EXHIBIT 10.2
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
TIES WARRANT.
WARRANT NO. 2
To Purchase Common Stock of
BAGCRAFT CORPORATION OF AMERICA
Warrant No. 2
No. of Shares of Common Stock: 1419.54
TABLE OF CONTENTS
Section
1. DEFINITIONS
2. EXERCISE OF WARRANT
2.1. Manner of Exercise
2.2. Payment of Taxes
2.3. Fractional Sham
2.4. Continued Validity
3. TRANSFER, DIVISION AND COMBINATION
3. 1. Transfer
3.2. Division and Combination
3.3. Expenses
3 4. Maintenance of Books
4. ADJUSTMENTS
4.1. Stock Dividends, Subdivisions and Combinations
4.2. Certain Other Distributions
4.3. Issuance of Additional Shares of Common Stock
44. Issuance of Warrants or Other Rights
4.5. Issuance of Convertible Securities
4.6. Superseding Adjustment
4.7 Other Provisions Applicable to Adjustments under this Section
4.8 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets
4.9 Other Action Affecting Common Stock
4.10. Certain Limitations
5. NOTICES TO WARRANT HOLDERS
5.1 Notice of Adjustments
5.2. Notice of Corporate Action
6. NO IMPAIRMENT
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK
REGISTRATION WITH OR APPROVAL OF ANY
GOVERNMENTAL AUTHORITY
8. TAKING OF RECORD: STOCK AND WARRANT TRANSFER BOOKS
9. RESTRICTIONS ON TRANSFERABILITY
9.1. Restrictive Legend
9.2. Notice of Proposed Transfers, Request for Registration
- i -
9.3. Required Registration
9.4. Incidental Registration
9.5. Registration Procedures
9.6. Expenses
9.7. Indemnification and Contribution
9.8. Termination of Restrictions
9.9. Listing on Securities Exchange
9.10. Certain Limitations on Registration Rights
9.11. Selection of Xxxxxxx Underwriters
10. SUPPLYING INFORMATION
11. LOSS OR MUTILATION
13. FINANCIAL AND BUSINESS INFORMATION
13.1. Monthly and Quarterly Information
13.2. Annual Information
13.3 Filings
14. REPURCHASE BY COMPANY OF WARRANT
14.1. Obligation to Repurchase Warrant
14.2. Option to Repurchase Warrant
14.3. Subsequent Value Transactions
14.4. Determination and Payment of Repurchase Price
15. APPRAISAL
16. LIMITATION OF LIABILITY
17. PARTICIPATION IN CORPORATE DISTRIBUTIONS AND
TAKE-ALONG RIGHTS
18. MISCELLANEOUS
18.1. Nonwaiver and Expenses
18.2. Notice Generally
18.3. Indemnification
18.4. Remedies
18.5. Successors and Assigns
18.6. Amendment
18.7. Severability
18.8. Headings
18.9. Governing Law
- ii -
EXHIBITS AND ANNEXES
Exhibit A - Subscription Form
Exhibit B - Assignment Form
Annex A - Take-Along Letter Agreement
- iii -
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.
No. of Shares of Common Stock: 1419.54 Warrant No. 2
AMENDED AND RESTATED
WARRANT
To Purchase Common Stock of
BAGCRAFT CORPORATION OF AMERICA
THIS IS TO CERTIFY THAT GENERAL ELECTRIC CAPITAL CORPORATION, or
registered assigns, is entitled, at any time prior to the Expiration Date (as
hereinafter defined), to purchase from BAGCRAFT COMPANY OF AMERICA, a Delaware
corporation ("Company"), 1419.54 shares of Common Stock (as hereinafter defined
and subject to adjustment as provided herein), in whole or in part, including
fractional parts, at a purchase price of $0.001 per share, all on the terms and
conditions and pursuant to the provisions hereinafter set forth.
This Warrant No. 2 is given in substitution for Warrant No. I which was
issued by Company to General Electric Capital Corporation on December 17, 1993
for 1055.6 shares of Warrant Stock. increased to 1,419.54 shares of Warrant
Stock by that First Amendment to Warrant dated as of February 1, 1996, and
surrendered for cancellation on the date hereof concurrently with the issuance
of this Warrant No. 2.
1. DEFINITIONS
As used in this Warrant, the following -terms have the respective
meanings set forth "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by Company after the Closing Date, other than Warrant Stock.
"Appraised Value" shall mean, in respect of any share of Common Stock
on any date of determination, the fair market value of such share of Common
Stock determined (a) without giving effect to the discount for (i) a minority
interest or (h) any lack of liquidity of the Common Stock or to the fact that
Company may have no class of equity registered under the Exchange Act, and (b)
assuming that any and all then outstanding shares of preferred stock of the
Company and accrued dividends thereon were canceled and permanently retired as
of any date of determination without any requirement of payment by the Company
in respect thereof and assuming that any unpaid interest on any Qualified
Subordinated Debt accrued for periods after the Closing Date was then forgiven,
except that Appraised Value as of any date of determination shall be calculated
without giving effect to, without duplication (A) then outstanding PST-Held
Shares, (B) the redemption of PST-Held Shares in accordance with the
"Redemption" (as defined in the Limited Consent and Sixth Amendment to Credit
Agreement dated February 1, 1996 between Company and Holder), (C) then
outstanding dividends which were accrued as of the Closing Date on PST-Held
Shares, (D) the repurchase (but not the forgiveness) of dividends which were
accrued as of the Closing Date on PST-Held Shares in accordance With the
Redemption and (E) the then outstanding aggregate principal amount of Qualified
Subordinated Debt issued pursuant to a Qualified Transaction. Such fair market
per share of Common Stock shall be based on the value of Company in a sale as a
whole and on a going concern basis between a willing buyer and a willing seller,
neither acting under compulsion, as determined by an investment banking firm
selected in accordance with the terms of Section 15, divided by the number of
Fully Diluted Outstanding shares of Common Stock.
"Book Value" shall mean, in respect of any share of Common Stock on any
date of determination. the consolidated book value of Company as of the last day
of any month immediately preceding, such date of determination, divided by the
number of Fully Diluted Outstanding shares of Common Stock as determined in
accordance with GAAP by Coopers & Xxxxxxx or any other firm of independent
certified public accountants of recognized national standing selected by Company
and reasonable acceptable to the Majority Holders, provided that, for purposes
of any such determination it shall be assumed that any and all then outstanding
shares of preferred stock of the Company and accrued dividends thereon were then
canceled and permanently retired without any requirement of payment by the
Company in respect thereof and assuming that any unpaid interest on any
Qualified Subordinated Debt accrued for periods after the Closing Date was then
forgiven, except that Book Value as of any date of determination shall be
calculated without giving effect to, without duplication (a) then outstanding
PST-Held Shares, (b) the redemption of PST-Held Shares in accordance with the
Redemption, (c) then outstanding dividends which were accrued as of the Closing
Date on PST-Held Shares, (d) the repurchase (but not the forgiveness) of
dividends which were accrued as of the Closing Date on PST-Held Shares in
accordance with the Redemption and (e) the then outstanding aggregate principal
amount of Qualified Subordinated Debt issued pursuant to a Qualified
Transaction.
"Business Day" shall mean any day that is not a Saturday or Sunday or a
day on which banks are required or permitted to be closed in the State of
Illinois.
"Closing Date" shall mean December 17, 1993.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, S.001 par value, of Company as constituted on the
Closing Date, and any capital stock into which such Common Stock may thereafter
be changed, and shall also include (i) capital stock of Company of any other
class (regardless of how denominated) issued to the holders of shares of Common
Stock upon any reclassification thereof which is also not preferred as to
dividends or assets over any other class of stock of Company and which is not
subject to redemption and (ii) shares of common stock of any successor or
acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders of Common
Stock of Company in the circumstances contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable, with or
without payment of additional consideration in cash or property, for Additional
Shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date of determination, the highest of:
(a) the Book Value per share of Common Stock at such date;
(b) the Appraised Value per share of Common Stock as at such date,
and
(c) if there shall then be a public market for the Common Stock,
an amount determined in accordance with (i) and (ii) of this
definition.
(i) The average of the daily market prices for 30
consecutive Business Days commencing 45 days before such date
shall be determined in accordance with (ii) below (the
"Unadjusted Price Per Share"). The Unadjusted Price Per Share
shall then be multiplied the number of shares of Common Stock
Fully Diluted Outstanding (the result being referred to as the
"Unadjusted Gross Value"). The Unadjusted Gross Value shall
then be increased by an amount equal to the aggregate amount
which would then be payable by the Company if it then redeemed
and permanently retired all shares of its outstanding
preferred stock, including accrued dividends and paid all
unpaid interest on Qualified Subordinated Debt accrued for
periods after the Closing Date, (collectively, the "Gross-Up
Amount"), except that the Gross-Up Amount as of any date of
determination shall be calculated without giving effect to,
without duplication (A) then outstanding PST-Held Shares, (B)
the redemption of PST-Held Shares in accordance with the
Redemption, (C) then outstanding dividends which were accrued
as of the Closing Date on PST-Held Shares, (D) the repurchase
(but not the forgiveness) of dividends which were accrued as
of the Closing Date on PST-Held Shares in accordance with the
Redemption and (E) the then outstanding aggregate principal
amount of Qualified Subordinated Debt issued pursuant to a
Qualified Transaction. The sum of the Unadjusted Gross Amount
and the Gross-Up Amount is herein referred to as the "Adjusted
Gross Amount". The Adjusted Gross Amount shall then be divided
by the number of shares of Common Stock Fully Diluted
Outstanding to yield a per share amount.
