WARRANT AGREEMENT
WARRANT AGREEMENT dated as of January 31, 1996 between Delaware
Otsego Corporation, a New York corporation (the "Issuer"), and
Creditanstalt Corporate Finance, Inc., a Connecticut corporation (the
"Initial Holder," and together with any other registered holders of
Warrants or Warrant Shares (each as hereinafter defined) from time to
time, the "Holders").
W I T N E S S E T H :
WHEREAS, the Issuer has executed a Deficiency Guarantee dated as
of the date hereof (the "Guarantee") in favor of the Initial Holder,
as agent (the "Agent") for certain lenders (the "Lenders") party to
a certain Credit Agreement dated as of the date hereof (as amended,
modified and supplemented from time to time, the "Credit Agreement")
among The Toledo, Peoria and Western Railroad Corporation and Toledo,
Peoria and Western Railway Corporation (together, the "Borrowers"),
the Agent and the Lenders, pursuant to which Guarantee the Issuer has
guaranteed, among other things, the collection of the amounts due and
becoming due under the Credit Agreement.
WHEREAS, it is a condition precedent to the effectiveness of the
Credit Agreement that the Issuer shall (i) issue and deliver to the
Initial Holder Warrants evidencing rights to purchase in the
aggregate, 60,000 shares of the Common Stock of the Issuer on a fully
diluted basis.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Definitions. As used in this Warrant Agreement,
terms defined in the Credit Agreement shall, unless the context
otherwise requires, have such defined meanings when used herein and
the following terms shall have the following meanings:
"Affiliated Transferee" shall mean, with respect to a
Holder, an Affiliate of such Holder or a partnership or
corporation or other entity whose partners, stockholders or
members, as the case may be, are Affiliates, officers, directors
or employees of such Holder.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of the Issuer and any and all warrants or options
to purchase any of the foregoing.
"Commission" shall mean the Securities and Exchange
Commission or any entity succeeding to any or all of its
functions under the Securities Act.
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"Common Stock" shall mean the shares of common stock, par
value $0.0125 per share, of the Issuer.
"Effective Date" shall mean the Effective Date under the
Credit Agreement.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any successor federal statute.
"Exercise Price" shall mean the exercise price of a
Warrant, which shall be $10.00 per share, subject to adjustment
as provided in Section 12.
"Majority Holders" shall mean the Holders which own,
individually or in the aggregate, more than 50% of the
outstanding Warrants and Non-Public Warrant Shares.
"Non-Public Warrant Shares" shall mean Warrant Shares that
have not been sold to the public and bear the legend set forth
in Section 14(b).
"Public Offering" shall mean a public offering of securi-
ties by the Issuer for cash under a registration statement filed
and declared effective under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute.
"Subordinated Notes" shall mean the Issuer's 6.5%
Convertible Subordinated Notes due September 1, 2003, which
notes are in the aggregate principal amount outstanding as of
the date hereof of $3,580,000.
"Warrant" shall mean a warrant issued pursuant to this
Agreement entitling the Holder thereof to purchase from the
Issuer at the Warrant Office one share of Common Stock (subject
to adjustment as provided in Section 12) at the Exercise Price
at any time.
"Warrant Agreement" shall mean this Warrant Agreement,
between the Issuer and the Initial Holder, and as amended,
modified or supplemented from time to time.
"Warrant Certificate" shall mean a certificate evidencing
one or more Warrants, substantially in the form of Exhibit A
hereto, with such changes therein as may be required to reflect
any adjustments made pursuant to Section 12.
"Warrant Office" shall mean the office or agency of the
Issuer at which the Warrant Register shall be maintained and
where the Warrants may be presented for exercise, exchange,
substitution and transfer, which office or agency will be the
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office of the Issuer at 0 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxx
00000, which office or agency may be changed by the Issuer
pursuant to notice in writing to the Persons named in the
Warrant Register as the Holders.
"Warrant Register" shall mean the register, substantially
in the form of Exhibit B hereto, maintained by the Issuer at the
Warrant Office.
"Warrant Shares" shall mean the shares of Common Stock
issuable upon exercise of the Warrants, as the number of such
shares may be adjusted from time to time pursuant to Section 12.
Section 2. Representations and Warranties. The Issuer hereby
represents and warrants as follows:
(a) The Issuer is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New
York, has the corporate power and authority to execute and
deliver this Agreement and the Warrant Certificates, to issue
the Warrants and the Warrant Shares and to perform its
obligations under this Agreement and the Warrant Certificates.
(b) The execution, delivery and performance by the Issuer
of this Agreement and the Warrant Certificates, the issuance of
the Warrants and the issuance of the Warrant Shares upon
exercise of the Warrants have been duly authorized by all
necessary corporate action and do not violate, or result in a
breach of, or constitute a default under, or require any consent
under, or result in the creation of a Lien upon the assets of
the Issuer pursuant to, (A) any provision of law or the
certificate or articles of incorporation or the by-laws of the
Issuer, (B) any order of any court, or any rule, regulation or
order of any other agency of government or (C) any provision of
any indenture, agreement or other instrument to which the Issuer
is a party, or by which the Issuer or any of its properties or
assets are bound.
(c) This Agreement has been duly executed and delivered by
the Issuer and constitutes a legal, valid and binding obligation
of the Issuer enforceable against the Issuer in accordance with
its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors generally. When
the Warrants and Warrant Certificates have been issued as
contemplated hereby, (i) the Warrants and the Warrant
Certificates will each constitute legal, valid and binding
obligations of the Issuer enforceable against the Issuer in
accordance with its terms and (ii) each of the Warrant Shares,
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when issued upon exercise of the Warrants in accordance with the
terms hereof, will be duly authorized, validly issued, fully
paid and nonassessable shares of the Common Stock with no
personal liability attaching to the ownership thereof.
(d) On the Effective Date, the Issuer will have 1,740,000
shares of Common Stock outstanding, which shall constitute all
of the outstanding Capital Stock of the Issuer, exclusive of the
Warrants, and shares reserved for issuance under the
Subordinated Notes and the Issuer's stock option plans.
Section 3. Issuance of Warrants. On the Effective Date, the
Issuer shall issue and deliver to the Initial Holder Warrants
evidencing rights to purchase 60,000 shares of the outstanding Common
Stock, subject to adjustment as provided in Section 12, at any time
after the Effective Date, at a price per share equal to the Exercise
Price. On the Effective Date, the Issuer shall deliver to the Initial
Holder one or more Warrant Certificates evidencing such 60,000
Warrants.
Section 4. Registration, Transfer and Exchange of Certificates.
