EXHIBIT 4.5
WARRANT AGREEMENT
BETWEEN
BROTHERS WARRANT HOLDINGS I,
A CALIFORNIA GENERAL PARTNERSHIP
AND
BROTHERS GOURMET COFFEES, INC.
DATED AS OF DECEMBER 27, 1996
THE WARRANT AND WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANT
AND WARRANT SECURITIES, AS THE CASE MAY BE, MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, IN THE
ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT
WITH RESPECT TO THE WARRANT AND WARRANT SECURITIES, AS THE CASE MAY BE, UNDER
THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN
EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
1
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "AGREEMENT") is dated as of the 27th of
December, 1996, and executed by and between BROTHERS WARRANT HOLDINGS I, A
CALIFORNIA GENERAL PARTNERSHIP ("BWHI"), and BROTHERS GOURMET COFFEES, INC.,
a Delaware corporation (the "COMPANY").
WHEREAS, the Company has agreed to grant to BWHI or its assigns a common
stock warrant in the form attached hereto as EXHIBITS A hereto (the
"WARRANT") to acquire shares of the Company's Common Stock. This Agreement
sets forth certain rights and obligations of the Company and BWHI with
respect to the Warrant.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
representations, warranties and agreements contained in this Agreement, the
parties hereto agree as follows:
I. DEFINITIONS
Section 1.01 DEFINED TERMS. As used in this Agreement, the following
capitalized terms shall have the meanings respectively assigned to them below,
which meanings shall be applicable equally to the singular and plural forms of
the terms so defined. Terms not otherwise defined herein shall have the
meanings ascribed to such terms in that certain Securities Purchase Agreement,
dated September 20, 1996, between the Company and Siena Capital Partners, L.P.
(the "BRIDGE LOAN AGREEMENT"), and that certain Senior Subordinated Note
Agreement dated December 27, 1996, between the Company and Dilmun Financial
Services (the "SUBORDINATED LOAN AGREEMENT"). To the extent of any conflict in
defined terms in the Bridge Loan Agreement and the Subordinated Loan Agreement,
the definitions in the Subordinated Loan Agreement shall govern. To the extent
of any conflict or inconsistency in the information contained in the DISCLOSURE
SCHEDULE and the SCHEDULES, unless clearly indicated otherwise, the information
set forth in the schedules shall govern and/or be controlling.
"ADJUSTMENT TRANSACTION" shall mean any of: (i) the issuance or sale of Common
Stock, Class B Common Stock or Common Stock Equivalents for less than Fair Value
(as hereinafter defined) (other than delivery of shares of Common Stock upon
exercise of this Warrant), in addition to the number of shares outstanding as
of the date hereof, as disclosed herein, including, without limitation, any
issuance of Common Stock, Class B Common Stock or Common Stock Equivalents in
connection with the settlement of that certain litigation disclosed as Items
1.5(n)1, 2 and 3 in the DISCLOSURE SCHEDULE and Items 1., 2., 3. and 4. in the
Schedules (the "SETTLEMENT STOCK"), which Settlement Stock is valued at less
than Fair Value as of the date of such settlement or as of the date such
Settlement Stock is actually tendered to the participants in said litigation,
(ii) the declaration of a Dividend upon, or distribution in respect of, any of
the Company's capital stock, payable in Common Stock or Common Stock
Equivalents, (iii) the subdivision or combination by the Company of its
outstanding Common Stock into a larger or smaller number of shares of Common
Stock, as the case may be, (iv) any capital reorganization or reclassification
of the Common Stock or Class B Common Stock of the Company, (v) the
consolidation or merger of the Company or any Subsidiary (as hereinafter
defined) with or into
2
another corporation, (vi) the sale or transfer or other disposition of all or
substantially all of the property of the Company, (vii) the dissolution,
liquidation or winding up of the Company or (viii) any event as to which the
foregoing clauses are not strictly applicable, but the failure to make an
adjustment in the Exercise Price hereunder would not fairly protect the
purchase rights, without dilution, represented by the Warrant.
"CLASS B COMMON STOCK" shall mean Class B Common Stock, $.0001 par value
per share, of the Company.
"COMMON EQUITY" shall mean the total equity interest in the Company
represented by the Common Stock and the Class B Common Stock and shall
include Common Equity resulting from any reorganization, reclassification or
recapitalization or similar event.
"COMMON STOCK" shall mean common stock, $.0001 par value per share, of the
Company.
"COMMON STOCK EQUIVALENTS" shall mean all options, warrants (including the
Warrant), convertible securities, securities and other rights (in each case
whether now existing or hereafter issued or arising) to acquire from the Company
shares of Common Stock or Class B Common Stock (without regard to whether such
options, warrants, convertible securities, securities and other rights are then
exchangeable, exercisable or convertible in full, in part or at all).
"DISCLOSURE SCHEDULE" shall mean the schedules to the Bridge Loan
Agreement.
"DIVIDEND" means, as to any Person (as hereinafter defined), any
declaration or payment of any dividend (other than a stock dividend) on, or
the making of any pro rata distribution, loan, advance, or investment to,
any shares of capital stock of such Person.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, and any
successor provisions thereto.
"EXERCISE PRICE" shall have the meaning given in the Warrant, as adjusted
from time to time pursuant to the terms of the Warrant and this Agreement.
"EXPIRATION PERIOD" means the period commencing on the date hereof
through and including the seventh anniversary of the date hereof or, in the
event the seventh anniversary is not a Business Day (as hereinafter defined),
the next succeeding Business Day.
"EXERCISE QUANTITY" shall mean the number of shares of Common Stock,
determined from time to time, taking into account all shares of Common Stock
theretofore issued upon exercise of the Warrant, required to be issued by the
Company to the Holders of the Warrant. Exercise Quantity shall initially have
the meaning given in the Warrant, and may be adjusted from time to time,
pursuant to the provisions of the Warrant and this Agreement.
