1
EXHIBIT 99.9
WARRANT AGREEMENT
WARRANT AGREEMENT (as amended, modified or supplemented from
time to time, this "Agreement"), dated as of January 26, 1996, among Autotote
Corporation, a corporation incorporated under the laws of the State of Delaware
(with its successors, the "Company") and the undersigned initial holders of the
Warrants referred to below (the "Initial Holders").
W I T N E S S E T H :
WHEREAS, the Company, Autotote Systems, Inc. (the "Borrower"),
certain lenders from time to time party thereto (the "Banks"), and Bankers Trust
Company, as agent for such Banks, are parties to a Credit Agreement, dated as of
October 31, 1991, and amended and restated as of October 30, 1992, and amended
and restated as of June 4, 1993, and amended and restated as of April 28, 1994,
and further amended and restated as of January 26, 1996 (as so amended and
restated, and as the same may be further modified, amended or supplemented from
time to time, the "Credit Agreement");
WHEREAS, in order to induce the Banks to enter into the Credit
Agreement, the Company had agreed to issue the Warrants to the Initial Holders;
WHEREAS, the Company has authorized the issuance of the
Warrants which are exercisable, pursuant to the terms and conditions thereof,
for shares of Class A Common Stock (as hereinafter defined) of the Company; and
WHEREAS, the Initial Holders now desire to subscribe for, and
the Company now desires to issue to the Initial Holders, upon the terms and
conditions set forth herein, the Warrants substantially in the form of Exhibit A
hereto;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1
2
Section 1. Definitions.
1.01 Definitions. The following terms, as used herein, shall
have the following respective meanings:
"Affiliate" shall mean, with respect to any Person, any other
Person that directly or indirectly controls, or is under common control with, or
is controlled by, such Person, it being understood that in any event the
Borrower and its Affiliates shall be considered Affiliates of the Company. As
used in this definition, "control" (including, with its correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean the possession, directly or indirectly, of power to
direct or cause the direction of the management and policies of such Person
(whether through ownership of securities or partnership or other ownership
interests, contract or otherwise), provided that, in any event (other than for
purposes of Section 4.04 hereof), any Person which owns, directly or indirectly,
more than 10% of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or more than 10% of the
partnership or other ownership interests of any Person (other than as a limited
partner of such other Person) will be deemed to control such corporation or
other Person. Notwithstanding the foregoing, neither the Initial Holders nor any
of their Affiliates shall be deemed to be an Affiliate of the Company.
"Bank Holder" shall mean the Initial Holders and any other
Holder that becomes a Bank under the Credit Agreement or is an Affiliate of a
Bank.
"Banks" shall have the meaning provided in the first recital
hereof.
"Borrower" shall have the meaning provided in the first
recital hereof.
"Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which commercial banks are required by law or
authorized to close in New York City.
"Class A Common Stock" shall mean and include the Company's
authorized Class A Common Stock, $.01 par value, as constituted on the date
hereof.
"Commission" shall have the meaning provided in Section 4.06
hereof.
2
3
"Company" shall have the meaning provided in the first
paragraph hereof.
"Credit Agreement" shall have the meaning provided in the
first recital hereof.
"Demand Registration" shall have the meaning provided in
Section 5.01(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exercise Period" shall mean the period of time from January
26, 1996 until 5:00 P.M., local time in New York City, on April 30, 1998.
"Exercise Price" shall have the meaning provided in the
Warrants.
"Existing Rights Holder" shall mean any Person to whom the
Company has issued warrants to purchase common stock of the Company prior to the
date hereof but only if such warrants contain registration rights provisions
requiring the Company not to effect any public sale or distribution of its
securities during specified periods prior to and after the registration of such
common stock pursuant to the exercise of such registration rights.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States.
"Holder" initially shall mean each Initial Holder and each
other holder of any Warrant or Warrant Share that is a direct or indirect
transferee of one of the Initial Holders or any other Holder unless, with
respect to any such Warrant or Warrant Share, such Warrant or Warrant Share is
acquired in a public distribution pursuant to a registration statement under the
Securities Act or pursuant to a transaction exempt from registration under the
Securities Act if securities sold in such transaction may be resold without
subsequent registration under the Securities Act.
"Initial Holders" shall have the meaning provided in the first
paragraph hereof.
3
4
"Xxxxxx Demand Rights" shall have the meaning provided in
Section 5.03 hereof.
"Xxxxxx Shares" shall have the meaning provided in Section
5.03 hereof.
"Xxxxxx Warrants" shall have the meaning provided in Section
5.03 hereof.
"Person" shall mean an individual, a corporation, a limited
liability company, a company, a voluntary association, a general partnership, a
limited partnership, a trust, an unincorporated organization or a government or
any agency, instrumentality or political subdivision thereof.
"Piggy-Back Registration" shall have the meaning provided in
Section 5.02 hereof.
"Registrable Securities" shall mean any Warrants or Warrant
Shares until (i) one or more registration statements covering any such Warrants
and Warrant Shares has become effective under the Securities Act and all such
Warrants and Warrant Shares have been disposed of pursuant to such effective
registration statement, (ii) such Warrants or Warrant Shares are sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met or under
which such Warrants and Warrant Shares may be sold pursuant to Rule 144(k),
(iii) the Company has delivered a new certificate or other evidence of ownership
for such Warrants or Warrant Shares not bearing any legend relating to
restrictions on transfer and such Warrants or Warrant Shares may be resold
without subsequent registration under the Securities Act or (iv) such Warrants
and Warrant Shares are no longer outstanding.
"Registration Expenses" shall have the meaning ascribed to
such term in Section 5.05 hereof.
"Regulation Y" shall mean the Regulation Y promulgated by the
Board of Governors of the Federal Reserve System or any successor regulation.
"Required Holders" shall mean the Holders of more than 50% of
all Warrant Shares (assuming the full exercise thereof), provided that the term
Required Holders shall mean the Holders of all Warrant Shares in the case of any
amendment, modification or waiver to this Agreement or any Warrant which would
shorten the
4
5
Exercise Period, increase the Exercise Price or reduce the number of
Warrant Shares issuable upon the exercise of any Warrant.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Suspension Period" shall have the meaning provided in Section
5.01(f) hereof.