(a) The Issuer shall maintain at the Warrant Office the Warrant
Register for registration of the Warrants and Warrant Certificates and
transfer thereof. On the Effective Date, the Issuer shall register
the outstanding Warrants and Warrant Certificates in the name of the
Initial Holder. The Issuer may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
and the Warrants represented thereby (notwithstanding any notation of
ownership or other writing on the Warrant Certificates made by any
person) for the purpose of any exercise thereof or any distribution
to the Holder(s) thereof, and for all other purposes, and the Issuer
shall not be affected by any notice to the contrary.
(b) Subject to Section 14, the Issuer shall register the
transfer of any outstanding Warrants in the Warrant Register upon
surrender of the Warrant Certificate(s) evidencing such Warrants to
the Issuer at the Warrant Office, accompanied by a written instrument
or instruments of transfer in form reasonably satisfactory to it, duly
executed by the Holder thereof or by the duly appointed legal
representative thereof. Upon any such registration of transfer, (i)
new Warrant Certificate(s) evidencing such transferred Warrants shall
be issued to the transferee(s) and the surrendered Warrant
Certificate(s) shall be canceled and (ii) each such transferee shall
be party hereto and shall have the rights and obligations of a Holder
hereunder. If less than all the Warrants evidenced by a Warrant
Certificate surrendered for transfer are to be transferred, a new
Warrant Certificate or Certificates shall be issued to the Holder
surrendering such Warrant Certificate evidencing such remaining number
of Warrants.
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(c) Warrant Certificates may be exchanged at the option of
the Holder(s) thereof, when surrendered to the Issuer at the Warrant
Office, for another Warrant Certificate or other Warrant Certificates
of like tenor and representing in the aggregate a like number of
Warrants. Warrant Certificates surrendered for exchange shall be
canceled.
(d) No charge shall be made for any such transfer or
exchange except for any tax or other governmental charge imposed in
connection therewith. Except as provided in Section 14(b), each
Warrant Certificate issued upon transfer or exchange shall bear the
legend set forth in Section 14(b) if the Warrant Certificate presented
for transfer or exchange bore such legend.
Section 5. Mutilated or Missing Warrant Certificates. If any
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
Issuer shall issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed,
a new Warrant Certificate of like tenor and representing an equivalent
number of Warrants, but only upon receipt of evidence satisfactory to
the Issuer of such loss, theft or destruction of such Warrant
Certificate and, if requested, indemnity reasonably satisfactory to
it. No service charge shall be made for any such substitution, but
all expenses and reasonable charges associated with procuring such
indemnity and all stamp tax and other governmental duties that may be
imposed in relation thereto shall be borne by the Holder(s) of such
Warrant Certificate. Each Warrant Certificate issued in any such
substitution shall bear the legend set forth in Section 14(b) if the
Warrant Certificate for which such substitution was made bore such
legend.
Section 6. Duration and Exercise of Warrants. (a) The Warrants
evidenced by a Warrant Certificate shall be exercisable from time to
time in whole or in part by the Holder thereof on any Business Day
after the Effective Date.
(b) Subject to the provisions of this Agreement, upon
presentation of the one or more Warrant Certificates evidencing the
Warrants to be exercised by a Holder, with the form of election to
purchase on the reverse thereof duly completed and signed, to the
Issuer at the Warrant Office, and upon payment of the aggregate
Exercise Price for the number of Warrant Shares in respect of which
such Warrants are being exercised in lawful money of the United States
of America, the Issuer shall issue and cause to be delivered to or
upon the written order of such Holder of such Warrants and in such
name or names as such Holder may designate, a certificate for the
fully paid and nonassessable Warrant Shares issuable upon such
exercise of such Warrants. Any Person(s) so designated to be named
therein shall be deemed to have become holder(s) of record of such
Warrant Shares as of the date of exercise of such Warrants. Notwith-
standing anything to the contrary contained herein, in lieu of payment
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of the applicable Exercise Price, the Holder may elect to return to
the Company Warrants having an aggregate fair market value equal to
the applicable Exercise Price for the number of Warrant Shares in
respect of which Warrants are being exercised.
(c) If less than all of the Warrants evidenced by a Warrant
Certificate are exercised at any time, a new Warrant Certificate or
Certificates shall be issued for the remaining number of Warrants
evidenced by such Warrant Certificate. Each new Warrant Certificate
so issued shall bear the legend set forth in Section 14(b) if the
Warrant Certificate presented in connection with partial exercise
thereof bore such legend. All Warrant Certificates surrendered upon
exercise of Warrants shall be canceled.
(d) Notwithstanding any other provision of this Agreement,
the Initial Holder or any Affiliated Transferee of the Initial Holder
of Warrants may exercise Warrants solely to the extent such exercise
would not result in the Initial Holder or such Affiliated Transferee
of the Initial Holder holding, directly or indirectly, in excess of
4.99% of any class of the outstanding Common Stock (or voting stock)
of the Issuer, except for an exercise in connection with (i) a widely
dispersed public offering of the Warrant Shares or (ii) a private
placement or sale, including pursuant to Rule 144A under the
Securities Act, so long as the transferee and its affiliates do not
collectively acquire from such Initial Holder or such Affiliated
Transferee of the Initial Holder more than 2% of the Common Stock or
voting stock of the Issuer pursuant to such transfer.
Section 7. Fractional Shares. The Issuer shall not be required
to issue fractional shares of Common Stock upon exercise of the
Warrants but shall pay for any such fraction of a share an amount in
cash equal to the current market price per share of Common Stock of
such share (determined in accordance with the provisions of Section
12(d)) multiplied by such fraction.
Section 8. Payment of Taxes. The Issuer will pay all taxes
attributable to the initial issuance of Warrant Shares upon the
exercise of the Warrants; provided, that the Issuer shall not be
required to pay (i) any income taxes which may be payable by the
Holder with respect to any gain realized upon such Holder's exercise
of the Warrants and (ii) any transfer taxes which may be payable as
a result of any transfer involved in the issuance of any Warrant
Certificate or any certificate for Warrant Shares in a name other than
that of the Holder thereof.
Section 9. No Stockholder Rights. Except as expressly provided
herein, nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the Holders, with
respect to the Warrants (prior to their exercise into Warrant Shares),
the right to vote or to consent or to receive notice as a stockholder
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in respect of the meetings of stockholders or the election of
directors of the Issuer or any other matter, or any rights whatsoever
as a stockholder of the Issuer.
Section 10. Reservation and Issuance of Warrant Shares. (a)
The Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling
it to satisfy any obligation to issue Warrant Shares upon the exercise
of the Warrants, the maximum number of shares of Common Stock
deliverable upon exercise of all outstanding Warrants.
