WARRANT AGREEMENT
BETWEEN
DEP CORPORATION
and
Each Initial Warrant Holder
Executing A Copy Of This Warrant Agreement
______________________________
Dated as of November 4, 1996
______________________________
TABLE OF CONTENTS
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PAGE
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WARRANT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. WARRANT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. REGISTRATION OF TRANSFERS AND EXCHANGES. . . . . . . . . . . . 3
SECTION 5. WARRANTS; EXERCISE OF WARRANTS . . . . . . . . . . . . . . . . 3
SECTION 6. PAYMENT OF TAXES . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES. . . . . . . . . . . 5
SECTION 8. RESERVATION OF WARRANT SHARES. . . . . . . . . . . . . . . . . 5
SECTION 9. OBTAINING STOCK EXCHANGE LISTINGS. . . . . . . . . . . . . . . 5
SECTION 10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE. . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK . . . . . . . . . . . . . 6
(b) ADJUSTMENT FOR OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . 6
(c) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED . . . . . . . . . . . 7
(d) WHEN NO ADJUSTMENT REQUIRED. . . . . . . . . . . . . . . . . . . 7
(e) NOTICE OF ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . 7
(f) VOLUNTARY REDUCTION. . . . . . . . . . . . . . . . . . . . . . . 7
(g) NOTICE OF CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . 8
(h) REORGANIZATION OF COMPANY. . . . . . . . . . . . . . . . . . . . 8
(i) BOARD OF DIRECTORS DETERMINATION FINAL . . . . . . . . . . . . . 9
(j) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED . . . . . . . . . . . . 9
(k) ADJUSTMENT IN NUMBER OF SHARES . . . . . . . . . . . . . . . . . 9
(l) FORM OF WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 11. FRACTIONAL INTERESTS. . . . . . . . . . . . . . . . . . . . . 9
SECTION 12. NOTICES TO WARRANT HOLDERS. . . . . . . . . . . . . . . . . . 10
SECTION 13. NOTICES TO COMPANY AND WARRANT HOLDER . . . . . . . . . . . . 10
SECTION 14. SUPPLEMENTS AND AMENDMENTS. . . . . . . . . . . . . . . . . . 11
SECTION 15. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 16. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 17. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 18. BENEFITS OF THIS AGREEMENT. . . . . . . . . . . . . . . . . . 11
SECTION 19. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 11
WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of November 4, 1996 (this
"Agreement"), is by and between DEP CORPORATION, a Delaware corporation (the
"Company"), and each initial holder of Warrants issued pursuant to this
Agreement, as reflected in the signature pages hereto.
WHEREAS, the Company commenced on April 1, 1996 a case under Chapter
11 of the United States Bankruptcy Code (Title 11, United States Code) (the
"Bankruptcy Code") seeking protection from its creditors and reorganization
thereunder;
WHEREAS, the Company has prepared its Second Amended Plan of
Reorganization dated as of August 23, 1996 (the "Consensual Plan"), which
Consensual Plan was duly confirmed by the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") under Section 1129 of the
Bankruptcy Code;
WHEREAS, one element of the Consensual Plan calls for the Company to
issue to the holders of Class 1 Secured Claims under the Consensual Plan, at
such holders' election, either or both of shares of the Company's Common Stock
(as defined below) and warrants to purchase shares of such Common Stock; and
WHEREAS, the Common Stock Purchase Warrants issuable pursuant to this
Agreement (the "Warrants"), representing the right to purchase, in total, up to
an aggregate of 330,050 shares of the Company's Common Stock, are intended to be
the "Class 1 Warrants" contemplated by the Consensual Plan, and this Agreement
is intended as the "Class 1 Warrant Agreement" also so contemplated.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
"BUSINESS DAY" shall mean any day, other than a Saturday, Sunday or "LEGAL
HOLIDAY" (as defined in Rule 9006(a) of the Federal Rules of Bankruptcy
Procedure, or any successor provision then in force).
"COMMON STOCK" initially shall mean the Company's Common Stock, $.01 par
value per share, and in the event of any reclassification, reorganization or
other change in the Company's capital stock, shall mean shares of any class of
common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
"CURRENT MARKET PRICE" shall mean, with respect to any date of
determination, the average of the Quoted Prices of the Common Stock for 20
consecutive trading days commencing 21 trading days before the date in question.
"EFFECTIVE DATE" shall mean the date the Consensual Plan becomes effective
in accordance with the terms of such Consensual Plan.
"EXERCISE PRICE" shall mean the average of the Quoted Prices of the Common
Stock during the Trading Period.