(ii) For purposes of clause (i) of this definition, the
daily market price for each such usiness Day shall be (A) the
last sale price on such day on the principal stock exchange on
which such Common Stock is then listed or admitted to trading,
(B) if no sale takes place on such day on any such exchange,
the average of the last reported closing bid and asked prices
on such day as officially quoted on any such exchange, (C) if
the Common Stock is not then listed or admitted to trading on
any stock exchange, the average of the last reported closing
bid and asked prices on such day in the over-the-counter
market, as furnished by the National Association of Securities
Dealers Automatic Quotation System or the National Quotation
Bureau, Inc., (D) if neither such corporation at the time is
engaged in the business of reporting such prices, as furnished
by any similar firm then engaged in such business, or (E) if
there is no such firm, as furnished by any member of the NASD
selected mutually by the Majority Holders and Company or, if
they cannot agree upon such selection, as selected by two such
members of the NASD, one of which shall be selected by the
Majority Holders and one of which shall be selected by
Company.
"Current Warrant Price" shall mean, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date.
"Deferral Notice" shall have the meaning set forth in Section 14.1 (a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1.
"Expiration Date" shall mean the sixth anniversary of the Closing Date,
"Fully Diluted Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all shares of Common Stock Outstanding at such date and all shares of Common
Stock issuable in respect of this Warrant, and other options or warrants to
purchase, or securities convertible into, shares of Common Stock outstanding on
such date which would be deemed outstanding in accordance with GAAP for purposes
of determining book value or net income per share.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
"GE Capital" shall mean General Electric Capital Corporation, a New
York corporation.
"Holder" shall mean the Person in whose name the Warrant set forth
herein is registered on the books of Company maintained for such purpose.
"Initial Holder" shall mean GE Capital.
"Liabilities" shall mean the "Obligations" as defined in the Loan
Agreement.
"Loan Agreement" shall mean the Amended and Restated Credit Agreement
dated as of December 30, 1996 by and between Company and GE Capital as Agent and
Lender, or any successor agreement between such parties, as the same may be
amended, restated, modified or supplemented and in effect from time to time.
"Majority Holders" shall mean the holders of Warrants exercisable for
in excess of 50% of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of Securities Dealers, Inc.,
or any successor corporation thereto.
"Notes" shall mean the Revolving Note and the Term Notes and "Note"
shall mean any such note.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common Stock, at
any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or for the
account of Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust. incorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"PST" shall mean Plastic Specialties and Technologies, Inc., a Delaware
corporation.
"Qualified Subordinated Debt" shall mean indebtedness of the Company
incurred or arising after the Closing Date, which:
(a) is issued in exchange for shares of preferred
stock of the Company held by PST on the Closing Date on a
dollar-for-dollar basis such that the aggregate principal amount of
such subordinated debt at the time of issuance is equal to the
aggregate redemption value (including accrued dividends thereon as of
the Closing Date but excluding any dividends accruing thereon for
periods after the Closing Date) of the shares of preferred stock then
being redeemed; and
(b) is subordinated to a obligations of the Company
to GE Capital on terms and conditions satisfactory to GE Capital
pursuant to agreements, instruments and documents which are reasonably
satisfactory in all other respects to GE Capital.
"Qualified Transaction" shall mean a transaction in which Qualified
Subordinated Debt is issued by the Company in exchange for shares of preferred
stock held by PST which were outstanding on the Closing Date and accrued
dividends thereon for periods through the Closing Date and in which no other
consideration is granted or issued by the Company and, following such
redemption, all such shares of preferred stock are permanently canceled and
retired by the Company.
"Repurchase Price" shall have the meaning set forth in Section 14.4.
"Restricted Common Stock" shall mean shares of Common Stock which are,
or which upon their issuance on the exercise of this Warrant would be, evidenced
by a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Revolving Note" shall mean the "Revolving Note" as defined in the Loan
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute. and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Term Notes" shall mean the "Term Notes" as defined in the Loan
Agreement.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock
or of any interest in either thereof, which would constitute a sale thereof
within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Common Stock for which they may be
exercised.
"Warrant Price" shall mean an amount equal to (i) the number of shares
of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2. 1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the
holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. Manner of Exercise. From and after the Closing Date and until 5:00
P.M., New York time, on the Expiration Date, Holder may exercise this Warrant,
on any Business Day, for all or any part of the number of shares of Common Stock
purchasable hereunder. -
In order to exercise this Wan-ant, in whole or in part, Holder shall
deliver to Company at its principal office at 0000 Xxxx 00xx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000 or at the office or agency designated by Company pursuant to
Section 12:
(i) a written notice of Holder's election to exercise this
Warrant, which notice shall specify the number of shares of Common
Stock to be purchased;
(ii) payment of the Warrant Price applicable with respect
to the shares being purchased; and
(iii) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt thereof, Company shall. as promptly as
practicable, and in any event within five (5) Business Days thereafter, execute
or cause to be executed and deliver or cause to be delivered to Holder a
certificate or certificates representing the aggregate number of full shares of
Common Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be, to the extent possible, in such denomination
or denominations as such Holder shall request in the notice and shall be
registered in the name of Holder or. subject to Section 9, such other name as
shall be designated in the notice. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued, and Holder or any other Person so designated to be named therein shall
be deemed to have become a holder of record of such shares for all purposes, as
of the date the notice and the Warrant Price and this Warrant are received by
Company as described above and all taxes required to be paid by Holder, if any,
pursuant to Section 2.2 prior to the issuance of such shares have been paid If
this Warrant shall have been exercised in part, Company shall, at the time of
delivery of the certificate or certificates representing Warrant Stock, deliver
to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased shares of Common Stock called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant, or, at the request
of Holder, appropriate notation may be made on this Warrant and the same
returned to Holder. Notwithstanding any provision herein to the contrary,
Company shall not be required to register shares in the name of any Person who
acquired this Warrant (or part hereof) or any Warrant Stock otherwise than in
accordance with this Warrant.
At the option of the holder hereof, payment of the Warrant Price shall be made
by:
(a) wire transfer of funds to an account in a bank located
in the United States designated by the Company for such purpose;
(b) certified or official bank check payable to the order
of the Company;
(c) deducting from the shares delivered upon exercise
hereof a number of shares having an aggregate Current Market Price on
the date of exercise equal to the aggregate purchase price for all
shares as to which this Warrant is then being exercised (and so
directing the Company in the notice);
(d) by application of the Liabilities as provided in
Section 2.5 hereof, or
(e) by any combination of such methods.
If a Holder surrenders any Note having an aggregate value which exceeds
the aggregate Warrant Price, a new Note shall be issued in the principal amount
equal to that portion of such surrendered principal amount not applied to the
Warrant Price not paid in cash to the Holder; provided, however, that such Note
shall be in a principal amount equal to the next lowest integral multiple of
$1,000 and the Company shall pay in cash to the Holder the difference between
the Warrant Price and such in next lowest integral multiple of $1,000.
2.2. Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this, Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive fights. Company shall
pay all expenses in connection with, and all taxes and other Governmental
charges that may be imposed with respect to, the issue or delivery thereof
(other than any income taxes imposed on Holder in connection herewith), unless
such tax or charge is imposed by law upon Holder, in which case such taxes or
charges shall be paid by Holder and (except with respect to any such income
taxes) reimbursed to Holder by Company.
2.3. Fractional Shares. Company shall not be required to issue a
fractional share of Common Stock upon exercise o: any Warrant. As to any
fraction of a share which the Holder of
one or more Warrants, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, Company
shall pay a cash adjustment in respect of such final fraction in an amount equal
to the same fraction of the Current Market Price per share of Common Stock on
the date of exercise.
2.4. Continued Validity. A holder of shares of Common Stock issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10, 13
and 17 of this Warrant. Company will, at the time of each exercise of this
Warrant, in whole or in part, upon the request of the holder of the shares of
Common Stock issued upon such exercise hereof,
acknowledge in writing, in form reasonably satisfactory to such holder, its
continuing obligation to afford to such holder all such rights; provided,
however, that if such holder shall fail to make any such request, such failure
shall not affect the continuing obligation of Company to afford to such holder
all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer. Subject to compliance with Sections 9 and 14, transfer
of this Warrant and all fights hereunder, in whole or in part, shall be
registered on the books of Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of Company referred to in
Section 2.1 or the office or agency designated by Company pursuant to Section
12, together with a written assignment of this Warrant substantially in the form
of Exhibit B hereto duly executed by Holder or its agent or attorney and if such
transfer is not to be made pursuant to Section 14, funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, Company shall, subject to Section 9, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the denomination specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be canceled. A Warrant, if properly
assigned in compliance with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2. Division and Combination. Subject to Section 9, this Warrant may
be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of , Company. top-ether with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3. Expenses. Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. Maintenance of Books. Company agrees to maintain, at its aforesaid
office or agency, books for the registration and the registration of transfer of
the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Section 4. Company shall give each Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at the time of
such event.
4.1. Stock Dividends, Subdivisions and Combinations. If at any time
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable 'a or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then: (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event-, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
4.2. Certain Other Distributions. If at any time Company shall take
a record of the holders of its Common Stock for the purpose of entitling them
to receive any dividend or other distributed of:
(a) cash (other than a cash distribution or dividend payable out
of earnings or earned surplus legally available for the payment of
dividends under the laws of the jurisdiction of incorporation of
Company),
(b) any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other fights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then:
(i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of
shares of Common Stock for which this Warrant is exercisable
immediately prior to such adjustment by a fraction; \
(A) the numerator of which shall be the Current Market Price per
share of Common Stock at the date of taking such record, and
(B) the denominator of which shall be such Current Market Price
per share of Common Stock minus the amount allocable to one share of
Common Stock of
(x) any such cash so distributable, plus
(y) the fair value (as determined in good faith by the
Board of Directors of Company and supported by an opinion from an
investment banking firm of recognized national standing
acceptable to the Majority Holders) of any and all such evidences
of indebtedness, shares of stock, other securities or property
or warrants or other subscription or purchase rights so
distributable; and
(ii) the Current Warrant Price shall be adjusted to equal (A) the
Current Warrant Price multiplied by the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant
is exercisable immediately after such adjustment.
