WARRANT AGREEMENT
Between
SAFETY COMPONENTS INTERNATIONAL, INC.
KEYBANK NATIONAL ASSOCIATION
and
FLEET BANK
-------------------------
Dated as of June 23, 1999
WARRANT AGREEMENT ("this Agreement"), dated as of June 23, 1999, by and
among SAFETY COMPONENTS INTERNATIONAL, INC., a Delaware corporation (together
with any successors and assigns, the "Company"), KEYBANK NATIONAL ASSOCIATION
and FLEET BANK (each of KeyBank National Association and Fleet Bank
individually, an "Initial Holder" and together the "Initial Holders").
WHEREAS, the Company and certain of its subsidiaries and the Initial
Holders have previously entered into that certain Credit Agreement, dated as of
May 21, 1997, as amended by (i) Amendment No. 1 thereto, dated as of June 2,
1997, (ii) Amendment No. 2 thereto, dated as of July 15, 1997, (iii) Amendment
No. 3 thereto, dated as of July 30, 1998, (iv) Amendment No. 4 thereto, dated as
of October 9, 1998 and (v) Amendment No. 5 thereto, dated as of February 9, 1999
(as so amended, the "Credit Agreement"); and
WHEREAS, the Company has requested that the Initial Holders agree to
modify certain of the terms and provisions of the Credit Agreement by entering
into a further amendment of the Credit Agreement; and
WHEREAS, the Company proposes to issue up to 50,000 Warrants to the
Initial Holders pro rata (each a "Warrant," together the "Warrants") for the
purchase of an aggregate (subject to adjustment as herein provided) of 50,000
shares of its common stock, par value $.01 per share (the "Common Stock"),
pursuant to the Interest Rate/Fee Letter Agreement, dated June 23, 1999 (as
amended, supplemented, restated or otherwise modified from time to time, the
"Fee Letter"), by and among the Company and the Initial Holders of the Warrants
and as further consideration for the amendment to the Credit Agreement. Subject
to section 9 hereof, each Warrant entitles the holder thereof to purchase one
share of Common Stock. The shares of Common Stock deliverable upon exercise of
the Warrants are referred to herein as the "Warrant Shares."
NOW, THEREFORE, in consideration of the foregoing and for the purpose
of defining the terms and provisions of the Warrants and the respective rights
and obligations thereunder of the Company and the registered owners of the
Warrants and any security into which they may be exchanged (the "Holders"), the
parties hereby agree as follows:
SECTION 1. CERTAIN DEFINED TERMS; REPRESENTATIONS OF INITIAL
HOLDER.
1.1. Certain Defined Terms.
"Act" means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the SEC promulgated thereunder.
"Business Day" means a day other than (i) a Saturday or Sunday, (ii)
any day on which banking institutions located in the City of New York, New York
are required or authorized by law or local proclamation to close or (iii) a day
on which the New York Stock Exchange is closed.
"Current Market Price" has the meaning provided in section 9.1(e) of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"NASD" means the National Association of Securities Dealers, Inc.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements
CL: 406188v6
1
to the prospectus, including post-effective amendments and all material
incorporated by reference in such prospectus.
"Registrable Securities" means the Warrants, the Warrant Shares and any
other securities issued or issuable with respect to the Warrants or the Warrant
Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, provided that a security ceases to be a Registrable Security
when it is no longer a Transfer Restricted Security.
"Registration Statement" means any registration statement of the
Company filed with the SEC under the Act which covers the transfer of
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such Registration Statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in such Registration Statement.
"SEC" means the Securities and Exchange Commission.
"Transfer Restricted Securities" means a Warrant or Warrant Share,
until such Warrant or Warrant Share (i) has been transferred under the Act in
accordance with a Registration Statement covering it or (ii) is sold pursuant to
Rule 144 under the Act.
1.2. Representations of Initial Holders. Each of the Initial Holders,
severally and not jointly, hereby represent and warrant to the Company as
follows:
(a) The Initial Holder has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the Warrants
and the merits and risks of investing in the Warrants and (ii) access
to information about the Company and the Company's financial condition,
results of operations, business, properties, management and prospects,
sufficient to enable it to evaluate its investment in the Warrants.
(b) The Initial Holder represents that the Initial Holder will
hold the Warrants for its own account for investment and not with a
view to distribution except in compliance with the Act. The Initial
Holder acknowledges that the Warrants have not been registered under
the Act or the securities laws of any state, and this Agreement is
being made in reliance upon an exemption from registration under the
Act for an offer and sale of securities that does not involve a public
offering.
(c) The Initial Holder is an accredited investor within the
meaning of Rule 501(a) of Regulation D promulgated under the Act.
SECTION 2. FORM OF WARRANT; EXECUTION; REGISTRATION.
2.1. Form of Warrant; Execution of Warrants. The certificates
evidencing the Warrants (the "Warrant Certificates") shall be in registered form
only and shall be in the form set forth as Exhibit A hereto. The Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board, President or one of its Vice Presidents. The signature of any such
officers on the Warrant Certificates may be manual or facsimile.
Any Warrant Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant Certificate,
although at the date of the execution of this Warrant Agreement any such person
was not such officer.
CL: 406188v6
2
Each Warrant Certificate shall be dated the date it is executed by the
Company either upon initial issuance or upon division, exchange, substitution or
transfer.
2.2. Registration. The Warrant Certificates shall be numbered and shall
be registered on the books of the Company (the "Warrant Register") as they are
issued. The Company shall be entitled to treat the registered owner of any
Warrant as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person.
SECTION 3. TRANSFER AND EXCHANGE OF WARRANTS.
3.1. Transfers. Subject to sections 3.2, 11 and 12 hereof and the
receipt of such documentation as the Company may reasonably require, the Company
shall from time to time register the transfer of any outstanding Warrants upon
the records to be maintained by it for that purpose, upon surrender of the
Certificate or Certificates evidencing such Warrants duly endorsed or
accompanied (if required by it) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company, duly executed by the
registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Subject to the terms of
this Agreement, each Warrant Certificate may be exchanged for another Warrant
Certificate or Certificates entitling the Holder thereof to purchase a like
aggregate number of Warrant Shares as the Warrant Certificate or Certificates
surrendered then entitle such Holder to purchase. Any Holder desiring to
exchange a Warrant Certificate or Certificates shall make such request in
writing delivered to the Company and shall surrender, duly endorsed or
accompanied (if so required by the Company) by a written instrument or
instruments of transfer in form reasonably satisfactory to the Company, the
Warrant Certificate or Certificates to be so exchanged. Upon registration of
transfer, the Company shall issue and deliver by certified mail a new Warrant
Certificate or Certificates to the persons entitled thereto.
No service charge shall be made for any exchange or registration of
transfer of a Warrant Certificate or of Warrant Certificates, but the Company
may require payment of a sum sufficient to cover any stamp tax or other tax or
other governmental charge that is imposed in connection with any such exchange
or registration of transfer.
3.2. Restrictions on Transfer. As long as the Company has a class of
securities registered under the Exchange Act, each Holder shall be permitted to
transfer any Warrant (and the rights relating thereto under this Agreement) only
to an Affiliate (as such term is defined in the Exchange Act) of such Holder.
SECTION 4. TERM OF WARRANTS; EXERCISE OF WARRANTS; COMPLIANCE
WITH GOVERNMENT REGULATIONS; REDEMPTION.
4.1. Term of Warrants. Subject to the terms of this Agreement, each
Holder shall have the right, which may be exercised at any time on or after the
date on which the Warrant Certificate was issued until 5:00 p.m., New York City
time, on the tenth anniversary of such date (the "Exercise Period"), to receive
from the Company the number of Warrant Shares that the Holder may at the time be
entitled to receive upon exercise of such Warrants and the Warrant Shares issued
to a Holder upon exercise of its Warrants shall be duly authorized, validly
issued, fully paid, nonassessable and not subject to any preemptive rights. Each
Warrant not exercised prior to the expiration of the Exercise Period shall
become void, and all rights thereunder and all rights in respect thereof under
this Agreement shall cease as of such time.
4.2. Exercise of Warrants. During the Exercise Period, each Holder may,
subject to this Agreement, exercise from time to time some or all of the
Warrants evidenced by its Warrant Certificate(s) by (i) surrendering to the
Company such Certificate(s) with the form of election to purchase on the reverse
thereof duly filled in and signed and (ii) paying to the Warrant Agent for the
account of the Company a purchase price per Warrant Share, equal to the Current
Market Price of the Common Stock on the date the applicable Warrants are issued,
as such price may thereafter have been adjusted pursuant to section 9 hereof
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(the "Exercise Price"), for the number of Warrant Shares in respect of which
such Warrants are exercised. Warrants shall be deemed exercised on the date such
Warrant Certificate(s) are surrendered to the Company and (unless such exercise
is a Cashless Exercise) tender of payment of the Exercise Price is made. Payment
of the aggregate Exercise Price shall be made in cash by wire transfer of
immediately available funds to the Company or by certified or official bank
check or checks to the order of the Company or by any combination thereof.
