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EXHIBIT 10.3
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MARKETING SPECIALISTS CORPORATION
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WARRANT AGREEMENT
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DATED AS OF MARCH 30, 2000
WARRANTS TO PURCHASE 687,136 SHARES OF COMMON STOCK
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TABLE OF CONTENTS
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1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES......................................1
1.1. Form of Warrant Certificates.....................................................1
1.2. Execution of Warrant Certificates; Registration Books............................2
1.3. Transfer, Split Up, Combination and Exchange of Warrant Certificates; Lost or
Stolen Warrant Certificates......................................................2
1.4. Subsequent Issuance of Warrant Certificates......................................3
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE...........................................3
2.1. Exercise of Warrants.............................................................3
2.2. Cashless Exercise of Warrants....................................................3
2.3. Issuance of Common Stock.........................................................4
2.4. Unexercised Warrants.............................................................4
2.5. Cancellation and Destruction of Warrant Certificates.............................4
2.6. Notice of Expiration; Extension of Expiration Date...............................5
2.7. Fractional Shares................................................................5
2.8. Legend...........................................................................5
3. COVENANTS OF MSC..........................................................................5
3.1. Reservation of Common Stock......................................................5
3.2. Common Stock To Be Duly Authorized and Issued, Fully Paid and Nonassessable......6
3.3. Transfer Taxes...................................................................6
3.4. Common Stock Record Date.........................................................6
3.5. Rights in Respect of Common Stock................................................6
3.6. CUSIP Number.....................................................................7
3.7. Right of Action..................................................................7
3.8. Notice of Dividend...............................................................7
4. ADJUSTMENTS OF PURCHASE PRICE AND NUMBER OF SHARES........................................7
4.1. Mechanical Adjustments...........................................................7
4.2. Stock Dividends, Subdivisions and Combinations...................................7
4.3. Repurchases of Common Stock or Rights............................................7
4.4. Issuances of Additional Common Stock or Rights...................................8
4.5. Expiration of Rights.............................................................9
4.6. Consolidation; Merger; Sale; Reclassification....................................9
4.7. De Minimis Changes in Purchase Price............................................10
4.8. Adjustment of Number of Shares Issuable Pursuant to Warrants....................10
4.9. Warrant Clawback................................................................11
4.10. Miscellaneous...................................................................11
4.11. Other Securities................................................................12
4.12. Additional Agreements of MSC....................................................12
4.13. Information Concerning Adjustments..............................................13
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5. PUT RIGHTS................................................................................14
5.1. Put..............................................................................14
6. INFORMATION ABOUT MSC.....................................................................14
6.1. Financial and Business Information...............................................14
6.2. Inspection Rights................................................................16
7. INTERPRETATION OF THIS AGREEMENT..........................................................16
7.1. Certain Defined Terms............................................................16
7.2. Descriptive Headings.............................................................26
8. MISCELLANEOUS.............................................................................27
8.1. Expenses.........................................................................27
8.2. Amendment and Waiver.............................................................27
8.3. No Rights or Liabilities as Shareholder..........................................28
8.4. Directly or Indirectly...........................................................28
8.5. Survival of Representations and Warranties; Entire Agreement.....................28
8.6. Successors and Assigns...........................................................28
8.7. Notices..........................................................................28
8.8. Satisfaction Requirement.........................................................29
8.9. Severability.....................................................................29
8.10. Counterparts.....................................................................29
8.11. Waiver of Jury Trial, Consent to Jurisdiction, Service of Process, Other Forums..29
8.12. Governing Law....................................................................31
8.13. Schedule of Shares...............................................................31
9. PURCHASE FOR INVESTMENT...................................................................31
Exhibit 1 - Form of Warrant Certificate
Exhibit 2 - Form of Counterpart
Exhibit 3 - Schedule of Shares
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WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 30, 2000, among MARKETING
SPECIALISTS CORPORATION, a Delaware corporation (together with its successors
and assigns, "MSC"), and FIRST UNION INVESTORS, INC., a North Carolina
corporation (together with its successors and registered assigns, the
"PURCHASER").
RECITALS:
A. Certain capitalized terms used in this Agreement shall have the
meanings ascribed to them in Section 7 hereof.
B. First Union National Bank (the "Bank"), an Affiliate of the
Purchaser, and MSC have entered into that certain Second Amended and Restated
Credit Agreement (as may be amended or supplemented from time to time, the
"CREDIT AGREEMENT"), of even date herewith, pursuant to which, among other
things, the Bank agreed to lend MSC Thirty-Five Million Dollars ($35,000,000)
(the "Loan").
C. As a condition thereto and in consideration of the foregoing, MSC
agreed to issue to the Purchaser Six Hundred Eighty Seven Thousand One Hundred
Thirty Six (687,136) Warrants (the "WARRANTS") of MSC, each Warrant individually
representing the right to purchase one (1) share of Common Stock and the
Warrants collectively representing the right to purchase four percent (4%) of
the Common Stock of MSC on a Fully Diluted Basis, upon the terms and subject to
the conditions hereinafter set forth.
D. MSC has duly authorized the issuance to the Purchaser of the
Warrants.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties to this Agreement hereby agree as
follows:
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES.
1.1. Form of Warrant Certificates. The warrant certificates
(individually, a "Warrant Certificate" and, collectively, the "Warrant
Certificates") evidencing the Warrants, and the forms of assignment and of
election to purchase shares to be attached to such certificates, shall be
substantially in the form set forth in Exhibit 1 hereto and may have such
letters, numbers or other marks of identification or designation as may be
required to comply with any law or with any rule or regulation of any
governmental authority, stock exchange or self-regulatory organization made
pursuant thereto. Each Warrant Certificate shall be dated the date of issuance
thereof by MSC, either upon initial issuance or upon transfer or exchange, and
on its face shall initially entitle the holder thereof to purchase a number of
shares of Common Stock equal to the number
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of Warrants represented by such Warrant Certificate at a price per share equal
to the Purchase Price, but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
1.2. Execution of Warrant Certificates; Registration Books.
(a) Execution of Warrant Certificates. The Warrant
Certificates shall be executed on behalf of MSC by an officer of MSC authorized
by the Board of Directors. In case the officer of MSC who shall have signed any
Warrant Certificate shall cease to be such an officer of MSC before issuance and
delivery by MSC of such Warrant Certificate, such Warrant Certificate
nevertheless may be issued and delivered with the same force and effect as
though the individual who signed such Warrant Certificate had not ceased to be
such an officer of MSC, and any Warrant Certificate may be signed on behalf of
MSC by any individual who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of MSC to sign such Warrant Certificate,
although at the date of the execution of this Agreement any such individual was
not such an officer.
(b) Registration Books. MSC will keep or cause to be kept at
its office maintained at the address of MSC set forth in Section 8.7 hereof, or
at such other office of MSC in the United States of America of which MSC shall
have given notice to each holder of Warrant Certificates, books for registration
and transfer of the Warrant Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Warrant Certificates,
the registration number and the number of Warrants evidenced on its face by each
of the Warrant Certificates and the date of each of the Warrant Certificates.
1.3. Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Lost or Stolen Warrant Certificates.
(a) Transfer, Split Up, etc. Any Warrant Certificate, with or
without other Warrant Certificates, may be transferred, split up, combined or
exchanged for another Warrant Certificate or Warrant Certificates, entitling the
registered holder or Transferee thereof to purchase a like number of shares of
Common Stock as the Warrant Certificate or Warrant Certificates surrendered then
entitled such registered holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Warrant Certificate shall make such
request in writing delivered to MSC, and shall surrender the Warrant Certificate
or Warrant Certificates to be transferred, split up, combined or exchanged at
the office of MSC referred to in Section 1.2(b) hereof, whereupon MSC shall
deliver promptly to the Person entitled thereto a Warrant Certificate or Warrant
Certificates, as the case may be, as so requested.
(b) Loss, Theft, etc. Upon receipt by MSC of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate (which evidence shall be,
in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership (or of ownership by such Institutional Investor's
nominee) and such loss, theft, destruction or mutilation), and:
(i) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to MSC; provided, however, that if the holder
of such Warrant Certificate is an
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Institutional Investor or a nominee of an Institutional Investor, such
Institutional Investor's own unsecured agreement of indemnity shall be deemed to
be satisfactory; or
(ii) in the case of mutilation, upon surrender and
cancellation thereof;
MSC at its own expense will execute and deliver, in lieu thereof, a new Warrant
Certificate, dated the date of such lost, stolen, destroyed or mutilated Warrant
Certificate and of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant Certificate.
1.4. Subsequent Issuance of Warrant Certificates. Subsequent to the
original issuance, no Warrant Certificates shall be issued except:
(a) Warrant Certificates issued upon any transfer,
combination, split up or exchange of Warrants pursuant to Section 1.3(a) hereof;
(b) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 1.3(b)
hereof; and
(c) Warrant Certificates issued pursuant to Section 2.4 hereof
upon the partial exercise of any Warrant Certificate to evidence the unexercised
portion of such Warrant Certificate.
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE.
2.1. Exercise of Warrants. At any time, and from time to time, on or
after March 31, 2002 through the Expiration Date, (a) a holder of all Warrant
Certificates may exercise all or a portion of the Warrants evidenced thereby or
(b) if more than one Person holds Warrant Certificates, each holder of any
Warrant Certificate may exercise all or a portion of the Warrants evidenced
thereby, in whole or in part (but not, in the case of any exercise in part, to
the extent that such exercise would result in the issuance of a fractional share
of Common Stock), by surrender of such Warrant Certificate, with an election to
purchase (a form of which is attached to each Warrant Certificate) duly
executed, to MSC at its office referred to in Section 1.2(b) hereof, together
with payment of the Purchase Price for each share of Common Stock with respect
to which the Warrants are then being exercised.