A reclassification 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) into shares of
Common Stock and shares of any other class of stock shall be deemed a
distribution by Company to the holders of its Common Stock of such shares of
such other class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4. 1.
4.3. Issuance of Additional Shares of Common Stock.
(a) If at any time Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock in exchange for
consideration in an amount per Additional Share of Common Stock less than the
Current Warrant Price at the time the Additional Shares of Common Stock are
issued, then:
(i) the Current Warrant Price as to the number of shares for which
this Warrant is exercisable prior to such adjustment shall be reduced
to a price determined by multiplying the Current Warrant Price then in
effect by a fraction:
(A) the numerator of which is an amount equal to (x) the
number of shares of Common Stock Outstanding immediately
prior to such issue or sale multiplied by the then
existing Current Warrant Price, plus (y) the
consideration, if any, received by Company upon such
issue or sale, and
(B) the denominator of which is the total number of shares
of Common Stock Outstanding immediately after such issue
or sale; and
(ii) the number of shares of Common Stock for which this Warrant
is exercisable shall be adjusted to equal the product obtained by
multiplying the Current Warrant Price in effect immediately prior to
such issue or sale by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such issue or sale and
dividing the product thereof by the Current Warrant Price resulting
from the adjustment made pursuant to clause (i) above.
[Example: Assume Current Warrant Price is $1.00 per share, 90,000 shares
outstanding and Warrant is for 10,000 shares. Company issues 10,000 shares for
$.10 per share or $1,000 total. Current Warrant Price is adjusted by multiplying
$1.00 by the following fraction:
numerator = (90,000 x $1.00) + S1,002 = $ 91,000
-------------------------
denominator = 90,000 + 10,000 = 100,000
Resulting Current Warrant Price = $0.91 per share.
Number of Warrant Shares is then adjusted by multiplying 10,000 by $1.00 and
dividing the result (which is $10,000) by the new Current Warrant Price of
$0.91. $10,000/$0.91 = 10,989. So the adjusted number of shares for which
Warrant may be exercised is 10,989.]
(b) If at any time Company shall (except as hereinafter provided)
at any time issue or sell any Additional Shares of Common Stock for
consideration in an amount per Additional Share of Common Stock less than the
Current Market Price, then:
(i) the number of shares of Common Stock for which
this Warrant is exercisable shall be adjusted to equal the product
obtained by multiplying the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such issue or sale by
a fraction (A) the numerator of which shall be the number of shares of
Common Stock Outstanding immediately after such issue or sale, and (B)
the denominator of which shall be the number of shares of Common Stock
Outstanding immediately prior to such issue or sale plus the number of
shares which the aggregate offering price of the total number of such
Additional Shares of Common Stock would purchase at the then Current
Market Price; and
(ii) the Current Warrant Price as to the number of
shares for which this Warrant is exercisable prior to such adjustment
shall be adjusted by multiplying such Current Warrant Price by a
fraction (X) the numerator of which shall be the number of shares for
which this Warrant is exercisable immediately prior to such issue or
sale; and (Y) the denominator of which shall be the number of shares of
Common Stock purchasable immediately after such issue or sale.
[Example: Assume Current Market Price is $10.00 per share, 90,000 shares
outstanding, Warrant is for I 0,000 shares and Current Warrant Price is $1.00
per share. Company issues 10,000 shares for $.10 per share or $10,000 total.
Current Warrant Price is adjusted by multiplying $1.00 by the following
fraction:
numerator = (90,000 + 10,000) = $100,000
-------
denominator = 90,000 + $10,000 divided by $10) = 91,000
10,000 x (100,000/91,000) = 10,989. So the adjusted number of shares for which
Warrant may be exercised is 10,989.]
Current Warrant Price is then adjusted by multiplying $1.00 by the following
fraction:
numerator = 10,000
------
denominator = 10,989
(c) If at any time Company (except as hereinafter provided) shall issue
or sell any Additional Shares of Common Stock in exchange for consideration in
an amount per Additional Shares of Common Stock which is less than the Current
Wan-ant Price and less than the Current Market Price (as defined above) at the
time the Additional Shares of Common Stock are issued, the adjustment required
under Section 4.3 shall be made in accordance with the formula in paragraph (a)
or (b) above which results in the lower Current Warrant Price Mowing such
adjustment. The provisions of paragraphs (a) and (b) of Section 4.3 shall not
apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4.1 or 4.2. No adjustment of the number of
shares of Common Stock for which this Warrant shall be exercisable shall be made
under paragraph (a) or (b) of Section 4.3 upon the issuance of any Additional
Shares of Common Stock which are issued pursuant to the exercise of any warrants
or other subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights or upon the issuance of such Convertible Securities (or upon the
issuance of any warrant or other rights therefor) pursuant to Section 4.4 or
Section 4.5.
(d) If any Additional Shares of Common Stock are issued or sold in
exchange for consideration in an amount per Additional Share of Common Stock
equal to or greater than the Current Warrant Price and the Current Market Price
at the time the Additional Shares are issued, then.
(i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by
multiplying the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such adjustment by a fraction (A)
the numerator of which shall be the number of shares of Common Stock
Outstanding immediately after the issuance of such Additional Shares of
Common Stock, and (B) the denominator of which shall be the number of
shares of Common Stock Outstanding immediately prior to the issuance
of such Additional Shares of Common Stock, and
(ii) the Current Warrant Price as to the number of shares of
Common Stock for which this Warrant is exercisable prior to such
adjustment shall not change but the Current Warrant Price for each of
the incremental number of shares of Common Stock for which this Warrant
becomes exercisable after such adjustment shall be equal to the fair
value of such consideration per Additional Share of Common Stock.
[Example: Assume Current Market Price is $10.00 per share, 90,000 shares
outstanding, Warrant is for 10,000 shares and Current Warrant Price is $1.00 per
share. Company issues 10,000 shares for $20.00 per share or $200,000 total.
Number of Warrant Shares is adjusted by multiplying 10,000 by the following
fraction:
numerator = (90,000 + 10,000) = 100,000
----------------- -------
denominator = 90,000 = 90,000
10,000 x (100,000/90,000) = 11,111. This equals 10% on a fully-diluted basis.
Current Warrant Price for the original 10,000 Warrant Shares remains $1.00 per
share. Current Warrant Price for the additional 1, I I I Warrant Shares is equal
to the fair value of the consideration received for the shares sold by the
Company, in this case $20.00 per share. The effect is to give the Holder a
pre-emptive right to maintain the I 0% by acquiring the additional shares at the
sale price.]
4.4. Issuance of Warrants or Other Rights. If at any time Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which Company is the surviving corporation) issue
or sell, any warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such Convertible
Securities shall be less than either the Current Warrant Price or the Current
Market Price in effect immediately prior to the time of such issue or sale, then
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be adjusted as provided in Section 4.3 on the basis that the
maximum number of Additional Shares of Common Stock issuable pursuant to all
such warrants or other fights or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and
outstanding and Company shall have received all of the consideration payable
therefor, if any, as of the date of the actual issuance of the number of Shares
for which this Warrant is exercisable and such warrants or other rights.
No further adjustments of the Current Warrant
Price shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such warrants or other rights or upon
the actual issue of such Common Stock upon such conversion or exchange of such
Convertible Securities.
4.5 Issuance of Convertible Securities. If at any time Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which Company is the surviving corporations issue
or sell, any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange shall be less
than either the Current Warrant Price or Current Market Price in effect
immediately prior to the time of such issue or sale, then the number of Shares
for which this Warrant is exercisable and the Current Warrant Price shall be
adjusted as provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and
outstanding and Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the number of Shares for which this Warrant is
exercisable and the Current Warrant Price shall be made under this Section 4.5
upon the issuance of any Convertible Securities which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Section 4.4. No further adjustments of the
number of Shares for which this Warrant is exercisable and the Current Warrant
Price shall be made upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities and, if any issue or sale of such
Convertible Securities is made upon exercise of any warrant or other right to
subscribe for or to purchase any such Convertible Securities for which
adjustments of the number of Shares for which this Warrant is exercisable and
the Current Warrant Price have been or are to be made pursuant to other
provisions of this Section 4, no further adjustments of the number of Shares for
which this Warrant is exercisable and the Current Warrant Price shall be made by
reason of such issue or sale.
4.6 Superseding Adjustment. (a) If, at any time after any adjustment of
the number of shares of Common Stock for which this Warrant is exercisable and
the Current Warrant Price shall have been made pursuant to Section 4.4 or
Section 4.5 as the result of any issuance of warrants, rights or Convertible
Securities, such warrants or rights, or the right of conversion or exchange in
such other Convertible Securities, shall expire or be rescinded or canceled or
be determined to be illegal, and all or a portion of such warrants or rights, or
the right of conversion or exchange with respect to all or a portion of such
other Convertible Securities, as the case may be, shall not have been exercised
(because they have expired, been rescinded or canceled or determined to be
illegal), then, for each outstanding Warrant:
(i) such previous adjustment to the Warrant made with respect to
the issuance of such warrants, rights or Convertible Securities shall
be rescinded and annulled and any Additional Shares of Common Stock
which were deemed to have been issued (but not in fact issued) by
virtue of the computation made in connection with the adjustment so
rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation; and
(ii) a new adjustment of the number of shares of Common Stock for
which this Warrant is exercisable and the Current Warrant Price shall
be made on the basis of:
(A) treating any Additional Shares of Common Stock which
were in fact issued pursuant to such warrants, rights or
Convertible Securities as having been issued for the
consideration per share which was received; and
(B) treating any such warrants or rights or Convertible
Securities (if any) which then remain outstanding and are not
expired, rescinded, canceled or declared illegal as having
been newly granted or issued immediately after the time of
such expiration, rescinding, cancellation or declaration of
illegality and treating the number of Additional Shares of
Common Stock or other property issuable pursuant to such
warrants, rights or Convertible Securities as having been
issued on such date for the consideration receivable therefor
thereunder on such date.