Notwithstanding the above, a Warrant may also be exercised solely by the
surrender of the Warrant Certificate, and without the payment of the Exercise
Price in cash, for such number of Warrant Shares equal to the product of (x) the
number of Warrant Shares for which such Warrant is exercisable with payment of
the Exercise Price as of the date of exercise and (y) the Cashless Exercise
Ratio. For purposes of this Agreement, the "Cashless Exercise Ratio" shall equal
a fraction, the numerator of which is the excess of the Current Market Price per
share of Common Stock on the date of exercise (calculated as set forth in
section 9.1(e) hereof) over the Exercise Price per share of Common Stock of the
Warrant as of the date of exercise and the denominator of which is the Current
Market Price per share of Common Stock on the date of exercise (calculated as
set forth in section 9.1(e) hereof). An exercise of a Warrant in accordance with
the immediately preceding sentences is herein called a "Cashless Exercise." Upon
surrender of a Warrant Certificate evidencing more than one Warrant in
connection with the Holder's option to elect a Cashless Exercise, such Holder
shall specify the number of Warrants to be exercised pursuant to such Cashless
Exercise, and the number of Warrant Shares deliverable upon such Cashless
Exercise shall be equal to the number of Warrant Shares for which such Warrants
are so exercised multiplied by the Cashless Exercise Ratio. All provisions of
this Agreement shall be applicable with respect to a Cashless Exercise of less
than the full number of Warrants evidenced by the surrendered Warrant
Certificate.
Upon the exercise of any Warrants in accordance with this Agreement,
the Company shall issue and cause to be delivered with all reasonable dispatch,
and in any event within five Business Days thereafter, to or upon the written
order of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants and shall take such other actions at its sole
expense as are necessary to complete the exercise of the Warrants (including,
without limitation, payment of any cash with respect to fractional interest
required under section 10 hereof). The certificate or certificates representing
such Warrant Shares shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a holder of record
of such Warrant Shares as of the date the Warrants are exercised thereunder.
Each Warrant Share, when issued upon exercise of the Warrants, shall be duly
authorized, validly issued, fully paid and nonassessable and shall not have been
issued in violation of any preemptive rights.
In the event that less than all of the Warrants evidenced by a Warrant
Certificate are exercised, the Holder thereof shall be entitled to receive a new
Warrant Certificate or Certificates as specified by such Holder evidencing the
remaining Warrant or Warrants, and the Company shall issue and deliver the
required new Warrant Certificate or Certificates evidencing such remaining
Warrant or Warrants pursuant to the provisions of this section 4.2 and of
section 3 hereof.
4.3. Compliance with Government Regulations; Qualification under the
Securities Laws.
(a) The Company covenants that if any shares of Common Stock
required to be reserved for purposes of exercise of Warrants require,
under any federal or state law or applicable governing rule or
regulation or any national securities exchange, registration with or
approval of any governmental authority, or listing on any such national
securities exchange, before such shares may be issued upon exercise the
Company shall, unless the Company has received an opinion of counsel to
the effect that such registration is not then permitted by such laws,
in good faith and as expeditiously as possible use its best efforts to
cause such shares to be duly so registered or approved, or listed on
such national securities exchange, as the case may be, provided that in
no event shall such shares of Common Stock be issued, and the exercise
of all Warrants shall be suspended, and the Holders promptly notified
in writing of such suspension, for the period during
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which such registration, approval or listing is required but not in
effect, provided further, that the Exercise Period shall be extended
one day for each day (or portion thereof) that any such suspension is
in effect. Notwithstanding the foregoing, any suspension resulting
solely from a failure to list the shares of Common Stock shall be
effective for a period not to exceed 90 days and the Company shall take
all necessary steps so the listing of such shares shall not be
necessary.
(b) The Company will register or otherwise qualify the shares
of Common Stock issuable upon exercise of the Warrants pursuant to the
provisions of the Act and pursuant to applicable state securities laws.
SECTION 5. PAYMENT OF TAXES.
The Company will pay all documentary stamp and other like taxes, if
any, attributable to the initial issuance and delivery of Warrant Shares upon
the exercise of Warrants, provided that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue or delivery of any Warrant Shares in a name other than that of the Holder
of the Warrants being exercised.
SECTION 6. MUTILATED OR MISSING WARRANT CERTIFICATES.
In the event that any Warrant Certificate shall be mutilated, lost,
stolen or destroyed, the Company shall issue and deliver 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 right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such Warrant
Certificate and an indemnity or bond, if requested by the Company, also
reasonably satisfactory to it. An applicable for such a substitute Warrant
Certificate shall also comply with such other reasonable procedures as the
Company may reasonably require.
SECTION 7. RESERVATION OF WARRANT SHARES.
The Company shall have reserved, and shall at all times keep reserved,
out of its authorized Common Stock, free of all preemptive rights, a number of
shares of Common Stock sufficient to provide for the exercise of the rights of
purchase represented by the outstanding Warrants. The transfer agent for the
Common Stock and every subsequent or other transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the Warrants (each, a
"Transfer Agent") will be and are hereby irrevocably authorized and directed at
all times to reserve such number of authorized shares as shall be required for
such purpose. The Company will keep a copy of this Agreement on file with each
Transfer Agent. The Company will supply the Transfer Agent with duly executed
stock certificates for Warrant Shares required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement. The
Company covenants that all Warrant Shares which may be issued upon exercise of
Warrants are or will be duly authorized and will, upon issuance thereof as
provided herein, be validly issued, fully paid, nonassessable and free of
preemptive rights and free of all taxes, liens, charges, encumbrances and
security interests. The Company will supply its Transfer Agents with duly
executed stock certificates for such purposes and will itself provide or
otherwise make available any cash which may be payable as provided in section 10
hereof. The Company will furnish to its Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each Holder
pursuant to section 9.3 hereof.
Before taking any action that would reduce the Exercise Price pursuant
to section 9, the Company will take any and all corporate action that may be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
5
SECTION 8. STOCK EXCHANGE LISTINGS.
The Company shall use its best efforts to list the Warrant Shares on
each national securities exchange on which the Common Stock may at any time be
listed, if any, subject to official notice of issuance upon the exercise of the
Warrants, and shall use its best efforts to maintain such listing, so long as
any of the Common Stock shall be so listed. Any such listing and inclusion shall
be at the Company's sole expense.
SECTION 9. ADJUSTMENT OF EXERCISE PRICE; NUMBER OF WARRANT SHARES
AND SHARES OF CAPITAL STOCK INTO WHICH WARRANTS ARE
EXERCISABLE.
The number and kind of securities purchasable upon the exercise of each
Warrant, and the Exercise Price, shall be subject to adjustment from time to
time upon the happening of certain events, as hereinafter described.
9.1. Mechanical Adjustments. The number of Warrant Shares purchasable
upon the exercise of each Warrant and the Exercise Price shall be subject to
adjustment as follows:
(a) Adjustment for Change in Capital Stock. In case the
Company shall (i) pay a dividend on its outstanding shares of Common
Stock in shares of Common Stock or make a distribution of shares of
Common Stock on its outstanding shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock,
(iv) make a distribution on its outstanding shares of Common Stock in
shares of its capital stock other than Common Stock or (v) issue, by
reclassification of its shares of Common Stock, other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving entity),
the number of Warrant Shares purchasable upon exercise of each Warrant
immediately prior thereto shall be adjusted so that the Holder of each
Warrant shall be entitled to receive the kind and number of Warrant
Shares or other securities of the Company which such Holder would have
owned or have been entitled to receive upon the happening of any of the
events described above had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect
thereto. If a Holder is entitled to receive shares of two or more
classes of capital stock of the Company pursuant to the foregoing upon
exercise of Warrants, the allocation of the adjusted Exercise Price
between such classes of capital stock shall be determined reasonably
and in good faith by the Board of Directors of the Company. After such
allocation, the exercise privilege and the Exercise Price with respect
to each class of capital stock shall thereafter be subject to
adjustment on terms substantially identical to those applicable to
Common Stock in this section 9. An adjustment made pursuant to this
paragraph (a) shall become effective immediately after the record date
for such event or, if none, immediately after the effective date of
such event. Such adjustment shall be made successively whenever such an
event is made.
