. NO
TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED. A COPY OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE
PROVISIONS OF THE WARRANT AGREEMENT.
EAGLE PACIFIC INDUSTRIES, INC.
No. W Warrant to Purchase
____ Shares
of Common Stock
---------, -----
Common Stock Purchase Warrant
THIS CERTIFIES that, for value received, [Insert name of
holder] (the "Holder"), or assigns, is entitled to purchase from Eagle Pacific
Industries, Inc., a Minnesota corporation (the "Company"), ___ shares of the
[Class B] Common Stock, $.01 par value (the "Common Stock"), of the Company, at
the price (the "Exercise Price") of $.01 per share, at any time or from time to
time during the period commencing on the date hereof and ending at 5:00 P.M.
Eastern time, on September 20, 2009 (the "Expiration Time").
This Warrant has been issued pursuant to the Warrant Agreement
(as amended or supplemented from time to time, the "Warrant Agreement") dated as
of September 20, 1999, between the Company and the Initial Holders named
therein, and is subject to the terms and conditions, and the Holder is entitled
to the benefits, thereof, including without limitation provisions (i) for
adjusting the number of Warrant Shares issuable upon the exercise hereof and the
Exercise Price to be paid upon such exercise, (ii) providing for certain rights
of first offer upon the sale or other issuance by the Company of equity
securities, (iii) providing for certain "tag-along" and "put" rights and (iv)
providing certain information and other rights. A copy of the Warrant Agreement
is on file and may be inspected at the principal executive office of the
Company. The Holder of this certificate, by acceptance of this certificate,
agrees to be bound by the provisions of the Warrant Agreement. Capitalized terms
used but not defined herein shall have the meanings given to them in the Warrant
Agreement.
SECTION 1. Exercise of Warrant. On any Business Day prior to
the Expiration Time, the Holder may exercise this Warrant, in whole or in part,
by delivering to the Company this Warrant accompanied by a properly completed
Exercise Form in the form of Annex A and a check in an aggregate amount equal to
the product obtained by multiplying (a) the Exercise Price by (b) the number of
Warrant Shares being purchased. Any partial exercise of a Warrant shall be for a
whole number of Warrant Shares only.
SECTION 2. Exercise Price. The Exercise Price is subject to
adjustment from time to time as provided in the Warrant Agreement.
SECTION 3. Exchange of Warrant. On any Business Day prior to
the Expiration Date, the Holder may exchange this Warrant, in whole or in part,
for Warrant Shares by delivering to the Company this Warrant accompanied by a
properly completed Exchange Form in the form of Annex B. The number of shares of
Common Stock to be received by the Holder upon such exchange shall be determined
as provided in Section 4.2 of the Warrant Agreement.
SECTION 4. Transfer. Subject to the limitations set forth in
the Warrant Agreement, this Warrant may be transferred by the Holder by delivery
to the Company of this Warrant accompanied by a properly completed Assignment
Form in the form of Annex C.
SECTION 5. Lost, Stolen, Mutilated or Destroyed Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Company will issue a
new Warrant of like denomination and tenor upon compliance with the provisions
set forth in the Warrant Agreement.
SECTION 6. No Stockholder Rights. This Warrant shall not
entitle the holder hereof to any voting rights or, except as otherwise provided
in the Warrant Agreement, other rights of a stockholder of the Company, as such.
SECTION 7. Successors. All of the provisions of this Warrant
by or for the benefit of the Company or the Holder shall bind and inure to the
benefit of their respective successors and assigns.
SECTION 8. Headings. Section headings in this Warrant have
been inserted for convenience of reference only and shall not affect the
construction of, or be taken into consideration in interpreting, this Warrant.
SECTION 9. Governing Law. This Warrant shall be governed by
and construed in accordance with the laws of the State of New York (without
giving effect to principles of conflicts of laws), except to the extent that the
New York conflicts of laws principles would apply the Minnesota Business
Corporation Act to matters relating to corporations organized thereunder
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officers and this Warrant to be dated as of the
date first set forth above.
EAGLE PACIFIC INDUSTRIES, INC.
By:
Name:
Title: [Chairman or Chief Executive Officer]
ATTEST:
By:
Name:
Title: [Chief Financial Officer, Treasurer or
Assistant Treasurer]
ANNEX A
EXERCISE FORM
[To be signed upon exercise of Warrant]
TO EAGLE PACIFIC INDUSTRIES, INC.
The undersigned, being the Holder of the within Warrant,
hereby elects to exercise the purchase right represented by such Warrant for,
and to purchase thereunder _________ shares of, the [Common Stock] [Class B
Common Stock] of EAGLE PACIFIC INDUSTRIES, INC. and requests that the
certificates for such shares be issued in the name of, and be delivered to,
_________________________, whose address is
--------------------------------------------------------------------.