In addition, if a (i) Takeout Event occurs, (ii) Dividend is declared
or (iii) notice of either event listed in (i) or (ii) is delivered to holders of
Warrant Certificates prior to March 31, 2002, the Required Warrantholders may,
in connection with such event and by written notice to MSC, exercise all, but
not less than all, of their Warrants and all other holders of Warrant
Certificates agree to surrender all such Warrant Certificates and exercise all
of the Warrants evidenced thereby at such time as the Required Warrantholders
exercise their Warrants.
2.2. Cashless Exercise of Warrants. In the event that any holder of
Warrant Certificates delivers such Warrant Certificates to MSC and notifies MSC
in writing that such holder intends to exercise all, or any portion of, the
Warrants represented by such Warrant Certificates to satisfy its obligation to
pay the Purchase Price in respect thereof by virtue of the provisions of this
Section, such holder shall become entitled to receive, instead of the number of
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shares of Common Stock such holder would have received had the Purchase Price
been paid pursuant to Section 2.1, a number of shares of Common Stock in respect
of the exercise of such Warrants equal to the product of:
(a) the number of shares of Common Stock issuable upon such exercise of
such Warrant Certificate (or, if only a portion of such Warrant Certificate is
being exercised, issuable upon the exercise of such portion); multiplied by
(b) the quotient of:
(i) the difference of:
(A) the Market Price at the time of such exercise;
minus
(B) the Purchase Price at the time of such exercise;
divided by
(ii) the Market Price at the time of such exercise.
MSC shall not be required to issue fractional shares by virtue of this Section,
but shall pay the exercising holder cash in lieu of such fractional share in
accordance with Section 2.7. For purposes of Rule 144 under the Securities Act,
17 C.F.R. Section 230.144, MSC and the Purchaser agree that the exercise of any
Warrants in accordance with this Section shall be deemed to be a conversion of
such Warrants, pursuant to the terms of this Agreement and the Warrants, into
Common Stock.
2.3. Issuance of Common Stock. Upon timely receipt of a Warrant
Certificate, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each of the shares of Common Stock to be
purchased in the manner provided in Section 2.1 or 2.2 hereof and an amount
equal to any applicable transfer tax (if not payable by MSC as provided in
Section 3.3 hereof), MSC shall thereupon promptly cause certificates
representing the number of shares of the Common Stock then being purchased to be
delivered to or upon the order of the registered holder of such Warrant
Certificate, registered in such name or names as may be designated by such
holder, and, promptly after such receipt deliver the cash, if any, to be paid in
lieu of fractional shares pursuant to Section 2.7 to or upon the order of the
registered holder of such Warrant Certificate.
2.4. Unexercised Warrants. In case the registered holder of any Warrant
Certificate shall exercise less than all the Warrants evidenced thereby, a new
Warrant Certificate evidencing Warrants equal in number to the number of
Warrants remaining unexercised shall be issued by MSC to the registered holder
of such Warrant Certificate or to its duly authorized assigns.
2.5. Cancellation and Destruction of Warrant Certificates. All Warrant
Certificates surrendered to MSC for the purpose of exercise, exchange,
substitution or transfer shall be canceled by it, and no Warrant Certificates
shall be issued in lieu thereof except as expressly
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permitted by the provisions of this Agreement. MSC shall cancel and retire any
other Warrant Certificates purchased or acquired by MSC otherwise than upon the
exercise thereof.
2.6. Notice of Expiration; Extension of Expiration Date.
(a) Notice of Expiration; Effect. All Warrants that have not
been exercised or purchased in accordance with the provisions of this Agreement
shall expire and all rights of holders of such Warrants shall terminate and
cease on the Expiration Date. MSC agrees to notify each holder of Warrants, not
less than thirty (30) days but not more than one hundred fifty (150) days, prior
to the Expiration Date in writing, of the Expiration Date and that, on the
Expiration Date, all Warrants remaining unexercised shall expire and all rights
of holders of such Warrants shall terminate and cease.
(b) Extension of Expiration Date. If notice of the Expiration
Date is not given within the time period specified in Section 2.6(a), then the
Expiration Date shall be extended to, and shall instead occur, on that date
which is thirty (30) days after such notice is actually given.
2.7. Fractional Shares. MSC shall not be required to issue fractional
shares of Common Stock upon the exercise of any Warrant. Upon the exercise of
any Warrant, there shall be paid to the holder thereof, in lieu of any
fractional share of Common Stock resulting therefrom, an amount of cash equal to
the product of:
(a) the fractional amount of such share; times
(b) the Market Price, as determined on the trading day
immediately prior to the date of exercise of such Warrant.
2.8. Legend. Each Warrant Certificate issued pursuant to this Agreement
shall be stamped or otherwise have endorsed or imprinted thereon a legend in
substantially the following form:
"THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND NEITHER THIS WARRANT NOR ANY SUCH SHARES OF COMMON STOCK MAY BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAW, UNLESS, IN THE
OPINION (WHICH SHALL BE IN A FORM AND SUBSTANCE SATISFACTORY TO MSC) OF COUNSEL
SATISFACTORY TO MSC, SUCH REGISTRATION IS NOT REQUIRED. IN ADDITION, ANY
TRANSFER OF THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THIS WARRANT."
3. COVENANTS OF MSC.
3.1. Reservation of Common Stock. MSC covenants and agrees that it will
at all times cause to be reserved and kept available out of its authorized and
unissued shares of Common
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Stock such number of shares of Common Stock as will be sufficient to permit the
exercise in full of all Warrants issued hereunder and all other Rights
exercisable or convertible into Common Stock.
3.2. Common Stock To Be Duly Authorized and Issued, Fully Paid and
Nonassessable. MSC covenants and agrees that it will take all such action as may
be necessary to ensure that all shares of Common Stock delivered upon the
exercise of any Warrants, at the time of delivery of the certificates
representing such shares, shall be duly and validly authorized and issued and
fully paid and nonassessable, free of any preemptive rights in favor of any
Person in respect of such issuance and free of any Lien other than a Lien for
the benefit of a Purchaser.
3.3. Transfer Taxes. MSC covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may be
payable in respect of the initial issuance or delivery of:
(a) each Warrant Certificate;
(b) each Warrant Certificate issued in exchange for any other
Warrant Certificate pursuant to Section 1.3(a) or 2.3 hereof; and
(c) each share of Common Stock issued upon the exercise of any
Warrant.
MSC shall not, however, be required to:
(i) pay any transfer tax that may be payable in
respect of the transfer or delivery of Warrant Certificates or the issuance or
delivery of certificates for shares of Common Stock in a name other than that of
the registered holder of the Warrant Certificate evidencing any Warrant
surrendered for exercise (any such tax being payable by the holder of such
Warrant Certificate at the time of surrender); or
(ii) issue or deliver any such certificates referred
to in the foregoing clause (i) for shares of Common Stock upon the exercise of
any Warrant until any such tax referred to in the foregoing clause (i) shall
have been paid.
3.4. Common Stock Record Date. Each Person in whose name any
certificate for shares of Common Stock is issued upon the exercise of Warrants
shall for all purposes be deemed to have become the holder of record of the
shares of Common Stock represented thereby on, and such certificate shall be
dated, the date upon which the originally executed Warrant Certificate
evidencing such Warrants was duly surrendered and delivered to MSC with an
election to purchase attached thereto duly executed and payment of the aggregate
Purchase Price (and any applicable transfer taxes, if payable by such Person)
was made.
3.5. Rights in Respect of Common Stock. Prior to the exercise of the
Warrants evidenced thereby, the holder of a Warrant Certificate shall not be
entitled to any rights of a Shareholder with respect to shares for which the
Warrants shall be exercisable, including, without limitation, the right to vote
or receive distributions.
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3.6. CUSIP Number. MSC covenants and agrees to maintain a CUSIP Number
in respect of the Common Stock.
3.7. Right of Action. All rights of action in respect of the Warrants
are vested in the respective registered holders of the Warrant Certificates, and
any registered holder of any Warrant Certificate, without the consent of the
holder of any other Warrant Certificate, may, on its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against MSC to enforce, or otherwise act in respect of, its right to exercise
the Warrants evidenced by such Warrant Certificate in the manner provided in
such Warrant Certificate and in this Agreement.
3.8. Notice of Dividend. MSC convenants and agrees to deliver to all
holders of Warrant Certificates, at least ten (10) Business Days prior to the
applicable record date, a notice of its intent to declare any Dividend.
4. ADJUSTMENTS OF PURCHASE PRICE AND NUMBER OF SHARES
4.1. Mechanical Adjustments. The number of shares of Common Stock
purchasable upon the exercise of each Warrant, and the Purchase Price, shall be
subject to adjustment as set forth in this Section 4.
4.2. Stock Dividends, Subdivisions and Combinations. In the event that
MSC shall, on or after the date hereof:
(a) pay or make a Dividend in shares of Additional Common
Stock;
(b) reclassify by subdivision its outstanding shares of Common
Stock into a greater number of shares; or
(c) reclassify by combination its outstanding shares of Common
Stock into a smaller number of shares;
then, and in each such case, effective on the record date of such Dividend or
reclassification (or, in the event that no record date is fixed therefor, on the
date such Dividend is made or the effective date of such reclassification), the
Purchase Price in effect at such time shall be adjusted to that price determined
by multiplying the Purchase Price in effect immediately prior to such event by
the quotient of:
(i) the total number of outstanding shares of Common
Stock immediately prior to such event; divided by
(ii) the total number of outstanding shares of Common
Stock immediately after such event.