(b) Adjustment for Rights Issue. In case the Company shall
issue rights, options or warrants (collectively, "Rights") to all
holders of its outstanding Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a Price Per Share (as defined in
paragraph (e) below) that is lower at the record date mentioned below
than the then Current Market Price (as defined in paragraph (e) below)
per share of Common Stock, the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon
exercise of each Warrant by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding on the date of
issuance of such Rights plus the additional Number of Shares (as
defined in paragraph (e) below) of Common Stock offered for
subscription or purchase in connection with such Rights and the
denominator of which shall be the number of shares of Common Stock
outstanding on the date of
6
issuance of such Rights plus the number of shares which the aggregate
Proceeds (as defined in paragraph (e) below) received or receivable by
the Company upon exercise of such Rights would purchase at the Current
Market Price per share of Common Stock at such record date. Such
adjustments shall be made whenever Rights are issued, and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive Rights.
(c) Adjustment for Other Distributions. (i) In case the
Company shall distribute to all holders of its shares of Common Stock
(x) evidences of its indebtedness or assets (excluding cash dividends
or distributions payable out of the consolidated net income of the
Company earned after the date hereof (as described in accordance with
generally accepted accounting principles as in effect immediately prior
to such event) and dividends or distributions referred to in paragraph
(a) above or (y) Rights (excluding those referred to in paragraph (b)
above) or convertible, exchangeable or exercisable securities
(collectively, "Convertible Securities") containing the right to
subscribe for or purchase debt securities or assets or securities of
the Company (such assets and securities as set forth in clauses (x) and
(y) above, collectively, "Assets"), then in each case the number of
Warrant Shares thereafter purchasable upon the exercise of each Warrant
shall be determined by multiplying the number of Warrant Shares
theretofore purchasable upon the exercise of each Warrant by a
fraction, the numerator of which shall be the Current Market Price per
share of Common Stock on the date of such distribution and the
denominator of which shall be such Current Market Price per share of
Common Stock less the fair value as of such record date as determined
reasonably and in good faith by the Board of Directors of the Company
of the portion of the Assets applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made,
and shall become effective on the date of distribution retroactive to
the record date for the determination of shareholders entitled to
receive such distribution.
(ii) No adjustment shall be made pursuant to this paragraph
(c) unless, on the record date for such distribution, the Current
Market Price per share of Common Stock exceeds the fair market value of
the Assets applicable to each outstanding share of Common Stock. In the
event, and each time, that the Company distributes Assets to all
holders of its Common Stock and the Current Market Price per share of
Common Stock on the record date for such distribution is less than or
equal to the fair market value of the Assets applicable to each share
of outstanding Common Stock on such date, the Company shall either (x)
distribute Assets to the Holders of record on the record date for such
distribution when such Assets are distributed to the holders of Common
Stock as though all then outstanding Warrants had been exercised for
the number of Warrant Shares for which such Warrants are then
exercisable as of such record date or (y) irrevocably deposit Assets in
the amount distributable under clause (x) above in trust with a
reputable and financially sound trustee (a "Trustee") for the sole and
exclusive benefit of the Holders, subject only to the interests of the
Company as set forth in the last sentence of this paragraph. If the
Company elects to distribute Assets to the Holders, the Company shall,
on the date Assets are distributed to holders of Common Stock,
distribute to each Holder the Assets that such Holder would have been
entitled to receive on such date if such Holder had exercised its then
outstanding Warrants for the number of Warrant Shares for which such
Warrants are then exercisable immediately prior to the record date for
such distribution. If, however, the Company elects to deposit the
Assets due Holders in trust, the Company shall, on the fifth Business
Day after the date of the making of the distribution of such Assets to
holders of Common Stock, irrevocably deposit in trust with a Trustee
the Assets that all Holders would have been entitled to receive on such
date if all of their then outstanding Warrants had been exercised for
the number of Warrant Shares for which such Warrants are then
exercisable immediately prior to the record date for such distribution;
and each Holder shall be entitled upon exercise of Warrants to receive
the Warrant Shares then issuable upon exercise thereof, the Assets
deposited in trust in respect of such Holder's Warrants, and the
interest and dividends paid on such Assets since being placed in trust
plus all other assets, securities, money and other items of value
declared or distributed in respect of such Assets to the holders
thereof since the date the Company
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was obligated hereunder to deposit such Assets in trust. In the event
any Warrants have not been exercised by 5:00 p.m., New York City time,
on the last day of the Exercise Period, any Assets or other trust
assets shall be delivered over to the Company.
(d) Adjustment for Common Stock Issue. In case the Company
shall issue shares of its capital stock, shares of its Common Stock,
Rights containing the right to subscribe for or purchase shares of
Common Stock Convertible Securities with respect to Common Stock or
Rights to subscribe for or purchase such Convertible Securities
(collectively, the "Securities") (excluding the issuance of (i) shares,
Rights or Convertible Securities issued in any of the transactions
described in paragraph (a), (b) or (c) above, (ii) Warrant Shares
issued upon exercise of the Warrants and (iii) Securities to officers,
directors or employees of the Company as incentive compensation
pursuant to incentive compensation plans adopted by the Company at a
Price Per Share of Common Stock, in the case of the issuance of Common
Stock, or at a Price Per Share of Common Stock initially deliverable
upon conversion or exercise or exchange of such Securities, in each
case, together with any other consideration received by the Company in
connection with such issuance, more than 10% lower than the then
Current Market Price per share of Common Stock on the date the Company
fixed the offering, conversion or exercise or exchange price of such
additional shares, then the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon
exercise of each Warrant by a fraction, the numerator of which shall be
the total number of shares of Common Stock outstanding on such date
plus the additional number of Shares of Common Stock offered for
subscription or purchase and the denominator of which shall be the
number of shares of Common Stock outstanding on such date plus the
number of shares of Common Stock which the aggregate Proceeds of the
total amount of Securities so offered would purchase at the Current
Market Price Per Share of Common Stock at such record date. In case the
Company shall issue and sell Securities for a consideration consisting,
in whole or in part, of property other than cash or its equivalent,
then in determining the "Price Per Share" of Common Stock and the
"consideration received by the Company" for purposes of the first
sentence and the immediately preceding sentence of this paragraph (d),
the Board of Directors of the Company shall reasonably and in good
faith determine the fair value of such property. The determination of
whether any adjustment is required under this paragraph (d), by reason
of the sale and issuance of any Securities and the amount of such
adjustment, if any, shall be made at such time and not at the
subsequent time of issuance of shares of Common Stock upon the
exercise, conversion or exchange of Securities.
(e) Current Market Price; Price Per Share. (i) For the purpose
of any computation under section 4.2 hereof or this section 9.1, the
current market price per share of Common Stock at any date shall be the
closing price for the day preceding the date of such computation (the
"Current Market Price"). The closing price for such day shall be (x) if
the Common Stock shall be then listed or admitted to trading on the New
York Stock Exchange, the closing price on the NYSE Consolidated Tape
(or any successor composite tape reporting transactions on the New York
Stock Exchange) or, if such a composite tape shall not be in use or
shall not report transactions in the Common Stock, or if the Common
Stock shall be listed on a stock exchange other than the New York Stock
Exchange, the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the closing bid
and asked prices regular way for such day, in each case on the
principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading (which shall be the national
securities exchange on which the greatest number of shares of the
Common Stock has been traded during such day) or (y) if the Common
Stock is not listed or admitted to trading, the average of the closing
bid and asked prices of the Common Stock in the over-the-counter market
as reported by National Association of Securities Dealers Automated
Quotations ("NASDAQ") or NASDAQ/NMS or comparable system then in use
or, if not so reported, the average of the closing bid and asked prices
as furnished by two members of the NASD selected reasonably and in good
faith from time to time by the Board of Directors for that purpose. In
the
8
absence of one or more such quotations, the Current Market Price per
share of the Common Stock shall be determined reasonably and in good
faith by the Board of Directors of the Company.
(ii) For purposes of this section 9.1, "Price Per Share" shall
be defined and determined according to the following formula:
P = R
N
where
P = Price Per Share,
R = the "Proceeds received or receivable by the Company," which
(i) in the case of shares of Common Stock, is the total amount
received or receivable by the Company in consideration for the
issuance and sale of such shares, (ii) in the case of Rights
or of Convertible Securities with respect to shares of Common
Stock, is the total amount received or receivable by the
Company in consideration for the issuance and sale of Rights
or such Convertible Securities plus the minimum aggregate
amount of additional consideration, other than the surrender
of such Convertible Securities, payable to the Company upon
exercise, conversion or exchange thereof and (iii) in the case
of Rights to subscribe for or purchase such Convertible
Securities, is the total amount received or receivable by the
Company in consideration for the issuance and sale of such
Rights plus the minimum aggregate amount of additional
consideration, other than the surrender of such Convertible
Securities, payable upon the conversion or exchange or
exercise of such Convertible Securities, provided that in each
case the proceeds received or receivable by the Company shall
be the net cash proceeds after deducting therefrom any
compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or
others performing similar services, and
N = the "Number of Shares," which (i) in the case of Common
Stock, is the number of shares issued, (ii) in the case of
Rights or of Convertible Securities with respect to shares of
Common Stock, is the maximum number of shares of Common Stock
initially issuable upon exercise, conversion or exchange
thereof and (iii) in the case of Rights to subscribe for or
purchase such Convertible Securities, is the maximum number of
shares of Common Stock initially issuable upon conversion,
exchange or exercise of such Convertible Securities.
