REUTER MANUFACTURING, INC.
COMMON STOCK WARRANT AGREEMENT
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This Common Stock Warrant Agreement (the "Warrant") is made and
entered into as of December 31, 1995 (the "Effective Date"), by and between
Reuter Manufacturing, Inc., a Minnesota corporation ("Reuter"), and Sanwa
Business Credit Corporation, a Delaware corporation ("SBCC"). Reuter and SBCC
are sometimes herein collectively referred to as "Parties" and separately
referred to as a "Party".
RECITALS
This Warrant is entered into in light of the following background:
X. Xxxxxx has requested SBCC to make certain financial
accommodations to Reuter.
B. It is a material condition of SBCC's granting of the requested
financial accommodations that Reuter enter into this Warrant.
AGREEMENT
NOW THEREFORE, for and in consideration of the background Recitals and
the mutual promises, terms and conditions contained herein and other valuable
consideration, the receipt and sufficiency of which is acknowledged, the Parties
agree as follows:
1. GRANT OF WARRANT. Reuter hereby grants SBCC, its nominees,
successors or assigns the right to purchase up to 3,178,780 shares (the
"Shares") of Reuter's authorized, unissued, nonassessable Common Stock, par
value $.1875 per share (the "Common Stock"), upon the payment by SBCC to Reuter
of the total purchase price of ten dollars ($10.00) (the "Purchase Price").
SBCC shall have the right to exercise this Warrant in whole or in part at any
time or times after the occurrence of an event described in Section 3(a) below.
The number of Shares purchasable upon exercise of this Warrant (the "Share
Number") shall be subject to adjustment from time to time as set forth in
Section 4.
2. COVENANTS OF REUTER. Reuter will at all times reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issue upon the exercise of this Warrant as herein provided, such
number of shares of Common Stock as shall then be issuable upon the exercise
of this Warrant. Reuter covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof. Reuter will take all such action as may be necessary to
assure that all such shares of Common Stock may be so issued without
violation of any applicable requirements of any federal or state securities
laws or of any national stock exchange upon which the shares of Common Stock
of Reuter may be listed. Reuter will not take any action which results in
any adjustment of the Share Number if the total number of
shares of Common Stock issued and issuable after such action upon exercise of
this Warrant would exceed the total number of shares of Common Stock then
authorized by Reuter's Certificate of Incorporation.
3. EXERCISE OF WARRANT.
a. VESTING. SBCC can exercise the Warrant at any time, and
from time to time, in whole or in part, following the occurrence of an
"ownership change" in respect of Reuter, for the purposes of Section 382(g)(1)
of the Internal Revenue Code of 1986, as amended, except an "ownership change"
resulting directly or indirectly from the acquisition of securities of Reuter by
the holder of this Warrant, or a person or entity acting on behalf of or in
concert with such holder.
b. EXERCISE OF WARRANT. In order to exercise this Warrant, the
holder of this Warrant shall deliver to Reuter, at its address specified below,
(i) a written notice of such holder's election to exercise this Warrant,
specifying the number of shares of Common Stock to be purchased, (ii) this
Warrant and (iii) payment of the Purchase Price for the number of shares
specified, in cash or by a certified or cashier's check. Reuter may require
SBCC to furnish a written statement that the Shares are being purchased for its
own account and not with a view to the distribution thereof. Upon receipt of
written notice, Reuter shall as promptly as practicable execute or cause to be
executed and delivered to such holder a certificate or certificates representing
the aggregate number of Shares purchased. SBCC agrees that such certificate or
certificates may bear a legend setting forth restrictions on transferability of
the shares of Common Stock evidenced by such certificate or certificates. If
this Warrant shall have been exercised only in part, Reuter shall also cancel
this Warrant and deliver a new Warrant of like tenor evidencing the rights of
such holder to purchase the remaining Shares called for by this Warrant.
Notwithstanding the foregoing, Reuter shall not be required to deliver
any certificate for shares of Common Stock upon exercise of this Warrant, except
in accordance with the provisions, and subject to the limitations, of paragraph
5(d) hereof.
c. PURCHASE PRICE. The Purchase Price for an individual Share
under this Warrant at any time shall be $10.00 divided by the then-current Share
Number.
4. ADJUSTMENTS.
a. DIVIDENDS. No payment or adjustment shall be made upon any
exercise of this Warrant on account of any previous cash dividends.
b. SUBDIVISION OR COMBINATION OF STOCK.
i. In case Reuter shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares or declare a
dividend or make any other distribution upon the Common Stock of Reuter payable
in Common Stock, the Share Number in
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effect immediately prior to such subdivision, dividend or distribution shall be
proportionately increased, and conversely, in case the outstanding shares of
Common Stock of Reuter shall be combined into a smaller number of shares, the
Share Number in effect immediately prior to such combination shall be
proportionately reduced. No fractional shares shall be issued upon the exercise
of this Warrant.
ii. RECORD DATE. In case Reuter shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution payable in Common Stock, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution, as the case may be.
c. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE.
i. If any capital reorganization or reclassification of
the capital stock of Reuter, or any consolidation or merger of Reuter with
another corporation, or the sale of all or substantially all of its assets to
another corporation, shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then, Reuter covenants and agrees that, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, it shall ensure that lawful and adequate provisions shall be made whereby
SBCC shall thereafter have the right to receive upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
of Reuter immediately theretofore receivable upon the exercise of this Warrant,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately receivable upon
the exercise of this Warrant had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of SBCC to the
end that the provisions hereof (including without limitation provisions for
adjustments of the Share Number) shall thereafter be applicable, as nearly as
may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of this Warrant.
ii. In the event of a merger or consolidation of Reuter
with or into another corporation as a result of which a greater or lesser number
of shares of common stock of the surviving corporation are issuable to holders
of Common Stock of Reuter outstanding immediately prior to such merger or
consolidation, then the Share Number in effect immediately prior to such merger
or consolidation shall be adjusted in the same manner as though there were a
subdivision or combination of the outstanding shares of Common Stock of Reuter.