"Warrant" shall mean a Warrant substantially in the form of
Exhibit A hereto, and any Warrant or Warrants issued upon transfer thereof or in
substitution therefor.
"Warrantholder" shall mean the holder of any Warrant.
"Warrant Share" shall mean any share of Class A Common Stock
issued or issuable upon exercise of any Warrant. For purposes of this Agreement,
a Warrant Share shall be "outstanding" from and after the date hereof until the
redemption or cancellation of such Warrant Share (or, if the related Warrant has
not been exercised, the expiration, repurchase or cancellation of such Warrant)
by the Company.
1.02 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP.
Section 2. Terms and Conditions of Issuance of Warrants.
2.01 Issuance of the Warrants. In consideration of the
premises and other good and valuable consideration, the Company hereby agrees to
issue on the date hereof to each Initial Holder Warrants to purchase that number
of shares of Class A Common Stock (as such number may be adjusted as provided in
the Warrants) as is set forth on Schedule A hereto for each such Initial Holder.
Section 3. Representations and Warranties of the Company. The
Company represents and warrants to each Holder as follows:
5
6
3.01 Authorization. The Company has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement
and the Warrants and to issue and deliver the Warrants and Warrant Shares; the
execution, delivery and performance by the Company of this Agreement and the
Warrants have been duly authorized by all necessary action; each of this
Agreement and each of the Warrants has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to creditors' rights generally and to
general equitable principles.
3.02 Valid Issuances. The Warrants, when issued and delivered
pursuant hereto, and the Warrant Shares when issued and delivered pursuant to
the Warrants, will be validly issued, fully paid and non-assessable, with no
liability on the part of the Holders thereof, and are not subject to any
preemptive rights, rights of first refusal or rights of first offer. Except as
set forth on Schedule B hereto and except for the registration rights as set
forth in this Agreement, the Company is not under any obligation to cause the
registration under the Securities Act of any of its presently outstanding
securities or any of its securities which hereafter may be issued.
3.03 No Breach. Except for the filing of a listing application
with the NASDAQ National Market System in respect of the Warrant Shares issuable
upon exercise of the Warrants (which filing will be made within 15 days after
the date hereof), none of the execution and delivery of this Agreement and the
Warrants, the consummation of the transactions herein or therein contemplated,
including the issuance and delivery of the Warrants and, upon the exercise of
the Warrants, the Warrant Shares, nor compliance with the terms and provisions
hereof or thereof will conflict with or result in a breach of, or require any
consent under, the Certificate of Incorporation or By-Laws of the Company, or
any applicable law or regulation, or any order, writ, injunction or decree of
any court or governmental authority or agency, or any agreement or instrument to
which the Company is a party or by which it is bound or to which any of its
properties or assets is subject, or constitute a default under any such
agreement or instrument or result in the creation or imposition of any lien upon
any of the revenues or assets of the Company pursuant to the terms of any such
agreement or instrument.
3.04 Approvals. Except for the filing of a listing application
with the NASDAQ National Market System in respect of the Warrant Shares issuable
upon exercise of the Warrants (which filing will be made within 15 days after
the date hereof),
6
7
no authorizations, approvals or consents of, and no filings or registrations
with, any governmental or regulatory authority or agency, which have not already
been made or obtained, are necessary to be obtained by the Company for the
execution, delivery or performance by the Company of this Agreement and the
Warrants, the consummation by the Company of the transactions contemplated
herein and therein or the validity or enforceability hereof or thereof.
3.05 Capitalization. The authorized capital stock of the
Company on the date hereof consists of (i) 99,300,000 shares of Class A Common
Stock, of which 30,942,295 shares are issued and outstanding and 68,357,705
shares are held in the treasury of the Company, (ii) 700,000 shares of Class B
Nonvoting Common Stock, $.01 par value, of which no shares are issued and
outstanding, and (iii) 2,000,000 shares of Preferred Stock, $1.00 par value, of
which no shares are issued and outstanding, all as more fully set forth on
Schedule C hereto. There are no other outstanding shares of capital stock of the
Company and, except for the Warrants and as set forth on Schedule C hereto, no
outstanding options or warrants to acquire any shares of capital stock of the
Company and there will be no securities convertible into or exchangeable for, or
options or other rights to acquire from the Company or other obligations of the
Company to issue, directly or indirectly, any shares of capital stock of the
Company.
3.06 Offer of Warrants. Neither the Company nor any Person
acting on its behalf has directly or indirectly offered the Warrants or any part
thereof or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any Person other than a Holder. Neither the Company nor any Person acting on its
behalf has taken or will take any action which would subject the issuance and
sale of the Warrants to the provisions of Section 5 of the Securities Act, or to
the provisions of any state securities law requiring registration of securities,
notification of the issuance or sale thereof or confirmation of the availability
of any exemption from such registration except pursuant to this Agreement.
Section 4. Covenants.
4.01 Maintenance of Existence; Conduct of Business. The
Company will preserve and maintain its corporate existence as a corporation
under the Delaware General Corporation Law and all of its rights, privileges and
franchises necessary in the ordinary course of its business, and will conduct
its business in a regular manner.
7
8
4.02 Inspection. The Company covenants and agrees that it will
permit each Holder and its representatives to inspect the properties of the
Company, to examine and make extracts and copies from the books and records of
the Company during normal business hours and to discuss with management the
business and affairs of the Company, in each case on the same basis as a
shareholder of the Company may exercise such rights or to the extent reasonably
necessary to protect such Holder's rights under this Agreement or to ensure such
Holder's compliance with applicable law.
4.03 Information. The Company covenants and agrees that it
will deliver to each Holder such financial statements and other information
regarding the Company or any of its subsidiaries that the Company is obligated
to prepare and deliver to any shareholder of the Company, in each case at the
same time such financial statements and other information are delivered to any
such shareholder. The Company hereby acknowledges and agrees that each Holder
may share with any of its Affiliates any information related to the Company and
any of its subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of the Company and its subsidiaries),
subject to appropriate confidentiality arrangements.