(b) Before taking any action which would cause an
adjustment pursuant to Section 12 reducing the Exercise Price below
the then par value (if any) of the Warrant Shares issuable upon
exercise of the Warrants, the Issuer will take any corporate action
which may be necessary in order that the Issuer may validly and
legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
(c) The Issuer covenants that all Warrant Shares will, upon
issuance in accordance with the terms of this Agreement, be fully paid
and nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests with respect to the issuance
thereof. The Issuer further covenants that at or prior to the time
of its issuance of Warrant Shares to a Holder as provided in this
Agreement, it will provide to such Holder a written opinion of the
Issuer's counsel to the effect that, upon such issuance, such Warrant
Shares, will be validly issued and outstanding, fully paid and
nonassessable and free of preemptive rights.
Section 11. Obtaining of Governmental Approvals and Stock
Exchange Listings. The Issuer will, at its own expense, from time to
time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of Governmental
Authorities which may be or become required in connection with the
issuance, sale, transfer and delivery of the Warrant Certificates and
the exercise of the Warrants and the issuance, sale, transfer and
delivery of the Warrant Shares and all action which may be necessary
so that such Warrant Shares, immediately upon their issuance upon the
exercise of the Warrants, will be listed on each securities exchange,
if any, on which the Common Stock is then listed.
Section 12. Adjustment of Exercise Price and Number of Warrant
Shares Purchasable. The Exercise Price and the number of Warrant
Shares purchasable upon the exercise of each Warrant are subject to
adjustment from time to time upon the occurrence of any of the events
enumerated in this Section 12. For purposes of this Section 12,
"Common Stock" means shares now or hereafter authorized of any class
of common stock of the Issuer and any other Capital Stock of the
Issuer, however designated, that has the right (subject to any prior
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rights of any class or series of preferred stock) to participate in
any distribution of the assets or earnings of the Issuer without limit
as to per share amount.
(a) In the event that the Issuer shall at any time after the
date of this Agreement (i) declare a dividend on the Common Stock in
shares of its capital stock (whether shares of Common Stock or of
capital stock of any other class); (ii) split or subdivide the
outstanding Common Stock; (iii) combine the outstanding Common Stock
into a smaller number of shares; (iv) make a distribution on its
Common Stock in shares of its capital stock other than Common Stock;
or (v) issue by reclassification of its Common Stock any shares of its
capital stock, the Exercise Price in effect at the time of the record
date for such dividend or of the effective date of such split,
subdivision or combination shall be multiplied by a fraction the
numerator of which shall be the number of shares of Common Stock
outstanding at the time of the record date for such dividend or of the
effective date of such split, subdivision or combination, but without
giving effect thereto, and the denominator of which shall be the
number of shares of Common Stock outstanding at the time of the record
date for such dividend or the effective date of such split,
subdivision or combination, after giving effect thereto. The
adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or
reclassification. If after an adjustment a Holder upon exercise of
its Warrants may receive shares of two or more classes of capital
stock of the Issuer, the Issuer shall determine the allocation of the
adjusted Exercise Price between the classes of capital stock. After
such allocation, the exercise privilege and the Exercise Price of each
class of capital stock shall thereafter be subject to adjustment on
terms comparable to those applicable to Common Stock in this Section.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) In the event that the Issuer shall at any time after
the date of this Agreement (i) issue any shares of Common Stock (other
than (w) Warrant Shares, (x) shares issuable upon exercise of options
by management or employees of the Issuer pursuant to its currently
existing stock option plans, (y) shares issuable upon conversion of
the outstanding Subordinated Notes, and (z) shares of the Issuer
issued at a price per share equal to or greater than the Exercise
Price) or (ii) issue options, rights or warrants to subscribe for or
purchase Common Stock (or securities convertible into Common Stock),
the Exercise Price in effect at the time of such issuance shall be
adjusted so that each Holder of a Warrant exercised shall be entitled
to receive the aggregate number of shares of Common Stock which would
result in the ratio of (x) the number of shares of Common Stock such
Warrant is exercisable into at the time of such issuance (after giving
effect thereto) to (y) the number of shares of Common Stock
outstanding, after giving effect to such issuance or the exercise of
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such options, rights or warrants, being equal to such ratio
immediately prior to such issuance; and, in the event that, prior to
the exercise of the Warrants, such shares or options, rights or
warrants are not so issued, or any such option, right or warrant is
canceled, including any such option, right or warrant outstanding on
the Effective Date, the Exercise Price shall again be adjusted to be
the Exercise Price which would then be in effect if the date of such
issuance had not been fixed or such option, right or warrant had not
been outstanding on the Effective Date.
(c) In case the Issuer shall make a distribution to all
holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Issuer is the
surviving corporation) of evidences of its indebtedness or assets,
each Warrant outstanding on the date of such distribution shall
thereafter entitle the holder of such Warrant to receive a number of
shares of Common Stock equal to the product of (i) the number of
shares of Common Stock to which such Warrant was entitled immediately
prior to such date of distribution and (ii) a fraction of which the
numerator shall be the current market price per share of Common Stock
(as defined in Section 12(d) hereof) on such date, prior to giving
effect to such distribution, and of which the denominator shall be
such current market price per share of Common Stock (as determined in
accordance with subsection 12(d)) on such date, but after giving
effect to such distribution. Such adjustment shall be made
successively whenever a date for such distribution is fixed (which
date of distribution shall be the record date for such distribution
if a record date therefor is fixed); and, if such distribution is not
so made, the Exercise Price shall again be adjusted to be the Exercise
Price which would then be in effect if such date of distribution had
not been fixed.
(d) For the purpose of any computation under this
Agreement, the "current market price per share" of Common Stock on any
date shall be deemed to be (i) the average of the daily closing prices
for the 20 consecutive trading days, commencing before such date as
reported on the Composite Transactions Tape, or (ii) if the Common
Stock is not reported on the Composite Transactions Tape, the last
sale price regular way of the Common Stock on the principal national
securities exchange on which the Common Stock is listed or admitted
to trading or, in case no such sale takes place on such day, the
average of the closing bid and asked prices regular way, in either
case on such securities exchange or, (iii) if the Common Stock is not
listed or admitted to trading on such an exchange, the closing sales
price, or, if there is no closing sales price, the average of the
closing bid and asked prices, in the over-the-counter market as
reported by the National Association of Securities Dealers' Automated
Quotation System ("NASDAQ"), or, if not so reported, as reported by
the National Quotation Bureau, Incorporated, or any successor thereof,
or, if not so reported, the average of the closing bid and asked
prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Board of
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Directors of the Issuer for that purpose, or (iv) if no such prices
are furnished, the higher of (x) the Exercise Price or (y) the fair
market value of a share of Common Stock as determined by an
independent investment banking firm or independent appraisal firm (in
either case the cost of which engagement shall be borne by the Issuer)
reasonably acceptable to the Majority Holders. In making its
determination, such independent investment banking firm or such
independent appraisal firm shall not consider items such as discounts
for minority interests, lack of marketability of the Common Stock or
restrictions on exercise of any options, rights or warrants to
purchase Common Stock.
(e) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, that, any adjustments which by
reason of this Section 12(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 12 shall be made to the nearest
hundredth of a share.