(b) If, at any time after any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable and the Current Warrant Price
shall have been made pursuant to Section 4.4 or Section 4.5 as the result of any
issuance of warrants, rights or Convertible Securities, the consideration per
share for which shares of Common Stock are issuable pursuant to such warrants or
fights or Convertible Securities shall be increased solely by virtue of
provisions therein contained for an automatic increase in such consideration per
share upon the occurrence of a specified date or event then, for each
outstanding Warrant:
(i) such previous adjustment made with respect to the issuance of
such warrants, rights or Convertible Securities shall be rescinded and
annulled and any Additional Shares of Common Stock which were deemed to
have been issued (but not in fact issued) by virtue of the computation
made in connection with the adjustment so rescinded and annulled shall
no longer be deemed to have been issued by virtue of such computation;
and
(ii) a new adjustment of the number of shares of Common Stock for
which this Warrant is exercisable and the Current Warrant Price shall
be made on the basis of:
(A) treating the number of Additional Shares of Common
Stock or other property, I if any, theretofore actually issued
pursuant to the previous exercise of any such warrants or
rights or Convertible Securities as having been issued on the
date or dates of any such exercise and for the consideration
actually received therefor; and
(B) treating any such warrants or rights or Convertible
Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase
of the consideration per share for which shares of Common
Stock or other property are issuable under such warrants or
rights or other Convertible Securities and treating the number
of Additional Shares of Common Stock or other property
issuable pursuant to such warrants, rights or Convertible
Securities as having been issued on such date for the
consideration receivable therefor after giving effect to such
increase in the consideration per share.
4.7. Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other fights to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Securities shall be
issued for cash consideration, the consideration received by Company
therefor shall be the amount of the cash received by Company therefor,
or, if such Additional Shares of Common Stock or Convertible Securities
are offered by Company for subscription, the subscription price, or, if
such Additional Shares of Common Stock or Convertible Securities are
sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest or
accrued dividends and without taking into account any compensation,
discounts or expenses paid or incurred by Company for and in the
underwriting of, or otherwise in connection with, the issuance
thereof). To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided,
the amount of such consideration shall be deemed to be the fair value
of such consideration at the time of such issuance as determined in
good faith by the Board of Directors of Company. In case any Additional
Shares of Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase such Additional Shares of
Common Stock or Convertible Securities shall be issued in connection
with any merger in which Company issues any securities, the amount of
consideration therefor shall be deemed to be the fair value, as
determined in good faith by the Board of Directors of Company, of such
portion of the assets and business of the non-surviving corporation as
such Board in good faith shall determine to be attributable to such
Additional Shares of Common Stock, Convertible Securities, warrants or
other fights, as the case may be. The consideration for any Additional
Shares of Common Stock issuable pursuant to any warrants or other
rights to subscribe for or purchase the same shall be the consideration
received by Company for issuing such warrants or other fights plus the
additional consideration payable to Company upon exercise of such
warrants or other fights. The consideration for any Additional Shares
of Common Stock issuable pursuant to the terms of any Convertible
Securities shall be the consideration received by Company for issuing
warrants or other rights to subscribe for or purchase such Convertible
Securities, plus the consideration paid or payable to Company in
respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to
Company upon the exercise of the right of conversion or exchange in
such Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment
or satisfaction of any dividends upon any class of stock other than
Common Stock, Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a
consideration equal to the amount of such dividend so paid or
satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable
that would otherwise be required may be postponed (except in the case
of a subdivision or combination of shares of the Common Stock, as
provided for in Section 4.1) up to, but not beyond the date of exercise
if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than 1% of the shares of Common
Stock for which this Warrant is exercisable immediately prior to the
making of such adjustment. Any adjustment representing a change of less
than such minimum amount (except as aforesaid) which is postponed shall
be carried forward and made as soon as such adjustment, together with
other adjustments required by this Section 4 and not previously made,
would result in a minimum adjustment or on the date of exercise. For
the purpose of any adjustment, any specified event shall be deemed to
have occurred at the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
(d) When Adjustment Not Required. If Company shall take a record
of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, 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.
(e) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of
the event for which such record is taken, and Holder exercises this
Warrant, any Additional Shares of Common Stock issuable upon exercise
by reason of such adjustment shall be deemed the last shares of Common
Stock for which this Warrant is exercised (notwithstanding any other
provision to the contrary herein) and such shares or other property
shall be held in escrow for Holder by Company to be issued to Holder
upon and to the extent that the event actually takes place, upon
payment of the then Current Warrant Price. Notwithstanding any other
provision to the contrary herein, if the event for which such record
was taken fails to occur or is rescinded, then such escrowed shares
shall be canceled by Company and escrowed property returned.
(f) Challenge to Good Faith Determination. Whenever the Board of
Directors of Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders,
and any dispute shall be resolved by an investment banking firm of
recognized national standing selected by Company and acceptable to the
Majority Holders.
4.8. Reorganization. Reclassification, Merger, Consolidation or
Disposition of Assets. In case Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation (where
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business
to another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of Company, then
each Holder shall have the right thereafter to receive, upon exercise of such
Holder's Warrant, the number of shares of common stock of the successor or
acquiring corporation or of Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than Company) shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Warrant to be performed and observed by Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of Company
acting in good faith) in order to provide for adjustments of shares of the
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 4. For
purposes of Ns Section 4.8, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock The
foregoing provisions of this Section 4.8 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
4.9. Other Action Affecting Common Stock. In case at any time or from
time to time Company shall take any action in respect of its Common Stock, other
than the payment of dividends permitted by Section 4.2(a) or any other action
described in this Section 4, then, unless such action will not have a materially
adverse effect upon the rights of the Holders, the number
of shares of Common Stock or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
4.10 Certain Limitations. Notwithstanding anything herein to the
contrary, Company agrees not to enter into any transaction which, by reason of
any adjustment hereunder, would cause the Current Warrant Price to be less than
the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock - may be purchased upon exercise of the Warrants,
shall be adjusted pursuant to Section 4, Company shall forthwith prepare a
certificate to be executed by the chief financial officer of Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated (including a description of the basis on
which the Board of Directors of Company determined the fair value of any
evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this Warrant
is exercisable and (if such adjustment was made pursuant to Section 4.8 or 4.9)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. Company shall
promptly cause a signed copy of such certificate to be delivered to each Holder
in accordance with Section 17.2. Company shall keep at its office or agency
designated pursuant to Section 12 copies of all such certificates and cause the
same to be available for inspection at said office during normal business hours
by any Holder or any prospective purchaser of a Warrant designated by a Holder
thereof.
5.2. Notice of Corporate Action. If at any time
(a) Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences
of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of Company, any
reclassification or recapitalization of the capital stock of Company or
any consolidation or merger of Company with, or any sale, transfer or
other disposition of all or substantially all the property, assets or
business of Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of Company;
then, in any one or more of such cases, Company shall give to Holder (i) at
least ten (10) days' prior written notice of the date on which a record date
shall be selected for such dividend distribution or right or for determining
rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least ten (10) days'
prior written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
r1uht, the date on which the holders of Common Stock shall be entitled to any
such dividend, distribution or rip-ht, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of Company and delivered in accordance with Section 17.2.
6. NO IMPAIRMENT
Company shall not by any action, including, without limitation,
amending 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 of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, Company
will (a) not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all such
action as may be necessary or appropriate in order that Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant, and (c) use its best efforts to obtain all such
authorizations, exemptions or consents from any Public regulatory body having
jurisdiction thereof as may be necessary to enable Company to perform its
obligations under this Warrant.
Upon the request of Holder, Company will at any time during the period
this Warrant is outstanding (but not more often than twice in any year)
acknowledge in writing, in form reasonably satisfactory to Holder, the
continuing validity of this Warrant and the obligations of Company hereunder
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, Company shall at all times reserve and
keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares available of Common Stock as will be sufficient
to permit the exercise in full of all outstanding Warrants. All shares of Common
Stock which shall be so issuable, when issued upon exercise of any
Warrant and payment therefor in accordance with the terms of such Warrant, shall
be duly and validly issued and fully paid and non-assessable, and not subject to
pre-emptive rights.
Before taking any action which would cause an adjustment reducing the
current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, Company shall take any corporate
action which may be necessary in order that Company may validly and legally
issue fully paid and non-assessable shares of such Common Stock at such adjusted
Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
law (otherwise than as provided in Section 9) before such shares may be so
issued, Company will in good faith and as expeditiously as possible and at its
expense endeavor to cause such shares to be duly registered or qualified.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, Company will in each such case
take such a record and will take such record as of the close of business on a
Business Day. Company will not at any time, except upon dissolution, liquidation
or winding up of Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of any
Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9 1. Restrictive Legend. (a) Except as otherwise provided in this
Section 9, each certificate for Warrant Stock initially issued upon the exercise
of this Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
are subject to the conditions specified in a certain Warrant
No. 2 dated December 30, 1996, originally issued by Bagcraft
Corporation of America. No transfer of the shares represented
by this certificate shall be valid or effective until such
conditions have been fulfilled. A copy of the form of said
Warrant is on file with the Secretary of Bagcraft Corporation
of America. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant "
(b) Except as otherwise provided in this Section 9, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, and may
not be transferred in violation of such Act, the rules and
regulations thereunder or the provisions of this Warrant."