4.04 Repurchase of Common Stock. The Company covenants and
agrees that it will not, without the prior written consent of each affected Bank
Holder, to the extent that such Bank Holder is subject to the provisions of the
Bank Holding Company Act of 1956, as amended (including Regulation Y promulgated
thereunder), directly or indirectly, purchase, redeem, retire or otherwise
acquire any shares of capital stock of the Company if, as a result of such
purchase, redemption, retirement or other acquisition, any Bank Holder, together
with its Affiliates, will own, or be deemed to own, Warrant Shares or other
shares of capital stock of the Company representing capital equal to 5% or more
of the aggregate shares of capital stock of the Company then outstanding
(assuming the full exercise of all Warrants then held by such Bank Holder and
its Affiliates).
4.05 Regulatory Matters. The Company agrees to cooperate in
good faith with and assist any Bank Holder or any of the Bank Holder's
Affiliates as such Bank Holder may reasonably request in connection with any
United States regulatory issues that may arise from time to time with respect to
the Company. Anything herein or in the Warrants to the contrary notwithstanding,
in the event that any Bank Holder or any of such Bank Holder's Affiliates shall
determine that it is illegal or unduly burdensome, by reason of regulatory
restriction, for such Bank Holder or such Affiliate to continue to hold some or
all of the Warrants or its Warrant Shares or any other securities of the
8
9
Company held by it, such Bank Holder or such Affiliate, as the case may be, may
sell or otherwise dispose of that portion of its Warrants or Warrant Shares, as
the case may be, that such Bank Holder or such Affiliate determines to be
appropriate in light of such regulatory restrictions in as prompt and orderly a
manner as is reasonably necessary. The Company shall cooperate with and assist
such Bank Holder or such Affiliate, as the case may be, in disposing of such
Warrants or Warrant Shares, and (without limiting the foregoing) at the request
of such Bank Holder or such Affiliate, as the case may be, the Company shall
provide (and authorize such Bank Holder or such Affiliate, as the case may be,
to provide) financial and other information concerning the Company to any
prospective purchaser of the Warrants or Warrant Shares owned by such Bank
Holder or such Affiliate, as the case may be, subject to appropriate
confidentiality arrangements. The provisions of this Section 4.05 shall inure
solely to the benefit of such Bank Holders and their Affiliates which are
subject to the provisions of the Bank Holding Company Act of 1956, as amended
(including Regulation Y promulgated thereunder).
4.06 Rules 144 and 144A. The Company covenants that it will
file any reports required to be filed by it under the Securities Act and the
Exchange Act and that it will take such further action as the Required Holders
may reasonably request, all to the extent required from time to time to enable
the Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rules 144
and 144A under the Securities Act, as such Rules may be amended from time to
time, or (b) any similar rules or regulations or regulations hereafter adopted
by the Securities and Exchange Commission (the "Commission"). Upon the request
of any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
Section 5. Registration Rights.
5.01 Demand Registration Rights. (a) Demand Registrations. At
any time after September 14, 1996 and prior to the expiration of the Exercise
Period, the Required Holders may make a written request to the Company for
registration of Registrable Securities under the Securities Act with the
Commission (or any successor entity) for a public offering of Registrable
Securities (a "Demand Registration"). The Holders shall have the right, in the
aggregate, to one (1) Demand Registration of all or any part of their
Registrable Securities (which Demand Registration may be on Form S-2 or S-3 or
other short-forms if the Company then qualifies for such short form
registration), provided, however, that the Company shall not be required to
effect a registration pursuant to this Section 5.01 with respect to any
Registrable Securities unless the request
9
10
for registration covers Registrable Securities representing at least 50% of all
Registrable Securities then outstanding and held by the Holders. Whenever the
Company shall receive a request for a Demand Registration, the Company will
promptly give written notice of such registration to all Holders and shall as
expeditiously as is reasonable, use its best efforts to effect the registration
under the Securities Act of the Registrable Securities with respect to which the
Company has received written requests for inclusion therein within 30 Business
Days after such notice is given. All requests made pursuant to this Section
5.01(a) will specify the number of shares of Registrable Securities to be
registered and will also specify the intended methods of disposition thereof.
(b) Effective Registration. A registration initiated as a
Demand Registration shall not be deemed a Demand Registration (i) until a
registration statement with respect thereto has become effective and has
remained effective for the period of time in which the Company is required to
keep such registration statement effective under this Agreement (without giving
effect to any Suspension Period), provided, however, that a registration that
does not become effective after the Company has filed a registration statement
with respect thereto solely by reason of the refusal to proceed of the Holders
shall be deemed to have been effected by the Company, unless the Holders shall
have elected (without any obligation) to pay, and in fact pay (within 30 days
after the Company receives notice of such refusal to proceed of the Holders),
all Registration Expenses in connection with such registration, (ii) if after
such registration statement has become effective, such registration statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason and, as a
result thereof, the offering of Registrable Securities is terminated prior to
the sale thereof, unless after giving effect to any termination the Holders had
a period of 120 consecutive days during which they were permitted to sell their
Registrable Securities pursuant to such registration statement, (iii) if after
such registration statement has become effective, the Company exercises any of
its rights under Section 5.01(f) hereof, unless after giving effect to any
termination of a Suspension Period the Holders had a period of 120 consecutive
days during which they were permitted to sell their Registrable Securities
pursuant to such registration statement or (iv) if conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied or waived, other than solely
by reason of some act or omission of the Holders.