"FAIR VALUE" means, so long as, (a) the Company maintains its listing on a
national stock exchange, the NASDAQ system or another inter-dealer quotation
system; and (b) there exists and is continuing a public float having a minimum
value of $15 million based on an average
3
trailing twenty (20) trading-day period, to the extent such definition is
applicable, with reference to the Warrant Securities (as hereinafter defined)
and the Common Stock on a per share basis, the current market price per
share of the Common Stock as of any date of determination. Notwithstanding
the foregoing, in the event the standards set forth in the preceding sentence
have not been met or with respect to other appropriate security, property,
assets, business or entity, "Fair Value" shall mean the fair value of such
item as determined by mutual agreement reached by the Holder and the Company
or, in the event the parties are unable to agree, an opinion of an
independent investment banking firm or firms in accordance with the following
procedure. In the case of any event which gives rise to a requirement to
determine "Fair Value" pursuant to this Agreement, the Company shall be
responsible for initiating the process by which Fair Value shall be
determined as promptly as practicable, but in any event within sixty (60)
days following such event and if the procedures contemplated herein in
connection with determining Fair Value have not been complied with fully,
then any such determination of Fair Value for any purpose of this Agreement
shall be deemed to be preliminary and subject to adjustment pending full
compliance with such procedures. Upon the occurrence of an event requiring
the determination of Fair Value, the Company shall give the Holder(s) of the
Warrant notice of such event, and the Company and the Holders shall engage in
direct good faith discussions to arrive at a mutually agreeable determination
of Fair Value.
In the event the Company and the Holder(s) (as hereinafter defined) are
unable to arrive at a mutually agreeable determination within thirty (30)
days of the notice, the Company and the Holder(s) of the Warrant (who, if
more than one, shall agree among themselves by a majority) shall each retain
a separate independent investment banking firm of national reputation (which
firm, in either case, may be the independent investment banking firm
regularly retained by the Company or any such Holder). Such firms shall
jointly determine the Fair Value of the security, property, assets, business
or entity, as the case may be, in question and deliver their opinion in
writing to the Company and to such Holder within thirty (30) days of their
retention. In no event shall the marketability, or lack thereof, or lack of
registration of a security be a factor in determining the "Fair Value" of
such security.
If such firms cannot jointly make such determination within such 30-day
period, then, unless otherwise directed by agreement of the Company and the
Holder(s) of a majority or more of the Warrant, such firms, in their sole
discretion, shall choose another independent investment banking firm of the
Company or such Holder(s), which firm shall make such determination and
render such an opinion. In either case, the determination so made shall be
conclusive and binding on the Company and such Holder(s). The fees and
expenses of the investment banking firm retained by Holder(s) pursuant to
this provision shall be borne by Holder(s). The fees and expenses of all
other investment banking firms retained pursuant to this provision shall be
borne by the Company.
"HOLDER" or "HOLDERS" shall mean the Person(s) then registered as the
owner(s) of the Warrant or Warrant Securities, as the case may be, on the
books and records of the Company.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, estate,
unincorporated organization, joint venture, court or governmental or
political subdivision or agency thereof.
4
"PREFERRED STOCK" shall mean Preferred Stock, $1.00 par value per share, of
the Company.
"REGISTRABLE SECURITIES" shall have the meaning assigned to it in SECTION
6.01 hereof.
"SCHEDULES" shall mean the Schedules to the Subordinated Loan Agreement.
"SUBSIDIARY" shall mean any corporation as to which an aggregate of more
than 50% of the outstanding voting stock is at any time directly or
indirectly owned by the Company, or by one or more of its Subsidiaries or by
the Company and one or more of its Subsidiaries.
"WARRANT SECURITIES" shall mean the shares of Common Stock (or other
securities representing Common Stock) purchasable or purchased from time to
time under the Warrant or acquired upon any transfer of any such shares,
together with all additional securities received in payment of dividends or
distributions on or splits of those securities or received as a result of the
adjustments provided for in ARTICLE V hereof.
II. WARRANT
On the date hereof, the Company will grant to BWHI, for good and valuable
consideration, the Warrant in the form attached as EXHIBIT A hereto. BWHI and
any subsequent Holder of the Warrant and of Warrant Securities shall have the
rights and obligations provided for in the Warrant and in this Agreement.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows:
(a) The execution and delivery of this Agreement and the Warrant have
been duly and properly authorized by all requisite corporate action of the
Company and its board of directors, and, except as disclosed in the
DISCLOSURE SCHEDULE AND THE Schedules, no consent of any other Person is
required as a prerequisite to the validity and enforceability of this
Agreement and the Warrant that has not been obtained. The Company has the
full legal right, power and authority to execute and deliver this Agreement
and the Warrant and to perform its obligations hereunder and thereunder. When
issued and delivered pursuant to this Agreement, the Warrant will have been
duly executed, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided herein
and therein.
(b) Except as set forth in the DISCLOSURE SCHEDULE AND THE Schedules, the
Company is not a party to or otherwise subject to any contract or agreement
which restricts or otherwise affects its right or ability to execute and deliver
this Agreement or the Warrant or to perform any obligation hereunder or
thereunder (including, without limitation, issuance of the Warrant Securities).
Neither the execution or delivery of this Agreement or the Warrant, nor
compliance therewith (including, without limitation, issuance of the Warrant
Securities), will conflict with, or result in a breach of the terms, conditions
or provisions of, or constitute a default under, or result in any violation of,
or result in the creation of any material lien upon any properties of the
Company under, or require any consent, approval, or other action by, notice to
or filing with
5
any court or Governmental Person pursuant to the Certificate of Incorporation
or By-laws of the Company, as currently in effect, any award of any
arbitrator, or any material agreement, instrument or law to which the
Company is subject or by which it is bound.