4.3. Repurchases of Common Stock or Rights. In the event that MSC shall
repurchase, redeem, retire or otherwise acquire shares of Common Stock or Rights
for a Consideration Per Share greater than the Market Price in effect on the
date of such repurchase, redemption, retirement or acquisition, then the
Purchase Price in effect immediately after such
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event shall be adjusted by multiplying the Purchase Price in effect immediately
prior to such event by the quotient of:
(a) the difference of:
(i) the product of:
(A) the number of shares of Common Stock
immediately prior to such event (calculated
on a Fully-Diluted Basis); multiplied by
(B) the Market Price in effect immediately
prior to such event;
minus
(ii) the Aggregate Consideration Paid;
divided by
(b) the product of:
(i) the Market Price in effect immediately prior to
such event; multiplied by
(ii) the number of shares of Common Stock (calculated
on a Fully-Diluted Basis) immediately after such event.
In the event that any of the Aggregate Consideration Paid consists of
Property other than cash, the value of such Property for purposes of computing
the Aggregate Consideration Paid shall be determined by the Valuation Agent as
of a date not more than thirty (30) days prior to the date of determination
thereof and shall be set forth in a written certificate of the Valuation Agent
which shall be delivered to the holders of the Warrants in the manner
contemplated by Section 8.7.
4.4. Issuances of Additional Common Stock or Rights. In the event that
MSC shall issue or sell shares of Additional Common Stock or Rights (excluding
Excluded Securities) for no consideration or at a Consideration Per Share lower
than the Reference Price in effect on the date of such issuance or sale, then
the Purchase Price in effect immediately after such event shall be adjusted by
multiplying the Purchase Price in effect immediately prior to such event by the
quotient of:
(a) the sum of:
(i) the number of shares of Common Stock outstanding
immediately prior to such event; plus
(ii) the quotient of:
(A) the Aggregate Consideration Receivable;
divided by
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(B) the Reference Price;
in each case immediately prior to such event;
divided by
(b) the sum of:
(i) the number of shares of Common Stock outstanding
immediately prior to such event; plus
(ii) the number of shares of Additional Common Stock
so issued or sold (or initially issuable pursuant to such Rights).
In the event that any of the Aggregate Consideration Receivable
consists of Property other than cash, the value of such Property for purposes of
computing the Aggregate Consideration Receivable shall be determined by the
Valuation Agent as of a date not more than thirty (30) days prior to the date of
determination thereof and shall be set forth in a written certificate of the
Valuation Agent which shall be delivered to the holders of the Warrants in the
manner contemplated by Section 8.7.
4.5. Expiration of Rights. Upon the expiration of any Rights in respect
of the issuance of which adjustment was made pursuant to Section 4.4, without
the exercise thereof, the Purchase Price and the number of shares of Common
Stock purchasable upon the exercise of each Warrant shall, upon such expiration,
be readjusted and shall thereafter be such Purchase Price and such number of
shares of Common Stock as would have been had such Purchase Price and such
number of shares of Common Stock been originally adjusted (or had the original
adjustment not been required, as the case may be) as if:
(a) the only shares of Common Stock so issued were the shares
of Common Stock, if any, actually issued or sold upon the exercise of such
Rights; and
(b) such shares of Common Stock, if any, were issued or sold
for the consideration actually received by MSC upon such exercise plus the
aggregate consideration, if any, actually received by MSC for the issuance, sale
or grant of all of such Rights, whether or not exercised; provided that no such
readjustment shall have the effect of increasing the Purchase Price by an amount
in excess of the amount of the reduction initially made in respect of the
issuance, sale, or grant of such Rights.
4.6. Consolidation; Merger; Sale; Reclassification. In the event that
there shall be:
(a) any consolidation of MSC with, or merger of MSC with or
into, another Person (other than a merger in which MSC is the surviving
corporation and that does not result in any reclassification or change of shares
of Common Stock outstanding immediately prior to such merger);
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(b) any sale or conveyance to another Person of the Property
of MSC substantially as an entirety; or
(c) any reclassification of the Common Stock that results in
the issuance of other Securities of MSC;
then, in each such case, lawful provision shall be made as a part of the terms
of such transaction so that the holders of Warrants shall thereafter have the
right to purchase the number and kind of shares of stock, other Securities,
cash, Property and Rights receivable upon such consolidation, merger, sale,
conveyance or reclassification by a holder of such number of shares of Common
Stock as the holder of a Warrant would have had the right to acquire upon the
exercise of such Warrant immediately prior to such consolidation, merger, sale,
conveyance or reclassification, at the Purchase Price then in effect, and,
without further action on the part of any Person, each Warrant will thereafter
represent the right to receive, upon payment of the Purchase Price, such shares
of stock, other Securities, cash, Property and Rights as are so receivable. At
the time of each such consolidation, merger or sale, the Person surviving such
merger or consolidation or the Person to whom such sale or conveyance is made,
as the case may be, shall expressly assume the due and punctual observance and
performance of each and every provision of this Agreement and all obligations
and liabilities of MSC hereunder (subject to the foregoing sentence), in each
case, pursuant to such agreements and instruments as are reasonably acceptable
to the Required Warrantholders.
Notwithstanding the foregoing, MSC shall not enter into any such
merger, consolidation, sale or conveyance of all or substantially all of the
Property of MSC or reclassification in which the operation of the foregoing
provision would otherwise result in the holder of a Warrant receiving, upon
exercise thereof, consideration other than cash, Common Stock or Freely Tradable
Securities, or some combination thereof.
4.7. De Minimis Changes in Purchase Price. No adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided that any adjustments that, at the time of the calculation thereof, are
less than one percent (1%) of the Purchase Price at such time and by reason of
this Section 4.7 are not required to be made at such time shall be carried
forward and added to any subsequent adjustment or adjustments for purposes of
determining whether such subsequent adjustment or adjustments, as so
supplemented, exceed the one percent (1%) amount set forth in this Section 4.7
and, if any such subsequent adjustment, as so supplemented or otherwise, should
exceed such one percent (1%) amount, all adjustments deferred prior thereto and
not previously made shall then be made. In any case, all such adjustments being
carried forward pursuant to this Section 4.7 shall be given effect upon the
exercise of any Warrants by any holder thereof for purposes of determining the
Purchase Price thereof. All calculations shall be made to the nearest
ten-thousandth of a dollar ($0.0001).
4.8. Adjustment of Number of Shares Issuable Pursuant to Warrants. Upon
each adjustment of the Purchase Price as a result of any calculations made
pursuant to Section 4.2 through Section 4.4, each Warrant outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of shares of
Common Stock (calculated to the nearest one-hundredth (.0001)) obtained
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by multiplying the number of shares of Common Stock covered by such Warrant
immediately prior to such adjustment by the quotient of:
(a) the Purchase Price in effect immediately prior to such
adjustment, divided by
(b) the Purchase Price in effect immediately after such
adjustment, calculated, for this purpose, to ten (10) decimal places and applied
prior to giving effect to any rounding required by Section 4.7.
All Warrants originally issued by MSC hereunder shall, subsequent to any
adjustment made to the Purchase Price hereunder, evidence the right to purchase,
at the adjusted Purchase Price, the number of shares of Common Stock determined
to be purchasable from time to time hereunder upon exercise of such Warrants,
all subject to further adjustment as provided herein. Each such adjustment shall
be valid and binding upon MSC and the holders of Warrants irrespective of
whether the Warrant Certificates theretofore and thereafter issued express the
Purchase Price per share of Common Stock and the number of shares of Common
Stock that were expressed upon the initial Warrant Certificates issued
hereunder.
4.9. Warrant Clawback. In the event that, on or after the date hereof
and in accordance with the terms of the Credit Agreement, there is a reduction
in the Loan which payment shall reduce the Purchaser's Exposure by at least
$1,000,000, the number of shares of Common Stock purchasable upon the exercise
of each Warrant shall be adjusted such that each Warrant outstanding immediately
prior to the making of such payment shall thereafter evidence the right to
purchase that number of shares of Common Stock (calculated to the nearest
one-hundredth (.0001)) obtained by multiplying the number of shares of Common
Stock covered by such Warrant immediately prior to such adjustment by the
quotient of:
(a) the Warrant Percentage immediately prior to such
adjustment minus the Warrant Clawback resulting from such principal reduction;
divided by
(b) the Warrant Percentage immediately prior to such
adjustment.
4.10. Miscellaneous.
(a) Adjustments shall be made pursuant to this Section 4
successively whenever any of the events referred to in Section 4.2 through
Section 4.6, inclusive, or Section 3.10 shall occur.
(b) If any Warrant shall be exercised subsequent to the record
date for any of the events referred to in Section 4.2 through Section 4.6,
inclusive, but prior to the effective date thereof, appropriate adjustments
shall be made immediately after such effective date so that the holder of such
Warrant on such record date shall have received, in the aggregate, the kind and
number of shares of Common Stock or other Securities or Property that it would
have owned or been entitled to receive on such effective date had such Warrant
been exercised prior to such record date.
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(c) Shares of Common Stock owned by or held for the account of
MSC or any Subsidiary shall not, for purposes of the adjustments set forth in
this Section 4, be deemed outstanding.
4.11. Other Securities. In the event that at any time, as a result of
an adjustment made pursuant to this Section 4, each holder of Warrants shall
become entitled to purchase any Securities of MSC other than shares of Common
Stock, the number or amount of such other Securities so purchasable and the
Purchase Price of such Securities shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in Section 4.2 through Section 4.6, inclusive, hereof, and
all other relevant provisions of this Section 4 that are applicable to shares of
Common Stock shall be applicable to such other Securities.