(c) No Right of Company or Other Person to Piggyback on Demand
Registrations. Neither the Company nor any Person owning any of its securities
(other than the Holders) shall have the right to include any of the Company's
securities in a
10
11
registration statement initiated as a Demand Registration under this Section
5.01, unless (i) such securities are of the same class and type as the
Registrable Securities being registered and (ii) if such Demand Registration is
an underwritten offering, the Company or such Person, as applicable, agree in
writing to sell their securities on the same terms and conditions as apply to
the Registrable Securities being sold. Subject to the registration rights
granted by the Company prior to the date hereof, if any Person owning any
securities of the Company (other than any Holder) registers securities of the
Company in a Demand Registration (in accordance with the provisions of this
Section 5.01(c)), such Person shall pay the fees and expenses of counsel to such
Person and its pro rata share of the Registration Expenses if the Registration
Expenses for such registration are not paid by the Company for any reason. The
Company covenants that it shall not grant any registration rights to any Person
which rights would conflict or be inconsistent with the provisions of this
Section 5.01(c) or which would otherwise adversely affect the rights of any
Holder under this Agreement, and in the event of such a conflict or
inconsistency, the terms of this Section 5.01(c) shall prevail.
(d) Selection of Underwriters and Counsel, Etc. If the
Required Holders so elect, the offering of such Registrable Securities pursuant
to such Demand Registration shall be in the form of an underwritten offering. If
a Demand Registration involves an underwritten offering, (i) the Company shall
have the right to select the investment banker or bankers and manager or
managers to administer the offering (provided that such investment bankers and
managers must be reasonably satisfactory to the Required Holders) and (ii) the
Required Holders shall have the right to select the counsel to represent the
Holders.
(e) The Company may delay the filing of a registration
statement for up to 60 days (120 days in the case of clauses (iv) and (v) of
this Section 5.01(e)) if at the time of a request for registration under Section
5.01(a) above, (i) the Company is a party to a transaction involving the
purchase, sale, conversion or issuance of securities of the Company (other than
a transaction which is specifically not prohibited in Rule 10b-6 promulgated by
the Commission under the Exchange Act), (ii) there is material undisclosed
information concerning the Company or any subsidiary of the Company which cannot
be disclosed for bona fide and significant business reasons, (iii) financial
statements required to be included or incorporated in the registration statement
have not been prepared or are otherwise not available, (iv) the Company is about
to commence an offering of securities of the Company and the investment banker
for the Company shall advise the Company in writing (with a copy to the Holders)
that, in its opinion, the offering contemplated by the Company would be
materially and adversely affected by the
11
12
sale of Registrable Securities by the Holders or (v) the Company estimates in
good faith that it will file within 30 days after such request a registration
statement pursuant to a demand made by an Existing Rights Holder or pursuant to
which an Existing Rights Holder will include shares of common stock of the
Company held by it. The Company shall promptly notify the Holders of any delay
in such filing, the reasons for such delay and proposed length of such delay.
(f) The Company may suspend the effectiveness of any
registration statement or, without suspending such effectiveness, instruct the
Holders that no sales of Registrable Securities included in such registration
statement may be made (and the Holders shall forthwith discontinue disposition
of any such Registrable Securities) if, in the Company's reasonable good faith
judgment, the Company would be required to disclose any actions taken or
proposed to be taken by the Company, which disclosure would have a material
adverse effect on the Company or on such actions (a "Suspension Period") by
providing the Holders with written notice of such Suspension Period and the
reasons therefor. The Company shall use its best efforts to provide such notice
a reasonable number of days prior to the commencement of a Suspension Period,
provided that in any event the Company shall provide such notice no later than
the commencement of such Suspension Period. The Suspension Period shall not
exceed 90 days in any consecutive 365 day period during the Exercise Period,
provided that no more than one Suspension Period may be commenced in any such
365 day period. The Company shall give prompt written notice to the Holders of
the termination of any Suspension Period.
5.02 Piggy-Back Registration. If, at any time or from time to
time while any Registrable Securities are outstanding, the Company proposes to
register any of its securities (whether for its own or others' account) to be
offered for cash or cash equivalents in a public offering under the Securities
Act (other than by a registration statement on Form S-8 or other form that does
not include substantially the same information as would be required in a form
for the general registration of securities or that would not be available for
registration of Registrable Securities), the Company shall, as expeditiously as
is reasonably possible (but in no event later than 45 days prior to any such
registration), give written notice to the Holders of the Company's intention to
effect such registration. If, within 30 days after receipt of such notice, any
Holder submits a written request to the Company specifying the Registrable
Securities such Holder proposes to sell or otherwise dispose of (a "Piggy-Back
Registration"), the Company shall include the number of shares of Registrable
Securities specified in such Holder's request in such registration statement and
the Company shall use its best efforts to keep each such registration statement
in effect and to maintain compliance with each Federal
12
13
and state law and regulation for the period necessary for such Holder to effect
the proposed sale or other disposition, provided, however, that if, at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine not to register or to delay
registration of such securities, the Company shall give written notice of such
determination to the Holders and, thereupon, (i) in the case of a determination
not to register any securities, the Company shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), and (ii) in the case of a determination to delay
registering any securities, the Company shall be permitted to delay registering
any Registrable Securities, for the same period as the delay in registering such
other securities; and, provided, further, that if, after any such registration
statement has been declared effective, the Company reasonably determines that it
would be required to disclose any actions taken or proposed to be taken by the
Company, which disclosure would have a material adverse effect on the Company or
on such actions, the Company shall, subject to discontinuance of sales of all
other securities covered by the registration statement, be entitled to suspend
the effectiveness of such registration statement, or without suspending such
effectiveness, to request that each Holder forthwith discontinue the disposition
of such Registrable Securities and each such Holder agrees that it will
discontinue the disposition of such Registrable Securities pursuant to such
registration statement (so long as the disposition of all other such securities
is also discontinued) and thereupon the Company shall be relieved of its
obligation under this Section 5.02 with respect to such registration (but not
from its obligation to pay the Registration Expenses in connection therewith to
the extent provided in Section 5.05). Any Holder participating in an
underwritten offering pursuant to this Section 5.02 shall, if required by the
managing underwriter or underwriters of such offering, enter into an
underwriting agreement in a form customary for underwritten offerings of the
same general type as such offering.