(f) If at any time, as a result of an adjustment made
pursuant to Section 12(a) hereof, any Holder of a Warrant thereafter
exercised shall become entitled to receive any shares of the Issuer
other than shares of Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Section 12, and the provisions of
this Agreement with respect to the Warrant Shares shall apply on like
terms to such other shares.
(g) Each Warrant outstanding immediately prior to any
adjustment of the Exercise Price shall thereafter evidence the right
to purchase, at the adjusted Exercise Price, that number of Warrant
Shares (calculated to the nearest hundredth) obtained by (A)
multiplying the number of Warrant Shares purchasable upon exercise of
a Warrant immediately prior to such adjustment of the number of
Warrant Shares by the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price and (B) dividing the product so
obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
(h) In the event of any capital reorganization of the
Issuer, or of any reclassification of the Common Stock (other than a
subdivision or combination of outstanding shares of Common Stock), or
in case of the consolidation of the Issuer with or the merger of the
Issuer with or into any other corporation or of the sale of the
properties and assets of the Issuer as, or substantially as, an
entirety to any other corporation, each Warrant shall after such
capital reorganization, reclassification of Common Stock,
consolidation, merger or sale be exercisable, upon the terms and
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conditions specified in this Agreement, for the number of shares of
stock or other securities or assets to which a Holder of the number
of Warrant Shares purchasable (at the time of such capital
reorganization, reclassification of Common Stock, consolidation,
merger or sale) upon exercise of such Warrant would have been entitled
upon such capital reorganization, reclassification of Common Stock,
consolidation, merger or sale; and in any such case, if necessary, the
provisions set forth in this Section 12 with respect to the rights
thereafter of the Holders shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock or
other securities or assets thereafter deliverable on the exercise of
the Warrants. The Issuer shall not effect any such consolidation,
merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor corporation (if other than the
Issuer) resulting from such consolidation or merger or the corporation
purchasing such assets or the appropriate corporation or entity shall
assume, by written instrument, the obligation to deliver to each
Holder the shares of stock, securities or assets to which, in
accordance with the foregoing provisions, such Holder may be entitled
and all other obligations of the Issuer under this Agreement.
(i) Irrespective of any adjustments in the Exercise Price
or the number or kind of shares purchasable upon the exercise of the
Warrant, Warrant Certificates theretofore or thereafter issued may
continue to express the same Exercise Price per share and number and
kind of shares are as stated on the Warrant Certificates initially
issuable pursuant to this Agreement.
(j) If any questions shall at any time arise with respect
to the adjusted Exercise Price, the resolution of such question shall
be determined by an independent certified public accountant of
recognized national standing (the cost of which engagement shall be
borne by the Issuer) reasonably acceptable to the Majority Holders and
such determination shall be binding upon the Issuer and each Holder.
(k) Anything in this Section 12 to the contrary
notwithstanding, the Issuer shall be entitled to make such reductions
in the Exercise Price or increase in the number of Warrant Shares
purchasable upon the exercise of each Warrant, in addition to those
adjustments required by this Section 12, as it in its sole discretion
shall determine to be advisable in order that any consolidation or
subdivision of the Common Stock, or any issuance wholly for cash of
shares of Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Common Stock, or any
stock dividend, or any issuance of rights, options or warrants
referred to hereinabove in this Section 12, hereinafter made by the
Issuer to the holders of its Common Stock shall not be taxable to
them.
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(l) In the event that, as a result of an adjustment of the
Exercise Price in respect of the occurrence of any event set forth in
this Section 12, the Exercise Price to be in effect after such event
pursuant to Section 12(a), (b) or (c) would be less than the par value
of the Common Stock, the Exercise Price to be in effect following such
event shall be the par value of the Common Stock and each Warrant
shall thereafter evidence the right to purchase, at an Exercise Price
equal to such par value, that number of Warrant Shares (calculated to
the nearest hundredth) obtained by (A) multiplying the number of
Warrant Shares purchasable upon exercise of a Warrant immediately
prior to such adjustment of the number of Warrant Shares by the
Exercise Price in effect immediately prior to such adjustment of the
Exercise Price (giving effect to any limitations on such adjustment
theretofore made pursuant to this Section 12(l)) and (B) dividing the
product so obtained by the Exercise Price which would have been in
effect pursuant to Section 12(a), (b) or (c) but for the limitation
on such adjustment required by this Section 12(l).
Section 13. Notices to Holders. (a) Upon any adjustment
of the Exercise Price pursuant to Section 12, the Issuer shall
promptly, but in any event within 20 calendar days thereafter, cause
to be given to each Holder, at its address appearing on the Warrant
Register, by first-class mail, postage prepaid, a certificate signed
by its chief financial officer setting forth the Exercise Price as so
adjusted and the number of shares of Common Stock issuable upon the
exercise of each Warrant as so adjusted and describing in reasonable
detail the facts accounting for such adjustment and the method of
calculation used. Where appropriate, such certificate may be given
in advance and included as a part of the notice required to be mailed
under the other provisions of this Section 13.
(b) In the event:
(i) the Issuer shall authorize the distribution to
all holders of Common Stock of evidences of its
indebtedness or assets (including, without
limitation, cash dividends or cash distributions
payable out of consolidated earnings or earned
surplus or dividends payable in Common Stock); or
(ii) of any consolidation or merger to which the
Issuer is a party and for which approval of any
stockholders of the Issuer is required, or of the
conveyance or transfer of the properties and
assets of the Issuer substantially as an
entirety, or of any capital reorganization or
reclassification or change of the Common Stock
(other than a change in par value, or from par
value to no par value, or from no par value to
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par value, or as a result of a subdivision or
combination); or
(iii) of the voluntary or involuntary dissolution,
liquidation or winding up of the Issuer; or
(iv) the Issuer proposes to take any other action
which would require an adjustment of the Exercise
Price pursuant to Section 12(c);
then the Issuer shall cause to be given to each Holder at its address
appearing on the Warrant Register, at least 20 calendar days prior to
the applicable record date hereinafter specified by first-class mail,
postage prepaid, a written notice stating (A) the date as of which the
holders of record of Common Stock to be entitled to receive any such
capital stock, rights, options, warrants or distribution are to be
determined, or (B) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of record of Common Stock shall be entitled to exchange
their shares of securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to given the
notice required by this Section 13(b) or any defect therein shall not
affect the legality or validity of any capital stock, right, option,
warrant, distribution, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any action.
(c) The Issuer shall furnish to each Holder:
(i) as soon as available, but in any event within 90
calendar days after the end of each fiscal year of
the Issuer, a copy of the report on Form 10-K (or
its equivalent) for such fiscal year, which the
Issuer shall have filed with the Securities and
Exchange Commission;
(ii) as soon as available, but in any event not later
than 45 calendar days after the end of each of the
first three calendar quarters, copies of the reports
on Form 10-Q (or its equivalent) for such quarter,
which the Issuer shall have filed with the
Securities and Exchange Commission; and
(iii) promptly upon the distribution thereof, a copy of
the annual report of the Issuer for each year.