(c) On the date hereof, the authorized capital stock of the Company will
consist of: (i) 15,000,000 shares of Common Stock; (ii) 2,000,000 shares of
Class B Common Stock, and (iii) 10,000,000 shares of Preferred Stock. As of
September 27, 1996, the Company had issued and outstanding (A) 10,362,605
shares of Common Stock, (B) 839,332 shares of Class B Common Stock and (C) no
shares of Preferred Stock. All such outstanding shares are validly issued,
fully paid and nonassessable. Except as disclosed in the DISCLOSURE
SCHEDULE, and the SCHEDULES, and except for the Warrant issued to BIB
Holdings Bermuda L.H. ("BIB") in connection with the closing of the
Subordinated Loan Agreement (the "BIB WARRANT"), there are no rights, options
or warrants of any kind outstanding to purchase or acquire Common Stock or
Class B Common Stock or any other ownership interest in the Company, nor are
there other securities, obligations, agreements or rights of any kind
outstanding which are exercisable for, convertible into or exchangeable for
any Common Stock or Class B Common Stock or any other ownership interests in
the Company or under the terms of which the parties thereto have the right to
purchase or acquire Common Stock, Class B Common Stock or Common Stock
Equivalents. Except as disclosed in the DISCLOSURE SCHEDULE, and the
SCHEDULES, and except for the Warrant issued to BIB Holdings Bermuda L.H.
("BIB") in connection with the closing of the Subordinated Loan Agreement
(the "BIB WARRANT"), the issuance by the Company of the Warrant and the
Warrant Securities is not subject to any preemptive or similar right of any
Person pursuant to statute, contract or understanding.
(d) Except as provided in this Agreement and except as provided in the
Subordinated Loan Agreement and BIB Warrant, the Company is not subject to any
obligation to repurchase or otherwise acquire or retire any shares of capital
stock. Except as disclosed in the DISCLOSURE SCHEDULE and except as provided in
the Subordinated Loan Agreement and BIB Warrant, there is no commitment of the
Company to issue any shares, warrants, options, or other such rights, or to
distribute to holders of any class of its capital stock any evidences of
indebtedness or assets, or to pay any Dividend or make any other distribution in
respect thereof.
(e) The Warrant is, and the Warrant Securities will be, issued by the
Company to BWHI in a transaction exempt from registration and qualification
under the applicable federal and state securities laws.
(f) Except as disclosed in the DISCLOSURE SCHEDULE AND THE SCHEDULES,
AND EXCEPT AS PROVIDED FOR IN THE SUBORDINATED LOAN AGREEMENT AND BIB
WARRANT, there is not in effect on the date of this Agreement any agreement
by the Company (other than this Agreement) 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.
IV. COVENANTS
6
Section 4.01 COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees that, during the term of this Agreement, unless all of the Holders of the
Warrant agree otherwise in writing:
(a) Each of the Warrant Securities issued and delivered upon the
exercise of the Warrant and payment of the Exercise Price will be duly and
validly authorized and issued, will be fully paid and nonassessable, and will
not be subject to any unpaid tax or any lien, whether respecting their
issuance to and purchase by the Holder of the Warrant or otherwise. The
Company will take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Common Stock may be listed.
(b) The Company shall, but only to the extent shares of Common Stock are
legally available and subject to the rights of BIB under the BIB Warrant which
shall take precedence over BWHI's rights hereunder, reserve and at all times
keep available for issuance an authorized number of shares of Common Stock
sufficient to permit the full and immediate exercise of the Warrant and the full
and immediate exercise, exchange and conversion of all other securities,
options, warrants and other rights issued or granted by the Company.
(c) The Company shall not permit the par value of its Common Stock to
exceed, at any time, the Exercise Price and shall take all such actions as
may be necessary or appropriate to ensure that it does not do so.
(d) The Company shall not create or permit the existence of any class of
common stock, preferred stock, or any class or series of securities having
voting rights other than as may be required by statute, or any other class or
series of securities having any liquidation, Dividend or other preference,
other than the Common Stock, the Class B Common Stock and the Preferred Stock.
(e) As soon as available, and in no event later than the dates filed
with the SEC or any other Governmental Person or other regulatory authority,
if such documents are so filed, the Company shall deliver to the Holder(s) of
the Warrant and the Warrant Securities copies of (i) all annual, quarterly
and monthly financial statements made available by the Company to its
stockholders, (ii) all reports, notices and proxy or information statements
sent or made available generally by the Company to its stockholders, and
(iii) all regular and periodic reports and all registration statements,
prospectuses and other information filed by the Company with the Commission,
relevant state authorities or any securities exchange, securities quotation
system or other self-regulatory organization.
(f) The Company shall cooperate with the Holder(s) of the Warrant and the
Warrant Securities in supplying such information as may be reasonably necessary
for the Holder(s) to complete and file any information or other reporting forms
from time to time required by the Commission, relevant state authorities or any
securities exchange, securities quotation system
7
or other self-regulatory organization, including, without limitation,
information pertaining to or required for the availability of any exemption
from the securities laws for the sale, transfer or other disposition of the
Warrant or any of the Warrant Securities.
Section 4.02 INDEMNIFICATION.
(a) In connection with any registration or qualification of Warrant
Securities hereunder, the Company agrees that BWHI and each other Holder of
the Warrant or any Warrant Securities purchased hereunder, any
underwriter(s), and their respective directors, officers, employees,
attorneys and agents, as well as each other Person (if any) controlling any
of the foregoing Persons within the meaning of Section 15 of the Securities
Act, or Section 20 of the Exchange Act, shall not incur any liability for
acts and omissions arising out of or related directly or indirectly to the
Warrant, the Warrant Securities, this Agreement, any registration statement
or prospectus or any misstatement or omission of a material fact therein; and
the Company hereby expressly waives any and all claims and actions which it
now has or may hereafter at any time have against BWHI and each other Holder
of the Warrant or underlying Warrant Securities, and their respective
directors, officers, employees, attorneys and agents, arising out of or
related directly or indirectly to any and all of the foregoing acts,
omissions and circumstances, except insofar as such liability is caused by
untrue statements or alleged untrue statements or omissions or alleged
omissions and is based upon information furnished in writing by Holder
expressly for use therein.