"EXPIRATION DATE" shall mean the sixth anniversary of the Effective Date.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ SMALLCAP MARKET" shall mean the National Association of Securities
Dealers, Inc. SmallCap Market.
"QUOTED PRICE" shall mean, with respect to any date of determination, the
last reported sales price (or, as applicable, closing price) of the Common Stock
on such date as reported by NASDAQ SmallCap Market, or if the Common Stock is
not listed on such market, "QUOTED PRICE" shall mean the last reported sales
price (or, as applicable, closing price) of the Common Stock on such date on any
other nationally recognized market or exchange, or if the Common Stock is not
listed on such market or exchange, "QUOTED PRICE" shall mean the last bid price
for the Common Stock quoted on such date in any recognized over-the-counter
reporting service. In the absence of one or more such quotations, the Board of
Directors of the Company shall reasonably determine the Quoted Price of the
Common Stock in good faith, which determination shall (absent manifest error) be
conclusive and binding.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"TRADING PERIOD" shall mean the period beginning with the first NASDAQ
SmallCap Market trading day following the Effective Date and ending 20 trading
days thereafter (including such 20th trading day in such period); PROVIDED that
if the Common Stock is not listed on the NASDAQ SmallCap Market during such
period, the pricing period shall commence on the first trading day thereafter in
which the Common Stock is listed on the NASDAQ SmallCap Market or other
nationally recognized market or exchange and shall terminate 20 trading days
thereafter; and PROVIDED FURTHER, that if a transaction of the sort described in
Section 10(h) hereof is consummated within such 20 day period, the "Trading
Period" shall mean the period beginning with the first trading day following the
Effective Date and ending on one day immediately prior to the consummation of
such transaction.
"TRANSFER AGENT" shall mean the Company's transfer agent for the Common
Stock.
"WARRANT CERTIFICATES" shall mean the certificates evidencing the Warrants.
"WARRANT SHARES" shall mean the Common Stock issuable on exercise of the
Warrants.
SECTION 2. WARRANT CERTIFICATES. The Warrant Certificates to be
delivered pursuant to this Agreement shall be in registered form only and shall
be substantially in the form set forth in Exhibit A attached hereto. Each
Warrant Certificate shall represent the right to purchase no fewer than 10,000
Warrant Shares (as appropriately and equitably adjusted for any
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stock split or similar transaction as provided in Section 10), and no transfer
or exercise of any Warrants or Warrant Certificate shall be valid, recognized or
consummated if such transfer or exercise would otherwise result in the issuance
of a Warrant Certificate to purchase fewer than 10,000 Warrant Shares. The
Warrant Certificates shall be signed on behalf of the Company by its Chairman of
the Board or its President or a Vice President and by its Secretary or an
Assistant Secretary under its corporate seal. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office. The seal of the Company may be in the form of
a facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 3. REGISTRATION. The Company shall number and register the
Warrant Certificates in a register as they are issued. The Company may deem and
treat the registered holder(s) of the Warrant Certificates as the absolute
owner(s) thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone), for all purposes, and shall not be affected by any
notice to the contrary.
SECTION 4. REGISTRATION OF TRANSFERS AND EXCHANGES. Subject to the
limitations set forth in Sections 2 and 5 hereof, the Company shall from time to
time register the transfer of any outstanding Warrant Certificates in a Warrant
register to be maintained by the Company upon surrender thereof with the form of
assignment on the reverse thereof duly completed and signed. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled and
disposed of by the Company.
Subject to the limitations set forth in Sections 2 and 5 of this
Warrant Agreement, Warrant Certificates may be exchanged at the option of the
holder(s) thereof, when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered
for exchange shall be cancelled and disposed of by the Company.
SECTION 5. WARRANTS; EXERCISE OF WARRANTS. Subject to the terms of
this Agreement, each Warrant holder shall have the right, which may be exercised
commencing at 9:00 a.m., Los Angeles time, on the first Business Day following
the expiration of the Trading Period and ending at 5:00 p.m., Los Angeles time,
on the Expiration Date, to receive from the
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Company the number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive upon the exercise of such Warrants
and payment of the Exercise Price then in effect for such Warrant Shares. Each
Warrant not exercised prior to 5:00 p.m., Los Angeles time, on the Expiration
Date shall become void and all rights thereunder and all rights in respect
thereof under this Agreement shall cease as of such time. No adjustments as to
dividends will be made upon exercise of the Warrants.
Anything to the contrary contained herein or in any Warrant
Certificate notwithstanding, no Warrant holder may purchase fewer than 10,000
Warrant Shares (such number, as appropriately and equitably adjusted for any
stock split or similar transaction) pursuant to any exercise of Warrants or any
Warrant Certificate issued or delivered pursuant to this Warrant Agreement.