Section 14. Restrictions on Transfer. (a) The Holders
represent that they are acquiring the Warrants for their own account,
for investment and not with a view to any distribution or public
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offering within the meaning of the Securities Act. The Holders
acknowledge that the Warrants and the Warrant Shares issuable upon
exercise thereof have not been registered under the Securities Act and
agree that they will not sell or otherwise transfer any of their
Warrants or Warrant Shares except to an Affiliated Transferee or
another transferee upon the terms and conditions specified herein and
that they will cause any transferee thereof (including an Affiliated
Transferee) to agree to take and hold the same subject to the terms
and conditions specified herein.
(b) Except as provided in Section 14(d) hereof, each
Warrant Certificate and each certificate for the Warrant Shares issued
to the Initial Holder or to a subsequent transferee pursuant to
Section 14(c) shall include a legend in substantially the following
form; provided, that such legend shall not be required if such
transfer is being made in connection with a sale which is exempt from
registration pursuant to Rule 144 under the Securities Act or if the
opinion of counsel referred to in Section 14(c) is to the further
effect that neither such legend nor the restrictions on transfer in
this Section 14 are required in order to ensure compliance with the
Securities Act:
"THE WARRANTS AND WARRANT SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT AND ANY
APPLICABLE STATE SECURITIES LAW. SUCH WARRANTS
AND WARRANT SHARES MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE
WARRANT AGREEMENT, DATED AS OF JANUARY 31, 1996,
BETWEEN THE ISSUER AND THE INITIAL HOLDER OF THE
WARRANTS NAMED THEREIN, A COMPLETE AND CORRECT
COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE ISSUER AND WILL BE
FURNISHED TO THE HOLDER HEREOF UPON WRITTEN
REQUEST AND WITHOUT CHARGE. THE WARRANTS AND
WARRANT SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS
SET FORTH IN THE WARRANT AGREEMENT."
(c) Prior to any proposed assignment, transfer or sale of
any Warrant or any Warrant Shares, other than to an Affiliated
Transferee, for which no notice or other action specified in this
Section 14(c) shall be required, the Holder thereof shall give written
notice to the Issuer of such Holder's intention to effect such
assignment, transfer or sale, which notice shall set forth the date
of such proposed assignment, transfer or sale and the price to be paid
to such Holder of such Warrants or Warrant Shares. Each Holder
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wishing to effect such a transfer of any Warrant or Warrant Shares
shall also furnish to the Issuer (i) an agreement by the transferee
thereof that it is taking and holding the same subject to the terms
and conditions specified herein and (ii) a written opinion of such
Holder's counsel to the effect that the proposed transfer may be
effected without registration under the Securities Act or the
securities laws of any state or other jurisdiction; provided, that no
such opinion shall be required in connection with any transfer
pursuant to Rule 144A under the Securities Act, and each request to
register a transfer of Warrants or Warrant Shares pursuant to the
exemption from registration provided by Rule 144A shall be deemed to
be a representation by the purchaser and the seller that the transfer
was effected in compliance with Rule 144A and that the transferee is
a "qualified institutional buyer" as defined in Rule 144A.
(d) The restrictions set forth in this Section 14 shall
terminate and cease to be effective with respect to any Warrants or
Warrant Shares registered under the Securities Act or as to which the
proviso to Section 14(b) is applicable. Whenever such restrictions
shall so terminate, each Holder of such Warrants or Warrant Shares
shall be entitled to receive from the Issuer, without expense (other
than transfer taxes, if any), Warrant Certificates or certificates for
such Warrant Shares not bearing the legend set forth in Section 14(b)
at which time the Issuer will rescind any transfer restrictions
relating thereto.
(e) With a view to making available to the Holders the
benefits of certain rules and regulations of the Commission
(including, without limitation, Rule 144 under the Securities Act)
which may permit the sale of Warrant Shares to the public without
registration, the Issuer agrees, after such time as a public market
exists for the Common Stock, to take any and all such actions as may
be required of it to make available to the Holders such benefits,
including, without limitation, to:
(i) make and keep public information available as those
terms are understood and defined in Rule 144 under
the Securities Act or any successor provisions
thereto;
(ii) file with the Commission in a timely manner all
reports and other documents required of the Issuer
under the Securities Act and the Exchange Act; and
(iii) furnish the Holders forthwith upon request a
written statement by the Issuer as to its com-
pliance with the reporting requirements of Rule 144
or any successor provision thereto, and of the
Securities Act and the Exchange Act, a copy of the
most recent annual and quarterly report of the
Issuer with the Commission, and such other reports
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and documents of the Issuer and other information
in the possession of or reasonably obtainable by
the Issuer as the Holders may reasonably request in
availing themselves of any rule or regulation of
the Commission allowing the Holders to sell any
such securities without registration.
Section 15. Registration. (a) (i) If, at any time, the Issuer
shall be requested in writing (which request shall state the intended
method of disposition) by one or more Holders to effect the
registration under the Securities Act of Non-Public Warrant Shares
aggregating at least 50% of the outstanding Non-Public Warrant Shares
(assuming exercise of all outstanding Warrants) issued pursuant to
this Agreement (as adjusted to the date of such request), the Issuer
shall promptly give written notice of such proposed registration to
all of the Holders. Upon receipt of a request to effect registration
as aforesaid, the Issuer shall, as expeditiously as possible, use its
best efforts to effect registration on an appropriate form under the
Securities Act of the Warrant Shares which the Issuer has been
requested to register (i) in such request and (ii) in any response to
such notice given by or on behalf of a Holder to the Issuer within 20
calendar days after the Issuer's giving of such notice, in order to
permit the sale or other disposition of such Warrant Shares in
accordance with the intended method of sale or other disposition
described in such request and in any such response.