4.12. Additional Agreements of MSC. MSC covenants and agrees that:
(a) MSC shall not, by amendment to the Charter, or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
liquidation, issuance or sale of Securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by MSC, or which would have the effect of
circumventing or avoiding the provisions of this Section 4, but shall at all
times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the holders of the Warrant
Certificates against dilution or other impairment.
(b) Before taking any action that would result in an
adjustment to the then current Purchase Price to a price that would be below the
then current par value of Common Stock issuable upon exercise of any Warrant,
MSC will take or cause to be taken any and all necessary corporate or other
action that may be necessary in order that MSC may validly and legally issue
fully paid and nonassessable shares of Common Stock upon payment of such
Purchase Price as so adjusted.
(c) If MSC shall amend the provisions of any Rights (other
than the Warrants) or make any adjustment thereto (pursuant to any antidilution
provision or otherwise) so as to reduce the Consideration Per Share applicable
thereto, increase the number of shares issuable upon exercise thereof or
otherwise change the economic terms (such as the purchase price, exercise price,
conversion price or conversion ratio thereof), then MSC shall make appropriate
adjustment, as nearly as practical to those that would be required by the
provisions of Section 4.2 through Section 4.4, inclusive, most nearly analogous
to the effect of such amendment, to the Purchase Price, and, pursuant to Section
4.8, to the number of shares of Common Stock issuable upon exercise of the
Warrants, as shall be fair and equitable, such adjustment to be determined by
the Valuation Agent.
(d) In the event that any of the events described in any of
Section 4.2 through Section 4.4, inclusive, give rise to an adjustment to the
purchase, exercise or conversion price or conversion ratio, or number of shares
of Common Stock issuable upon conversion or exercise, of any Rights (other than
the Warrants), then the adjustments provided for in Section 4.2 through Section
4.4, inclusive, in respect of such event shall give effect both to the event
giving rise to
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such adjustment under this Agreement and to all such adjustments made in respect
of such other Rights; provided, however, that no such adjustment shall duplicate
any adjustment required to be made in respect thereof by virtue of the
provisions of Section 4.11(b).
4.13. Information Concerning Adjustments.
(a) Notice of Adjustment Whenever the number of shares of
Common Stock issuable upon the exercise of Warrants is adjusted or the Purchase
Price in respect thereof is adjusted, as herein provided, MSC shall promptly
give to each holder of Warrants notice of such adjustment or adjustments and
shall promptly deliver to each holder of Warrants a certificate of the chief
financial officer of MSC setting forth:
(i) the number of shares of Common Stock issuable
upon the exercise of each Warrant and the Purchase Price of such shares after
such adjustment;
(ii) a brief statement of the facts requiring such
adjustment; and
(iii) the computation by which such adjustment was
made.
(b) Annual Certificate. So long as any Warrant is outstanding,
within ninety (90) days of the end of each fiscal year of MSC, MSC shall deliver
to each holder of Warrants a certificate of the chief financial officer of MSC
setting forth:
(i) the number of shares of Common Stock issuable
upon the exercise of each Warrant and the Purchase Price of such shares as of
the end of such fiscal year;
(ii) a brief statement of the facts requiring each
adjustment, if any, required to be made in such fiscal year; and
(iii) the computation by which each such adjustment
was made.
(c) Confirmation by Accountants. At the request of a holder of
Warrants, a certificate of the chief financial officer pursuant to Section
4.13(a) or Section 4.13(b) shall be confirmed by a certificate from the
independent certified public accountants of MSC.
(d) Notices of Certain Events. Whenever MSC shall publicly
announce the authorization of any Notice Event, MSC shall, not less than fifteen
(15) days prior to the record date with respect to such event (or, if no record
date for the same shall be fixed, not less than fifteen (15) days prior to the
occurrence of such Notice Event), give to each holder of Warrants, written
notice of such event setting forth any change in the number of shares of Common
Stock MSC estimates will be issuable upon the exercise of each Warrant, the
estimated Purchase Price after any adjustment required to be made hereunder and
a brief statement of the facts requiring such adjustment and the computation by
which MSC expects such adjustment will be made. Notwithstanding the foregoing,
no failure of MSC to give any such notice shall affect the validity of the
action taken unless such failure was in bad faith.
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5. PUT RIGHTS
5.1. Put.
(a) Granting of Put; Price. At any time or from time to time
during the Put Period, each holder of MSC Securities, upon written notice to MSC
(a "PUT NOTICE"), shall be entitled to sell (a "PUT OPTION"), and MSC shall be
obligated to purchase from such holder, any or all of MSC Securities held by
such holder at a purchase price equal to the Repurchase Price.
(b) Put Notice. Each Put Notice delivered pursuant to Section
5.1(a) hereof shall specify (i) the name of the holder of MSC Securities
delivering such Put Notice, (ii) that such holder is exercising such holder's
Put Option, pursuant to this Section 5.1 to sell certain of MSC Securities held
by such holder, and (iii) the number of, and a description of, MSC Securities
being tendered.
(c) MSC Notice.
(i) Notice to Holders. MSC shall, within ten (10)
days of receipt of such Put Notice, deliver to the holder or holders exercising
its or their Put Option pursuant to this Section 5.1, a notice (1) specifying
the Repurchase Date, (2) providing the names and addresses of each of the other
holders of MSC Securities and the number of MSC Securities held by such holder
which are the subject of another Put Notice at such time, and (3) stating the
type and number of MSC Securities held by each such holder, which notice MSC
shall also simultaneously deliver to all other holders of a Put Option.
(ii) Calculation of Repurchase Price. MSC, not less
than ten (10) days prior to the Repurchase Date, shall deliver to the holder or
holders exercising its or their Put Option pursuant to this Section 5.1, a
notice containing a detailed calculation of the Repurchase Price with respect to
MSC Securities which are to be so repurchased from such holder.
(d) Obligation of MSC to Purchase MSC Securities. MSC shall be
obligated to purchase from each holder of MSC Securities exercising such
holder's Put Option rights pursuant to this Section 5.1 all MSC Securities
subject to each Put Notice, and shall pay the Repurchase Price payable to each
such holder in immediately available funds, on the Repurchase Date, against
delivery to MSC by such holder of any and all certificates or other instruments
evidencing MSC Securities subject to the Put Notice, together with appropriate
instruments of transfer or assignment duly endorsed in blank.
(e) Cancellation of Warrants. Any Warrants purchased by MSC
pursuant to this Section 5.1 shall be cancelled and shall not be reissued.
6. INFORMATION ABOUT MSC.
6.1. Financial and Business Information.
MSC shall deliver to each holder of MSC Securities:
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(a) Quarterly Financial Statements - as soon as practicable
after the end of each quarterly fiscal period in each fiscal year of MSC (other
than the last quarterly fiscal period of each such fiscal year), and in any
event within forty-five (45) days thereafter:
(i) a consolidated balance sheet as at the end of
such quarter; and
(ii) consolidated statements of income and retained
earnings and cash flows for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such quarter;
for MSC and the Subsidiaries, setting forth in each case, in
comparative form, the financial statements for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared
in accordance with GAAP applicable to quarterly financial statements
generally, and certified as complete and correct by the chief financial
officer of MSC, provided, that, should MSC become subject to or agree
with any Person to comply with the provisions of section 13 or section
15(d) of the Exchange Act, delivery of copies of MSC's Quarterly Report
on Form 10-Q filed with the SEC within the time period specified above
shall be deemed to satisfy the requirements of this Section 6.1(a) so
long as such Quarterly Report contains or is accompanied by the
information specified in this Section 6.1(a);
(b) Annual Financial Statements - as soon as practicable after
the end of each fiscal year of MSC, and in any event within ninety (90) days
thereafter:
(i) consolidated balance sheets as at the end of such
year; and
(ii) consolidated statements of income and retained
earnings and cash flows for such year;
for MSC and the Subsidiaries, setting forth in the case of each
consolidated financial statement, in comparative form, the financial
statement for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by an audit report
thereon of independent certified public accountants of recognized
national standing, which report shall state without qualification
(including, without limitation, qualifications related to the scope of
the audit, the compliance of the audit with generally accepted auditing
standards, or the ability of MSC or a material subsidiary thereof to
continue as a going concern), that such financial statements have been
prepared and are in conformity with GAAP and a certification by the
chief financial officer of MSC that such consolidated and consolidating
statements are complete and correct; provided, that, should MSC become
subject to or agree with any Person to comply with the provisions of
section 13 or section 15(d) of the Exchange Act, the delivery of MSC's
Annual Report on Form 10-K for such fiscal year filed with the SEC
within the time period specified above shall be deemed to satisfy the
requirements of this Section 6.1(b) so long as such Annual Report
contains or is accompanied by the reports and other information
otherwise specified in this Section 6.1(b);
(c) SEC and Other Reports - promptly upon their becoming
available:
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(i) each financial statement, report, notice or proxy
statement sent by MSC or any Subsidiary to Shareholders generally;
(ii) each regular or periodic report (including,
without limitation, each Form 10-K, Form 10-Q and Form 8-K), any registration
statement which shall have become effective, and each final prospectus and all
amendments thereto filed by MSC or any Subsidiary with the SEC; and
(iii) all press releases and other statements made
available by MSC or any Subsidiary to the public concerning material
developments in the business of MSC or the Subsidiaries; and
(d) Requested Information - with reasonable promptness, such
other data and information as from time to time may be reasonably requested by
any holder of MSC Securities.