(b) The Company agrees to defend, indemnify and hold harmless BWHI and
each other Holder of the Warrant, this Agreement, or any Warrant Security
purchased hereunder, any underwriter(s), and their respective directors,
officers, employees, attorneys and agents, as well as each other Person (if
any) controlling any of the foregoing Persons within the meaning of Section
15 of the Securities Act, or Section 20 of the Exchange Act, from and
against any and all claims, liabilities, losses and expenses (including,
without limitation, the disbursements, expenses and fees of their respective
attorneys) that may be imposed upon, incurred by, or asserted against any of
them, any of their respective directors, officers, employees, attorneys and
agents, or any such control Person, under the Securities Act, the Exchange
Act or any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof), arise out of or are
related directly or indirectly to: (i) the Warrant or the Warrant
Securities, (ii) any registration statement or prospectus, (iii) any alleged
untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such securities were
registered under the Securities Act or the Exchange Act, or in any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (iv) any alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such Persons for
any legal or any other expenses reasonably incurred by such Persons in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any alleged untrue statement or alleged
omission made in such registratry prospectus, prospectus or amendment or
8
supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such
respective Person specifically for use therein. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of any such indemnified Person, and shall survive the transfer of such
securities by such Person. Promptly after receipt of notice of the
commencement of any action in respect of which indemnity may be sought
against the Company, the Company shall assume the defense of such action
(including the employment of counsel, who shall be counsel reasonably
satisfactory to the party seeking indemnity hereunder) and the payment of
expenses insofar as such action shall relate to any alleged liability in
respect of which indemnity may be sought against the Company. The Company
shall not, except with the approval of each party being indemnified under
this SECTION 4.02, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to the parties being so indemnified of a release
from all liability in respect to such claim or litigation.
Section 4.03 LISTING ON THE SECURITIES EXCHANGE. The Company shall, at
its expense, list on any securities exchange where it lists its Common Stock,
and maintain and increase when necessary such listing of all outstanding
Warrant Securities so long as any shares of Common Stock shall be so listed.
The Company shall also so list on each securities exchange, and will maintain
such listing of, any other securities which the holder of the Warrant shall
be entitled to receive upon the exercise thereof if at the time any
securities of the same class shall be listed on such securities exchange by
the Company.
Section 4.04 REPURCHASES AND REDEMPTIONS. Except as otherwise
permitted under the Subordinated Loan Agreement and the BIB Warrant, the
Company shall not repurchase or redeem any of its equity securities or any
securities convertible into or exchangeable for such equity securities or any
warrants or other rights to purchase such equity securities unless it
concurrently makes a cash payment to the Holder(s) of the Warrant equal to
the product of: (1) the quotient obtained by dividing (x) the aggregate
amount of cash and the aggregate Fair Value of any property paid out by the
Company in connection with any such repurchase or redemption by (y) the
number of shares of Common Stock and Common Stock Equivalents outstanding
immediately after such repurchase or redemption (excluding Warrant
Securities) and (2) the number of shares of Common Stock issuable upon the
exercise of the Warrant.
V. ANTIDILUTION
Section 5.01 NO DILUTION OR IMPAIRMENT. The Company hereby
acknowledges that the initial number of shares issuable upon exercise of the
Warrant was calculated based upon 2.60% of the number of shares of Common
Stock, Class B Common Stock and Common Stock Equivalents outstanding and the
representation of the Company that the number of shares of Common Stock and
Common Stock Equivalents outstanding as of the date hereof (including the
Warrant Securities) was Fifteen Million Four Hundred Two Thousand Eight
Hundred Thirty (15,402,830) shares. If for any reason it shall hereafter be
determined by the Company that the actual number of shares of Common Stock,
Class B Common Stock and Common Stock
9
Equivalents outstanding as of the Date hereof was different from the
foregoing, the Company will notify the Holder(s) of such determination and
if the Holder(s) does not dispute the same, the Company shall forthwith
reissue the Warrant with an appropriate proportional increase in the Exercise
Quantity to be effective from the Date hereof. If a Holder shall dispute
such determination and the parties cannot otherwise resolve the dispute
promptly and in good faith, then the Company shall appoint a firm of
independent public accountants of recognized national standing (which may be
the regular auditors of the Company), which shall give their opinion as to
the adjustment, if any, to be made to the Exercise Quantity. Upon receipt of
such opinion, the Company shall promptly mail a copy thereof to the Holder(s)
of the Warrant and shall make the adjustment described therein.
It is the intent of the parties hereto that, after giving effect to any
exercise of the Warrant, the Holder(s) of the Warrant or Warrant Securities
would collectively be the owner of 2.60% of the Common Stock and Common Stock
Equivalents (or have the right to acquire 2.60% of the Common Stock and
Common Stock Equivalents outstanding as such amount may be adjusted in the
event of a cashless exercise of the Warrant according to SECTION 2(a)(ii) or
(iii) thereof or other adjustments contemplated herein), except such
percentage may be reduced as a consequence of an issuance of Common Stock not
requiring any adjustment in the Exercise Price resulting from any Adjustment
Transaction in accordance with SECTION 5.02 or other adjustments contemplated
herein.
Upon any adjustment of the Exercise Price as provided in SECTION 5.02, the
Exercise Quantity shall be adjusted so that the New Exercise Quantity shall be
equal to the product of (x) the former Exercise Quantity and (y) the following
fraction:
THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ADJUSTMENT
The Exercise Price resulting from such adjustment
EXHIBIT B hereto sets forth the formula and an illustrative example of the
manner in which the adjustments contemplated herein should be applied.
So long as any part of this Warrant is outstanding, then, without the prior
written consent of the Holders of outstanding Warrant(s) evidencing a majority
in number of the total number of Warrant Securities at the time purchasable
upon the exercise of all then outstanding Warrant(s), the Company will not take
any voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Agreement or the Warrant or impair the ability of the
Holder(s) to realize the full intended economic value thereof, but will at all
times in good faith assist in the carrying out of all such terms, and of the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder(s) of the Warrant against dilution or other
impairment.
Section 5.02 ADJUSTMENT.
10
(a) In the event the Company, after the Date hereof, shall propose to
consider or engage in an Adjustment Transaction, then, in each such event,
the Company shall mail to the Holder of the Warrant notice of such proposed
action, which shall specify the date on which the stock transfer books of the
Company shall close, or a record shall be taken, for determining the holders
of Common Stock entitled to receive the benefit of such Adjustment
Transaction, or the date on which the Adjustment Transaction shall take place
or commence, as the case may be, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to receive securities or
other property deliverable upon such action, if any such date is to be fixed.