5.03 Reduction of Offering. Notwithstanding anything contained
herein, if the managing underwriter or underwriters of an offering described in
Section 5.01 or 5.02 hereof delivers a written opinion to the Holders that the
size of the offering that the Holders, the Company or any other Person intends
to make or the kind or combination of securities that the Holders, the Company
and any other Persons intend to include in such offering are such that the
success of the offering would be materially and adversely affected by inclusion
of the Registrable Securities requested to be included, then:
13
14
(x) in the case of a Demand Registration, the amount of any securities
proposed to be offered shall be reduced or excluded from the offering
as follows:
if shares of common stock of the Company issued or issuable
pursuant to the warrants heretofore issued to Xxxxxx Brothers
Finances S.A. and Pilgrim Prime Rate Trust (such warrants, the
"Xxxxxx Warrants", and such shares, the "Xxxxxx Shares") are
proposed to be included in the underwriting as a result of the
exercise of incidental registration rights previously granted
under the Xxxxxx Warrants, then the number of shares that
shall be included in the underwriting shall be allocated as
follows: (a) one Xxxxxx Share shall be included for each share
held by the Holders and all other holders of common stock of
the Company possessing registration rights whose shares are to
be included in the underwriting and any shares to be sold for
the account of the Company (collectively, the "Non-Xxxxxx
Shares") until either the limit is reached or all the Xxxxxx
Shares are included in the underwriting and (b) any excess
shares up to such limitation shall be Non-Xxxxxx Shares. In
allocating Non-Xxxxxx Shares under clauses (a) and (b) of the
immediately preceding sentence, or in the event that no Xxxxxx
Shares are proposed to be included in the underwriting, the
amount allocated shall be such that each holder of Non-Xxxxxx
Shares may include in the underwriting that portion of the
amount to be allocated which the number of shares proposed to
be included by such holder bears to the aggregate number of
shares proposed to be included by holders of all Non-Xxxxxx
Shares, provided that, notwithstanding the foregoing
provisions of this sentence, all of the Non-Xxxxxx Shares held
by the Holders shall be included in any such Demand
Registration before any Non-Xxxxxx Shares held by the Company
or the holders of any Non-Xxxxxx Shares that have been granted
piggy-back registration rights after the date hereof are
included in such Demand Registration; provided, further, that
if any Non-Xxxxxx Shares held by the holders thereof under the
September 1995 Warrant Agreement (as defined in the Credit
Agreement) are proposed to be included in the underwriting
then all such Non-Xxxxxx Shares shall be included (together
with any other Non-Xxxxxx Shares entitled to be included with
the Non-Xxxxxx Shares held by such holders) before any
Non-Xxxxxx Shares held by the Holders are included; and
14
15
(y) in the case of a Piggy-Back Registration, the amount of any
securities proposed to be offered shall be reduced or excluded from the
offering as follows:
(i) if the registration is initiated as a result of the
exercise by a holder of Xxxxxx Shares of demand registration
rights ("Xxxxxx Demand Rights"), then the number of shares to
be included in the underwriting shall be allocated as follows:
(a) all Xxxxxx Shares to be sold shall be included and (b) any
additional shares to be included shall be allocated pursuant
to the last sentence of 5.03(x) above and (ii) if the
registration is not initiated as a result of the exercise of
Xxxxxx Demand Rights, then the number of shares of Non-Xxxxxx
holders not initiating the registration which may be included
therein shall be allocated as set forth in the last sentence
of 5.03(x) above, subject to Section 5.03(x)(a) above if
Xxxxxx Shares are included as a result of the exercise of
incidental registration rights relating thereto; provided,
that, in each case, if any Non-Xxxxxx Shares held by the
holders thereof under the September 1995 Warrant Agreement are
proposed to be included in the underwriting then all such
Non-Xxxxxx Shares shall be included (together with any other
Non-Xxxxxx Shares entitled to be included with the Non-Xxxxxx
Shares held by such holders) before any Non-Xxxxxx Shares held
by the Holders are included.
5.04 Registration Procedures. Whenever the Required Holders
request that any Registrable Securities be registered pursuant to this Section
5, the Company will, subject to the limitations otherwise provided in this
Agreement, use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof as quickly as is reasonably practicable, and in connection with any such
request:
(a) The Company will as expeditiously as possible prepare and
file with the Commission a registration statement on any form for which
the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with
the intended method of distribution thereof, and use its best efforts
to cause such filed registration statement to become and remain
effective for a period of not less than 120 days or until all of such
Registrable Securities have been disposed of (if earlier).
15
16
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement
thereto, furnish to the Holders requesting registration of Registrable
Securities and each underwriter, if any, of the Registrable Securities
covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter furnish to the
Holders requesting registration of Registrable Securities and
underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as the
Holders requesting registration of Registrable Securities or
underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holders.
(c) After the filing of the registration statement, the
Company will promptly notify the Holders of any stop order issued or
threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue
sky laws of such jurisdictions in the United States as the Holders
requesting registration of Registrable Securities reasonably (in light
of such Holders' intended plan of distribution) request and (ii) cause
such Registrable Securities to be registered with or approved by such
other governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Company and do any and all
other acts and things that may be reasonably necessary or advisable to
enable the Holders to consummate the disposition of the Registrable
Securities owned by the Holders; provided that the Company will not be
required to (A) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
paragraph (d), (B) subject itself to taxation in any such jurisdiction
or (C) consent to general service of process in any such jurisdiction.
(e) The Company will immediately notify the Holders, at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a
16
17
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
promptly make available to the Holders any such supplement or
amendment.
(f) The Company will enter into customary agreements
(including an underwriting agreement in customary form) and take such
other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities.
(g) The Company will make available for inspection by the
Holders requesting registration of Registrable Securities, any
underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other
professional retained by such Holders or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
Inspectors in connection with such registration statement. Records
which the Company determines, in good faith, to be confidential and
which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in
such registration statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each Holder agrees that information obtained by it as a
result of such inspections shall be deemed confidential and shall not
be used by it as the basis for any market transactions in the
securities of the Company or its Affiliates unless and until such is
made generally available to the public.