6.2. Inspection Rights. At all times during which the Purchaser or any
Affiliate shall hold any MSC Securities, MSC shall permit the Purchaser, such
Affiliate or a representative thereof, upon written demand of the Purchaser,
such Affiliate, during the usual hours for business of MSC to inspect for any
Proper Purpose MSC's or any Subsidiary's stock ledger, a list of its
stockholders, and its other books and records, and to make copies of extracts
therefrom. As used in this Section 6.2. "Proper Purpose" shall mean a purpose
reasonably related to the Purchaser's interest as a holder of MSC Securities. In
every instance where an attorney or other agent shall be the person who seeks
the rights to inspection, the oath shall be accompanied by a power of attorney
or such other writing which authorizes the attorney or other agent to so act on
behalf of the Purchaser or such Affiliate.
7. INTERPRETATION OF THIS AGREEMENT.
7.1. Certain Defined Terms. For the purpose of this Agreement, the
following terms shall have the meanings specified with respect thereto below:
ADDITIONAL COMMON STOCK -- means Common Stock, including treasury
shares, issued after the date hereof, except Common Stock issued upon the
exercise of any one or more Warrants.
AFFILIATE -- means, at any time, a Person (other than a Subsidiary or
the Purchaser): (a) that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
MSC; (b) that beneficially owns or holds five percent (5%) or more of any class
of Securities; (c) five percent (5%) or more of the Voting Stock (or in the case
of a Person that is not a corporation, five percent (5%) or more of the equity
interest) of which is beneficially owned or held by MSC or a Subsidiary; or (d)
that is an officer, member of the Board of Directors (or a member of the
immediate family of an officer or director or member of the Board of Directors)
of MSC or any Subsidiary, at such time. As used in this definition, "Control"
shall means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
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AGREEMENT, THIS -- and references thereto shall mean this Warrant
Agreement as it may from time to time be amended or supplemented.
AGGREGATE CONSIDERATION PAID - means, in the case of a repurchase,
redemption, retirement or acquisition of shares of Common Stock, the aggregate
amount paid by MSC in connection therewith and, in the case of a repurchase,
redemption, retirement or acquisition of Rights, the sum of:
(a) the aggregate amount paid by MSC for such Rights; plus
(b) the aggregate consideration or premiums stated in such
Rights to be payable for the shares of Common Stock covered thereby.
For purposes of clause (a) above, in the event of the repurchase,
redemption, retirement or acquisition of any Rights together with other
Securities or obligations of MSC or any other Person in which the purchase price
for the Rights and such other Securities or obligations is expressed as a single
purchase price (including, without limitation, upon the repurchase, redemption,
retirement or acquisition of Preferred Stock or debt Securities which are
convertible into Common Stock), the aggregate amount paid by MSC for such Rights
shall include only the portion of such single purchase price attributable to
such Rights, and not the portion attributable to such other Securities or
obligations. The portion of such purchase price attributable to such Rights in
such case shall be equal to the product of:
(i) such single purchase price; multiplied by
(ii) the quotient of:
(A) the fair market value (as determined by the
Valuation Agent) of such Right, independent of the value of
such other securities or obligations (computed using the
Black-Scholes option pricing model or such other pricing model
as the Valuation Agent determines is appropriate, and applying
such reasonable assumptions concerning price variances with
respect to the Common Stock and such other variables as the
Valuation Agent considers appropriate); divided by
(B) the fair market value (as determined by the
Valuation Agent) of such Right together with such other
securities or obligations (computed using such methodology and
making such assumptions as the Valuation Agent determines is
appropriate).
AGGREGATE CONSIDERATION RECEIVABLE - means, in the case of an issuance
or sale of shares of Additional Common Stock, the aggregate amount paid to MSC
in connection therewith and, in the case of an issuance or sale of Rights, or
any amendment thereto, the sum of:
(a) the aggregate amount paid to MSC for such Rights; plus
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(b) the aggregate consideration or premiums stated in such
Rights to be payable for the shares of Additional Common Stock covered
thereby;
in each case without deduction for any fees, expenses or underwriters'
discounts.
For purposes of clause (a) above, in the event of the issuance or sale
of any Rights together with other Securities or obligations of MSC or any other
Person in which the purchase price for the Rights and such other Securities or
obligations is expressed as a single purchase price (including, without
limitation, upon the issuance or sale of Preferred Stock or debt Securities
which are convertible into Common Stock), the aggregate amount paid to MSC for
such Rights should include only the portion of such single purchase price
attributable to such Rights, and not the portion attributable to such other
Securities or obligations. The portion of such purchase price attributable to
such Rights in such case shall be equal to the product of:
(i) such single purchase price; multiplied by
(ii) the quotient of:
(A) the fair market value (as determined by the
Valuation Agent) of such Right, independent of the value of
such other securities or obligations (computed using the
Black-Scholes option pricing model or such other pricing model
as the Valuation Agent determines is appropriate, and applying
such reasonable assumptions concerning price variances with
respect to the Common Stock and such other variables as the
Valuation Agent considers appropriate); divided by
(B) the fair market value (as determined by the
Valuation Agent) of such Right together with such other
securities or obligations (computed using such methodology and
making such assumptions as the Valuation Agent determines is
appropriate).
BOARD OF DIRECTORS -- means the board of directors of MSC or any
committee thereof that, in the instance, shall have the lawful power to exercise
the power and authority of such board of directors.
BUSINESS ENTITY -- means a corporation, limited liability company,
general partnership, limited partnership, limited liability partnership or trust
created for any business purpose.
CAPITAL STOCK -- means any class of preferred, common or other capital
stock, share capital or similar equity interest of a Person, including, without
limitation, any partnership interest in any partnership or limited partnership
and any membership interest in any limited liability company.
CHANGE IN CONTROL -- means the occurrence of any of the following
events:
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(i) the Permitted Holders either (x) cease to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act), directly or indirectly, of at least 51% of the aggregate of the
total voting power of the Voting Stock of MSC, whether as a result of
issuance of securities of MSC, any merger, consolidation, liquidation
or dissolution of MSC, any direct or indirect transfer of securities by
any Permitted Holder or otherwise, or (y) do not have the right or
ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors (for purposes of this
clause (i), the Permitted Holders shall be deemed to own beneficially
any Voting Stock of an entity (the "specified entity") held by any
other entity (the "parent entity") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the
parent entity); or
(ii) any Going Private Transaction.
CHARTER -- means the certificate of incorporation and bylaws of MSC, as
in effect immediately upon execution of this Agreement.
CLOSING PRICE -- means, on any date with respect to any share of Common
Stock:
(a) the last sale price, regular way, on such date or, if no
such sale takes place on such date, the average of the closing bid and
asked prices on such date, in each case as officially reported on the
principal national securities exchange on which any Common Stock is
then listed or admitted to trading; and
(b) if no Common Stock is then listed or admitted to trading
on any national securities exchange, but is listed on the NASDAQ
National Market or the NASDAQ SmallCap Market, as the case may be, the
last trading price of any Common Stock on such date as reported by
NASDAQ, or if there shall have been no trading on such date, the
average of the reported closing bid and asked prices on such date as
shown by NASDAQ.
COMMISSION -- means the Securities Exchange Commission.
COMMON EQUITY PERCENTAGE -- shall mean, as to any Shareholder, the
percentage that (i) the outstanding shares of Common Stock then owned by such
Shareholder and any shares of Common Stock issuable upon exercise of any
warrants or options, in each case which are fully vested and then owned by such
Shareholder, is of (ii) the aggregate outstanding number of shares of Common
Stock then owned by all of the Shareholders plus all shares of Common Stock
issuable upon exercise of any warrants or options, in each case which are fully
vested and then owned by any Shareholder.
COMMON STOCK -- means common stock, par value $0.01 per share, of MSC.
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CONSIDERATION PER SHARE -- means, with respect to shares of Common
Stock or Rights, the quotient of:
(a) the Aggregate Consideration Paid (in the case of a
repurchase, redemption, retirement or other acquisition for value of
Common Stock or Rights) or the Aggregate Consideration Receivable (in
the case of an issuance or sale of Common Stock or Rights by MSC), as
the case may be, in respect of such shares of Common Stock or such
Rights; divided by
(c) the total number of such shares of Common Stock or, in the
case of Rights, the total number of shares of Common Stock into which
such Rights are exercisable or convertible.
COUNTERPART -- shall mean a counterpart to this Agreement in the form
of Exhibit 2 hereto, pursuant to the execution of which a Person shall become
bound by all of the terms and conditions to this Agreement.
CREDIT AGREEMENT -- shall have the meaning specified in Recital B of
this Agreement.
DIVIDEND -- means and includes, with respect to any class of Capital
Stock of any Person, dividends and any other similar distributions or payments
made to the holders of such capital stock in respect of such Capital Stock.
EMPLOYEE STOCK AWARDS/OPTIONS -- means one or more equity options
granted to, and shares of Common Stock issued or awarded to directors, officers,
employees and consultants of MSC, as approved by the Board of Directors.
EXCLUDED SECURITIES -- means and includes:
(a) shares of Common Stock issuable upon exercise of the
Warrants;
(b) shares of Common Stock issued upon the exercise,
conversion or exchange of any warrant, option or other right to acquire
shares of Common Stock or any convertible or exchangeable Security in
respect of which an adjustment was made (or was not required to be
made) pursuant to Section 4.4 hereof; and
(c) shares of Common Stock issuable upon the exercise of share
options included therein.
EXPIRATION DATE -- means 5:00 p.m. Philadelphia, Pennsylvania time on
December 31, 2010.