9.2. Notice of Proposed Transfers; Request for Registration. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of Restricted
Common Stock, the holder of such Warrants or Restricted Common Stock shall give
ten (10) days' prior written notice (a "Transfer Notice") to Company of such
holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and obtain from counsel to such holder
who shall be reasonably satisfactory to Company, an opinion that the proposed
Transfer of such Warrants or such Restricted Common Stock may be effected
without registration under the Securities Act. After receipt of the Transfer
Notice and opinion, Company shall, within five days thereof, notify the holder
of such Warrants or such Restricted Common Stock as to whether such opinion is
reasonably satisfactory and, if so, such holder shall thereupon be entitled to
Transfer such Warrants or such Restricted Common Stock, in accordance with the
terms of the Transfer Notice. Each certificate, if any, evidencing such shares
of Restricted Common Stock issued upon such Transfer shall bear the restrictive
legend set forth in Section 9. 1 (a), and each Warrant issued upon such Transfer
shall bear the restrictive legend set forth in Section 9.l(b), unless in the
opinion of such counsel such legend is not required in order to ensure
compliance with the Securities Act. The holder of the Warrants or the Restricted
Common Stock, as the case may be, giving the Transfer Notice shall not be
entitled to Transfer such Warrants or such Restricted Common Stock until receipt
of notice from Company under this Section 9.2(a) that such opinion is reasonably
satisfactory.
The holders of Warrants and War-rant Stock shall have the right to
request registration of such Warrant Stock pursuant to Sections 9.3 and 9.4.
9.3. Required Registration. After receipt of a written request from the
holder of Warrants and/or Warrant Stock representing at least an aggregate of
fifty percent (50%) of the total of (1) all shares of Warrant Stock then subject
to purchase upon exercise of all warrants and (ii) all shares of Warrant Stock
then outstanding, and which are Restricted Common Stock requesting that Company
effect the registration of Warrant Stock issuable upon the exercise of such
holder's Warrants or of any of such holder's Warrant Stock under the Securities
Act and specifying the intended method or methods of disposition thereof (which
the Company shall be reasonably satisfied in writing, of the receipt of such
request and each such holder, in addition to any rights under Section 9.4, may
elect (by written notice sent to Company within ten (10) Business Days from the
date of such holder's receipt of the aforementioned Company's notice) to have
its shares of Warrant Stock included in such registration thereof pursuant to
this Section 9.3. Thereupon Company shall, as expeditiously as is possible, use
its best efforts to effect the registration under the Securities Act of ail
shares of Warrant Stock which Company has been so requested to register by such
holders for sale, all to the extent required to permit the disposition (in
accordance with the intended method or methods thereof as aforesaid) of the
Warrant Stock so registered; provided, however, that Company shall not be
required to effect more than two (2) registrations of any Warrant Stock pursuant
to this Section 9.3, unless Company shall be eligible to file a registration
statement on Form S-3 (or other comparable short form) under the Securities Act,
in which event there shall be no limit on the number of such registrations
pursuant to this Section 9.3.
If the managing underwriter advises the prospective sellers in writing
that the aggregate number of shares of Warrant Stock and other shares of Common
Stock, if any, requested to be registered by other holders of registration
rights or proposed to be included in such registration by the Company should be
less than the number of shares of Warrant Stock and other shares of Common Stock
requested or proposed to be registered, the number of shares of Warrant Stock
and other shares of Common Stock to be sold by each prospective seller
(including the Company) shall be reduced as follows: first, the number of shares
of Common Stock proposed to be registered by the holders of Common Stock
possessing registration rights granted by the Company other than under or
arising from this Warrant shall be reduced to zero, if necessary; second, the
number of shares of Common Stock proposed to be registered by the Company shall
be reduced to zero, if necessary; second the the number of shares of Warrant
Stock proposed to be included in such registration shall be reduced pro rata
among the prospective sellers of shares of Warrant Stock to be sold in the
proposed distribution.
If such underwriter determines that the number of shares of Common Stock
proposed to be sold is insufficient to proceed with such registration or
qualification, the Company shall immediately recapitalize its Common Stock to
enable such registration and qualification to be completed as such underwriter
advises.
9.4. Incidental Registration. If Company at any time proposes to file
on its behalf and/or on behalf of any of its security holders (the "demanding
security holders") a Registration Statement under the Securities Act on any form
(other than a Registration Statement on Form S-4 or S-8 or any successor form
for securities to be offered in a transaction of the type referred to in Rule
145 under the Securities Act or to employees of Company pursuant to any employee
benefit plan, respectively) for the general registration of securities to be
sold for cash with respect to its Common Stock or any other class of equity
security (as defined in Section 3(a)(1 1) of the Exchange Act) of Company, it
will give written notice to all holders of Warrants or Warrant Stock at least 60
days before the initial filing with the Commission of such Registration
Statement, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by Company. The notice shall offer to
include in such filing any or all of the aggregate number of shares of Warrant
Stock then outstanding and any or all of the shares of Common Stock for which
this Warrant is then exercisable, as such holders may request.
Each holder of any such Warrants or any such Warrant Stock desiring to
have Warrant Stock registered under this Section 9.4 shall advise Company in
writing within 30 days after the date of receipt of such offer from Company,
setting forth the amount of such Warrant Stock for which registration is
requested. Company shall thereupon include in such filing the number of shares
of Warrant Stock for which registration is so requested, subject to the next
sentence, and shall use its best efforts to effect registration under the
Securities Act of such shares. If the managing underwriter of a proposed public
offering shall advise Company in writing that, in its opinion, the distribution
of the Warrant Stock requested to be included in the registration concurrently
with the securities being registered by Company or such demanding security
holder would materially and adversely affect the distribution of such securities
by Company or any selling stockholders, then the Company and each prospective
seller may sell that proportion of the shares of Common Stock to be sold in the
proposed distribution which the number of shares of Common Stock proposed to be
sold by such prospective seller bears to the aggregate number of Common Stock
proposed to be sold by all prospective sellers including the Company. Except as
otherwise provided in Section 9.6, all expenses of such registration shall be
borne by Company.
9.5. Registration Procedures. If Company is required by the provisions
of this Section 9 to use its best efforts to effect the registration of any of
its securities under the Securities Act, Company will, as expeditiously as
possible:
(a) prepare and file with the Commission a Registration Statement
with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of
time required for the disposition of such securities
by the holders thereof, but not to exceed 90 days;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities
covered by such Registration Statement until the earlier of such time
as all of such securities have been disposed of in a public offering or
the expiration of 90 days;
(c) furnish to such selling security holders such number of copies
of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act,
and such other documents, as such selling security holders may
reasonably request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions within the United States and Puerto
Rico as each holder of such securities shall reasonably request or as
shall be required by the managing underwriter (provided, however, that
Company shall not be obligated to qualify as a foreign corporation to
do business under the laws of any jurisdiction in which it is not then
qualified or to file any general consent to service or process), and do
such other reasonable acts and things as may be required of it to
enable such holder to consummate the disposition in such jurisdiction
of the securities covered by such Registration Statement;
(e) furnish, at the request of any holder requesting registration
of Warrant Stock pursuant to Section 9.3), on the date that such shares
of Warrant Stock are delivered to the underwriters for sale pursuant to
such registration or, if such Warrant Stock is not being sold through
underwriters, on the date that the Registration Statement with respect
to such shares of Warrant Stock becomes effective, (1) an opinion,
dated such date, of the independent counsel representing Company for
the purposes of such registration, addressed to the underwriters, if
any, and if such Warrant Stock is not being sold through underwriters,
then to the holders making such request, in customary form and covering
matters of the type customarily covered in such legal opinions; and (2)
a comfort letter dated such date, from the independent certified public
accountants of Company, addressed to the underwriters, if any, and if
such Warrant Stock is not being sold through underwriters, then to the
holder making such request and, if such accountants refuse to deliver
such letter to such holder, then to Company in a customary form and
covering matters of the type customarily covered by such comfort
letters as the underwriters or such holders shall reasonably request.
Such opinion of counsel shall additionally cover such other legal
matters with respect to the registration in respect of which such
opinion is being given as such holders holding a majority of the
Warrant Stock being so registered may reasonably request. Such letter
from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the
period ending not more than five (5) Business Days prior to the date of
such letter) with respect to the registration in respect of which such
letter is being given as the holders holding a majority of the Warrant
Stock being so registered may reasonably request;
(f) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of such Registrable Securities; and
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than
18 months after the effective date of the Registration Statement, an
earnings statement covering the period of at least twelve (12) months
beginning with the first full month after the effective date of such
Registration Statement. which earnings statements shall satisfy the
provisions of Section II (a) of the Securities Act
It shall be a condition precedent to the obligation of Company to take
any action pursuant to this Section 9 in respect of the securities which are to
be registered at the request of any holder of Warrants or Warrant Stock that
such holder shall furnish to Company such information regarding the securities
held by such holder and the intended method of disposition thereof as Company
shall reasonably request, and as shall be required in connection with the action
taken
by Company, and, if such registration is pursuant to an underwriting, such
holder shall enter into an underwriting agreement customary for such
transactions.
9.6 Expenses. All expenses incurred in complying with Section 9,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD), printing expenses, fees and
disbursements of counsel for Company, the reasonable fees and expenses of one
firm acting as counsel for the selling security holders (selected by those
holding a majority of the shares being registered), expenses of any special
audits incident to or required by any 91such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions pursuant to
Section 9.5(d), shall be paid by Company, except that:
(a) all such expenses in connection with any amendment or
supplement to the Registration Statement or prospectus filed more than
90 days after the effective date of such Registration Statement because
any holder of Warrant Stock has not effected the disposition of the
securities requested to be registered shall be paid by such holder; and
(b) Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of counsel
for any underwriter in respect of the securities sold by such holder of
Warrant Stock except to the same extent that the Company has agreed to
pay fees, discounts or commissions to any underwriter and/or fees and
disbursements of counsel for any underwriter in respect of the
securities being sold by any other selling stockholder of the Company.