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 13
hereof) of the Certificate or Certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the NASD, and
upon payment to the Company of the Exercise Price for the number of Warrant
Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made in cash or by certified or official bank
check to the order of the Company.
Subject to the provisions of this Section 5 and of Sections 2 and 6
hereof, upon such surrender of Warrants and payment of the Exercise Price the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the holder and in such name or names as the Warrant
holder may designate, a certificate or certificates for the number of full
Warrant Shares issuable upon the exercise of such Warrants together with cash as
provided in Section 11; PROVIDED, HOWEVER, that if any consolidation, merger or
lease or sale of assets is proposed to be effected by the Company as described
in subsection (h) of Section 10 hereof, or a tender offer or an exchange offer
for shares of Common Stock shall be made, upon such surrender of Warrant
Certificates and payment of the Exercise Price as aforesaid, the Company shall,
as soon as possible, but in any event not later than seven Business Days
thereafter, issue and cause to be delivered the full number of Warrant Shares
issuable upon the exercise of such Warrants in the manner described in this
sentence together with cash as provided in Section 11. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrant Certificates and
payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof and subject to the limitations set forth in this Section 5 and in
Section 2 hereof, either in full or from time to time in part and, in the event
that a Certificate evidencing Warrants is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new Certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section and of Section 2 hereof.
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All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the holders during normal business hours at its principal place of
business.
SECTION 6. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants.
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate and indemnity or bond, if requested,
also reasonably satisfactory to it, PROVIDED HOWEVER, that no such bond may be
requested from any initial holder of Warrants issued pursuant to this Agreement
or any institutional "accredited investor" (as defined in Regulation D under the
Securities Act) who subsequently acquires Warrants. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
SECTION 8. RESERVATION OF WARRANT SHARES. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or, if appointed, the Transfer Agent and every subsequent
transfer agent for shares of the Company's Common Stock will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the rights of purchase represented by the Warrants. The Company will furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto, transmitted to each holder pursuant to Section 12 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to increase the number of the Warrant Shares issuable upon
exercise of the Warrants, the Company will take any corporate action which may,
in the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue the full
number of Warrant Shares as so adjusted.
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The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
SECTION 9. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of the Company's Common Stock are then
listed. The Company is under no obligation, hereunder or otherwise, to register
the Warrants or the Warrant Shares under the Securities Act or under any state
"blue sky" laws.
SECTION 10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 10.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If the Company:
1. pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
2. subdivides its outstanding shares of Common Stock into a greater
number of shares;
3. combines its outstanding shares of Common Stock into a smaller
number of shares;
4. makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
5. issues by reclassification of its Common Stock any shares of its
capital stock;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company shall reasonably determine in good faith the allocation
of the adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall thereafter be subject to
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adjustment on terms comparable to those applicable to Common Stock in this
Section. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Company distributes to all
holders of its Common Stock any of its assets (including but not limited to
cash), debt securities, preferred stock, or any rights or warrants to purchase
debt securities, preferred stock, assets or other securities of the Company, the
Exercise Price shall be adjusted in accordance with the formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Current Market Price on the record date.
F = the fair market value on the record date of the assets, securities,
rights or warrants applicable to one share of Common Stock, as
reasonably determined in good faith by the Board of Directors of the
Company.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
(c) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in the
Exercise Price need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Price. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(d) WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made for rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest. No adjustment need be made for a change in the par value or no par
value of the Common Stock. To the extent the Warrants become convertible into
cash, no adjustment need be made thereafter as to the cash. Interest will not
accrue on the cash.
(e) NOTICE OF ADJUSTMENT. Whenever the Exercise Price is adjusted, the
Company shall provide the notices required by Section 12 hereof.
(f) VOLUNTARY REDUCTION. The Company from time to time may reduce the
Exercise Price by any amount for any period of time if the period is at least 15
Business Days and if the reduction is irrevocable during the period; PROVIDED,
HOWEVER, that in no event may the Exercise Price be reduced pursuant to this
subsection (f) to less than the par value of a share of Common Stock.
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Whenever the Exercise Price is reduced, the Company shall mail to
Warrant holders a notice of the reduction. The Company shall mail the notice at
least 10 Business Days before the date the Exercise Price reduced pursuant to
this subsection (f) takes effect. The notice shall state the reduced Exercise
Price and the period it will be in effect. Failure to mail the notice or any
defect in it shall not affect the validity of the reduction in the Exercise
Price reduced pursuant to this subsection (f).