FAIR VALUE -- means, with respect to any share of Common Stock, the
quotient of:
(a) the difference of:
(i) the sum of:
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(A) the fair salable value of MSC as a going
concern, giving effect to all Property thereof and
subject to all liabilities thereof, that would be
realized in an arm's length sale between an informed
and willing buyer and an informed and willing seller,
under no compulsion to buy or sell, respectively, as
of a date that is within fifteen (15) days of the
date as of which the determination is to be made by
the Valuation Agent, such determination in either
case to be made without regard to the absence of a
liquid or ready market for such Common Stock; plus
(B) the aggregate exercise or conversion
price of all Warrants and all other Valuable Rights
(including, without limitation, Valuable Rights in
respect of any shares of Preferred Stock convertible
at such time into shares of Common Stock) in
existence and remaining unexercised on such date;
minus
(ii) in the case of any outstanding shares of
Preferred Stock (other than Preferred Stock convertible at
such time into shares of Common Stock, which shares represent
Valuable Rights at such time), the aggregate liquidation
preference of (or, if less, the aggregate price, if any, at
which MSC could elect to redeem) such shares of Preferred
Stock (together with all accrued and unpaid Dividends
thereon);
divided by
(b) the sum of:
(i) the total number of shares of Common Stock then
outstanding; plus
(ii) the aggregate number of shares of Common Stock
issuable in respect of all Valuable Rights (including, without limitation,
Valuable Rights in respect of any shares of Preferred Stock convertible at such
time into shares of Common Stock) at such time.
FREELY TRADABLE SECURITIES -- means Securities:
(a) which are of a class:
(i) of Securities issued or fully guaranteed by the
United States of America or any agency thereof and entitled to
the full faith and credit of the United States of America, for
which price quotations are routinely quoted and for which, in
the opinion of the Required Warrantholders, there is a ready
liquid market; or
(ii) both (x) registered pursuant to either section
12(b) or section 12(g) of the Exchange Act and (y) either
listed on a national securities exchange or on the NASDAQ
National Market; and
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(b) which may be resold immediately in the public markets by
each and every holder thereof without requirement of further
registration under the Securities Act.
FULLY DILUTED BASIS -- means, with respect to any calculation of the
number of shares of Common Stock at any time, the sum of:
(a) the number of shares of Common Stock outstanding at such
time; plus
(b) the aggregate number of shares of Common Stock issuable
upon the exercise, conversion or exchange, as the case may be, of all
Rights outstanding at such time, regardless of whether such Rights are
then exercisable, convertible or exchangeable and regardless of whether
the consideration given up by the holder of such Right in connection
with the exercise, conversion or exchange thereof would exceed the
value of the Common Stock received upon such exercise, conversion or
exchange.
GOING PRIVATE TRANSACTION -- means any transaction or series of
transactions as a result of which MSC will cease to be (i) required to register
under the Securities Exchange Act or (ii) listed either on a national securities
exchange or on the NASDAQ National Market or NASDAQ SmallCap Market; provided,
however, that the failure to be so listed shall not be a Going Private
Transaction if such failure is not the result of a transaction or series of
transactions.
INITIAL PURCHASE PRICE -- means $0.01 per share.
INSTITUTIONAL INVESTOR -- means the Purchaser, any Related Party of the
Purchaser, and any holder of Warrants that is an "accredited investor" as
defined in Section 2(15) of the Securities Act.
LIEN -- means any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement to
give any of the foregoing), any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the payment
or performance of an obligation.
MARKET PRICE -- means, per share of Common Stock, as of any date of
determination, the arithmetic mean of the daily Closing Prices for the twenty
(20) consecutive trading days before such date of determination; provided that
if the Common Stock is then neither listed or admitted to trading on any
national securities exchange, the NASDAQ National Market or the NASDAQ SmallCap
Market, then "Market Price" means the Fair Value of one share of Common Stock,
as determined by the Valuation Agent as of the date of determination.
MSC -- shall have the meaning specified in the introductory paragraph
hereof.
MSC SECURITIES -- means (without duplication) (a) each of the Warrant
Interests; and (b) the Rights to acquire shares existing under the Warrants.
NASD -- means the National Association of Securities Dealers, Inc.
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NASDAQ -- means the NASDAQ Stock Market, Inc., a subsidiary of the
NASD.
NASDAQ NATIONAL MARKET -- has the meaning ascribed thereto in Rule
4200(r) of the NASDAQ.
NASDAQ SMALLCAP MARKET -- has the meaning ascribed thereto in Rule
4200(t) of the NASDAQ.
NOTICE EVENT -- means any event that would require an adjustment in the
Purchase Price pursuant to Section 4.
PERMITTED HOLDERS -- means MS Acquisition Limited, a Delaware limited
partnership, MSSC Acquisition Corporation, a Delaware corporation, Richmont
Capital Partners I, L.P., a Delaware limited partnership, J.R. Investments
Corp., a Delaware corporation, Xxxx X. Xxxxxx, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxx,
Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxx, Xxxx X. Xxxxxx and Xxxxx X. Xxxxxx.
PERSON -- means an individual, partnership, corporation, limited
liability company, joint venture, trust, unincorporated organization or a
government or agency or political subdivision thereof.
PREFERRED STOCK -- means and includes any Capital Stock of MSC of any
class which is preferred, as to payment of Dividends, payment upon a liquidation
or dissolution of MSC or both, over the Common Stock.
PROPERTY -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
PRINCIPAL REDUCTION INCREMENT - means, as to any payment of principal
owing under the Loan, the amount of such payment divided by $1,000,000, rounded
down to the next whole integer.
PUBLIC OFFERING -- means any offering for sale by MSC of equity
securities of MSC pursuant to a registration statement filed under the
Securities Act, other than a registration relating solely to (x) employee
benefit plans, or (y) a Commission Rule 145 transaction.
PURCHASE PRICE -- means, prior to any adjustment pursuant to Section
4.1 of this Agreement, the Initial Purchase Price and thereafter, the Initial
Purchase Price as adjusted and readjusted from time to time. Notwithstanding any
adjustement to the Purchase Price pursuant to the provisions of this Agreement,
a holder of any Warrants may in its sole discretion elect to pay as the Purchase
Price upon any exercise of its Warrants an amount equal to the the par value per
share of the Company Common Stock, provided that such election shall not affect
any adjustement to the number of shares of Common Stock purchasable upon the
exercise of such Warrants.
PURCHASER'S EXPOSURE -- means, at any time, the sum of the amount of
principal outstanding under the Loan.
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27
PUT PERIOD -- means the period of time beginning on December 16, 2008
and ending on the Expiration Date.
REFERENCE PRICE -- means, per share of Common Stock, as of any date of
determination, the greater of the Market Price as of such date and the Purchase
Price on such date.
RELATED PARTY -- means, as to any Person, (i) the partners, directors
and officers, as the case may be, of such Person, (ii) the partners of any of
the parties referred to in the foregoing clause of this definition, (iii) the
spouse or lineal descendants, and siblings of such Person or any of the parties
referred to in the foregoing clauses of this definition, (iv) a trust for the
benefit of such Person or any of the parties referred to in the foregoing
clauses of this definition, (v) any corporation or pass-through entity
controlled by such Person or by any of the parties referred to in the foregoing
clauses of this definition, and (vi) any other party that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person.
REPURCHASE DATE -- means a date selected by MSC, which shall be not
more than 30 days after the date of the related Put Notice.
REPURCHASE PRICE -- means the product of (A) the difference of (1) the
Put Price minus (2) the Purchase Price multiplied by (B) the Warrants being
redeemed. The "Put Price" shall mean an amount equal to the higher of the (i)
Market Price and (ii) the book value per share of outstanding Common Stock,
determined in accordance with GAAP.
REQUIRED WARRANTHOLDERS -- means, at any time, the holders of at least
fifty-one percent (51%) of all Warrants outstanding (excluding any Warrants
directly or indirectly held by MSC, any Subsidiary or any Affiliate) at such
time.
RIGHT -- means and includes:
(a) any warrant (including, without limitation, any Warrant)
or any option (including, without limitation, Employee Stock
Awards/Options) to acquire Common Stock;
(b) any right issued to holders of the Common Stock, or any
class thereof, permitting the holders thereof to subscribe to shares of
Additional Common Stock (pursuant to a rights offering or otherwise);
(c) any right to acquire Common Stock pursuant to the
provisions any Security convertible or exchangeable into Common Stock;
and
(d) any similar right permitting the holder thereof to
subscribe for or purchase shares of Common Stock.
SALE OF MATERIAL ASSETS - means any transfer, sale or other disposition
of Property of MSC or its Subsidiaries (including the stock of any Subsidiary)
in one or more related transactions, which represented, or with respect to which
the proceeds from such transaction(s)
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28
comprised, either (i) constituted 35% or more of the of Property of MSC or its
Subsidiaries as of the most recent date for which a balance sheet has been
delivered hereunder, or (ii) contributed 35% or more of the EBITDA (as such term
in defined in the Credit Agreement) of MSC or its Subsidiaries for the most
recent period of four consecutive fiscal quarters; provided, however, that no
such transaction shall constitute a Sale of Material Assets to the extent that
within ninety (90) days after receipt of the proceeds thereof by MSC or its
Subsidiaries such proceeds have been used to acquire assets of a similar
character for use in the business of MSC and its Subsidiaries.
SECURITIES ACT -- means the Securities Act of 1933, as amended, or any
successor federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
SECURITIES EXCHANGE ACT -- means the Securities Exchange Act of 1934,
as amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
SECURITY -- shall have the meaning specified in Section 2(1) of the
Securities Act.
SENIOR CREDIT FACILITIES -- means (i) the Credit Agreement and (ii)
that certain Credit Agreement dated the date hereof between MSC and its
subsidiaries, the lenders described therein, and The Chase Manhattan Bank, as
agent for such lenders, each as may be amended, restated or refinanced from time
to time.
SHAREHOLDER -- means a holder of shares of Common Stock.