(h) The Company will furnish to the Holders requesting
registration of Registrable Securities and to each underwriter, if any,
a signed counterpart, addressed to such Holders or underwriter, of (i)
an opinion or opinions of counsel to the Company and (ii) a comfort
letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case
may be.
17
18
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to the Holders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within
three months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act.
(j) The Company will (at its own expense) use its best efforts
to cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company
are then listed if the listing of such Registrable Securities is then
permitted by the rules of such exchange.
The Company may require the Holders requesting registration of
Registrable Securities to promptly furnish in writing to the Company such
information regarding the distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration.
The Holders agree that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5.04(c)
or (e) hereof, the Holders will forthwith discontinue disposition of any
Registrable Securities registered pursuant to this Section 5 pursuant to the
registration statement covering such Registrable Securities until any such stop
order (if entered) has been removed or the Holders' receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.04(e) hereof, and,
if so directed by the Company, the Holders will deliver to the Company all
copies, other than permanent file copies then in such Holders' possession, of
the most recent prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event the Company shall give such notice, the
Company shall extend the period during which such registration statement shall
be maintained effective (including the period referred to in Section 5.04(a)
hereof) by the number of days during the period from and including the date of
the giving of notice pursuant to Section 5.04(c) or (e) hereof, as the case may
be, to the date when the Company shall have removed any stop order that has been
entered or the date that the Company shall make available to the Holder a
prospectus supplemented or amended to conform with the requirements of Section
5.04(e) hereof, as the case may be.
5.05 Registration Expenses. In connection with any
registration statement required to be filed hereunder, the Company shall pay the
following registration
18
19
expenses incurred in connection with the registration hereunder (the
"Registration Expenses"): (i) all registration and filing fees, (ii) all fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) the fees and expenses incurred in connection with the listing of
the Registrable Securities, (vi) fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
5.04(h) hereof), (vii) the fees and expenses of any special experts retained by
the Company in connection with such registration, and (viii) the reasonable fees
and expenses of one counsel (who shall be reasonably acceptable to the Company)
for the Holders. The Company shall have no obligation to pay any underwriting
fees, discounts or commissions attributable to the sale of Registrable
Securities, or any out-of-pocket expenses of Holders (other than as provided in
clause (viii) above) selling Registrable Securities under this Section 5 (or any
of the agents who manage any Holder's account).
5.06 Indemnification and Contribution. (a) In connection with
each registration statement relating to the disposition of Registrable
Securities, the Company shall indemnify and hold harmless each of the Holders,
each underwriter of Registrable Securities, each partner, officer, director or
employee of each of the Holders or any such underwriter and each Person, if any,
who controls (within the meaning of either the Securities Act or the Exchange
Act) any of the Holders or any such underwriter against all losses, claims,
damages or liabilities, joint or several, to which any of the Holders, such
underwriter or any such Person may be subject arising out of or based upon (A)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement or the prospectus included therein (or any
supplement or amendment thereto) or a preliminary prospectus, or (B) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company shall reimburse each of the Holders and each of such other Persons
for any reasonable legal or other expenses incurred in connection with the
investigation or defense thereof (any such reimbursement to be made as such
expenses are incurred); provided, however, that the Company shall not be liable
in any such instance to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or
19
20
omission or alleged untrue statement or omission made in any such registration
statement, preliminary prospectus, or prospectus (or amendment or supplement) in
reliance upon and in conformity with information relating to any Person referred
to above who would be indemnified by the Company pursuant to this Section
5.06(a) to the extent that any such information is furnished in writing to the
Company by such Person expressly for use therein.
(b) In connection with each registration relating to the
disposition of Registrable Securities, each Holder shall severally indemnify the
Company, each director of the Company, each officer of the Company who signs the
registration statement and any Person who controls the Company (within the
meaning of either the Securities Act or the Exchange Act) to the same extent as
the indemnity from the Company provided in Section 5.06(a) hereof, but only with
respect to information relating to such Holder furnished in writing to the
Company by such Holder expressly for use in any such registration statement,
preliminary prospectus or prospectus (or amendment or supplement). The maximum
liability of any Holder under this Section 5.06(b) shall be limited to the
aggregate amount of all sales proceeds actually received by such Holder upon the
sale of such Holder's Registrable Securities in connection with such
registration.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to subsections (a) or (b) of this Section 5.06,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the indemnified party, and shall assume the
payment of all fees and disbursements related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (x) the indemnifying party and indemnified party
shall have mutually agreed to the retention of such counsel or (y) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) at any time for all such
indemnified parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the indemnified
parties, such firm shall be designated in writing by the indemnified parties.
The indemnifying party shall
20
21
not be liable for any settlement of any proceeding effected without its written
consent (which consent shall not be unreasonably withheld or delayed) but if
settled with such consent, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability arising out of such proceeding.
(d) If the indemnification provided for in this Section 5.06
is unavailable to the indemnified parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities as between the Company on the one hand and the respective Holder
on the other, in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and such Holder on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the respective Holder on
the other 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 such 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 5.06(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5.06(d), no Holder shall be
required to contribute any amount in excess of the amount of all sales proceeds
actually received by such Holder upon the sale of such Holder's Registrable
Securities in connection with such registration. No Person guilty of fraudulent
misrepresentation (within the meaning of
21
22
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
5.07 Participation in Underwritten Registrations. Subject to
the registration rights granted by the Company prior to the date hereof, no
Person may participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Company and the Required Holders and
(b) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and these registration rights.
5.08 Holdback Agreement. (a) The Company and its Affiliates
agree not to effect any public sale or distribution of any Registrable
Securities or any securities similar to the Registrable Securities, or any
securities convertible into or exchangeable or exercisable for Registrable
Securities or any securities similar to the Registrable Securities, during the
14 days prior to, and during the 90-day period beginning on, the later of the
effective date of any registration statement filed pursuant to Section 5.01 or
5.02 of this Agreement (except as part of such registration statement where the
Required Holders consent) or the commencement of a public distribution of
Registrable Securities; provided, however, that the provisions of this paragraph
shall not prevent the (x) conversion or exchange of any securities pursuant to
their terms into or for other securities (it being understood that the foregoing
includes the exercise of warrants or options) or (y) issuance of securities
pursuant to the Company's employee benefit plans.