A reduction of the Exercise Price pursuant to this subsection (f) does
not change or adjust the Exercise Price otherwise in effect for purposes of
subsections (a) and (b) of this Section 10.
(g) NOTICE OF CERTAIN TRANSACTIONS. If:
1. the Company takes any action that would require an adjustment in
the Exercise Price pursuant to subsections (a) or (b) of this Section 10
and if the Company does not arrange for Warrant holders to participate
pursuant to subsection (d) of this Section 10;
2. the Company takes any action that would require a supplemental
Warrant Agreement pursuant to subsection (h) of this Section 10; or
3. there is a liquidation or dissolution of the Company;
the Company shall mail to Warrant holders a notice stating the proposed record
date for the dividend or distribution or the proposed effective date of the
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least
15 Business Days before such date. Failure to mail the notice or any defect in
it shall not affect the validity of the transaction.
(h) REORGANIZATION OF COMPANY. If the Company consolidates or merges with
or into, or transfers or leases all or substantially all its assets to, any
person, upon consummation of such transaction the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other assets
which the holder of a Warrant would have owned immediately after the
consolidation, merger, transfer or lease if the holder had exercised the Warrant
immediately before the effective date of the transaction. This subsection (h)
shall apply to any successive transaction of the sort described in the preceding
sentence with the same force and effect as in the first such transaction.
Concurrently with the consummation of such transaction, the corporation formed
by or surviving any such consolidation or merger if other than the Company, or
the person to which such sale or conveyance shall have been made, shall enter
into a supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 10. The successor company shall mail
to Warrant holders a notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
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If this subsection (h) applies to any event described in this
subsection (h), subsections (a) or (b) of this Section 10 do not apply to such
event.
(i) BOARD OF DIRECTORS DETERMINATION FINAL. Any determination reasonably
made by the Board of Directors of the Company acting in good faith pursuant to
subsection (a) or (b) of this Section 10 shall be (absent manifest error)
conclusive.
(j) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED. In any case in which this
Section 10 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event (i) issuing to the holder of any
Warrant exercised after such record date the additional Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise over and above
the Warrant Shares and other capital stock of the Company, if any, that would
have been issuable upon such exercise prior to such adjustment, and (ii) paying
to such holder any amount in cash in lieu of a fractional share pursuant to
Section 11; PROVIDED, HOWEVER, that the Company shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional Warrant Shares, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
(k) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the Exercise
Price pursuant to this Section 10, each Warrant outstanding prior to the making
of the adjustment in the Exercise Price shall thereafter evidence the right to
receive upon payment of the adjusted Exercise Price that number of shares of
Common Stock (calculated to the nearest hundredth) obtained from the following
formula:
N'= N x E
-----
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(l) FORM OF WARRANTS. Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon the exercise of the
Warrants, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
SECTION 11. FRACTIONAL INTERESTS. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant
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Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 11, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall pay an amount in cash equal to
the Quoted Price on the Business Day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction.
SECTION 12. NOTICES TO WARRANT HOLDERS. Upon any adjustment of the
Exercise Price pursuant to Section 10, the Company shall promptly thereafter (i)
cause to be filed with the Company a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Company (who may be the regular auditors of the Company) setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate, absent manifest error, shall be
conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register written notice of
such adjustments and a certificate from the chief financial officer of the
Company setting forth the method of calculation of such adjustments by first
class mail, postage prepaid. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 12. If the Company proposes to take any action
which would require an adjustment of the Exercise Price pursuant to Section 10,
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, by
first class mail, postage prepaid, a written notice stating (i) the transaction
or proposed transaction which would require such adjustment, (ii) the date on
which such transaction was or such proposed transaction will be effected, and
(iii) the adjusted Exercise Price and number of Warrant Shares resulting from
such transaction or proposed transaction. The failure to give the notice
required by this Section 12 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 13. NOTICES TO COMPANY AND WARRANT HOLDER. Any notice or
demand authorized by this Agreement to be given or made by the registered holder
of any Warrant Certificate to or on the Company shall be sufficiently given or
made three business days after deposit in the mail, first class or registered,
postage prepaid, addressed to the office of the Company expressly designated by
the Company at its office for purposes of this Agreement (until the Warrant
holders are otherwise notified in accordance with this Section by the Company),
as follows:
10
DEP Corporation
0000 Xxxx Xxx Xxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Any notice pursuant to this Agreement to be given by the Company to
the registered holder(s) of any Warrant Certificate shall be sufficiently given
when and if deposited in the mail, first class or registered, postage prepaid,
addressed (until the Company is otherwise notified in accordance with this
Section by such holder) to such holder at the address appearing on the Warrant
register of the Company.