STOCK -- shall mean and include (i) all shares of Capital Stock of MSC,
including without limitation, shares of Capital Stock issued, issuable or
transferable (A) on the exercise of rights to acquire shares of Capital Stock or
(B) on the conversion or exchange or exercise of securities convertible into or
exchangeable or exercisable for Capital Stock, and (ii) all other securities of
MSC which may be issued in exchange for or in respect of shares of Capital Stock
(whether by way of stock split, stock dividend, combination, reclassification,
reorganization or any other means).
SUBSIDIARY -- means, at any time, a Person of which MSC owns, directly
or indirectly, at least fifty percent (50%) (by number of votes) of each class
of Voting Stock (or other shares of beneficial interest entitled to vote
generally), or at least a majority of the partnership, joint venture or similar
interests, or in which MSC is, directly or indirectly, a general partner or
joint venturer without limited liability.
TAKEOUT EVENT -- shall mean any one of the following: (i) Public
Offering, (ii) a Change in Control, (iii) a Sale of Material Assets, (iv) an
acceleration of the Loan or (v) a payoff of the Loan.
TRANSFEREE -- means any registered Transferee of all or any part of any
one or more Warrant Certificates acquired by the Purchaser under this Agreement.
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29
VALUABLE RIGHT -- means, at any time, a Right, the effective
conversion, exercise or purchase price of which on the date of determination is
less than the Market Price in respect of the shares of Common Stock issuable
upon conversion, exercise or purchase pursuant to such Right on such date.
VALUATION AGENT -- means the Board of Directors, acting in good faith;
provided, however, that in the event that the Required Warrantholders shall not
agree with any determination made by the Board of Directors as Valuation Agent,
the "Valuation Agent" shall mean, and such determination shall instead be made
by, a firm of independent certified public accountants, an investment banking
firm or appraisal firm (which firm shall own no Securities of, and shall not be
an Affiliate, Subsidiary or a related Person of, MSC) of recognized national
standing retained by MSC and reasonably acceptable to the Required
Warrantholders.
VOTING STOCK -- of a Person means all classes of Capital Stock of such
Person then outstanding that normally entitle the holders of such interests to
participate in the management or to elect those participating in the management
of such Person.
WARRANT -- shall have the meaning specified in Recital C hereof.
WARRANT CERTIFICATE -- shall have the meaning specified in Section 1.1
hereof.
WARRANT CLAWBACK - means the product of (i) the Principal Reduction
Increment and (ii) the percentage listed in the right hand column below which
corresponds to the then applicable elapsed time period listed in the left hand
column below.
Time Period Percentage
----------- ----------
Closing through 6/30/2000 0.0750%
7/1/2000 through 9/30/2000 0.0643%
10/1/2000 through 12/31/2000 0.0536%
1/1/2001 through 3/31/2001 0.0429%
4/1/2001 through 6/30/2001 0.0321%
7/1/2001 through 9/30/2001 0.0214%
10/1/2001 through 12/31/2001 0.0107%
1/1/2002 and thereafter 0.0000%
WARRANT INTERESTS -- means shares of Stock issued or issuable upon
exercise of the Warrants, together with any interests issued as a distribution
thereon or with respect thereto in connection with a recapitalization.
WARRANT PERCENTAGE -- means the percentage equal to the quotient of:
(a) the value of shares of Common Stock which can be purchased under all
outstanding Warrants, divided by (b) the amount of shares of Common Stock on a
Fully Diluted Basis.
7.2. Descriptive Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
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30
8. MISCELLANEOUS.
8.1. Expenses. MSC agrees to pay, and save and hold harmless the
Purchaser and any other holder of a Warrant Certificate against liability for
the payment of all out-of-pocket expenses (including, without limitation,
reasonable attorney's fees and disbursements) arising in connection with the
transactions contemplated by this Agreement (provided that MSC shall not be
responsible for the fees and expenses of more than one counsel for all the
holders together), including, without limitation:
(a) the cost, if any, of complying with Section 3.3 hereof;
(b) any subsequent proposed modification of, or proposed
consent requested or initiated by or on behalf of MSC under, this Agreement or
the Warrants, whether or not such proposed modification shall be effected or
proposed consent granted (including, without limitation, all document production
and duplication charges and the reasonable fees and expenses of any special
counsel engaged by the Purchaser or any holder of a Warrant Certificate in
connection therewith); and
(c) the enforcement of (or determination of whether or how to
enforce) any rights under this Agreement or the Warrant Certificates or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the transactions contemplated
hereby or by reason of a Purchaser or other holder having acquired any Warrant
Certificate, including, without limitation, reasonable attorney's fees incurred
by a Purchaser or such other holder and the costs and expenses incurred in any
bankruptcy case involving MSC or any Subsidiary.
The obligations of MSC under this Section 8.1 shall survive the transfer of any
Warrant Certificate or interest therein by the Purchaser or any other holder of
a Warrant Certificate and the exercise or expiration of any Warrant.
Notwithstanding the foregoing, MSC shall not be required to pay any costs or
expenses of any holder of a Warrant Certificate which cost or expense arises
solely from such holder's gross negligence or willful misconduct.
8.2. Amendment and Waiver. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with and only with the
written consent of MSC and:
(a) in the case of Section 1 through Section 8, inclusive,
hereof (other than this Section 9.2), the written consent of the Required
Warrantholders; or
(b) in the case of this Section 8.2, the written consent of
all holders of Warrant Certificates;
provided that no such amendment or waiver of any of the provisions of this
Agreement pertaining to the Purchase Price or the number of Shares of Common
Stock that may be purchased upon exercise of each Warrant shall be effective as
to the holder of any Warrant unless consented to in writing by such holder.
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31
8.3. No Rights or Liabilities as Shareholder. This Agreement shall not
be construed as conferring upon the holder of any Warrant any rights of a
Shareholder of MSC. Nothing in this Agreement shall be construed as imposing any
obligation on any holder of any Warrant to purchase any securities or as
imposing any liabilities on such holder as a Shareholder of MSC, whether such
obligation or liabilities are asserted by MSC or by creditors of MSC.
8.4. Directly or Indirectly. Where any provision in this Agreement
refers to any action to be taken by any Person, or that such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, including actions taken by or on
behalf of any partnership in which such Person is a general partner.
8.5. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein and in the Credit Agreement in
connection herewith shall survive the execution and delivery of this Agreement
and the Warrant Certificates, the transfer by the Purchaser of any Warrant
Certificate or portion thereof or interest therein and the exercise or
expiration of any Warrant, and may be relied upon by the Purchaser or other
holder of a Warrant Certificate, regardless of any investigation made at any
time by or on behalf of the Purchaser or such other holder. Subject to the
preceding sentence, this Agreement and the Warrant Certificates embody the
entire agreement and understanding between the Purchaser and MSC, and supersede
all prior agreements and understandings, relating to the subject matter hereof.
8.6. Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any holder of a Warrant Certificate)
whether so expressed or not.
8.7. Notices. All communications hereunder or under the Warrants shall
be in writing, shall be delivered by United States mail (postage prepaid),
nationwide overnight courier, or facsimile transmission (confirmed by delivery
by nationwide overnight courier sent on the day of the sending of such facsimile
transmission), and
(a) if to the Purchaser, addressed to it at:
FIRST UNION INVESTORS, INC.
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
and
FIRST UNION NATIONAL BANK
12th Floor, Xxxxxxx Building
PA 4843
One South Penn Square
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32
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
or at such other address as the Purchaser shall have specified to MSC in
writing;
(b) if to any other holder of a Warrant Certificate, addressed
to such other holder at such address as such holder shall have specified to MSC
in writing or, if any such other holder shall not have so specified an address
to MSC, then addressed to such other holder in care of the last holder of such
Warrant Certificate that shall have so specified an address to MSC; and
(c) if to MSC, addressed to it at:
MARKETING SPECIALISTS CORPORATION
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: President and General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
or at such other address as MSC shall have specified to the holders of the
Warrant Certificates in writing.
Any communication addressed and delivered as herein provided shall be
deemed to be received when actually delivered to the address of the addressee
(whether or not delivery is accepted) or received by the facsimile machine of
the recipient. Any communication not so addressed and delivered shall be
ineffective.
8.8. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Purchaser or to any other holder of a Warrant
Certificate, the determination of such satisfaction shall be made by the
Purchaser or such other holder, as the case may be, in the sole and exclusive
judgment (exercised in good faith) of the Person or Persons making such
determination.
8.9. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
8.11. Waiver of Jury Trial, Consent to Jurisdiction, Service of
Process, Other Forums.
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33
(a) WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OF THE DOCUMENTS, AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY.
(b) CONSENT TO JURISDICTION. ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OF THE DOCUMENTS,
AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR PROCEEDING TO
EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER THIS
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY MAY BE BROUGHT BY
SUCH PARTY IN THE FEDERAL DISTRICT COURT LOCATED IN DELAWARE OR ANY DELAWARE
STATE COURT AS SUCH PARTY MAY IN ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE IN PERSONAM JURISDICTION OF EACH
SUCH COURT, AND EACH OF THE PARTIES HERETO IRREVOCABLY WAIVE AND AGREE NOT TO
ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF
ANY SUCH COURT. IN ADDITION, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT OR TRANSACTION
CONTEMPLATED HEREBY BROUGHT IN ANY SUCH COURT, AND HEREBY IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) Service of Process. EACH PARTY HERETO IRREVOCABLY AGREES
THAT PROCESS PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL OR SERVED IN
THE MANNER PROVIDED FOR COMMUNICATIONS IN THIS AGREEMENT SHALL CONSTITUTE, TO
THE EXTENT PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT,
AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY, OR ANY ACTION OR PROCEEDING TO
EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER OR
UNDER ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY. RECEIPT OF PROCESS SO
SERVED SHALL BE CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT
FURNISHED BY THE UNITED STATES POSTAL SERVICE OR ANY COMMERCIAL DELIVERY
SERVICE.