(ii) The Issuer shall not be required to effect any
registration requested pursuant to this Section 15(a) if the
registration rights granted pursuant to this Section 15(a) have been
exercised by the Holders on a previous occasion. The right of the
Holders under this Section 15(a) shall not be deemed to have been
exercised (x) if the requisite notice given by Holders pursuant to
this Section 15(a) is withdrawn prior to the date of filing of a
registration statement or if a registration statement filed by the
Issuer under the Securities Act pursuant to this Section 15(a) is
withdrawn prior to its effective date, in either case, by written
notice to the Issuer from the Holders of not less than a majority of
the Warrant Shares to be included or which are included in such
registration statement, stating that such Holders have elected not to
proceed with the offering contemplated by such registration statement
because (A) general market conditions are unfavorable, (B) a
development in the Issuer's affairs has occurred or has become known
to such Holders subsequent to the date of the notice by the Holders
to the Issuer requesting registration of Warrant Shares or the filing
of such registration statement which, in the judgment of such Holders
or the managing underwriter of the proposed public offering, adversely
affects the market price or marketability of such Warrant Shares or
(C) a registration statement filed by the Issuer pursuant to this
- 136 -
Section 15(a), in the judgment of such Holders or the managing
underwriter of the proposed public offering, contains an untrue
statement of material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and the Issuer has not, promptly after written notice
thereof, corrected such statement or omission in an amendment filed
to such registration statement pursuant to Section 15(f), (y) if a
registration statement pursuant to this Section 15(a) shall have
become effective under the Securities Act and (A) the underwriters
shall not purchase any Warrant Shares, because of a failure of
condition contained in the underwriting agreement (other than a
condition to be performed by the Holders) relating to the offering
covered by such registration statement or (B) the offering of the
Warrant Shares pursuant to such registration statement is interfered
with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court.
(b) If the Issuer proposes to register any shares of its
equity securities under the Securities Act (except pursuant to an
exercise of the registration rights granted by Section 15(a) hereof
and except pursuant to a registration statement filed on Form S-8 or
Form S-4 or such other form as shall be prescribed under the
Securities Act for the same purposes), it will at each such time given
written notice to all of the Holders of its intention to do so and,
upon the written request of any Holder given within 30 calendar days
after the Issuer's giving of such notice (which request shall state
the intended method of disposition thereof by the prospective
sellers), the Issuer will use its best efforts to effect the
registration of the Warrant Share which it shall have been so
requested to register by including the same in such registration
statement, all to the extent required to permit the sale or other
disposition thereof in accordance with the intended method of sale or
other disposition given in each such request. If the registration of
which the Issuer gives notice pursuant to this Section 15(b) is for
an underwritten public offering, only Warrant Shares which are to be
included in the underwriting may be included in such registration, and
the Issuer shall have the right to designate the underwriters (which
shall be reasonably acceptable to the Majority Holders seeking to
effect registration of Warrant Shares), including the managing
underwriter(s), in any such underwritten public offering. It shall
be a condition to the inclusion of any Holder's Warrant Shares in such
underwriting that the Holder enter into an underwriting agreement in
the customary form with the underwriter or underwriters selected by
the Issuer; provided that any indemnity contained therein shall be
only with respect to information relating to such Holder furnished to
the Issuer in writing by such Holder expressly for use in the regis-
tration statement, any prospectus, or preliminary prospectus contained
therein or any amendment or any supplement thereto.
(c) If the Issuer's managing underwriters shall advise the
Issuer and the Holders in writing that the inclusion in any
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registration pursuant to this Agreement of some or all of the Warrant
Shares sought to be registered by the Holders requesting such
registration creates a substantial risk that the proceeds or price per
unit the Issuer will derive from such registration will be reduced or
that the number of securities to be registered (including those sought
to be registered at the instance of the Issuer and any other party
entitled to participate in such registration as well as those sought
to be registered by the Holders) is too large a number to be
reasonably sold, the Issuer will include in such registration to the
extent of the number which the Issuer is so advised can be sold in
such offering:
(i) if such registration is pursuant to Section 15(a)
hereof, (A) first, Warrant Shares requested to be
included in such registration, pro rata, among the
Holders in proportion to the number of Warrant Shares
sought to be registered by all such Holders and (B)
second, shares of Common Stock sought to be
registered at the instance of the Issuer and any
other party entitled to participate in such
registration, pro rata among the sellers in pro-
portion to the number of shares of Common Stock
sought to be registered by all such sellers; or
(ii) if such registration is pursuant to Section 15(b),
first, the number of shares of Common Stock sought to
be registered by each of the Issuer and the Holders,
pro rata among the Issuer and each Holder in
proportion to the number of shares of Common Stock
sought to be registered by the Issuer and all such
Holders, and then, the number of shares of Common
Stock sought to be registered by each other seller
(which term shall include each holder of shares of
Common Stock other than the Issuer and the Holders),
pro rata among each other seller in proportion to the
number of shares of Common Stock sought to be
registered by all such other sellers.
(d) If a registration under Section 15(a) or 15(b) shall
be in connection with an underwritten public offering, each Holder of
Warrant Shares shall be deemed to have agreed by acquisition of such
Warrant Shares not to effect any public sale or distribution,
including any sale pursuant to Rule 144, of any Warrant Shares, and
to use such Holder's best efforts not to effect any such public sale
or distribution of any other equity security of the Issuer or of any
security convertible into or exchangeable or exercisable for any
equity security of the Issuer (other than as part of such underwritten
public offering) within seven calendar days before or 90 calendar days
after the effective date of such registration statement (and the
- 138 -
Issuer hereby also so agrees and agrees to cause each holder of any
equity security, or of any security convertible into or exchangeable
or exercisable for any equity security, of the Issuer purchased from
the Issuer at any time other than in a public offering so to agree).
(e) As a condition to the inclusion of a Holder's Warrant
Shares in any registration statement, each Holder requesting
registration thereof will furnish to the Issuer such information with
respect to such Holder as is required to be disclosed in the
registration statement (and the prospectus included therein) by the
applicable rules, regulations and guidelines of the Commission.
Failure of a Holder to furnish such information shall not affect the
obligations of the Issuer under this Section 15 to the remaining
Holders who furnish such information.