The foregoing exercise is (check one):
______ irrevocable
______ conditioned upon the consummation of the transaction described briefly
below:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Dated: ------------------------------
(Signature)
------------------------------
(Address)
ANNEX B
EXCHANGE FORM
[To be signed upon exercise of Warrant]
TO EAGLE PACIFIC INDUSTRIES, INC.
The undersigned, being the Holder of the within Warrant,
hereby irrevocably elects to exchange, pursuant to Section 4.2 of the Warrant
Agreement referred to in such Warrant, the portion of such Warrant representing
the right to purchase _________ shares of [Common Stock] [Class B Common Stock]
of EAGLE PACIFIC INDUSTRIES, INC. The undersigned hereby requests that the
certificates for the number of shares of [Common Stock] [Class B Common Stock]
issuable in such exchange pursuant to such Section 4.2 be issued in the name of,
and be delivered to, _____________, whose address is
________________________________________.
The foregoing exchange is (check one):
______ Irrevocable
______ conditioned upon the consummation of the transaction described briefly
below:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Dated:
------------------------------
(Signature)
------------------------------
(Address)
ANNEX C
ASSIGNMENT FORM
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto _________________________, all of the rights represented by the
within Warrant to purchase shares of Common Stock and Class B Common Stock of
EAGLE PACIFIC INDUSTRIES, INC. (the "Company"), to which such Warrant relates,
and appoints ________________________ Attorney to transfer such Warrant on the
books of the Company, with full power of substitution in the premises.
Dated:
------------------------------
(Signature)
------------------------------
(Address)
EXHIBIT C
Form of Spell Group Undertaking
[see attached]
CONFORMED COPY
================================================================================
WARRANT AGREEMENT
Dated as of September 20, 1999
among
EAGLE PACIFIC INDUSTRIES, INC.
and
THE INITIAL WARRANT HOLDERS
LISTED ON SCHEDULE I HERETO
================================================================================
TABLE OF CONTENTS
Page
Article I DEFINITIONS.......................................................1
1.1 Definitions.......................................................1
1.2 Accounting Terms and Determinations...............................9
Article II PURCHASE AND SALE OF WARRANTS....................................9
2.1 Authorization and Issuance of Shares and Warrants.................9
2.2 Issuance of the Warrants..........................................9
2.3 Representations by Initial Holders...............................10
2.4 Representations and Warranties of the Company....................10
Article III FORM; register; EXCHANGE FOR WARRANTS; TRANSFER................12
3.1 Form of Warrant; Register........................................12
3.2 Exchange of Warrants for Warrants................................13
3.3 Transfer of Warrant..............................................13
Article IV EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES................15
4.1 Exercise of Warrants.............................................15
4.2 Exchange for Warrant Shares......................................15
4.3 Issuance of Common Stock.........................................16
Article V ADJustment of Exercise Price and Shares..........................17
5.1 General..........................................................17
5.2 Stock Dividends, Subdivisions and Combinations...................17
5.3 Issuance of Common Stock.........................................18
5.4 Issuance of Other Equity Securities..............................21
5.5 Capital Reorganization, Capital Reclassifications, Merger, Etc...22
5.6 Other Actions Affecting Common Stock.............................22
5.7 Miscellaneous....................................................22
Article VI CERTAIN OTHER RIGHTS............................................24
6.1 Payments in Respect of Dividends and Distributions...............24
6.2 Right of First Offer.............................................24
6.3 Tag-Along Rights.................................................25
6.4 Put Rights.......................................................27
Article VII COVENANTS OF THE COMPANY.......................................30
7.1 Notices of Certain Actions.......................................30
7.2 Financial Statements and Reports.................................30
7.3 Information Rights...............................................31
7.4 Transactions with Affiliates.....................................32
7.5 Merger or Consolidation of the Company...........................32
7.6 Reservation of Shares, Etc.......................................32
7.7 Redemptions, Etc.................................................32
7.8 Restrictions on Performance......................................33
7.9 Modification of Other Equity Documents...........................33
Article VIII MISCELLANEOUS.................................................33
8.1 Board Voting.....................................................35
8.2 Notices..........................................................33
8.3 Expenses, Etc....................................................34
8.4 No Voting Rights; Limitations of Liability.......................34
8.5 Amendments and Waivers...........................................35
8.6 Specific Performance.............................................35
8.7 Binding Effect...................................................35
8.8 Counterparts.....................................................35
8.9 Governing Law....................................................36
8.10 Benefits of this Agreement.......................................36
8.11 Headings.........................................................36
SCHEDULE I - Initial Warrant Holders
SCHEDULE 2.4(g) - Capitalization of the Company
EXHIBIT A - Registration Rights Agreement
EXHIBIT B - Form of Warrant
EXHIBIT C - Spell Group Undertaking