9.7. Indemnification and Contribution. (a) In the event of any
registration of any of the Warrant Stock under the Securities Act pursuant to
this Section 9, Company shall indemnify and hold harmless the holder of such
Warrant Stock, such holder's directors and officers, and each other Person
(including each underwriter) who participated in the offering of such Warrant
Stock and each other Person, if any, who controls such holder or such
participating Person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such holder
or any such director or officer or participating Person or controlling Person
may become subject under the Securities 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 based upon:
(i) 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, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or
(ii) any alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and s hall reimburse such
holder or such director, officer or participating Person or
controlling Person for any legal or any other expenses
reasonably incurred by such holder or such director, officer or
participating Person or controlling Person
in connection with investigating or defending any such loss,
claim. damage, liability or action;
provided; however, that 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 Registration
Statement, preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to Company by
such holder specifically for use therein or (in the case of any registration
pursuant to Section 9.3) so furnished for such purposes by any underwriter. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or such director, officer or participating
Person or controlling Person, and shall survive the transfer of such securities
by such holder.
(b) Each holder of any Warrant Stock, by acceptance thereof,
agrees to indemnify, and hold harmless Company, its directors and
officers and each other Person, if any, who controls Company within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, Joint or several, to which Company or any such director or
officer or any such Person may become subject under the Securities 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 based upon information in writing provided to Company by such
holder of such Warrant Stock specifically for use in the following
documents and contained, on the effective date thereof- any
Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto.
(c) If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution . pursuant to this Section 9.7(c) were determined by
pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
9.8. Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock and the legend requirements of Section 9.1 shall terminate as to any
particular Warrant or share of Warrant Stock or Restricted Common Stock:
(a) when and so long as such security shall have been effectively
registered under the Securities Act and disposed of pursuant thereto;
or
(b) when Company shall have received an opinion of counsel
reasonably satisfactory to it that such shares may be transferred
without registration thereof under the Securities Act.
Whenever the restrictions imposed by Section 9 shall terminate as to this
Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive
from Company, at the expense of Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON ____________, 199_,
AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Whenever the restrictions imposed
by this Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from
Company, at Company's expense, a new certificate representing such Common Stock
not bearing the restrictive legend set forth in Section 9. 1 (a).
9.9. Listing on Securities Exchange. If Company shall list any shares
of Common Stock on any securities exchange, it will, at its expense, list
thereon, maintain and, when necessary, increase such listing of, all shares of
Common Stock issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this Warrant so long as
any shares of Common Stock shall be so listed during any such Exercise Period.
9.10. Certain Limitations on Registration Rights. Notwithstanding the
other provisions of Section 9:
(a) Company shall not be obligated to register the Warrant Stock
of any holder if, in the opinion of counsel to Company reasonably
satisfactory to the holder and its counsel (or. if the holder has
engaged an investment banking firm, to such investment banking firm and
its counsel), the sale or other disposition of such holder's Warrant
Stock, in the manner proposed by such holder (or by such investment
banking firm), may be effected without registering such Warrant Stock
under the Securities Act; and
(b) if Company has had a registration statement under which a
holder had a fight to have its Warrant Stock included pursuant to
Sections 9.3 or 9.4 declared effective within one year prior to the
date of any request pursuant to Section 9.3, then, until such one year
period has expired, Company shall not be obligated to register the
Warrant Stock of any holder pursuant to Section 9.31 provided, however,
that if any holder elected to have shares of its Warrant Stock included
under such registration statement but some or all of such shares were
excluded pursuant to the penultimate sentence of Section 9.4, then such
one-year period shall be reduced to six months
9.11. Selection of Managing Underwriters. The managing underwriter or
underwriters for any offering of Warrant Stock to be registered pursuant to
Section 9.3 shall be selected by the holders of a majority of the shares being
so registered (other than any shares being registered pursuant to Section 9.4)
and shall be reasonably acceptable to Company. The managing underwriter or
underwriters for any offering of Warrant Stock to be registered pursuant to
Section 9.4 shall be selected by the Company but shall be reasonably acceptable
to holders of a majority of the shares of Warrant Stock being registered in such
registration.
10. SUPPLYING INFORMATION
Company shall cooperate with each Holder of a Warrant and each holder
of Restricted Common Stock in supplying such information as may be reasonably
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Warrant
or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of GE Capital shall be sufficient
indemnity, so long as GE Capital is not then the subject of a bankruptcy or
insolvency proceeding and has not made an assignment for the benefit of its
creditors), and in case of mutilation upon surrender and cancellation hereof,
Company will execute and deliver in lieu hereof a new Warrant of like tenor to
such Holder; provided, in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form is surrendered
to Company for cancellation.
12. OFFICE OF COMPANY
As long as any of the Warrants remain outstanding, Company shall
maintain an office or agency (which may be the principal executive offices of
Company) where the Warrants may be . presented for exercise, registration of
transfer, division or combination as provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1. Monthly and Quarterly Information. (a) While the Loan Agreement
is in effect, the Company will deliver to each Holder copies of the monthly
financial statements required to be delivered to the agent under the Loan
Agreement (the 'Agent"), as and when the same are delivered to the Agent.
Thereafter, until such time (if ever) as the Company shall become a reporting
company under the Exchange Act, the Company will deliver to each Holder, within
thirty (30) days after the end of each fiscal month of the Company (a "Fiscal
Month"), consolidated and consolidating financial and other information
regarding the Company and its Subsidiaries, certified by the chief financial
officer of the Company, including (1) unaudited balance sheets as of the close
of such Fiscal Month and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Month and (ii)
unaudited statements of income and cash flows for such Fiscal Month, in each
case setting forth in comparative form the figures for the corresponding period
in the prior year and the figures contained in the budget, all prepared in
accordance with GAAP (subject to normal year-end adjustments and except for the
absence of footnotes and except as otherwise disclosed therein in reasonable
detail), and accompanied by the certification of the chief executive officer or
chief financial officer of the Company that all of such financial and other
information is true, complete and correct and presents fairly in accordance with
GAAP (subject to normal year-end adjustments and except for the absence of
footnotes and except as otherwise disclosed therein in reasonable detail), the
financial position, results of operations and statements of cash flows of the
Company and its Subsidiaries, on both a consolidated and consolidating basis, as
at the end of such Fiscal Month and for the period then ended.
(b) From and after the date, if ever, upon which the Company shall
become a reporting company under the Exchange Act, the Company shall provide to
each Holder, as and when required to be filed with the Commission, copies of all
quarterly financial statements and other financial reports required to be filed
with the Commission or which the Company elects to file with the Commission or
otherwise to publicly disclose.
13.2. Annual Information. (a) While the Loan Agreement is in effect,
the Company will deliver to each Holder copies of the annual financial
statements required to be delivered to the Agent as and when the same are
delivered to the Agent. Thereafter, until such time (if ever) as the Company
shall become a reporting 'company under the Exchange Act, for each fiscal year
of the Company (a "Fiscal Year"), the Company will deliver to each Holder
audited financial statements for the Company and its Subsidiaries, on a
consolidated and consolidating basis, consisting of balance sheets as of the end
of such Fiscal Year and statements of income and retained earnings and cash
flows for such Fiscal Year, setting forth in comparative form in each case the
figures for the previous Fiscal Year, which financial statements shall be
prepared in accordance with GAAP, certified (only with respect to the
consolidated financial statements) without qualification, by an independent
certified public accounting firm of national standing and accompanied by: (i)
the annual letters to such accountants in connection with their audit
examination detailing contingent liabilities and material litigation matters,
and (@) the certification of the chief executive officer or chief financial
officer of the Company that all such financial statements are true, complete and
correct and present fairly in accordance with GAAP the financial position,
results of operations and statements of cash flows of the Company and its
Subsidiaries, on a consolidated basis, as at the end of such year and for the
period then ended. Such annual financial statements shall be delivered to each
Holder contemporaneously with filing thereof with the Commission by the
Company's parent corporation, ARTRA Group, Incorporated ("ARTRA") so long as
ARTRA shall be a reporting company under the Exchange Act, but within one
hundred twenty (120) days after the end of each Fiscal Year for any period
occurring after the date (if ever) upon which ARTRA shall cease to be a
reporting company under the Exchange Act.
(b) From and after the date, if ever, upon which the Company shall
become a reporting company under the Exchange Act, the Company shall provide to
each Holder, as and when required to be filed with the Commission, copies of all
annual financial statements, annual reports to stockholders and proxy statements
required to be filed with the Commission.
13.3. Filings. Company will file on or before the required date au
regular or periodic reports (pursuant to the Exchange Act) required to be filed
with the Commission and will deliver to Holder promptly upon their becoming
available one copy of each report, notice or proxy statement sent by Company or
ARTRA to the Company's or ARTRA's stockholders generally, and of each regular or
periodic report (pursuant to the Exchange Act) and any Registration Statement,
prospectus or written communication (other than transmittal letters) (pursuant
to the Securities Act), filed by Company or ARTRA with (i) the Commission or
(ii) any securities exchange on which shares of Common Stock or any class of
securities of ARTRA are listed.
14. REPURCHASE BY COMPANY OF WARRANT
14.1. Obligation to Repurchase Warrant.
(a) From time to time during the period ending on the Expiration
Date and commencing on the earliest to occur of
(i) the fourth anniversary of the Closing Date;
(ii) the occurrence of a merger (other than where Company is
the surviving corporation and there is no change in or
distribution with respect to its Common Stock), sale of
substantially all of the assets or sale of the majority of the
outstanding shares of Common Stock of Company;
(iii) repayment of a material portion of the indebtedness
evidenced by the Notes with funds derived from any source other
than (A) operating income of the Company, or (B) additional
capital contributed by the Company's stockholders and obtained by
them without any direct or indirect credit support (by guaranty or
otherwise) from the Company;
(iv) the date upon which a public offering of any class of
the Company's securities becomes effective; and
(v) the acceleration of the maturities of the Notes pursuant
to the occurrence of an Event of Default under the Loan Agreement;
(the "Repurchase Period"), upon written notice from any Holder, Company shall
repurchase, on the date and in the manner set forth in Section 14.4 below, from
such Holder all or the portion of this Warrant designated in such notice for an
amount determined by multiplying (x) the number of shares of Common Stock
subject to this Warrant or portion thereof being repurchased by (y) the
difference between the Current Market Price per share of Common Stock as of the
date of such notice and the Current Warrant Price per share of Common Stock as
of the date of such notice; provided, however, that if no Event of Default under
the Loan Agreement shall have occurred and then be continuing, Company shall
have the fight, upon delivery of a written notice (the "Deferral Notice") to the
Holder within thirty (30) days following its receipt of the repurchase notice,
to satisfy its obligations under this Section 14.1 to repurchase this Warrant or
a portion thereof by effecting, at Company's expense, within one hundred twenty
(120) days after the date of the Deferral Notice, an underwritten public
offering on a firm commitment basis of the shares of Common Stock subject to the
Warrant requested to be repurchased, the net proceeds (after underwriting
discounts and commissions) of which shall not be less than the amount required
for such repurchase, in which event such repurchase of the Warrant shall be
deferred and such underlying Common Stock shall be sold pursuant to such public
offering. Nothing herein shall preclude the exercise by Holder of any portion of
this Warrant exercisable at any time prior to such repurchase.