(f) When De Minimis Adjustment May Be Deferred. No adjustment
in the number of Warrant Shares purchasable hereunder shall be required
unless such adjustment would require an increase or decrease of at
least one percent (1%) in the number of Warrant Shares purchasable upon
the exercise of each Warrant, provided that any adjustments that by
reason of this paragraph (f) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-thousandth of a
Warrant Share and the nearest cent.
(g) Other Dilutive Events. In case any event shall occur as to
which the provisions of paragraphs (b), (c) or (d) of this section 9.1
are not strictly applicable but the failure to make an
9
adjustment would not fairly protect the purchase rights represented by
this Agreement and the Warrants in accordance with the essential intent
and principles of those paragraphs, then, in each such case, the
Company shall appoint a firm of independent certified public
accountants of recognized national standing (which may be the regular
independent auditors of the Company), which shall give their opinion
upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in such sections, necessary to
preserve, without dilution, the purchase rights represented by this
Agreement and the Warrants. Upon receipt of such opinion, the Company
will promptly mail a copy thereof to the Holders and shall make the
adjustments described therein.
(h) Adjustment in Exercise Price. Whenever the number of
Warrant Shares purchasable upon the exercise of each Warrant is
adjusted as herein provided, the Exercise Price payable upon exercise
of each Warrant immediately prior to such adjustment shall be adjusted
by multiplying such Exercise Price by a fraction, the numerator of
which shall be the number of Warrant Shares purchasable upon the
exercise of each Warrant immediately prior to such adjustment and the
denominator of which shall be the number of Warrant Shares purchasable
immediately thereafter.
(i) When No Adjustment Required. No adjustment in the number
of Warrant Shares purchasable upon the exercise of each Warrant need be
made under paragraphs (b), (c) and (d) of this section 9.1 if the
Company issues or distributes to each Holder of Warrants the Rights,
Convertible Securities, Securities, evidences of indebtedness or assets
referred to in those paragraphs that each Holder of Warrants would have
been entitled to receive had the Warrants been exercised for the number
of Warrant Shares for which Warrants are then exercisable prior to the
happening of such event or the record date with respect thereto. No
adjustment in the number of Warrant Shares purchasable upon the
exercise of each Warrant need be made for sales of Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or to no par
value of Warrant Shares, provided that the Exercise Price shall at no
time be less than the par value of the Common Stock of the Company. The
Company will take appropriate action to assure that the par value of
Warrant Shares shall not exceed $.01, and to reduce the par value of
its Common Stock from time to time as necessary so that such par value
shall not be more than the Exercise Price then in effect.
(j) Shares of Common Stock. For all purposes of this
Agreement, the term "shares of Common Stock" shall mean (i) the class
of stock designated as the Common Stock of the Company at the date of
this Agreement or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting
solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that, at any time, as a
result of an adjustment made pursuant to paragraph (a) above, the
Holders shall become entitled to purchase any securities of the Company
other than shares of Common Stock, thereafter the number of such other
shares so purchasable upon exercise of each Warrant and the Exercise
Price of such shares shall be subject to adjustment from time to time
in a manner and on terms substantially identical to the provisions with
respect to the Warrant Shares contained in paragraphs (a) through (i)
above, and the provisions of this Agreement with respect to the Warrant
Shares shall apply on like terms to any such other securities.
(k) Expiration of Rights, etc. Upon the expiration of any
Rights or conversion or exchange or exercise rights, if any thereof
shall not have been exercised, the Exercise Price and the number of
Warrant Shares purchasable upon the exercise of each Warrant shall,
upon such expiration, be readjusted and shall thereafter be such as it
would have been had it 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
10
upon the exercise of such Rights or conversion or exchange or exercise
rights and (B) such shares of Common Stock, if any, were issued or sold
for the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually received by
the Company for the issuance, sale or grant of all of such Rights or
conversion or exchange or exercise rights whether or not exercised,
provided that no such readjustment shall have the effect of increasing
the Exercise Price or decreasing the number of Warrant Shares
purchasable upon the exercise of each Warrant by any amount in excess
of the amount of the adjustment initially made in respect of the
issuance, sale or grant of such Rights or conversion or exchange or
exercise rights.
9.2. Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount deemed appropriate by the Board of Directors of the
Company, provided that the Company may not in any case increase the Exercise
Price pursuant to this section 9.2, and provided further, that if the Company
elects to reduce the then current Exercise Price, such reduction shall remain in
effect for at least a 30-day period, after which time the Company may, at its
option, reinstate the Exercise Price in effect immediately prior to such
reduction, provided, however, that notice of such option to reinstate shall have
been given to the Holders of the Warrants prior to such reduction.
9.3. Notice of Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Exercise Price of Warrant
Shares is adjusted as herein provided, the Company shall promptly mail at its
sole expense by first class mail, postage prepaid, to each Holder notice of such
adjustment or adjustments and a certificate of the Chief Financial Officer of
the Company setting forth the number of Warrant Shares purchasable upon the
exercise of each Warrant and the Exercise Price of Warrant Shares after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth in reasonable detail the computations by which such
adjustment was made.
9.4. Preservation of Purchase Rights upon Merger or Consolidation. In
case of any consolidation of the Company with or merger of the Company with or
into another entity or the sale of all or substantially all the Company's
assets, the Company or such successor entity shall execute and deliver to the
Holders an agreement that each Holder shall have the right thereafter, upon
payment of the Exercise Price in effect immediately prior to such action, to
purchase upon exercise of each Warrant the kind and amount of shares and other
securities and property (including cash) that such Holder would have owned or
have been entitled to receive after the happening of such consolidation or
merger or sale of assets had such Warrant been exercised immediately prior to
such action. The Company shall at its sole expense mail by first class mail,
postage prepaid, to each Holder notice of the execution of any such agreement.
Such agreement shall provide for adjustments, which shall be substantially
identical to the adjustments provided for in this section 9. In addition, the
Company shall not merge or consolidate with or into any other entity or enter
into any agreement to sell all or substantially all of its assets unless the
successor entity (if not the Company) shall expressly assume, by supplemental
agreement executed and delivered to the Holders, and satisfactory to the
Holders, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company. The provisions of this section 9.4 shall similarly apply to successive
consolidations or mergers.
9.5. No Impairment of Holder's Rights. The Company shall not, by
amendment of its Certificate of Incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms hereof or of the Warrants, but shall at all
times in good faith carry out all such terms and take all such action as may be
necessary or appropriate in order to protect the rights of the Holders against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (a) shall not permit the par value of any shares of stock receivable
upon the exercise of the Warrants to exceed the amount payable therefor upon
such exercise, (b) shall take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue, free from preemptive
11
rights, fully paid and nonassessable shares of stock upon the exercise of all
Warrants from time to time outstanding and (c) shall not take any action that
results in any adjustment of the Exercise Price if the total number of shares of
Common Stock issuable after the action upon the exercise of all the Warrants
would exceed the total number of shares of Common Stock then authorized by the
Company's Certificate of Incorporation and available for the purpose of issue
upon such exercise.
9.6. Statement on Warrants. Irrespective of any adjustments in the
Exercise Price of the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
SECTION 10. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. If more than one Warrant shall be exercised at the
same time by the same Holder, the number of full Warrant Shares which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of Warrants so exercised. If any fraction of a Warrant Share would,
except for the provisions of this section 10, be issuable on the exercise of any
Warrant, the Company shall pay an amount in cash equal to the closing price for
one share of Common Stock on the date the Warrant Certificate is presented for
exercise (determined in accordance with the second sentence of section 9.1(e)(i)
hereof) multiplied by such fraction.
SECTION 11. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS.
Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the Holders or their transferees the right to vote
or to receive dividends or the consent or to receive notice as stockholders in
respect of any meeting of stockholders for the election of directors of the
Company or any other matter, or any rights whatsoever as stockholders of the
Company.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than cash dividends); or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of a substantial portion of
the properties and assets of the Company for which approval of any
shareholders of the Company is required, or of any reclassification or
change of Common Stock issuable upon exercise of the Warrants (other
than change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action which would
require an adjustment of the Exercise Price pursuant to section 9
hereof;
12
then the Company shall cause to be given to each Holder at its address appearing
on the Warrant Register, at least twenty (20) days prior to the applicable
record date hereinafter specified, or promptly in the case of events for which
there is no record date, by first class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
entitled to receive any such rights, options, warrants or distribution are to be
determined, (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation, winding up or action is expected to become effective or
consummated, as well as the date as of which it is expected that holders or
record of shares of Common Stock shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation, winding
up or action. The failure to give the notice required by this section 11 or any
defect therein shall not affect the legality or validity of any distribution,
right, option, warrant, reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation, winding up or action, or the vote upon any
of the foregoing.