Such notice shall be mailed at least thirty (30) days prior to the date upon
which it is proposed that such action take place and twenty (20) days prior
to any record date to determine holders of Common Stock entitled to receive
the benefit of such Adjustment Transaction. If an Adjustment Transaction
occurs, the Exercise Price shall be adjusted by the Company so as to fairly
preserve, without dilution, the purchase rights represented by the Warrant in
accordance with SECTION 5.01 and otherwise with the essential intent and
purposes hereof. If the Holder(s) of the Warrant disputes the adjustment of
the Exercise Price made by the Company and the parties cannot otherwise
resolve the dispute promptly and in good faith, then the Company shall at its
expense appoint a firm of independent public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion as to the adjustment, if any, to be made to the
Exercise Price as the result of the relevant Adjustment Transaction. Upon
receipt of such opinion, the Company shall promptly mail a copy thereof to
the Holder(s) of the Warrant and shall make the adjustment described
therein. An adjustment made pursuant to this SECTION 5.02(A)DIATELY AFTER
THE EFFECTIVE DATE OF ANY SUCH ISSUE, SALE, DIVIDEND, SUBDIVISION,
COMBINATION OR RECLASSIFICATION.
ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, THE COMPANY SHALL NOT BE
REQUIRED TO MAKE ANY ADJUSTMENT OF THE EXERCISE PRICE IN THE CASE OF THE
ISSUANCE OF SHARES OF COMMON STOCK UPON THE EXERCISE IN WHOLE OR PART OF THE
WARRANT.
(B) WHENEVER THE EXERCISE PRICE IS ADJUSTED AS PROVIDED IN THIS SECTION
5.02, the Company will, if requested, promptly obtain a certificate of a firm
of independent public accountants of recognized national standing selected by
the Board of Directors of the Company (who may be the regular auditors of the
Company) setting forth the Exercise Price, and the Exercise Quantity as so
adjusted, the computation of such adjustment and a brief statement of facts
accounting for such adjustment, and will retain such certificate on file and
mail to the Holder(s) of the Warrant a copy of such certificate from such
firm of independent public accountants.
VI. REGISTRATION RIGHTS
Section 6.01 "PIGGYBACK" REGISTRATION RIGHTS. If at any time the
Company shall determine to register under the Securities Act (including
pursuant to a demand of any security holder of the Company exercising
registration rights) any of its Common Stock (except securities to be issued
solely in connection with any acquisition of any entity or business, shares
issuable solely pursuant to employee benefit plans eligible for registration
on SEC Form S-8
11
or shares to be registered on any registration form that does not permit
secondary sales), it shall send to BWHI and to each of the Holder(s) written
notice of such determination at least thirty (30) days prior to each such
filing and, if within twenty (20) days after receipt of such notice, any
Holder shall so request in writing, the Company shall use its best efforts to
include in such registration statement (to the extent permitted by
applicable regulation) all or any part of the Warrant Securities
(collectively referred to in this ARTICLE VI as "REGISTRABLE SECURITIES")
that such Holder requests to be registered, provided, however, that if, in
connection with any offering involving an underwriting of Common Stock to be
issued by the Company, the managing underwriter shall impose a limitation on
the amount of Registrable Securities included in any such registration
statement, then, to the extent that any Registrable Securities remain
available for registration after the underwriter's cutback, the Company shall
be obligated to include in such registration statement with respect to each
Holder requesting inclusion only the product of: (i) the number of
Registrable Securities with respect to which such Holder has requested
inclusion hereunder and (ii) such Holder's pro rata share of the sum of all
Registrable Securities permitted to be registered and all other securities of
the Company, the holders of which Registrable Securities and other securities
have requested that such securities be registered. Any Registrabl any
underwritten offering under this SECTION 6.01 shall be sold upon such terms
as the managing underwriters shall reasonably request but in any event shall
be upon terms not less favorable than those upon which any other selling
security holder shall sell any of its securities. If any Holder disapproves
of the terms of such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter. The Company
shall use its best efforts to cause the managing underwriter or underwriters
of a proposed underwritten offering (the "COMPANY UNDERWRITER") to permit the
Holders who have requested to participate in the registration for such
offering to include such Registrable Securities in such offering on the same
terms and conditions as the securities of the Company included therein.
Notwithstanding the foregoing, if the Company Underwriter delivers a written
opinion to the Holders that the total amount or kind of securities which
they, the Company and any other Persons intend to include in such offering
(the "TOTAL SECURITIES") is sufficiently large so as to prevent the Company
from affecting a successful offering of the Total Securities, then the amount
or kind of securities to be offered for the account of any members of
management shall be reduced pro rata to the extent necessary to reduce the
Total Securities to the amount recommended by the Company Underwriter, and if
the amount or kind of Total Securities is still sufficiently large so as to
prevent the Company from affecting a successful offering of the Total
Securities, then the amount or kind of securities to be offered for the
account of the Holders and any other Persons shall be reduced pro rata to the
extent necessary to reduce the Total Securities to the amount recommended by
the Company Underwriter. Notwithstanding the provisions of this SECTION
6.01, the Company shall have the right, at any time after it shall have given
written notice pursuant to this SECTION 6.01 request for inclusion of
Registrable Securities shall have been made), to elect not to file any such
proposed registration statement or to withdraw the same after the filing and
prior to the effective date thereof.