(b) To the extent not inconsistent with applicable law, each
Holder agrees not to effect any public sale or distribution of the issue being
registered or any similar security of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, during the 14 days
prior to and during the 90-day period beginning on the effective date of such
registration statement (except in any case as part of such registration), if and
to the extent requested by the Company in the case of a non-underwritten public
offering or if and to the extent requested by the managing underwriter or
underwriters in the case of an underwritten public offering.
5.09 Specific Enforcement. The Company and each of the Holders
acknowledge that remedies at law for the enforcement of this Section 5 may be
inadequate and intend that this Section 5 shall be specifically enforceable in
accordance with Section 7.04 hereof.
22
23
Section 6. Compliance with the Securities Act.
6.01 Representations and Warranties. Each Holder by its
acceptance of the Warrants represents and warrants as follows:
(a) Such Holder is acquiring the Warrants and the related
Warrant Shares for its own account and not as nominee or agent for any
other Person and not for offer or sale in any manner that would be in
violation of the securities laws of the United States of America or any
state thereof, without prejudice, however, to its right at all times to
sell or otherwise dispose of all or any part of said Warrants or
Warrant Shares under a registration under the Securities Act or any
applicable state securities laws or under an exemption from such
registration available under such Act or any applicable state
securities laws.
(b) Such Holder is an "accredited" investor within the meaning
of Regulation D promulgated under the Securities Act.
6.02 Transfer Restriction; Legend. No Holder will sell,
transfer or otherwise dispose of any Warrant or Warrant Share other than to an
Affiliate of such Holder or in a transaction that complies with the registration
requirements of Section 5 of the Securities Act or pursuant to an exemption
(including, without limitation, sales under Rules 144 and 144A promulgated under
the Securities Act) therefrom. Each Warrant or certificate or instrument (if
any) representing the Warrant Shares issued upon exercise of the Warrants (and
each Warrant or certificate or instrument (if any) representing the Warrant
Shares issued to transferees of such Warrant or certificate or instrument (if
any)), unless at such time as the same is no longer required under the
applicable requirements of the Securities Act, shall bear the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR
INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT."
Section 7. Miscellaneous.
7.01 Expenses. The Company agrees to pay all fees and
disbursements of the Holders (including the reasonable fees and expenses of
their counsel) in connection
23
24
with the purchase and sale of the Warrants as contemplated by this Agreement or
any amendments hereto and the fees and disbursements of the Holders (including
the reasonable fees and expenses of their counsel) in connection with the
negotiation, execution, delivery and enforcement of this Agreement and the
Warrants or any waiver or consent hereunder or thereunder or any amendment
hereof or thereof. In addition, the Company agrees to pay any and all stamp,
transfer and other similar taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement, any Warrants or
the issuance or transfer of the Warrants.
7.02 Notices. All notices and other communications provided
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex, telegraph,
telecopy, cable or other writing and telexed, telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof; or, as to any party, at
such other address as shall be designated by such party in a notice to the
Company given in accordance with this Section 7.02. All such communications
shall be deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
7.03 Exclusion. This Agreement and the Warrants shall be
binding upon, and inure solely to the benefit of the Company and the Holders,
and no other Person shall acquire or have any right under or by virtue of this
Agreement or the Warrants (other than any such Person to whom such Holders have
transferred an interest in the Warrants pursuant to the terms thereof and
hereof).
7.04 Specific Performance. The Company and each Holder
acknowledge and agree that in the event of any breach of this Agreement or the
Warrants by the Company or such Holder, the non-defaulting party would be
irreparably harmed and could not be made whole by monetary damages. The Company
and each Holder accordingly agree (i) to waive the defense in any action for
specific performance that a remedy at law would be adequate, and (ii) that the
Company and each Holder, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to compel specific performance
of this Agreement or the Warrants in any action instituted in the United States
District Court for the Southern District of New York, or, in the event such
Court would not have jurisdiction for such action, in any court of the United
States or any state thereof having subject matter jurisdiction for such action.
24
25
7.05 Warrantholder Not a Stockholder. Prior to the exercise of
any of its Warrants, no Warrantholder shall, except as specifically provided
herein, be entitled to any of the rights of, or be deemed to be, a stockholder
in the Company.
7.06 No Waivers. No failure or delay by any party in
exercising any rights, power or privilege hereunder or under the Warrants shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided herein shall be
cumulative and not exclusive of any rights or remedies provided by law.
7.07 Amendments and Waivers. Any provision of this Agreement
or the Warrants may be amended or waived if, but only if, such amendment or
waiver is in writing and signed by the Company and the Required Holders.
7.08 Governing Law. This Agreement and the Warrants shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to the principles of conflict of laws thereof.
7.09 Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatories thereto and hereto were upon the same instrument.
* * *
25
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
AUTOTOTE CORPORATION
By /s/ Xxxxxxx Xxxx
------------------------
Title: Vice President
Address for Notices:
000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
Telephone No. : (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
Autotote Corporation
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. : (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: General Counsel
BANKERS TRUST COMPANY
By /s/ Xxxxxxxxxxx Xxxxxxx
------------------------
Title: Vice President
Address for Notices:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No : (000) 000-0000
Telecopier No.: (000) 000-0000
26
27
Attention: Xxxxxxxxxxx Xxxxxxx
27
28
BANK OF IRELAND, GRAND CAYMAN
BRANCH
By /s/ Xxxxx Xxxxxxx
-------------------------
Title: Vice President
Address for Notices:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. : (000) 000-0000
Telecopier No. : (000) 000-0000
Attention: Xxxxx Xxxxxxx
BANK POLSKA KASA OPIEKI, S.A.