SECTION 14. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Warrant Certificates in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable,
in either case if it shall not in any way adversely affect the interests of the
holders of Warrant Certificates.
SECTION 15. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 16. TERMINATION. This Agreement shall terminate at 5:00
p.m., Los Angeles time, on the Expiration Date. Notwithstanding the foregoing,
this Agreement will terminate on any earlier date if all Warrants have been
exercised.
SECTION 17. GOVERNING LAW. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company and the registered holders of the
Warrant Certificates.
SECTION 19. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Pages Follow]
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
DEP CORPORATION
By____________________________
Xxxxxx Xxxxxxxx
President
[NAME OF EACH INITIAL WARRANT HOLDER]
By_____________________________
Name:___________________
Title:__________________
12
EXHIBIT A
[Form of Warrant Certificate]
[Face]
____ Warrants, Each to Purchase One Share No. ________
Warrant Certificate
DEP CORPORATION
This Warrant Certificate certifies that ______________, or registered
assigns, is the registered holder of Warrants ("WARRANTS") expiring on the
Expiration Date (as defined in the Warrant Agreement dated as of November 4,
1996 (the "WARRANT AGREEMENT")) to purchase an aggregate of ____ shares of the
Common Stock, $.01 par value per share (the "COMMON STOCK"), of DEP CORPORATION,
a Delaware corporation (the "COMPANY"). Each Warrant entitles the holder upon
exercise to receive from the Company on or before 5:00 p.m., Los Angeles time,
on the Expiration Date, one fully paid and nonassessable share of Common Stock
(a "WARRANT SHARE") at the Exercise Price (as defined in the Warrant Agreement),
payable in lawful money of the United States of America upon surrender of this
Warrant Certificate and payment of the Exercise Price at the office of the
Company designated for such purpose, but subject to the conditions set forth
herein and in the Warrant Agreement referred to on the reverse hereof. The
Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant holder may purchase fewer than 10,000 Warrant Shares
pursuant to any exercise of the Warrants represented by this Warrant
Certificate, and any purported exercise with respect to fewer than 10,000
Warrant Shares shall be null and void. No Warrant Certificate shall be issued
that represents the right to purchase fewer than 10,000 Warrant Shares, and no
transfer or exercise of any Warrants or Warrant Certificate shall be valid,
recognized or consummated if such transfer or exercise would otherwise result in
the issuance of a Warrant Certificate representing the right to purchase fewer
than 10,000 Warrant Shares.
No Warrant may be exercised after 5:00 p.m., Los Angeles time, on the
Expiration Date, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Company, as such term is used in the Warrant Agreement.
A-1
IN WITNESS WHEREOF, DEP CORPORATION has caused this Warrant
Certificate to be signed by its President and by its Secretary.
Dated:
DEP CORPORATION
By ________________________________________
President
By ________________________________________
Secretary
A-2
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date, entitling the
holder on exercise to receive shares of Common Stock and are issued or to be
issued pursuant to a Warrant Agreement, duly executed and delivered by the
Company, which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Subject to the limitations set forth in the Warrant Agreement,
Warrants may be exercised at any time on or before the Expiration Date. The
holder of Warrants evidenced by this Warrant Certificate may exercise them by
surrendering this Warrant Certificate, with the form of election to purchase set
forth hereon properly completed and executed, together with payment of the
Exercise Price in cash at the office of the Company designated for such purpose.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall, subject to the limitations set forth in the Warrant
Agreement, be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company, with the form of assignment set forth
hereon properly completed and executed, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
A-3
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
A-4
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of DEP
CORPORATION in the amount of $______ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of ________________, whose address is _______________________________ and
that such shares be delivered to ________________ whose address is ___________
______________________. If said number of shares is less than all of the shares
of Common Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of ______________, whose address is____________________
_________________________, and that such Warrant Certificate be delivered to
_________________, whose address is __________________.
Signature: _____________________________________
Date: _____________________
A-5
[Form of Assignment]
(To be Executed Upon Transfer of Warrant)
To assign this Warrant Certificate, fill in the form below:
The undersigned assigns and transfers this Warrant Certificate to
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(Print or type assignee's name, address and zip code)
______________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
and irrevocably appoints __________________________________________ agent to
transfer this Warrant Certificate on the books of the Company. The agent may
substitute another to act for him.
Date: _______________________
Your Signature: __________________________________________________
(Your name as it appears on the front of this Warrant Certificate)
By: ________________________________
Title: _____________________________
Signature Guarantee: _______________________________________________
A-6