(b) Notwithstanding the provisions of Section 14. 1 (a), if, at
any time during the period between the date on which any Holder shall
have exercised its rights under Section 14.1 to cause Company to
repurchase all or a portion of such Holder's Warrant and, on or prior
to the date of such repurchase, Company shall consolidate or merge
with, or sell all or substantially all of its property and assets to,
any Person and the consideration received by stockholders in connection
with such merger, consolidation or sale shall consist solely of cash,
then such Holder shall (whether or not such Holder shall have
previously surrendered such Holder's Warrant for repurchase by Company
pursuant to this Section 14) be entitled to receive, on the date of
such repurchase, the higher of (i) the amount payable to such Holder as
determined pursuant to Section 14.1 (a) and (ii) an amount equal to the
amount of cash such Holder would have received upon such consolidation,
merger or sale had such Holder's Warrant (or t he portion thereof being
repurchased) been fully exercised immediately prior thereto less the
aggregate Current Warrant Price payable at such time for the purchase
of the shares of Common Stock then subject to such Holder's Warrant (or
the portion thereof being repurchased).
(c) Notwithstanding any provision contained in this Warrant to the
contrary, should Company for any reason fail to perform its obligations
arising under Section 14.1 hereof, such obligations shall in all
respects continue until Company has fulfilled such obligations.
14.2. Option to Repurchase Warrant.
(a) From time to time on or after the fourth anniversary of
the Closing Date until the Expiration Date, and, with respect to any
shares of Warrant Stock requested to be registered pursuant to Section
9.3 hereof, Company shall have the right, upon written notice to any
Holder, to repurchase from such Holder, from any source of funds
legally available therefor, on the date and in the manner set forth in
Section 14.4 below, all or any part of the Warrant then held by such
Holder for an amount (subject to the adjustment provided in Section
14.3 below) determined by multiplying the number of shares of Common
Stock subject to such Warrant or portion thereof being repurchased by
the difference between the Current Market Price per share of Common
Stock as of the date of such notice and the Current Warrant Price per
share of Common Stock as of the date of such notice, provided, however,
that nothing herein shall preclude the exercise by Holder of any
portion of this Warrant exercisable at any time prior to such
repurchase.
(b) In addition to the repurchase rights granted in clause (a)
above, Company shall have the right, upon written notice to Holder, to
repurchase from such Holder, from any source of funds legally available
therefor, 709.77 shares of Warrant Stock for $1,500,000 in immediately
available funds during the period of January 15, 1997 through January
31, 1997. If such repurchase rights are not exercised and the
repurchase of those shares of Warrant Stock is not consummated during
that period, the repurchase price of $1,500,000 shall not be deemed to
be indicative of the Appraised Value of any Warrant Stock for purposes
of any subsequent repurchase of Warrant Stock hereunder.
14.3. Subsequent Value Transactions. If Company exercises its
repurchase right pursuant to Section 14.2(b) hereof and at any time on or prior
December 17, 1997, (i) 5% or more of Company's Fully Diluted Outstanding Common
Stock is sold, transferred or otherwise disposed of, (ii) 5% or more of the
capital stock of BCA Holdings, Inc. ("BCA") outstanding on a fully diluted basis
is sold, transferred or otherwise disposed of, (iii) 5% or more of ARTRA's
capital stock outstanding on a fully diluted basis is sold, transferred or
otherwise disposed of by Xxxxx X. Xxxxxx or any of his Affiliates, collectively,
(iv) Company, BCA or ARTRA is merged with or into, acquired by or otherwise
combined with, any other Person and, in the case of ARTRA, the practical effect
of which is equivalent to a disposition referred to in clause (iii) above, or
(v) 5% or more of the assets or business of Company or BCA is sold, transferred
or otherwise disposed of, in each of the foregoing cases whether directly or
indirectly, in a single transaction or a series of related transactions, then a
"Value Transaction" shall be deemed to have occurred. Notwithstanding the
foregoing, a Value Transaction also shall be deemed to have occurred if any of
the transactions described in the preceding sentence occurs at any time pursuant
to or otherwise in connection with any agreement or other document in existence
on or prior to December 17, 1997.
If the value of a share of Common Stock indicated or determinable by
reference to any Value Transaction exceeds the price per share of Common Stock
paid in any repurchase under Section 14.2(b), then on the date on which that
Value Transaction is consummated, Company shall pay to Holder in immediately
available funds that excess value per share multiplied by the number shares of
Warrant Stock previously repurchased under Section 14.2(b).
14.4 Determination and Payment of Repurchase Price. (a) The purchase
price for any repurchase pursuant to this Section 14 other than pursuant to
Section 14.2(b) (the "Repurchase Price") shall be determined within ninety (90)
days of the date of the repurchase notice received or Oven by Company pursuant
to Section 14.1 or 14.2(a), and shall be payable in cash within twenty (20) days
following the date of such determination of the Repurchase Price. On the date of
any repurchase of Warrants pursuant to this Section 14, each Holder shall assign
to Company such Holder's Warrant or portion thereof being repurchased, as the
case may be, without any representation or warranty (other than customary
representations and warranties as to ownership, absence of liens and due
authority to consummate such transaction), by the surrender of such Holder's
Warrant at the principal office of Company referred to in Section 2.1 against
payment therefor of the Repurchase Price by, at the option of such Holder, (i)
wire transfer to an account in a bank located in the United States designated by
such Holder for such purpose or (ii) a certified or official bank check drawn on
a member of the New York Clearing House payable to the order of such Holder. If
less than all of any Holder's War-rant is being repurchased, Company shall,
pursuant to Section 3, cancel such Warrant and issue in the name of, and deliver
to, such Holder a new Warrant for the portion not being repurchased.
(b) Each Holder shall have the fight at any time to object to the
determination of Current Market Value pursuant to this Section 14 by specifying
in writing to Company the nature of its objection and, unless such objection is
resolved by agreement of Company and such Holder, Company and such Holder shall
each have the night to subject the disputed determination to separate firms of
independent accountants of recognized national standing for a joint resolution
of the objection of such Holder (which firms of independent accountants may, in
either case, be the firms of accountants regularly retained by Company or such
Holder). If such firms cannot jointly resolve the objection of such Holder,
then, unless otherwise directed by agreement of Company and such Holder, such
firms shall in their sole discretion choose another firm of independent
certified public accountants of recognized national standing, which is not the
regular auditor of such Holder or Company, which firm shall resolve such
objection. In either case, for purposes hereof the determination so made shall
be conclusive and binding on Company, such Holder and all Persons claiming under
or through any of them, and any adjustment in the determination of Book Value
and the Repurchase Price per share of Common Stock resulting from such
determination shall be made. The cost of any such determination shall be borne:
(i) by Company if it results in an increase of the aggregate Repurchase Price
for all shares of Common Stock issuable upon the exercise hereof of ten percent
(101/6) or more; (ii) by such Holder if it results in a decrease of the
aggregate Repurchase Price for all shares of Common Stock issuable upon the
exercise hereof of ten percent (10%) or more; and (iii) equally by the Company
and the Holder in any other case.
(c) Any repurchase by Company of all or any portion of the Warrant
pursuant to Section 14.1 which is delayed by the failure of Company to
determine the Repurchase Price within the time periods required in
Section 14.4(a) shall be consummated within 10 days after, as the case
may be, the determination of the Repurchase Price or the resolution of
such objection.
(d) In the event that the determination of the Repurchase Price
requires an opinion from an investment banking firm or accounting firm,
all costs and fees associated therewith shall be paid by Company.
15. APPRAISAL
The determination of the Appraised Value per share of Common Stock
shall be made by an investment banking firm of nationally recognized standing
selected by Company and acceptable to the Majority Holders. If the investment
banking firm selected by Company is not acceptable to the Majority Holders and
Company and the Majority Holders cannot agree on a mutually acceptable
investment banking firm, then the Majority Holders and Company shall each choose
one such investment banking firm and the respective chosen firms shall agree on
another investment banking firm which shall make the determination. Company
shall retain, at its sole cost, such investment banking firm as may be necessary
for the determination of Appraised Value required by the terms of this Warrant,
except as otherwise provided in Section 14.4(b).
16. LIMITATION OF LIABILITY
No provision hereof in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the fights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of Company, whether
such liability is asserted by Company or by creditors of Company.
17. PARTICIPATION IN CORPORATE DISTRIBUTIONS AND TAKE-ALONG RIGHT
17.1 Company's Obligation to Make Payments.
(a) Company shall not declare, make or pay any dividend or
other distribution, whether in cash, securities or other property, with
respect to its Common Stock (a "Distribution") unless it concurrently
makes a cash payment to the holder of this Warrant equal to (1) the
amount of cash plus the fair value of any property or securities
distributed with respect to each outstanding share of Common Stock at
the time, as determined in good faith by the Board of Directors of Company,
multiplied by (2) the number of shares of Common Stock then issuable upon
exercise of this Warrant.