Reuter covenants and agrees that it will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the successor
corporation (if other than Reuter) resulting from such consolidation or merger
or the corporation purchasing such assets shall assume by written instrument
executed and mailed or delivered to the registered holder hereof at the last
address of such holder appearing on the books of Reuter, the obligation to
deliver to such holder such shares
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of stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to receive.
d. NOTICE OF ADJUSTMENT. Upon any adjustment of the Share
Number, then and in each such case Reuter shall give written notice thereof,
which notice shall state the Share Number resulting from such adjustment,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
e. OTHER NOTICES. In case at any time:
x. Xxxxxx shall declare any dividend upon its Common Stock
payable in stock;
ii. Reuter shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of
stock of any class or other rights;
iii. there shall be any capital reorganization, or
reclassification of the capital stock of Reuter, or
consolidation or merger of Reuter with, or sale of all
or substantially all of its assets to, another
corporation; or
iv. there shall be a voluntary dissolution, liquidation or
winding up of Reuter;
then, in any one or more of said cases, Reuter shall give, (i) at least 20 days
prior written notice of the date on which the books of Reuter shall close or a
record shall be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (ii) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
5. MISCELLANEOUS.
a. TERMINATION. This Warrant will terminate and cease to be
exercisable upon the indefeasible payment in full of all sums due SBCC under the
Income Sharing Agreement of even date herewith by and between the parties
hereto.
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b. ISSUE TAX. The issuance of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to SBCC
for any issuance tax in respect thereof, provided that Reuter shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than that of the
holder of this Warrant.
c. CLOSING OF BOOKS. Reuter will not close its books against
the transfer of any shares of Common Stock issued or issuable upon the exercise
of this Warrant.
d. TRANSFERABILITY; REGISTRATION UNDER SECURITIES ACT. Neither
this Warrant nor the shares of Common Stock issuable upon exercise of this
Warrant have been registered under the Securities Act of 1933, as amended, nor
under the securities law of any state. This Warrant cannot be exercised, sold
or transferred, in whole or in part, and the shares of Common Stock issuable
upon exercise of this Warrant cannot be sold or transferred, unless and until
they are so registered or upon receipt of an opinion of SBCC's counsel addressed
to Reuter, such counsel and opinion to be reasonably satisfactory to Reuter,
that such registration is not then required under applicable state or federal
law under the circumstances of such sale or transfer. If in the opinion of such
counsel the proposed exercise, sale or transfer may be effected without
registration or qualification (under federal or state law), such holder shall be
entitled to exercise sell or transfer the Warrant or the Shares, as the case may
be, in accordance with the opinion of such counsel; provided, that an
appropriate legend may be endorsed on this Warrant, and/or the certificates
evidencing the Shares purchased upon exercise of this Warrant, regarding the
restrictions upon the transfer thereof necessary or advisable in the opinion of
counsel to prevent further transfers which would be in violation of Section 5 of
the Securities Act of 1933.
e. NOTICE. Except as otherwise expressly provided for herein,
any and all notices given in connection with this Warrant shall be deemed
adequately given only if in writing and addressed to the party for whom such
notices are intended at the address set forth below. All notices shall be sent
by personal delivery, Federal Express, or other overnight messenger service,
first class registered or certified mail, postage prepaid, return receipt
requested, facsimile transmission with a duplicate copy sent contemporaneously
by U.S. Mail, or by other means at least as fast and reliable as first class
mail. A written notice shall be deemed to have been given to the recipient
party on the earlier of (a) the date it shall be delivered to the address
required by this Warrant; (b) the date delivery shall have been refused at the
address required by this Warrant; or (c) with respect to notices sent by mail,
the date as of which the postal service shall have indicated such notice to be
undeliverable at the address required by this Warrant. Any and all notices
referred to in this Warrant, or which either party desires to give to the other,
shall be addressed as follows:
(a) If to SBCC, at: Sanwa Business Credit Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Asset Management Division
Fax: (000) 000-0000
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with a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx & Xxxxxx, Ltd.
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
(b) If to Reuter, at: Reuter Manufacturing, Inc.
000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxx, President and
Chief Executive Officer
Fax: (000) 000-0000
with a copy to: Xxxx Xxxxxx, Esq.
Winthrop & Weinstine, P.A.
3200 Minneapolis World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
The above addresses may be changed by notice of such changed, mailed as provided
herein, to the last address designated.
f. LIMITATION OF LIABILITY. No provisions hereof, in the
absence of affirmative action by SBCC to purchase Shares hereunder, and no mere
enumeration herein of the rights or privileges of SBCC shall give rise to any
liability of such holder for the Purchase Price or as a shareholder of Reuter
(whether such liability is asserted by Reuter or creditors of Reuter).
g. NO VOTING RIGHTS. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company.
h. ENTIRE AGREEMENT. This Warrant constitutes the entire
agreement by and between the Parties with respect to the matters herein
contemplated. This Warrant supersedes all previous agreements, negotiations and
commitments in respect thereto. This Warrant shall not be changed or modified
in any manner, except by mutual consent in a writing of subsequent date signed
by the duly authorized representatives of each Party hereto at any time prior to
the date of exercise.
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i. COUNTERPARTS. This Warrant may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the Parties have executed this Warrant as of the
Effective Date.
REUTER MANUFACTURING, INC. SANWA BUSINESS CREDIT
CORPORATION
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Its: President Its: Group Vice President
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