(f) If and whenever the Issuer is required to use its best
efforts to effect the registration of Warrant Shares under the
Securities Act, the Issuer shall:
(i) as expeditiously as possible, prepare and file with
the Commission (in the case of a registration pursuant
to Section 15(a), not later than 60 calendar days
after the requisite request therefor) a registration
statement on the appropriate form with respect to such
Warrant Shares and use its best efforts to cause such
registration statement to become effective as soon as
practicable after such filing;
(ii) as expeditiously as possible, prepare and file with
the Commission such amendments and supplements
(including post-effective amendments and supplements)
to the registration statement covering such Warrant
Shares and the prospectus used in connection
therewith as may be necessary to keep such
registration statement effective and to comply with
the provisions of the Securities Act with respect to
the disposition of all Warrant Shares covered by such
registration statement until such time as all of the
Warrant Shares registered thereunder have been
disposed of in accordance with the intended method of
disposition of the sellers set forth therein;
(iii) as expeditiously as possible, furnish to each seller
of such Warrant Shares registered, or to be
registered, under the Securities Act, and to each
underwriter, if any, of such Warrant Shares such
number of copies of a prospectus and preliminary
prospectus in conformity with the requirements of the
Securities Act, and such other documents as such
- 139 -
seller or underwriter may reasonably request, in order
to facilitate the public sale or other disposition of
such Warrant Shares;
(iv) as expeditiously as possible notify each seller of
such Warrant Shares if, at any time when a prospectus
relating to such Warrant Shares is required to be
delivered under the Securities Act, any event shall
have occurred as a result of which the prospectus then
in use with respect to such Warrant Shares would
include an untrue statement of a material fact or omit
to state a material fact required to be stated therein
or necessary to make the statements therein not
misleading or for any other reason it shall be
necessary to amend or supplement such prospectus in
order to comply with the Securities Act and prepare
and furnish to all sellers a reasonable number of
copies of a supplement to or an amendment of such
prospectus which will correct such statement or
omission or effect such compliance;
(v) as expeditiously as possible, use its best efforts to
register or qualify such Warrant Shares under such
other securities or blue sky laws of such
jurisdictions as such seller shall reasonably request
(insofar as the registration thereof shall be
permitted under applicable law) and do any and all
other acts and things which may be necessary or
desirable to enable such seller to consummate the
public sale or other disposition in each such
jurisdiction of the Warrant Shares included in the
registration statement; provided, that, the Issuer
shall not be required to consent to the general
service of process or to qualify to do business in any
jurisdiction where it is not then qualified;
(vi) use its best efforts to keep the Holders of such
Warrant Shares informed of the Issuer's best estimate
of the earliest date on which such registration
statement or any post-effective amendment or
supplement thereto will become effective and will
promptly notify such Holders and the managing
underwriters, if any, participating in the distri-
bution pursuant to such registration statement of the
following: (A) when such registration statement or
any post-effective amendment or supplement thereto
becomes effective or is approved; (B) of the issuance
by any competent authority of any stop order
suspending the effectiveness or qualification of such
registration statement or the prospectus then in use
or the initiation or threat of any proceeding for that
purpose; and (C) of the suspension of the
- 140 -
qualification of any Warrant Shares included in such
registration statement for sale in any jurisdiction;
(vii) furnish to the sellers of such Warrant Shares, on the
date that such Warrant Shares are delivered to the
underwriters for sale in connection with a
registration, if such Warrant Shares are being sold
through underwriters or, if such Warrant Shares are
not being sold through underwriters, on the date that
the registration statement with respect to such
Warrant Shares becomes effective, (A) an opinion of
the independent counsel representing the Issuer for
the purposes of such registration, dated such date, in
form and substance as is customarily given by counsel
to underwriters in an underwritten public offering,
and (B) a "comfort" letter dated such date from the
independent public accountants who have certified the
Issuer's financial statements included in the
registration statement, in form and substance as is
customarily given by independent certified public
accountants to underwriters in an underwritten public
offering;
(viii) make available to its security holders, as soon as
practicable, an earnings statement covering a period
of at least twelve months which satisfies the
provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(ix) cooperate with the sellers of such Warrant Shares and
the underwriters, if any, of such Warrant Shares, give
each seller of such Warrant Shares, and the
underwriters, if any, of such Warrant Shares or, if
there is no underwriter, the sellers, and their
respective counsel and accountants, such access to its
books and records and such opportunities to discuss
the business of the Issuer with its officers and
independent public accountants as shall be necessary
to enable them to conduct a reasonable investigation
within the meaning of the Securities Act, and in the
event that Warrant Shares are to be sold in an
underwritten offering, enter into an underwriting
agreement containing customary representations and
warranties, covenants, conditions and indemnification
provisions; and
(x) in the case of the registration effected pursuant to
Section 15(a) and each registration of Warrant Shares
pursuant to Section 15(b), pay all costs and expenses
incident to the performance and compliance by the
- 141 -
Issuer of this Section 15, including, without
limitation, (A) all registration and filing fees; (B)
all printing expenses; (C) all fees and disbursements
of counsel and independent public accountants for the
Issuer; (D) all blue sky fees and expenses (including
fees and expenses of counsel in connection with blue
sky surveys); (E) the entire expense of any special
audits required by the rules and regulations of the
Commission; (F) the cost of distributing prospectuses
in preliminary and final form as well as any
supplements thereto; (G) the fees and expenses of one
counsel for the Holders of the Warrant Shares being
registered and (H) underwriting discounts and commis-
sion relating to the Warrant Shares sold.
(g) (i) the issuer will indemnify and hold harmless each
seller thereof and each other person, if any, who controls such seller
within the meaning of the Securities Act or the Exchange Act from and
against any and all losses, claims, damages, liabilities and legal and
other expenses (including costs of investigation) caused by any untrue
statement or alleged untrue statement of a material fact contained in
any registration statement under which such Warrant Shares were
registered under the Securities Act, any prospectus or preliminary
prospectus contained therein or any amendment or supplement thereto,
or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by any such untrue
statement or omission or alleged untrue statement or omission based
upon information relating to such seller and furnished to the Issuer
in writing by such seller expressly for use therein.
(ii) it shall be a condition to the obligation of the Issuer
to effect a registration of Warrant Shares under the Securities Act
pursuant hereto that each seller, severally and not jointly, indemnify
and held harmless the issuer and each person, if any, who controls the
issuer within the meaning of the Securities Act or the Exchange Act
to the same extent as the indemnity from the Issuer in the foregoing
paragraph (i), but only with reference to information relating to such
seller furnished to the Issuer in writing by such seller expressly for
use in the registration statement, any prospectus or preliminary
prospectus contained therein or any amendment or supplement thereto.
(iii) In case any claim shall be made or any proceeding
(including any governmental investigation) shall be instituted
involving any indemnified party in respect of which indemnity may be
sought pursuant to this Section 15(g), such indemnified party shall
- 142 -
promptly notify the indemnifying party in writing of the same;
provided, that failure to notify the indemnifying party shall not
relieve it from any liability it may have to an indemnified party
otherwise that under this Section 15(g). The indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party in such proceeding and shall pay the fees and disbursements of
such counsel. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and
disbursements of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party shall have failed
to retain counsel for the indemnified party as aforesaid, (ii) the
indemnifying party and such indemnified party shall have mutually
agreed to the retention of such counsel or (iii) representation of
such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding; provided, that the
Issuer shall not be liable for the fees and disbursements of more than
one additional counsel for all indemnified parties. The indemnifying
party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any
loss or liability by reason of such settlement or judgment.
Section 16. Amendments and Waivers. Any provisions of this
Agreement may be amended, supplemented, waived, discharged or
terminated by a written instrument signed by the Issuer and the
Majority Holders; provided, that the Exercise Price may not be
increased or the number of Warrant Shares issuable upon exercise of
the Warrants may not be reduced (except pursuant to Section 12 hereof)
and this Section may not be amended except with the consent of all the
Holders.
Section 17. Specific Performance. The Holders shall have the
right to specific performance by the Issuer of the provisions of this
Agreement. The Issuer hereby irrevocably waives, to the extent that
it may do so under applicable law, any defense based on the adequacy
of a remedy at law which may be asserted as a bar to the remedy of
specific performance in any action brought against the Issuer for
specific performance of this Agreement by the Holders.