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34
(d) Other Forums. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO
LIMIT THE ABILITY OF ANY PARTY HERETO TO SERVE ANY WRITS, PROCESS OR SUMMONSES
IN ANY MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER ANY
OTHER PARTY HERETO IN SUCH OTHER JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY
BE PERMITTED BY APPLICABLE LAW.
8.12. Governing Law. (a) THIS AGREEMENT AND THE WARRANT CERTIFICATES
SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS (OTHER THAN ITS CONFLICTS OF LAW PRINCIPLES).
8.13. Schedule of Shares. The attached Exhibit C is a schedule listing
all of the outstanding shares of Stock and options, warrants, Rights, and other
interests in Stock.
9. PURCHASE FOR INVESTMENT.
(a) Each Purchaser represents to MSC that it is an "accredited
investor" (as such term is defined in Section 2(15) of the Securities Act) and
that it is purchasing the Warrants for its own account, with no intention of
distributing the Warrants or any part thereof, but without prejudice to the
Purchaser's right at all times to
(i) sell or otherwise dispose of all or any part of
the Warrants under a registration statement filed under the Securities Act, or
in a transaction exempt from the registration requirements of such Act, and
(ii) have control over the disposition of all of its
assets to the fullest extent required by any applicable law.
(b) The Purchaser further represents that:
(i) it realizes that the purchase of the Warrants is
a highly speculative investment;
(ii) it is able, without impairing its financial
condition, to bear the economic risk of the purchase of the Warrants pursuant to
the terms of this Agreement, to hold the Warrants for an indefinite period of
time and to suffer a complete loss of its investment;
(iii) prior to executing and delivering this
Agreement, it has received and reviewed carefully a copy of this Agreement and
each exhibit to this Agreement;
(iv) it has such knowledge and experience in
financial and business matters that it is capable of (1) evaluating the merits
and risks of the purchase of the Warrants pursuant to the terms of this
Agreement and (2) protecting its interests in connection therewith;
(v) it has been solely responsible for its own
analysis of the merits and risks of this investment, and for its own analysis of
the fairness and desirability of the terms of
- 31 -
35
the investment; in taking any action or performing any role relative to the
arranging of the proposed investment, it has acted solely in its own interest;
(vi) it has been afforded access to corporate books, financial
statements, records, contracts, documents, other information concerning MSC and
MSC and their offices and facilities, have been afforded an opportunity to ask
such questions of MSC and MSC's officers, employees, agents, accountants and
representatives concerning MSC and MSC's business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable; and
(vii) it understands that the Warrants have not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act that, subject to and without prejudice to its rights under the
Registration Rights Agreement between the Purchaser and MSC dated as of the date
hereof. The Purchaser understands that the Warrants are securities within the
meaning of Rule 144 under the Securities Act, which allows limited resale of
such securities under certain conditions.
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36
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed and delivered, all as of the date and year first
above written.
MARKETING SPECIALISTS CORPORATION
By:
--------------------------------
Name:
Title:
ACCEPTED:
FIRST UNION INVESTORS, INC.
By:
---------------------------
Name:
Title:
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37
EXHIBIT 1
[FORM OF WARRANT CERTIFICATE]
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND NEITHER THIS WARRANT NOR ANY SUCH SHARES OF COMMON STOCK MAY BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAW, UNLESS, IN THE
OPINION (WHICH SHALL BE IN A FORM AND SUBSTANCE SATISFACTORY TO MSC) OF COUNSEL
SATISFACTORY TO MSC, SUCH REGISTRATION IS NOT REQUIRED. IN ADDITION, ANY
TRANSFER OF THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THIS WARRANT.
WARRANT CERTIFICATE
MARKETING SPECIALISTS CORPORATION
No. WR-___ ______________ Warrants
Date: March ___, 2000
This Warrant Certificate certifies that ________, or registered
assigns, is the registered holder of _________________________ (________)
Warrants. Each Warrant entitles the owner thereof to purchase at any time
(subject to the restrictions set forth in the Warrant Agreement described below)
one (1) Common Share of MARKETING SPECIALISTS CORPORATION ("MSC"), a Delaware
corporation, at a Purchase Price of one one-hundredth of one cent ($.01) upon
(i) presentation and surrender of this Warrant Certificate with a form of
election to purchase duly executed and (ii) delivery to MSC of the payment of
the Purchase Price in the manner set forth in the Warrant Agreement referred to
below, subject to vesting as described in the Warrant Agreement.
The Warrants are issued pursuant to the Warrant Agreement, dated as of
March __, 2000 (as it may from time to time be amended or supplemented, the
"WARRANT AGREEMENT"), between MSC and FIRST UNION INVESTORS, INC., and are
subject to all of the terms, provisions and conditions thereof, which Warrant
Agreement is hereby incorporated herein by reference and made a part hereof and
to which Warrant Agreement reference is hereby made for a full description of
the rights, obligations, duties and immunities of MSC and the holders of the
Warrant Certificates. Capitalized terms used, but not defined, herein have the
respective meanings ascribed to them in the Warrant Agreement.
38
As set forth in, and subject to, the Warrant Agreement, the expiration
date of this Warrant Certificate is 5:00 p.m. Philadelphia, Pennsylvania time on
December 31, 2010.
This Warrant Certificate shall be exercisable, at the election of the
holder, either as an entirety or in part from time to time. If this Warrant
Certificate shall be exercised in part, the holder shall be entitled to receive,
upon surrender hereof, another Warrant Certificate or Warrant Certificates for
the number of Warrants not exercised. This Warrant Certificate, with or without
other Warrant Certificates, upon surrender in the manner set forth in the
Warrant Agreement, may be exchanged for another Warrant Certificate or Warrant
Certificates of like tenor evidencing Warrants entitling the holder to purchase
a like aggregate number of Shares of Common Stock as the Warrants evidenced by
the Warrant Certificate or Warrant Certificates surrendered shall have entitled
such holder to purchase.
Except as expressly set forth in the Warrant Agreement, no holder of
this Warrant Certificate shall be entitled to vote or receive distributions or
be deemed for any purpose the holder of Shares of Common Stock or of any other
Securities of MSC that may at any time be issued upon the exercise hereof, nor
shall anything contained in the Warrant Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a holder of a
Common Share in MSC or any right to vote upon any matter submitted to
Shareholders at any meeting thereof, or to give or withhold consent to any
entity action (whether upon any recapitalization, issuance of Shares of Common
Stock, reclassification of Securities, consolidation, merger, conveyance, or
otherwise) or, except as provided in the Warrant Agreement, to receive notice of
meetings, or to receive distributions or otherwise, until the Warrant or
Warrants evidenced by this Warrant Certificate shall have been exercised as
provided in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (OTHER THAN ITS
CONFLICTS OF LAW PRINCIPLES).
WITNESS the signature of a proper officer of MSC as of the date first
above written.
MARKETING SPECIALISTS CORPORATION
By:
-------------------------------------
Name:
Title:
ATTEST:
------------------------------
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39
[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED, _______________________________ hereby sells,
assigns and transfers unto
-------------------------------------------------------------------------
(Please print name, address and taxpayer identification number or social
security number of Transferee.)
the accompanying Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint:
-------------------------------------------------------------------------
attorney, to transfer the accompanying Warrant Certificate on the books of MSC,
with full power of substitution.
Dated: _________________, ______.
[HOLDER]
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
40
[FORM OF ELECTION TO PURCHASE]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO EXERCISE THE WARRANT CERTIFICATE)
To: ___________:
The undersigned hereby irrevocably elects to exercise _________________________
Warrants represented by the accompanying Warrant Certificate to purchase the
Shares of Common Stock issuable upon the exercise of such Warrants and requests
that certificates for such shares be issued in the name of:
-------------------------------------------------------------------------
(Please print name and address.)
-------------------------------------------------------------------------
(Please insert social security or other identifying number.)
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
-------------------------------------------------------------------------
(Please print name and address.)
-------------------------------------------------------------------------
(Please insert social security or other identifying number.)
Dated: ______________, ______.
[HOLDER]
NOTICE
The signature to the foregoing Election to Purchase must correspond to
the name as written upon the face of the accompanying Warrant Certificate or any
prior assignment thereof in every particular, without alteration or enlargement
or any change whatsoever.
41
EXHIBIT 2
COUNTERPART
THIS INSTRUMENT forms part of the Warrant Agreement (the "Agreement")
dated as of March __, 2000, among MARKETING SPECIALISTS CORPORATION, a Delaware
corporation (together with its successors and assigns, "MSC"), and FIRST UNION
INVESTORS, INC., a North Carolina corporation, and ____________________________
and any additional Shareholders of MSC (as defined in the Agreement), from time
to time, which Agreement permits execution (including by facsimile) by
counterpart. The undersigned hereby acknowledges having received a copy of the
said Agreement (which is annexed hereto as Schedule I) and having read the said
Agreement in its entirety, and for good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, hereby agrees that the terms and
conditions of the said Agreement shall be binding upon the undersigned as a
Shareholder and such terms and conditions shall inure to the benefit of and be
binding upon the undersigned and its successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
____ day of ___________,
--------------------------------------
(SIGNATURE OF SHAREHOLDER)
--------------------------------------
(NAME IN BLOCK LETTERS)
42
EXHIBIT 3
SCHEDULE OF SHARES
Common Stock........................ 15,790,835
Warrants............................ 0
Preferred Stock..................... 0
Options to Purchaser
Common Stock*..................... 1,387,575
----------
17,178,410
==========
* Does not include 4,000,000 share of Common Stock to be issued
immediately after the issuance of the Warrant.