SECTION 12. SEC REGISTRATION.
12.1. SEC Restrictions. Each Holder represents and warrants to the
Company that it will not transfer any Warrants or Warrant Shares (unless such
Warrants or Warrant Shares were previously transferred pursuant to an effective
registration statement under the Act) except pursuant to (i) an effective
registration statement under the Act, (ii) to the extent applicable, Rule 144
under the Act (or any similar rule under the Act relating to the disposition of
restricted securities as defined thereunder) or (iii) an opinion of counsel,
reasonably satisfactory to the Company, to the effect that an exemption from
registration under the Act is available in connection with such transfer.
12.2. Certificates To Bear Legends. The Warrant Certificates shall
initially bear the following legend, by which each Holder shall be bound.
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES
OF COMMON STOCK OR OTHER SECURITIES ISSUABLE UPON EXERCISE
THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES) OR (iii) AN OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE IN CONNECTION WITH SUCH SALE.
The Warrant Shares or other securities issued upon exercise of the
Warrants shall initially, unless previously issued pursuant to an effective
registration statement under the Act, bear the following legend, by which the
holder thereof shall be bound;
"THE SHARES OR OTHER SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER
THE ACT RELATING TO THE DISPOSITION OF SECURITIES) OR (iii) AN
CL: 406188v6
13
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, TO
THE EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT
IS AVAILABLE IN CONNECTION WITH SUCH SALE.
12.3. Registration Statements.
(a) Piggyback Registration Rights. In the event the Company
proposes to file a registration statement under the Act prior to the
last day of the Exercise Period with respect to an offering of any
class of equity security for the Company's account and/or for the
account of others (other than in connection with an exchange offer or a
registration statement on Form S-4 or S-8 or other similar registration
statements not available to register securities so requested to be
included) which registration statement the Company believes will be or
become effective at any time on or after the first day of the Exercise
Period, the Company shall in each case give written notice of such
proposed filing to each Holder of Registrable Securities in each case
at least 30 days before the earlier of the anticipated or the actual
effective date of the Registration Statement and at least 10 days
before the initial filing of such Registration Statement. Such notice
shall offer to such Holders the opportunity to include in such
Registration Statement such number of Registrable Securities as they
may request. Holders desiring inclusion of Registrable Securities in
such registration statement shall so inform the Company by written
notice, given within 10 days of the giving of such notice by the
Company in accordance with the provisions of Section 15 hereof. The
Company shall permit, or shall cause the managing underwriter or
underwriters of a proposed offering to permit, the Holders of
Registrable Securities requested to be included in the Registration
Statement to include the transfer of such securities in the proposed
offering on the same and conditions as applicable to securities of the
Company, if any, included therein for the account of any person other
than the Company and the holders of Registrable Securities and in any
event on such terms as are customary for holders of securities of a
company to be offered in a public underwritten offering by selling
security holders, provided that to the extent the terms of this
Agreement are applicable, the terms of this Agreement shall control.
Notwithstanding the foregoing, if any such managing underwriter or
underwriters shall advise the Company and the Holders of Registrable
Securities in writing that, in its opinion, the distribution of
securities by holders thereof, including all or a portion of Regis
trable Securities, requested to be included in the registration
statement concurrently with the securities being registered by the
Company would materially adversely affect the distribution of the
securities by the Company for its own account, then the Company will
include in the registration, to the extent of the number of securities
that the Company is so advised can be sold in the offering, first,
securities proposed by the Company to be sold for its own account and,
second, Registrable Securities and securities of the Company held by
any other holders thereof whose rights to have securities of the
Company included in the registration pre-date those of the Holders of
Registrable Securities, pro rata on the basis of the number of
securities so proposed to be sold and so requested to be included. The
Company, in its sole discretion, may decide to suspend any offering
under, or to terminate, any such registration statement at any time.
(b) No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (i) agrees to
sell such Holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Holders of not less than a
majority of the Registrable Securities and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements.
12.4. Registration Procedures. In connection with any Registration
Statement, the Company shall effect such registrations to permit the offering
and sale of the Registrable Securities in accordance with
CL: 406188v6
14
the intended method or methods of disposition thereof, and pursuant thereto the
Company shall as expeditiously as possible:
(a) Before filing a Registration Statement, any amendments or
supplements thereto or to any related Prospectus (including documents
that would be incorporated or deemed to be incorporated therein by
reference, including such documents, filed under the Exchange Act that
would be incorporated therein by reference), the Company shall afford
promptly to the Holders of the Registrable Securities covered by the
Registration Statement, their counsel and the managing underwriter or
underwriters, if any, an opportunity to review copies of all such
documents proposed to be filed a reasonable time prior to the proposed
filing thereof. The Company shall not file any Registration Statement
or Prospectus or any amendments or supplements thereto if the Holders
of the Registrable Securities covered by such Registration Statement,
their counsel, or the managing underwriter or underwriters, if any,
shall reasonably object in writing. The objections of such Persons
shall be deemed to be reasonable if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission, or fails to comply
with the applicable requirements of the Act.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep such Registration Statement continuously effective
for the time periods prescribed hereby; cause the related Prospectus to
be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Act; and comply with the provisions
of the Act and the Exchange Act to the disposition of all securities
covered by such Registration Statement as so amended or in such
prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities, their
counsel and the managing underwriter or underwriters, if any, promptly
(but in any event within five Business Days), and confirm such notice
in writing, (i) when a Prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective (including in such notice a written statement that
any Holder may, upon request, obtain, without charge, one conformed
copy of such Registration Statement or post-effective amendment,
including all financial statements, schedules and exhibits thereto),
(ii) of the issuance by the SEC of any stop order suspending the
effectiveness of such Registration Statement or of any order preventing
or suspending the use of any preliminary pro spectus or the initiation
or threatening of any proceedings for that purpose, (iii) if, at any
time when a prospectus is required by the Act to be delivered in
connection with sales of the Registrable Securities, the
representations and warranties of the Company (or, if applicable, any
subsidiary of the Company) contained in any agreement (including any
underwriting agreement) contemplated by section 12.4(m) below, to the
knowledge of the Company, cease to be true and correct in any material
respect, (iv) of the receipt by the Company (or, if applicable, any
subsidiary of the Company) of any notification with respect to (A) the
suspension of the qualification or exemption from qualification of the
Registration Statement or any of the Registrable Securities covered
thereby for offer or sale in any jurisdiction or (B) the initiation or
threatening of any proceeding for such purpose, (v) of the happening of
any event or information becoming known that requires the making of any
changes in such Registration Statement, Prospectus or documents so
that, in the case of such Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading and, in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading and (vi) of the Company's reasonable determination
that a post-effective amendment to such Registration Statement would be
appropriate.
15
(d) Use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any
of the Registrable Securities covered thereby for sale in any
jurisdiction, and, if any such order is issued, to obtain the
withdrawal of any such order at the earliest possible moment.
(e) If requested by the managing underwriter or underwriters,
if any, or the Holders of a majority of the Registrable Securities
being sold in connection with an underwritten offering, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters, if any, or
such Holders reasonably request to be included therein to comply with
applicable law, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable
after the Company (and, if applicable, a subsidiary of the Company) has
received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment and (iii) supplement
or make amendments to such Registration Statement.
(f) Furnish to each Holder of Registrable Securities who so
requests and to counsel for the holders of Registrable Securities and
each managing underwriter, if any, without charge, one conformed copy
of the Registration Statement and each post-effective amendment
thereto, including all financial statements, schedules and exhibits,
and of all documents incorporated or deemed to be incorporated therein
by reference.
(g) Deliver to each Holder of Registrable Securities, their
counsel and each underwriter, if any, without charge, as many copies of
each Prospectus (including each form of prospectus) and each amendment
or supplement thereto as such persons may reasonably request; and
subject to the last paragraph of this Section 12.4, the Company hereby
consents to the use of each such Prospectus and each amendment or
supplement thereto by each of the holders of Registrable Securities and
the underwriter or underwriters or agents, if any, in connection with
the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, to
register or qualify, and cooperate with the holders of Registrable
Securities, the underwriter or underwriters, if any, and their
respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of, such
Registrable Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as may be
reasonably requested by the Holders of Registrable Securities, or as
the managing underwriter or underwriters reasonably request in writing;
keep each such registration or qualification (or exemption therefrom)
effective during the period during which the Registration Statement is
required to be kept effective and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions
of the securities covered thereby, provided that the Company will not
be required to (A) qualify generally to do business in any jurisdiction
where it is not then so qualified, (B) take any action that would
subject it to general service of process in any such jurisdiction where
it is not then so subject or (C) become subject to taxation in any
jurisdiction where it is not then so subject.