Section 6.02 REQUESTED REGISTRATIONS. At any time, and from time to
time upon the written request of BWHI or a majority-in-interest of the
Holders, the Company effects the registration under the Securities Act of all
or part of such Registrable Securities and specifying
12
the number of Registrable Securities to be registered and the intended method
of disposition thereof (a "REQUESTED REGISTRATION"), the Company will use its
best efforts to affect the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
such Holder(s), and all to the extent requisite to permit the disposition (in
accordance with the intended methods thereof) of the Registrable Securities
so to be registered. Neither the Company nor any of its securityholders
shall have the right to include any of the Company's securities (other than
Registrable Securities) in a registration statement to be filed as part of a
Requested Registration unless: (i) such securities are of the same class as
the Registrable Securities and (ii) if such Requested Registration is an
underwritten offering, the Company or such securityholders, as applicable,
agree in writing to sell their securities on the same terms and conditions as
apply to the Registrable Securities being sold. Notwithstanding anything
herein to the contrary, the Company shall not be required to honor a request
for a Requested Registration if: (a) the Company has previously affected one
effective Requested Registration; (b) the Registrable Securities to be so
registered do not constitute at least five percent (5%) of the total number
of Registrable Securities then outstanding or issuable upon exercise or
conversion of the warrants; or (c) such request is received by the Company
(i) less than ninety (90) days following the effective date of any previous
registration statement filed in connection with a Requested Registration or
(ii) less than forty-five (45) days following the effective date of any
prement filed in connection with a Piggyback Registration, regardless of
whether any Holder exercised its rights under this Agreement with respect to
such registration.
Section 6.03 EFFECTIVENESS. If necessary to permit distribution of the
Registrable Securities, the Company shall use its best efforts to maintain
the effectiveness for up to one (1) year of the registration pursuant to
which any of the Registrable Securities are being offered, and from time to
time will amend or supplement such registration statement and the prospectus
contained therein as and to the extent necessary to comply with the
Securities Act and any applicable state securities statute or regulation.
Notwithstanding the foregoing, if the registration by the Company of the
resale of Registrable Securities is eligible for SEC Form S-3 or any
successor to such form, the Company shall use its best efforts to maintain
the effectiveness of the registration until all registered Registrable
Securities are sold. The Holder shall notify the Company promptly of the
completion of the offering of its Registrable Securities under any such
effective registration statement.
Section 6.04 FURTHER OBLIGATIONS OF THE COMPANY. Whenever, under the
preceding Sections of this ARTICLE VI, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the
following:
(a) Furnish to each selling Holder such copies of each preliminary and
final prospectus and any other documents as such Holder may reasonably
request to facilitate the public offering of its Registrable Securities;
13
(b) Use its best efforts to register or qualify the Registrable
Securities to be registered pursuant to this ARTICLE VI under the applicable
securities or blue sky laws of such jurisdictions as any selling Holder may
reasonably request;
(c) Furnish to each selling Holder: (i) a signed counterpart of an
opinion of counsel for the Company, dated the effective date of the
registration statement; and (ii) a copy of any "comfort" letters signed by
the Company's independent public accountants who have examined and reported
on the Company's financial statements included in the registration statement,
covering substantially the same matters as are customarily covered in
opinions of issuer's counsel and in accountants' "comfort" letters delivered
to the underwriters in underwritten public offerings of securities;
(d) Permit each selling Holder or such Holder's counsel or other
representatives to inspect and copy such corporate documents and records as
may reasonably be requested by them in connection with such registration; and
(e) Furnish to each selling Holder, upon request, a copy of all documents
filed and all correspondence from or to the Commission in connection with any
such offering.
Section 6.05 EXPENSES. Except for underwriters' discounts and brokerage
commissions allocable to the Registrable Securities, the Company shall bear
all costs and expenses of each registration contemplated in SECTIONS 6.01 and
6.02 including, but not limited to, printing, legal and accounting fees and
expenses, SEC and NASD filing fees and blue sky fees and expenses in any
jurisdiction in which the securities to be offered are to be registered or
qualified.
Section 6.06 TRANSFER OF REGISTRATION RIGHTS. The registration rights
of the Holders of Registrable Securities under this ARTICLE VI shall inure to
the benefit of and be exercisable by any transferee of Registrable Securities.
Section 6.07 PARTICIPATION RIGHTS.
The Company will not grant to any Person (other than BWHI, the Holders,
any Affiliate thereof or any transferee of Registrable Securities under this
ARTICLE VI) at any time on or after the date of this Agreement the right (a
"PARTICIPATION RIGHT") to request the Company to register any securities of
the Company under the Securities Act by reason of the exercise by any holder
of its rights under this ARTICLE VI unless such Participation Right provides
that such securities shall not be registered and sold at the same time if the
managing underwriter for the offering, including the Registrable Securities,
believes that sale of such securities would adversely affect the amount of,
or price at which, the respective Registrable Securities being registered
under this ARTICLE VI can be sold.
The Company agrees: (1) not to affect any public or private sale or
distribution of its securities, including a sale pursuant to Regulation D
under the Securities Act, during the 10-day period prior to, and during the
90-day period beginning on, the date hereof of an underwritten
14
offering made to pursuant to a registration statement filed pursuant to
SECTION 6.02, and (2) to cause each holder (other than BWHI, the Holders, any
Affiliate thereof or any transferee of Registrable Securities under this
ARTICLE VI) of its privately placed equity securities or convertible
securities purchased from the Company at any time prior to, on or after the
date of this Agreement to agree not to affect any public or private sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 or Rule 144A under the Securities Act (except as part of
such underwritten registration, if permitted).
Notwithstanding anything in this ARTICLE VI to the contrary, in no event
shall this ARTICLE VI be construed as prohibiting, restricting or impairing
the Company's ability to comply with the registration rights agreements or
the registration rights in any warrant it has: (i) entered into on or prior
to the date hereof and (ii) disclosed on the DISCLOSURE SCHEDULE, THE
SCHEDULES OR AS SET FORTH IN THE SUBORDINATED LOAN AGREEMENT AND BIB WARRANT.