(b) Except for repurchases of Warrant Shares upon the exercise
of the repurchase options contained in Section 14 hereof, 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 of this Warrant equal
to the product of (i) the quotient obtained by dividing (x) the
aggregate amount of cash and the aggregate fair value of any property
paid out by Company in connection with any such repurchase or
redemption at the time, as determined in good faith by the Board of
Directors of Company, by (y) the number of shares of Common Stock
outstanding on a fully diluted (excluding shares of Common Stock then
issuable upon exercise of this Warrant) immediately after such
repurchase or redemption, and (ii) the number of shares of Common Stock
then issuable upon the exercise of this Warrant. Upon any such payment
by the Company, the number of shares of Common Stock then issuable upon
the exercise of this Warrant shall be adjusted by multiplying the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such payment by a fraction (A) the numerator of
which shall be the number of shares of Common Stock Outstanding
immediately after such repurchase or redemption, and (B) the
denominator of which shall be the number of shares of Common Stock
Outstanding immediately prior to such repurchase or redemption.
Concurrently, the Holder of this Wan-ant shall deliver the same to the
Company for cancellation and the Company shall deliver to Holder a new
Warrant evidencing the adjusted number of unpurchased shares of Common
Stock called for by this Section 17. 1 (b), which new Warrant shall in
all other respects be identical with this Warrant, or, at the request
of Holder, appropriate notation may be made on this Warrant and the
same returned to Holder. [Example: 90 shares are outstanding and
Warrant is for 10 shares (10% on a fully diluted basis). Company
redeems 10 shares for $8 each ($80 total). 80 shares are left
outstanding. $80 divided by 80 shares = $1 per share. 10 x $1 = $10 to
be delivered to Holder. Warrant is then adjusted by multiplying 10
(prepayment number of exercisable shares) by 80/90. Resulting Warrant
is for 8.89 shares or 10% of post-redemption stock on a fully-diluted
basis.]
17.2. Take-Along Rights. Each holder of Warrants or Warrant Shares
shall have the right to be taken along in the sale of any Common Stock by BCA,
the principal stockholder of the Company, or in any sale of capital stock of BCA
by ARTRA, in accordance with the letter addressed to each holder, and any
assignee, transferee or successor, a copy of which is attached as Annex A hereto
and made a part hereof .
18. MISCELLANEOUS
18.1. Non-waiver and Expenses. No course of dealing or any delay or
failure to exercise any fight hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its fights, powers or remedies
hereunder.
18.2. Notice Generally. Any notice, demand, request, consent, approval,
declaration. delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last known
address appearing on the books of Company maintained for such purpose.
(b) If to Company, at:
Bagcraft Corporation of America
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx, Esq.
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx
Xxxxxx, Xxxxxxxxx & Xxxxx, Ltd.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) Business Days after the same shall have been deposited
in the United States mail, certified, or one (1) Business Day after the same has
been deposited with a reputable overnight courier with instructions to deliver
the same on the next Business Day. Failure or delay in delivering copies of any
notice, demand, request, approval, declaration, delivery or other communication
to the person designated above to receive a copy shall in no way adversely
affect the effectiveness of such notice, demand, request, approval, declaration,
delivery or other communication.
18.3. Indemnification. Company agrees to indemnify and hold harmless
Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of (i) Holder's exercise
of this Warrant and/or ownership of any shares of Warrant Stock issued in
consequence thereof, or (ii) any litigation to which Holder is made a party in
its capacity as a stockholder of Company; provided, however, that Company will]
not be liable hereunder to the extent that any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses or disbursements are found in a final non-appealable judgment by a
court to have resulted from Holder's gross negligence, bad faith or willful
misconduct in its capacity as a stockholder or warrant holder of Company.
18.4. Remedies. Each holder of Warrant and Warrant Stock, in addition
to being entitled to exercise all fights granted by law, including recovery of
damages, will be entitled to specific performance of its fights under Section 9
of this Warrant. Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 9 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
18.5. Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of Company and the successors and assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant and, with respect to Section 9
hereof holders of Warrant Stock, and shall be enforceable by any such Holder or
holder of Warrant Stock.
18.6. Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of Company and
the Majority Holders, provided that no such Wan-ant may be modified or amended
to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
18.7. Severability. Wherever possible, each provision of this Warrant
shall be prohibited by or invalid under applicable law interpreted in such
manner as to be effective and valid under applicable law, but if any provision,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Warrant.
18.8. Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
18.9. Governing Law. This Warrant shall be governed by the internal
laws and decisions of the State of Illinois, without regard to the provisions
thereof relating to conflict of laws.
[Balance of page left intentionally blank; signature page follows.]
IN WITNESS WHEREOF, Company has caused this Warrant to be duly executed
and its corporate seal to be impressed hereon and attested by its Secretary or
an Assistant Secretary.
Dated: December 30, 0000
XXXXXXXX XXXXXXXXXXX XX
XXXXXXX
By: _____________________________
Name: _____________________________
Title: _____________________________
Attest:
By: _____________________________
Name: _____________________________
Title: _____________________________
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of Shares of Common Stock of Bagcraft Corporation
of America and herewith makes payment therefor in the amount of $___________ as
follows:
$______________ by wire transfer;
$______________ by certified or official bank check enclosed herewith;
$______________ by deducting from the shares delivered upon exercise hereof
a number of shares having an aggregate Current Market Price on the date of
exercise equal to the aggregate purchase price for all shares as to which this
Warrant is then being exercised;
$_____________ by application of the Liabilities as provided in Section
2.5 of this Warrant;
all at the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common Stock hereby purchased (and
any securities or other property issuable upon such exercise) be issued in the
name of and delivered to whose address is -
and, if such shares of Common Stock shall not
include all of the shares of Common Stock issuable as provided in this Warrant,
that a new Warrant of like tenor and date for the balance of the shares of
Common Stock issuable hereunder be delivered to the undersigned.
--------------------------------------
(Name of Registered Owner)
--------------------------------------
(Signature of Registered Owner)
--------------------------------------
(Street Address)
--------------------------------------
(city) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Common Stock
and does hereby irrevocably constitute and appoint _____________________
attorney-in-fact to register such transfer on the books of Bagcraft Corporation
of America maintained for the purpose, with full power of substitution in the
premises
Date: _______________ Print Name: ________________________
Signature: ________________________
Witness: ________________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any chance whatsoever.
ANNEX A
December 30, 1996
To Each Holder of a Warrant to Purchase
Common Stock of Bagcraft Corporation of America
and all Assignees, Transferees and
Successors of such Holder:
Reference is made to the Warrant dated as of December 30, 1996 to
purchase the Common Stock of Bagcraft Corporation of America, a Delaware
corporation (the "Company"), issued to General Electric Capital Corporation, a
New York corporation ("GE Capital"), (as from time to time amended, replaced,
refinanced, restated, superseded, supplemented or otherwise modified). All
capitalized terms used in this agreement which are defined in the Warrant are
used as defined in the Warrant unless the context otherwise requires.
The undersigned BCA Holdings, Inc., a Delaware corporation ('BCA') and
ARTRA GROUP Incorporated, a Pennsylvania corporation ("ARTRA"- collectively, BCA
and ARTRA are referred to herein as the "Controlling Stockholders"), warrant,
covenant and agree with the holders of the Warrant and the Warrant Stock, their
assignees, transferees and successors (the "Warrantholders") as follows:
If any Controlling Stockholder proposes any sale (other than pursuant
to a public offering) (a "Sale") of all or a portion of its common stock of the
Company ("Common Stock") or any class of capital stock of BCA ("BCA Stock")
(collectively, Common Stock and BCA Stock are referred to herein as "Controlling
Stock"), the Controlling Stockholders shall provide for such Sale on a basis
which includes a ratable share of all shares which have been issued or then are
issuable under the Warrant (collectively "Warrant Stock") on a pro-rata basis.
1. The Controlling Stockholders shall Live each Warrantholder written
notice of a proposed Sale of Controlling Stock not less than 45 days before such
Sale is to take place. The notice ("Sale Notice") shall set forth:
a. the name and address of the Proposed Purchaser,
b. the name and address of each Warrantholder as shown on the
records of the Company, the number of shares of Warrant Stock held by
or issuable to each Warrantholder;
c. the number and nature of shares of Controlling Stock proposed
to be transferred by the Controlling Stockholders;
d. the proposed amount and form of consideration and terms and
conditions of payment offered by such Proposed Purchaser; and
e. the signed agreement of the Proposed Purchaser acknowledging
that he has been informed of this letter agreement and has agreed to
purchase Warrant Stock in accordance with the terms hereof.
2. The take-along rights provided in this agreement may be exercised by
any Warrantholder (an "Electing Warrantholder") by delivery of a written notice
(a "Take-Along-Notice") to the Company or ARTRA (with a copy to each other
Warrantholder) within thirty (30) days after receipt of the Sale Notice. A
Take-Along Notice shall state the number of shares of Warrant Stock which the
Warrantholder, wishes to include in such Sale to the Proposed Purchaser.
3. The Warrantholders shall be entitled to sell to the Proposed
Purchaser Warrant Stock at the same price per share as the price per share to be
paid for Controlling Stock and otherwise on the same terms as are to be
applicable to the sale of the Controlling Stock, except as provided in paragraph
5 below. The Warrantholders shall be entitled to sell the same percentage of the
Warrant Stock held by them, as that percentage of the Controlling Stock
ultimately sold by the Controlling Stockholders (after reductions to permit the
sale of the Warrant Stock).
4. Any shares of Warrant Stock purchased from the Warrantholders
pursuant to this . agreement shall be purchased on terms and conditions which do
not include the making of any representations and warranties, indemnities or
other similar agreements other than the representations, warranties and
indemnities as to the ownership of such shares of Warrant Stock and the due
authority to sell such shares.
BCA HOLDINGS, INC. ARTRA GROUP INCORPORATED
By: ___________________________ By: ________________________
Title: ___________________________ Title: ________________________