(i) Cooperate with the Holders of Registrable Securities and
the managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates shall not bear
any restrictive legends whatsoever and shall be in a form eligible for
deposit with The Depository Trust Company ("DTC"); and enable such
Registrable Securities to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request at least two Business Days prior to any
sale of Registrable Securities in a firm commitment underwritten public
offering.
16
(j) Use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities within the United
States as may be necessary to enable the seller or sellers thereof or
the underwriter or underwriters, if any, to complete the transfer of
such Registrable Securities.
(k) Upon the occurrence of any event contemplated by section
12.4(c)(v) or 12.4(c)(vi) above, as promptly as practicable prepare a
supplement or post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and, subject to section
12.4(a) hereof, file such with the SEC so that, as thereafter delivered
to the purchasers of Registrable Securities being sold thereunder, such
Prospectus will not contain 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, in light of the circumstances
under which they were made, not misleading and will otherwise comply
with law.
(l) Prior to the effective date of the Registration Statement,
(i) provide the registrar for the Warrant Shares or such other
Registrable Securities with printed certificates for such securities
which certificates shall not bear any restrictive legends whatsoever
and shall be in a form eligible for deposit with DTC and (ii) provide a
CUSIP number for such securities.
(m) Enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and take all such
other actions as are reasonably requested by the managing underwriter
or underwriters in order to expedite or facilitate the registration and
transfer of such Registrable Securities in any underwritten offering to
be made of the Registrable Securities in accordance with this Agreement
and in connection therewith, (i) make such representations and
warranties to the underwriter or underwriters with respect to the
business of the Company and the subsidiaries of the Company and the
Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and
when requested; (ii) obtain "cold comfort" letters and updates thereof
(which letters and updates shall be reasonably satisfactory in form,
scope and substance to the managing underwriter or underwriters) from
the independent certified public accountants of the Company and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included in the Registration Statement, addressed to each of the
underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings; and (iii) if an underwriting agreement is
entered into, assume that such underwriting agreement contains
indemnification provisions and procedures no less favorable to the
Holders than those set forth in section 12.6 hereof (or such other
provisions and procedures acceptable to Holders of a majority of
Registrable Securities covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said section; and (iv) obtain
opinions of counsel to the Company (and, if applicable, the
subsidiaries of the Company) and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the Holders and, if in connection with an underwritten
offering, to the managing underwriter or underwriters), covering the
matters customarily covered in opinions requested in public offerings
and such other matters as may be reasonably requested. The above shall
be done at each closing under such underwriting agreement, or as and to
the extent required thereunder.
(n) Make available for inspection by a representative of the
Holders of Registrable Securities being sold, any underwriter
participating in any such disposition of Registrable Securities, if
any, and any attorney or accountant retained by such representative of
the holders or underwriter (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business
17
hours, all financial and other records, pertinent corporate documents
and properties of the Company and the subsidiaries of the Company, and
cause the officers, directors and employees of the Company and the
subsidiaries of the Company to supply all information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement.
(o) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings
statements satisfying the provisions of section 11(a) of the Act and
Rule 158 thereunder (or any similar rule promulgated under the Act) no
later than 45 days after the end of any 12-month period (or ninety days
after the end of any 12-month period if such period is a fiscal year
(1) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to an underwriter or to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold
to an underwriter or to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the
effective date of the Registration Statement, which statements shall
cover said 12-month periods.
Each seller of Registrable Securities as to which any
registration is being effected agrees, as a condition to the
registration obligations with respect to such Holder provided herein,
to furnish to the Company, as the Company may, from time to time,
reasonably request in writing, (i) such information specified in item
507 of Regulation S-K under the Act, (ii) if such Holder's plan of
distribution includes any manner of offer or sale other than ordinary
course sales in the public markets through brokers at ordinary rates of
commission, such information as is required by item 508 of Regulation
S-K and (iii) such information otherwise required by the Act or the
SEC, for use in connection with any Registration Statement or
Prospectus or preliminary Prospectus included therein. The Company may
exclude from such registration the Registrable Securities of any seller
who unreasonably fails to furnish such information within a reasonable
time after receiving such request. If the identity of a seller of
Registrable Securities is to be disclosed in the Registration
Statement, such seller shall be permitted to include all information
regarding such seller as it shall reasonably request.
Each Holder of Registrable securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in section
12.4(c)(ii), 12.4(c)(iv), 12.4(c)(v), or 12.4(c)(vi), such Holder will
forthwith discontinue transfer of such Registrable Securities covered
by the Registration Statement or Prospectus until such Holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by
section 12.4(k), or until it is advised in writing by the Company that
the use of the applicable prospectus may be resumed, and has received
copies of any amendments or supplements thereto, and, if so directed by
the Company, such Holder will deliver to the Company or destroy all
copies, other than permanent file copies, then in such Holder's
possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
12.5. Registration Expenses. All fees and expenses incident to the
performance of or compliance with the provisions of section 12 of this Agreement
by the Company shall be borne by the Company whether or not the Registration
statement is filed or becomes effective, including, without limitation, (i) all
registration fees (including, without limitation, (A) fees with respect to
filings required to be made with the NASD in connection with an underwritten
offering and (B) fees and expenses of compliance with state securities or Blue
Sky laws (including, without limitation, fees and disbursements of counsel for
the underwriter or underwriters in connection with Blue Sky qualifications of
the Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such juris dictions as
provided in section 12.4(h)), (ii) reasonable printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with DTC and of printing prospectuses if the
printing of prospectuses is requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Securities, by the Holders
of a majority of Registrable
18
Securities included in any Registration Statement), (iii) fees and disbursements
of all independent certified public accountants referred to in section
12.4(m)(ii) (including, without limitation, the expenses of any special audit
and "cold comfort" letters required by or incident to such performance), (iv)
the fees and expenses of one "qualified independent underwriter" or other
independent appraiser participating in an offering pursuant to Schedule E to the
By-laws of the NASD, (v) liability insurance under the Act, if the Company so
desires such insurance, (vi) fees and expenses of all attorneys, advisors,
appraisers and other persons retained by the Company or any subsidiary of the
Company, (vii) internal expenses of the Company and the subsidiaries of the
Company (including, without limitation, all salaries and expenses of officers
and employees of the Company and the subsidiaries of the Company performing
legal or accounting duties), (viii) the expense of any annual audit, (ix) the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange and (x) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements and any other documents
necessary in order to comply with this Agreement.
12.6. Indemnification.
(a) Indemnification by the Company. The Company shall, without
limitation as to time, indemnify and hold harmless each Holder and each
holder of Registrable Securities, the officers, directors, agents,
investment advisors and employees of each of them, each person who
controls any such person (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) and the officers, directors, agents
and employees of each such controlling person (individually, an
"Indemnified Party") from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (and actions in respect
thereof) (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim
asserted or in any action, proceeding or litigation), joint or several,
to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar an such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are
based upon a breach of any representation, warranty or covenant made by
the Company in this Agreement or based upon any untrue statement or
alleged untrue statement of a material fact contained in any
Registration Statement, preliminary Prospectus or Prospectus, or in any
supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to; state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Indemnified Party for
any legal or other expenses reasonably incurred by the Indemnified
Party in connection with investigating or defending against such loss,
claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case
the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Indemnified
Party expressly for use therein; and provided further, that the Company
shall not be liable to any Indemnified Party under the indemnity
agreement in this section 12.6(a) with respect to any Registration
Statement, preliminary Prospectus or Prospectus, or any supplement
thereto or amendment thereof, to the extent that any such loss, claim,
judgment, liability or expense results solely from an untrue statement
of material fact contained in, or the omission of any material fact
from, such Registration Statement, preliminary Prospectus or
Prospectus, or any supplement thereto or amendment thereof, which
untrue statement or omission was corrected in the Prospectus or any
supplement thereto or amendment thereof, if the Company shall sustain
the burden of proving that the Indemnified Party sold Registrable
Securities to the person alleging such loss, claim, damage or liability
without sending or giving, at or prior to the written confirmation of
such sale, a copy of the Prospectus, as amended, to correct any
misstatement or omission, if the Company had previously furnished
copies
19
thereof to the Indemnified Party. This indemnity agreement will be in
addition to any liability that the Company may otherwise have,
including under this Agreement. The Company acknowledges that the
information provided pursuant to the second paragraph of section
12.4(o) of this Agreement that is included in any Registration
Statement, preliminary Prospectus or Prospectus, or any supplement
thereto or amendment thereof, constitutes the only information relating
to a Holder that will be furnished in writing to the Company by the
Holder expressly for inclusion in a Registration Statement, preliminary
Prospectus or Prospectus, or any supplement thereto or amendment
thereof.