VII. TRANSFER OF WARRANT AND WARRANT SECURITIES
Section 7.01 TRANSFER. Except as set forth in SECTION 7.02 below, the
Warrant and the Warrant Securities and all rights thereunder are
transferable, in whole or in part, on the books of the Company to be
maintained for such purpose, upon surrender of such Warrant at the office of
the Company maintained for such purpose, together with a written assignment
of such Warrant duly executed by the Holder hereof or its agent or attorney
and payment of funds sufficient to pay any stock transfer taxes payable upon
the making of such transfer. Upon such surrender and payment, the Company
shall execute and deliver a new Warrant or Warrant in the name of the
assignee or assignees and in the denominations specified in such instrument
of assignment, and this Warrant shall promptly be canceled. If and when the
transferred Warrant is assigned in blank, the Company may (but shall not be
obliged to) treat the bearer thereof as the absolute owner of such Warrant
for all purposes and the Company shall not be affected by any notice to the
contrary. The transferred Warrant, if properly assigned in compliance
herewith, may be exercised by an assignee for the purchase of shares of
Common Stock without having a new Warrant issued. The Company will not close
its stock transfer books against a transfer of the Warrant or the Warrant
Securities or any exercise of the Warrant. Any such transfer or exercise
tendered while such stock transfer books shall be closed shall be deemed
effective immediately prior to such closure.
Subject to SECTION 7.02 below, the Warrant may be divided or combined
with other Warrant upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in
which new Warrant are to be issued, signed by the Holder thereof or its agent
or attorney. Subject to compliance with this, as to any transfer which may
be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrant in exchange for the Warrant or Warrant to be
divided or combined in accordance with such notice.
15
The Company shall pay all expenses, taxes (other than income taxes, if
any, of the transferee) and other charges incurred by the Company in the
performance of its obligations in connection with the preparation, issue and
delivery of Warrant under this Section. The Company agrees to maintain at its
aforesaid office books for the registration and transfer of the Warrant.
Notwithstanding any provision to the contrary contained herein, the Warrant
and the Warrant Securities shall be transferable only in compliance with the
provisions of the Securities Act and applicable state securities laws in
respect of the transfer of any Warrant or any Warrant Securities.
Section 7.02 TRANSFER RESTRICTIONS. Neither this Warrant Agreement, the
Warrant nor the Warrant Securities, when issued, have been registered under
the Securities Act or under the securities laws of any state. Neither this
Agreement, the Warrant nor the Warrant Securities, when issued, may be
transferred: (a) if such transfer would constitute a violation of any
federal or state securities laws or a breach of the conditions to any
exemption from registration thereunder and (b) unless and until one of the
following has occurred: (i) registration of this Agreement, the Warrant or
the Warrant Securities, as the case may be, under the Securities Act, and
such registration or qualification as may be necessary under the securities
laws of any state, have become effective, or (ii) the Holder has delivered
evidence reasonably satisfactory to the Company that such registration or
qualification is not required.
Each certificate for Warrant Securities issued upon exercise of a Warrant
and each certificate issued to a subsequent transferee, unless at the time of
exercise such Warrant Securities are registered under the Securities Act,
shall bear a legend substantially in the following form (and any additional
legends required by law) on the face thereof:
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES
LAWS. THE WARRANT SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT
FOR CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE
REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH
RESPECT TO THE WARRANT SECURITIES UNDER THE SECURITIES ACT AND
UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN EXEMPTION
FROM SUCH REGISTRATION AND QUALIFICATION.
Section 7.03 REPLACEMENT OF INSTRUMENTS. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any certificate or instrument evidencing
any Warrant or Warrant Securities, and (a) in the case of loss, theft or
destruction, upon receipt by the Company of indemnity reasonably satisfactory
to it (provided that, if the owner of the same is a commercial bank or an
institutional lender or investor, its own agreement of indemnity
16
shall be deemed to be satisfactory), or (b) in the case of mutilation, upon
surrender and cancellation thereof, the Company, at its expense, will
execute, register and deliver, in lieu thereof, a new certificate or
instrument for (or covering the purchase of) an equal number of Warrant or
Warrant Securities.
VIII. MISCELLANEOUS
Section 8.01 TERM. Except as otherwise expressly provided in this
Agreement or the Warrant, this Agreement shall expire seven (7) years after
the date hereof, provided that the Company's obligations to honor an exercise
of the Warrant given prior to such expiration or to perform any obligation
continue and survive notwithstanding the expiration of this Agreement.
Section 8.02 NO WAIVER UNDER OTHER AGREEMENTS. The terms and provisions
contained in this Agreement are not intended and shall not be construed to
waive, modify, repeal, stay, diminish or otherwise impair or affect in any
manner whatsoever any right or remedy of BWHI or the Holder(s) under the
Company's Certificate of Incorporation, By-laws or similar agreements.
Section 8.03 RELIANCE. Each party to this Agreement shall be entitled
to rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or other communication reasonably believed by that party to
be genuine and to have been signed, sent or made by the proper Person or
Persons.
Section 8.04 NOTICE. All notices and other communications provided for
in this Agreement shall be in writing and delivered by registered or
certified mail, postage prepaid, or delivered by overnight courier (for next
Business Day delivery) or telecopied, addressed as follows, or at such other
address as any of the parties hereto may hereafter designate by notice to the
other parties given in accordance with this SECTION:
1) if to the Company:
Brothers Gourmet Coffees, Inc.
One Boca Place
0000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, President & CEO
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy of any notice to:
Xxxxxxxxxx Hyatt Xxxxxx & Xxxxxxxxxx, P.C.
22nd Floor, 000 Xxxxxxxxxxx Xxxxxx
00
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
2) if to BWHI:
Brothers Warrant Holdings I, A California General Partnership
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy of any notice to:
Nida & Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: C. Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 8.05 ENFORCEMENT. The Company acknowledges that the Holders may
proceed to exercise or enforce any right, power, privilege, remedy or
interest that they may have under this Agreement or applicable law without
notice, except as otherwise expressly provided herein, without pursuing,
exhausting or otherwise exercising or enforcing any other right, power,
privilege, remedy or interest that they may have against or in respect of any
other party, or any other Person or thing, and without regard to any act or
omission of such party or any other Person.