Section 18. Notices. (a) Any notice or demand to be given or
made by the Holders to or on the Issuer pursuant to this Agreement
shall be sufficiently given or made if sent by mail, first-class or
registered, postage prepaid, addressed to the Issuer at the Warrant
Office.
(b) Any notice to be given by the Issuer to the Holders
shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed to such Holder as such Holder's name and address
- 143 -
shall appear on the Warrant Register or the Common Stock registry of
the Issuer, as the case may be.
Section 19. Binding Effect. This Agreement shall be binding
upon and insure to the sole and exclusive benefit of the Issuer, its
successors and assigns, and each Holder from time to time party
hereto.
Section 20. Continued Validity. This Agreement shall remain
in full force and effect notwithstanding the exercise of the Warrants
by one or more Holders.
Section 21. Counterparts. This Agreement may be executed in
one or more separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
Section 22. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 23. Severability. Any provisions of this Agreement
which 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 rendered unenforceable such
provision in any other jurisdiction.
Section 24. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the
Issuer and each Holder any legal or equitable right, remedy or claim
under this Agreement.
- 144 -
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed and delivered by their proper and duly
authorized officers, as of the date and year first above written.
Date: January 31, 1996
DELAWARE OTSEGO CORPORATION
XXXXXX X. XXXX
--------------------------------------
Xxxxxx X. Xxxx
President and
Chief Executive Officer
CREDITANSTALT CORPORATE FINANCE, INC.,
as a Holder
XXXXXXXXX X. XXXXXX
--------------------------------------
Xxxxxxxxx X. Xxxxxx
Vice President
XXXXXX XXXXXX
--------------------------------------
Xxxxxx Xxxxxx
Senior Vice President
- 145 -
WARRANT CERTIFICATE
-------------------
THE WARRANTS AND WARRANT SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ANY
APPLICABLE STATE SECURITIES LAW. SUCH WARRANTS AND WARRANT SHARES MAY
BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE
WARRANT AGREEMENT, DATED AS OF JANUARY 31, 1996, BETWEEN THE ISSUER
AND THE INITIAL HOLDER OF THE WARRANTS NAMED THEREIN, A COMPLETE AND
CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL
OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE. THE WARRANTS AND WARRANT SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN OTHER TERMS AND
CONDITIONS SET FORTH IN THE AMENDED AND RESTATED WARRANT AGREEMENT.
No. ___ 60,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that CREDITANSTALT CORPORATE
FINANCE, INC., or registered assigns, is the registered holder of
60,000 Warrants (the "Warrants") to purchase Common Stock of DELAWARE
OTSEGO CORPORATION, a Delaware corporation (the "Issuer"). Each
Warrant entitles the holder, but only subject to the conditions set
forth herein and in the Warrant Agreement referred to below, to
purchase from the Issuer after the Effective Date referred to in the
Warrant Agreement (the "Exercise Date") one fully paid and nonassess
able share of the Common Stock of the Issuer (the "Warrant Shares")
at an exercise price (the "Exercise Price") of $10.00 per Warrant
Share payable in lawful money of the United States of America, upon
surrender of this Warrant Certificate, execution of the annexed Form
of Election to Purchase and payment of the Exercise Price at the
office of the Issuer at 0 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxx
00000, or such other address as the Issuer may specify in writing to
the registered holder of the Warrants evidenced hereby (the "Warrant
Office"). The Exercise Price and number of Warrant Shares purchasable
upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events as set forth in the Warrant Agreement.
As more particularly described in the Warrant Agreement, the
Issuer is entitled to purchase all or any part of the outstanding
Warrants on the terms and subject to the conditions specified in the
Warrant Agreement.
The Issuer may deem and treat the registered holder(s) of the
Warrants evidenced hereby as the absolute owner(s) thereof (notwith-
standing any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise and of any distribution to
the holder(s) hereof, and for all other purposes, and the Issuer shall
not be affected by any notice to the contrary.
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Warrant Certificates, when surrendered at the Warrant Office by
the registered holder hereof in person or by a legal representative
duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate
or Warrant Certificates of like tenor evidencing in the aggregate a
like number of Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Issuer at the above-mentioned
address, a new Warrant Certificate or Warrant Certificates of like
tenor and evidencing in the aggregate a like number of Warrants shall
be issued in exchange for this Warrant Certificate to the trans
feree(s) and, if less than all the Warrants evidenced hereby are to
be transferred, to the registered holder hereof, subject to the
limitations provided in the Warrant Agreement, without charge except
for any transfer tax or other governmental charge imposed as a result
of the transfer thereof.
This Warrant Certificate is one of the Warrant Certificates
referred to in the Warrant Agreement, dated as of January 31, 1996
(the "Warrant Agreement"), between the Issuer and the Initial Holder
of Warrants named therein. Said Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and
is hereby referred to for a description of the rights, limitation of
rights, obligations, duties and immunities thereunder of the Issuer
and the holders.
IN WITNESS WHEREOF, the Issuer has caused this Warrant Certifi
cate to be signed by its duly authorized officers and has caused its
corporate seal to be affixed hereunto.
Date: January 31, 1996
DELAWARE OTSEGO CORPORATION
XXXXXX X. XXXX
---------------------------
Xxxxxx X. Xxxx
President and
Chief Executive Officer
(CORPORATE SEAL)
ATTEST:
XXXXXX X. XXXXX
---------------------------
Xxxxxx X. Xxxxx
Secretary
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this
31st day of January, 1996 by Xxxxxx Xxxx, the President of Delaware
Otsego Corporation, a Delaware corporation, on behalf of the
Corporation.
Xxx X. Xxxxx
----------------------
Notary Public
My commission expires: May 31, 1996
------------
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ANNEX to Form
of
Warrant Certificate
[FORM OF ELECTION TO PURCHASE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ___ Warrant
Shares and herewith tenders payment for such Warrant Shares to the
order of the Issuer in the amount of $___________ in accordance with
the terms hereof. The undersigned requests that a certificate for
such Warrant Shares be registered in the name of _______________ whose
address is _______________________________ and that such certificate
be delivered to _______________________ whose address is
_____________________________. If said number of Warrant Shares is
less than all of the Warrant Shares purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the
remaining balance of the Warrant Shares be registered in the name of
________________________ whose address is
____________________________________ and that such Warrant Certificate
be delivered to __________________________ whose address is
__________________________________________.
Signature:
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant
Certificate.)
Date:
----------------
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EXHIBIT B
TO
WARRANT AGREEMENT
WARRANT REGISTER
Original Number
Warrant of Warrants and Certificate Names and Addresses
Certificate No. Warrant Shares Legended (Y/N) of Warrant Holders
------------------- ----------------- ------------------ -------------------
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