(b) Indemnification by Holders of Registrable Securities. Each
Holder of Registrable Securities severally, and not jointly, hereby
agrees to indemnify and hold harmless the Company and any underwriter
and each person, if any, who controls the Company and any underwriter
within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, and each other Holder against any losses, liabilities,
claims, damages and expenses whatsoever (and actions in respect
thereof) (including but not limited to attorneys' fees and any and all
expenses whatsoever, and any and all amounts paid in settlement of any
claim asserted or in any action, proceeding or litigation), joint or
several, to which they or any of them may become subject under the Act,
the Exchange Act or other federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement, any related
preliminary Prospectus or Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made therein in reliance
upon and in conformity with written information furnished to the
Company by such Holder (or its related Indemnified Party) expressly for
use therein; provided, however, that in no event shall the liability of
any Holder of Registrable Securities hereunder be, or be claimed by the
Company to be, greater in amount than the dollar amount of the proceeds
(net of payment of all expenses) received by such Holder upon the sale
of Registrable Securities pursuant to such Registration Statement
giving rise to such indemnification obligation. The Company
acknowledges that the information provided pursuant to the second
paragraph of section 12.4(o) of this Agreement that is included in any
Registration Statement, preliminary Prospectus or Prospectus, or any
supplement thereto or amendment thereof constitutes the only
information relating to a holder that will be furnished in writing to
the Company by the Holder expressly for inclusion in a Registration
Statement, preliminary Prospectus or Prospectus, or any supplement to
or amendment thereof. This indemnity will be in addition to any
liability that such Holder may otherwise have, including under this
Agreement.
(c) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under paragraph (a) or (b) of this
section 12.6 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such paragraph, notify each party
against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying
party shall not relieve it from any liability which it may have under
this section 12.6, except to the extent that it has been prejudiced in
any material respect by such failure, or from any liability which it
may otherwise have). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
20
indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense
of such action within a reasonable time after notice of commencement of
the action, or (iii) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all
of the indemnifying parties (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf
of the indemnified party or parties). The Company shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
then one separate firm of attorneys (in addition to any local counsel)
at any time for such indemnified parties, which firm shall be
designated by the Holders of a majority of the Registrable Securities
then outstanding. Anything in this subsection to the contrary
notwithstanding, an Indemnifying Party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withhold.
(d) Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in this section
12.6 is for any reason held to be unavailable to any indemnified party
or is insufficient to hold harmless such indemnified party hereunder,
then each applicable indemnifying party shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the
nature contemplated by such indemnification provisions (including any
investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting, in the case of losses,
claims, damages, liabilities and expenses suffered by the Company, any
contribution received by the Company from persons, other than any
Indemnified Parties, who may also be liable for contribution, including
persons who control the Company any within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act) to which such
indemnifying party may be subject, in such proportion as is appropriate
to reflect the relative fault of such indemnifying party in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the indemnifying
parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and each Holder agree
that it would not be just and equitable if contribution pursuant to
this section 12.6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the
equitable considerations referred to above. Notwithstanding the
provisions of this section 12.6(d), (i) an indemnifying party that is a
Holder of Registrable Securities shall not be required to contribute
any amount in excess of the amount by which the total price at which
the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount
of any damages that such indemnifying party has otherwise paid or
required to pay by reasons of such untrue or alleged untrue statement
or omission or alleged omission and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this section
12.6(d), each person, if any, who controls any Holder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
shall have the same rights to contribution as such Holder, and each
person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) at the Exchange Act shall have the same
rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this section 12.6(d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which a
claim for
21
contribution may be made against another party or parties under this
section 12.6(d), notify such party or parties from whom contribution
may be sought. but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this section 12.6
or otherwise. No party shall be liable for contribution with respect to
any action or claim settled without its written consent; provided,
however, that such written consent was not unreasonably withheld.
(e) Other Indemnities. The indemnity, contribution and expense
reimbursement obligations under this section 12.6 shall be in addition
to any liability each indemnifying person may otherwise have.
12.7. Rule 144. The Company shall file the reports required to be filed
by it under the Act and the Exchange Act and the rules and regulations adopted
by the SEC thereunder in a timely manner. The Company further covenants that it
will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Act within
the limitation of the exemptions provided by (a) Rule 144 and Rule 144A under
the Act, as such Rules may be amended from time to time, or (b) any similar rule
or regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with the foregoing requirements.
SECTION 13. PAYMENT IN U.S. CURRENCY.
All payments required to be made hereunder shall be made in lawful
money of the United States of America.
SECTION 14. IDENTITY OF TRANSFER AGENT.
The name and address of the Company's Transfer Agent as of the date
hereof is Continental Stock Transfer & Trust Company, 0 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000. Forthwith upon the appointment of any subsequent or other Transfer
Agent for the Common Stock, or any other shares of the Company's capital stock
issuable upon the exercise of the Warrants, the Company shall provide each
Holder with a statement setting forth the name and address of such Transfer
Agent.
SECTION 15. NOTICES.
Any notice pursuant to this Agreement by the Company to any Holder, or
by any Holder to the Company, shall be in writing and shall be delivered in
person or by facsimile transmission, or mailed first class, postage prepaid, (a)
to the Company, at its offices at 0000 X. Xxxxxxx Xxxx, Xxxx Xxx, Xxx Xxxxxx
00000, Attention: Xxxxxxx X. Xxxxxx, Telecopier No.: (000) 000-0000, or (b) to
KeyBank National Association, at its offices at 000 Xxxxxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxxxxx, Telecopier No.: (914)
681-8350, or (c) to Fleet Bank, 000 Xxxx Xxxxxx, Mail Stop: XX/XXX00X, Xxxxxxxx,
Xxxxxxxxxxx 00000, Attention: Xxxxxx Xxxxxxx, Telecopier No.: (000) 000-0000.
Each party hereto may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice to the other party.
Any notice mailed pursuant to this Agreement by the Company to the
Holders shall be in writing and shall be mailed first class, postage prepaid, or
otherwise delivered to such Holders at their respective addresses in the Warrant
Register. Any Holder may change its address by notice to the Company given in
accordance with this section 15.
22
SECTION 16. FURNISHING INFORMATION.
So long as the Warrants remain outstanding, the Company shall cause its
annual report to stockholders and any quarterly or other financial reports
furnished by it to stockholders to be mailed within five days to the Holders, at
their addresses as set forth in the Warrant Register.
SECTION 17. SUPPLEMENTS AND AMENDMENTS.
The Company and the Holders of a majority of the Warrants may amend
this Agreement from time to time.
SECTION 18. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders shall bind and inure to the benefit of
their respective successors hereunder.
SECTION 19. APPLICABLE LAW.
THIS AGREEMENT AND EACH WARRANT ISSUED HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
SECTION 20. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Holders any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, its successors and the Holders of the
Warrants.
SECTION 21. COUNTERPARTS.
This Agreement may be executed in any number of counterparts; each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
SECTION 22. CAPTIONS.
The captions of the sections and subsections of this Agreement have
been inserted for convenience only and shall have no substantive effect.
[Signatures are on the following page.]
23
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
as of the date first above written.
SAFETY COMPONENTS KEYBANK NATIONAL ASSOCIATION
INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxxxx
---------------------------- --------------------------
Executive Vice President Senior Vice President
FLEET BANK
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Vice President
24
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON
STOCK OR OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
(ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR
RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES) OR (iii)
AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE
IN CONNECTION WITH SUCH SALE.
No. ______ Warrants
Warrant Certificate
SAFETY COMPONENTS INTERNATIONAL, INC.
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of Warrants expiring on [the tenth anniversary of the issue
date] (the "Warrants") to purchase Common Stock, par value $.01 per share (the
"Common Stock"), of Safety Components International, Inc., a Delaware
corporation (the "Company"). Each Warrant entitles the registered holder upon
exercise on or after the date hereof and on or before 5:00 p.m. New York City
Time on [the tenth anniversary of the issue date], to receive from the Company
one fully paid and nonassessable share of Common Stock (each such share, a
"Warrant Share") at the exercise price of [Current Market Price as defined in
the Warrant Agreement described on the reverse of this certificate] per share
(the "Exercise Price") payable (i) in cash or (ii) by certified or official bank
check. The Warrants represented by this Warrant Certificate may be exercised
upon surrender of this Warrant Certificate and payment of the Exercise Price at
the office of the Company designated for such purpose, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof.