Section 8.06 EQUITABLE RELIEF. Each party acknowledges and agrees that
it would be impossible to measure in money the damage in the event of a
breach of any of the terms and provisions of this Agreement by any party
hereto, and that, in the event of any such breach, there may not be an
adequate remedy at law, although the foregoing shall not constitute a waiver
of any of the party's rights, powers, privileges and remedies against or in
respect of a breaching party, any other person or thing under this Agreement
or applicable law. It is therefore agreed that, in addition to all other
such rights, powers, privileges and remedies that it may have, each party
shall be entitled to injunctive relief, specific performance or such other
equitable relief as such party may request to exercise or otherwise enforce
any of the terms and provisions of this Agreement and to enjoin or otherwise
restrain any act prohibited thereby, and no party will urge, and each party
hereby waives, any defense that there is an adequate remedy available at law.
18
Section 8.07 INTERPRETATION; HEADINGS; SEVERABILITY.
(a) The parties acknowledge and agree that since each party and its
counsel have reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision, the normal rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this
Agreement, and its terms and provisions shall be construed fairly as to all
parties hereto and not in favor of or against any party, regardless of which
party was generally responsible for the preparation of this Agreement.
(b) The Section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(c) In the event that any term or provision of this Agreement shall be
finally determined to be superseded, invalid, illegal or otherwise
unenforceable pursuant to applicable law by a governmental authority having
jurisdiction and venue, determination shall not impair or otherwise affect
the validity, legality or enforceability: (i) by or before that authority
of the remaining terms and provisions of this Agreement, which shall be
enforced as if the unenforceable term or provision were deleted, or (ii) by
or before any other authority of any of the terms and provisions of this
Agreement.
(d) If any period of time specified in this Agreement expires on a day
that is not a Business Day, that period shall be extended to and expire on
the next succeeding Business Day.
Section 8.08 SURVIVAL OF COVENANTS. Each of the covenants and other
agreements of the parties contained in this Agreement shall be absolute and,
except as otherwise expressly provided, unconditional, shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until the term of this Agreement has expired, and thereafter with
respect to events occurring prior thereto.
Section 8.09 NO REQUIRED EXERCISE. No term or provision of the Warrant
or this Agreement is intended to require, nor shall any such term or
provision be construed as requiring, any Holder of the Warrant to exercise or
put the Warrant.
Section 8.10 BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the parties hereto and their respective successors and
assigns.
Section 8.11 NO WAIVER BY ACTION. The failure or delay of a party at any
time or times to require performance of, or to exercise its rights with
respect to, any term or provision of this Agreement (except as otherwise
expressly provided herein) shall not affect its right at a later time to
enforce any such provision.
19
Section 8.12 WAIVER; MODIFICATION; AMENDMENT. Each and every
modification to and amendment of this Agreement shall be in writing and
signed by the Company, BWHI (if at that time BWHI is a Holder) and by the
Holders of a majority in interest of all issued and unissued Warrant
Securities. Each and every waiver of and consent to any departure from any
term or provision hereof (except as otherwise provided herein) shall be in
writing and signed by BWHI (if at that time it is a Holder) and by the
Holders of a majority in interest of all issued and unissued Warrant
Securities and by each party against whom enforcement of the waiver or
consent may be sought.
Section 8.13 ENTIRE AGREEMENT. This Agreement and the Warrant contain
the entire agreement of the parties and supersede all other representations,
warranties, agreements and understandings, oral or otherwise, among the
parties hereto with respect to the matters contained herein, except as
otherwise provided herein.
Section 8.14 CERTIFICATE. BWHI shall have received a certificate,
dated the date of this Agreement, of the Secretary or an Assistant Secretary
of the Company, attaching a true and complete copy of the resolutions of the
Board of Directors of the Company, and of all documents evidencing other
necessary corporate or shareholder action (in form and substance satisfactory
to BWHI and to its counsel) taken by the Company in connection with the
matters contemplated by this Agreement.
Section 8.15 NO INCONSISTENT AGREEMENTS OR RIGHTS. The Company shall
not enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement.
Section 8.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT, THE WARRANT AND THE WARRANT SECURITIES AND ALL
AMENDMENTS, SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO OR THERETO
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE
COMPANY HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF CALIFORNIA AND AGREES
AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL
PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER CALIFORNIA, COLORADO
OR FEDERAL LAW. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE COMPANY SHALL APPOINT AN AGENT FOR SERVICE OF
PROCESS IN CALIFORNIA AND SHALL NOTIFY BWHI IN WRITING OF SUCH APPOINTMENT
AND ANY FUTURE CHANGE THEREIN. THE COMPANY AND
20
BWHI EACH HEREBY AGREE TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE
SECURITIES OR ANY OTHER AGREEMENTS RELATING TO THE SECURITIES OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT, THE WARRANT, THE WARRANT SECURITIES OR ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING THERETO.
[Signature page follows]
21
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be
executed as of the day and year first above written.
BWHI:
BROTHERS WARRANT HOLDINGS I,
A CALIFORNIA GENERAL PARTNERSHIP
By:
--------------------------
Name:
Title:
THE COMPANY:
BROTHERS GOURMET COFFEES, INC.,
a Delaware corporation
By:
--------------------------
Name:
Title:
22
Exhibit A
to
Warrant Agreement
WARRANT
23
EXHIBIT B TO WARRANT AGREEMENT
THE FOLLOWING IS ONLY FOR EXAMPLE PURPOSES
BOLD FIGURES ARE INPUTS
Example: 1000 shares are issued for $1000 on the day after the Closing
___________ OSBEFORE Outstanding shares (including options and
warrants) before adjustment
$__________ FVBEFORE Fair Value (per share) before adjustment
$__________ EPBEFORE Exercise Price of Warrants before adjustment
___________ OWBEFORE Number of Warrants before adjustment
_________% Fully diluted ownership before adjustment
$__________ CR Consideration received or to be received for new shares
or warrants
___________ OSAFTER Outstanding shares after sale but before Warrant
adjustment
$__________ EPAfter Exercise Price after adjustment
___________ OWAfter Number of Warrants after adjustment
$__________ FVAfter Fair Value (per share) after adjustment
_________% Fully diluted ownership after dilution
$__________ EPAfter = lesser of (OSBefore x EPBefore + CR)/OSAfter
or
$__________ EPBefore x (OSBefore x FVBefore + CR)/OSAfter/ FVBefore
___________ OWAfter = EPBefore x OWBefore/EPAfter
24