In the alternative, Warrants may be exercised without the exchange of
funds pursuant to the net exercise provisions of section 4.2 of the Warrant
Agreement. The number of Warrant Shares issuable upon exercise of the Warrants
and the Exercise Price are subject to adjustment upon the occurrence of certain
events set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time, on
[the tenth anniversary of the issue date] and, to the extent not exercised by
such time, such Warrants shall expire.
This Warrant is subject to redemption at the option of the Company
after the third anniversary of the initial date of issuance of the Warrants if
certain conditions relating to the market price of the Common Stock are met, as
set forth in the Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
1
This Warrant Certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
IN WITNESS WHEREOF, Safety Components International, Inc. has caused
this Warrant Certificate to be signed by its duly authorized officer.
Dated: , ____
SAFETY COMPONENTS INTERNATIONAL, INC.
By:
Title:
2
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on [the tenth anniversary of the issue
date], entitling the holder on exercise to receive shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock"), and are issued or to
be issued pursuant to a Warrant Agreement dated as of June __, 1999 (the
"Warrant Agreement"), among the Company, KeyBank National Association and Fleet
Bank, which Warrant Agreement is hereby incorporated by reference in and made a
part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Warrant Agreement.
Warrants may be exercised at any time on or after the date hereof and
on or before 5:00 p.m., New York City Time, on [the tenth anniversary of the
issue date]. The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price (i) in cash or (ii) by certified or official
bank check. In the alternative, Warrants may be issued without the exchange of
funds pursuant to the net exercise provisions of section 4.2 of the Warrant
Agreement. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his assignee a
new Warrant Certificate evidencing the number of Warrants not exercised. No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the number of shares of Common Stock issuable upon the exercise of each
Warrant and the Exercise Price shall be adjusted. No fractions of a share of
Common Stock will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Warrants and the Common Stock purchasable upon exercise of
the Warrants. Said registration rights are set forth in full in the Warrant
Agreement.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company, a new Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) hereon as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company, except as otherwise provided in the
Warrant Agreement.
3
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise Warrants
containing the right, represented by this Warrant Certificate, to receive shares
of Common Stock and herewith (check item) tenders payment for such shares to the
order of Safety Components International, Inc. in the amount of [market price]
per share of Common Stock in accordance with the terms hereof, as follows:
|_| $_______ in cash or by certified or official bank check to the
order of Safety Components International, Inc.; or
|_| By surrender of Warrant Shares having a Current Market Value (as
defined in the Warrant Agreement) of $ . ---------------------------
The undersigned requests that a certificate for such shares be
registered in the name of _________________ , whose address is
___________________, and that such shares be delivered to____________________ ,
whose address is___________________ .
If said numbers of shares is less than all of the shares of Common
Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate for Warrants representing the remaining balance of such Warrants be
registered in the name of , whose address is , and that such Warrant Certificate
be delivered to______________________________ , whose address
is____________________________. .
Signature
Date:
4
ASSIGNMENT FORM
To assign this Warrant, fill in the form below: (I) (we) assign and
transfer this Warrant to:
(Insert Assignee's Social Security or Tax Identification Number)
(Print or type Assignee's name, address and zip code)
and irrevocably appoint to transfer this Warrant on the books of the Company.
The agent may substitute another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face of this
Warrant)
5
TABLE OF CONTENTS
PAGE
SECTION 1. CERTAIN DEFINED TERMS; REPRESENTATIONS OF INITIAL HOLDER........................................1
1.1. Certain Defined Terms...........................................................................1
1.2. Representations of Initial Holders..............................................................2
SECTION 2. FORM OF WARRANT; EXECUTION; REGISTRATION........................................................2
2.1. Form of Warrant; Execution of Warrants..........................................................2
2.2. Registration....................................................................................3
SECTION 3. TRANSFER AND EXCHANGE OF WARRANTS...............................................................3
3.2. Restrictions on Transfer........................................................................3
SECTION 4. TERM OF WARRANTS; EXERCISE OF WARRANTS; COMPLIANCE WITH
GOVERNMENT REGULATIONS; REDEMPTION..............................................................3
4.1. Term of Warrants................................................................................3
4.2. Exercise of Warrants............................................................................3
4.3. Compliance with Government Regulations; Qualification under the Securities Laws.................4
SECTION 5. PAYMENT OF TAXES................................................................................5
SECTION 6. MUTILATED OR MISSING WARRANT CERTIFICATES.......................................................5
SECTION 7. RESERVATION OF WARRANT SHARES...................................................................5
SECTION 8. STOCK EXCHANGE LISTINGS.........................................................................6
SECTION 9. ADJUSTMENT OF EXERCISE PRICE; NUMBER OF WARRANT SHARES AND
SHARES OF CAPITAL STOCK INTO WHICH WARRANTS ARE EXERCISABLE
...............................................................................................6
9.1. Mechanical Adjustments..........................................................................6
(a) Adjustment for Change in Capital Stock.................................................6
(b) Adjustment for Rights Issue............................................................6
(c) Adjustment for Other Distributions.....................................................7
(d) Adjustment for Common Stock Issue......................................................8
(e) Current Market Price; Price Per Share..................................................8
(f) When De Minimis Adjustment May Be Deferred.............................................9
(g) Other Dilutive Events..................................................................9
(h) Adjustment in Exercise Price..........................................................10
(i) When No Adjustment Required...........................................................10
(j) Shares of Common Stock................................................................10
(k) Expiration of Rights, etc.............................................................10
9.2. Voluntary Adjustment by the Company............................................................11
9.3. Notice of Adjustment...........................................................................11
9.4. Preservation of Purchase Rights upon Merger or Consolidation...................................11
9.5. No Impairment of Holder's Rights...............................................................11
9.6. Statement on Warrants..........................................................................12
SECTION 10. FRACTIONAL INTERESTS...........................................................................12
SECTION 11. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS..................................................12
i
SECTION 12. SEC REGISTRATION...............................................................................13
12.1. SEC Restrictions...............................................................................13
12.2. Certificates To Bear Legends...................................................................13
12.3. Registration Statements........................................................................14
12.4. Registration Procedures........................................................................14
12.5. Registration Expenses..........................................................................18
12.6. Indemnification................................................................................19
(a) Indemnification by the Company........................................................19
(b) Indemnification by Holders of Registrable Securities..................................20
(c) Conduct of Indemnification Proceedings................................................20
(d) Contribution..........................................................................21
(e) Other Indemnities.....................................................................22
12.7. Rule 144.......................................................................................22
SECTION 13. PAYMENT IN U.S. CURRENCY............................................................................22
SECTION 14. IDENTITY OF TRANSFER AGENT.....................................................................22
SECTION 15. NOTICES........................................................................................22
SECTION 16. FURNISHING INFORMATION.........................................................................23
SECTION 17. SUPPLEMENTS AND AMENDMENTS....................................................................23
SECTION 18. SUCCESSORS.....................................................................................23
SECTION 19. APPLICABLE LAW.................................................................................23
SECTION 20. BENEFITS OF THIS AGREEMENT.....................................................................23
SECTION 21. COUNTERPARTS...................................................................................23
SECTION 22. CAPTIONS.......................................................................................23
ii
DEFINITION LIST
SECTION
Act.............................................................................................................1.1
Agreement..............................................................................................Introduction
Assets......................................................................................................9.1.(c)
Business Day....................................................................................................1.1
Cashless Exercise...............................................................................................4.2
Cashless Exercise Ratio.........................................................................................4.2
Common Stock...........................................................................................Introduction
Company................................................................................................Introduction
Convertible Securities......................................................................................9.1.(c)
Credit Agreement.......................................................................................Introduction
Current Market Price........................................................................................9.1.(e)
DTC.........................................................................................................12.4(i)
Exchange Act....................................................................................................1.1
Exercise Period.................................................................................................4.1
Exercise Price..................................................................................................4.2
Fee Letter.............................................................................................Introduction
Holders................................................................................................Introduction
Indemnified Party..........................................................................................12.6.(a)
Initial Holder.........................................................................................Introduction
Initial Holders........................................................................................Introduction
Inspectors..................................................................................................12.4(n)
NASD............................................................................................................1.1
NASDAQ......................................................................................................9.1.(e)
Number of Shares............................................................................................9.1.(e)
Price Per Share.............................................................................................9.1.(e)
Prospectus......................................................................................................1.1
Registrable Securities..........................................................................................1.1
Registration Statement..........................................................................................1.1
Rights......................................................................................................9.1.(b)
SEC.............................................................................................................1.1
Securities..................................................................................................9.1.(d)
Shares of Common Stock......................................................................................9.1.(j)
Transfer Agent....................................................................................................7
Transfer Restricted Securities..................................................................................1.1
Trustee.....................................................................................................9.1.(c)
Warrant................................................................................................Introduction
Warrant Certificates............................................................................................2.1
Warrant Register................................................................................................2.2
Warrant Shares.........................................................................................Introduction
Warrants...............................................................................................Introduction
iii