By /s/ Xxxxxxx X. Xxxx
-------------------------
Title: Vice President
Address for Notices:
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. : (000) 000-0000
Telecopier No. : (000) 000-0000
Attention: Xxxxxxx Xxxx
28
29
BHF-BANK AKTIENGESELLSCHAFT
By /s/ Xxxx Xxxxxxx
------------------------
Title: Vice President
By /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President
Address for Notices:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. : (000) 000-0000
Telecopier No. : (000) 000-0000
Attention: Xxxx Xxxxxxx
CREDITANSTALT CORPORATE
FINANCE, INC.
By /s/ Xxxxxx X. Xxxxxx
------------------------
Title: Vice President
By /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President
Address for Notices:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. : (000) 000-0000
Telecopier No. : (000) 000-0000
Attention: X.X. Xxxxxx
29
30
DELAWARE TRUST COMPANY
By /s/ Xxxxx Xxxxxxx
-------------------------
Title: Vice President
Address for Notices:
c/o Meridian Bank
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone No. : (000) 000-0000
Telecopier No. : (000) 000-0000
Attention: Xxxxx Xxxxxxx
EUROPEAN AMERICAN BANK
By /s/ Xxxxxxx Xxxxxxxxxx
-------------------------
Title: Vice President
Address for Notices:
0 XXX Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Telephone No. : (000) 000-0000
Telecopier No. : (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
30
31
FLEET BANK OF MASSACHUSETTS,
N.A.
By /s/ Xxxx X. Xxxxxxx
--------------------------------
Title: Senior Vice President
Address for Notices:
mail code: R10PT05A
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Telephone No. : (000) 000-0000
Telecopier No. : (000) 000-0000
Attention: Xxxx Xxxxxxx
GIROCREDIT BANK AG DER
SPARKASSEN, GRAND CAYMAN
ISLAND BRANCH
By /s/ Xxxx Xxxxxx
--------------------------------
Title: Vice President
Address for Notices:
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. : (000) 000-0000
Telecopier No. : (000) 000-0000
Attention: Xxxx Xxxxxx
31
32
SCHEDULE A
NUMBER OF SHARES OF CLASS A
COMMON STOCK ISSUABLE TO INITIAL
HOLDERS PURSUANT TO THE WARRANTS
Bank Number of Shares
---- ----------------
Bankers Trust Company 194,444
Bank of Ireland, Grand Cayman Branch 19,445
Bank Polska Kasa Opieki, S.A. 19,445
BHF-Bank Aktiengesellschaft 38,889
Creditanstalt Corporate Finance, Inc. 58,333
Delaware Trust Company 38,889
European American Bank 58,333
Fleet Bank of Massachusetts, N.A. 58,333
Girocredit Bank AG Der Sparkassen, 38,889
Grand Cayman Island Branch
=======
Total: 525,000
1
33
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT.
AUTOTOTE CORPORATION
Class A Common Stock Purchase Warrant
Representing Right To Purchase ___________ shares of Class A Common
Stock of Autotote Corporation.
No. ___
FOR VALUE RECEIVED, AUTOTOTE CORPORATION, a Delaware corporation
(the "Company"), hereby certifies that _______________________, or its
registered assigns (the "Holder"), is entitled, subject to the provisions of
this Warrant, to purchase from the Company, at any time or from time to time
during the Exercise Period (as hereinafter defined), up to a total of shares (as
such number of shares may be adjusted pursuant to Section 2 and/or 4 below, the
"Warrant Shares") of Class A Common Stock (as hereinafter defined), at a price
per share equal to the Exercise Price (as hereinafter defined). This Warrant is
issued to the Holder (together with such other warrants as may be issued in
exchange, transfer or replacement of this Warrant, the "Warrants") and entitles
the Holder to purchase the Warrant Shares (as hereinafter defined).
34
EXHIBIT A
Page 2
Section 1. Definitions. Terms defined in the Warrant Agreement (as
hereinafter defined) and not otherwise defined herein have, as used herein, the
respective meanings provided for therein. The following additional terms, as
used herein, have the following respective meanings:
"Class A Common Stock" shall mean and include the Company's
authorized Class A Common Stock, $.01 par value per share, as constituted on the
date hereof.
"Date of Issuance" shall have the meaning ascribed to such term in
Section 8 hereof.
"Distributions" shall have the meaning ascribed to such term in
Section 4.1(c) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Period" shall mean the period of time from January 26,
1996 until 5:00 P.M., local time in New York City, on April 30, 1998.
"Exercise Price" shall be $1.25, as adjusted pursuant to Sections
4.1(d) and 4.3 hereof.
"Fair Market Value" shall mean, as of any date of determination
thereof, with respect to any class of equity security of the Company (including
any equity security issuable upon exercise of any warrant (including the
Warrants) or option to acquire such equity security, (x) if there is a Qualified
Public Market for such class of equity security the value determined pursuant to
clause (i) or (ii) below of this definition or (y) if there is no such Qualified
Public Market, the value determined pursuant to clause (iii) below of this
definition:
(i) if such equity security is listed on a national securities
exchange or admitted to unlisted trading privileges on such an exchange,
the average last reported sale price of a share of such equity security
over a 21-day period prior
35
EXHIBIT A
Page 3
to the date of determination or if no such sale is made on any such day,
the mean of the closing bid and asked prices for such day on such
exchange; or
(ii) if such equity security is not so listed or admitted to
unlisted trading privileges, the average mean of the last bid and asked
prices reported for a share of such equity security over a 21-day period
prior to the date of determination (A) by the National Association of
Securities Dealers Automatic Quotation System or (B) if reports are
unavailable under clause (A) above by the National Quotation Bureau
Incorporated; or
(iii) if such equity security is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported,
the Fair Market Value for a share of such equity security shall be the
Fair Market Value as determined by an Independent Financial Expert
selected by the Required Holders from a group consisting of three
Independent Financial Experts chosen by the Company, it being understood
and agreed that in determining such Fair Market Value, the Independent
Financial Expert shall calculate such Fair Market Value as if all
outstanding shares of capital stock of the Company (assuming the exercise
of all warrants and options to acquire such shares of capital stock of the
Company) were sold in their entirety on such date of determination to an
unaffiliated third party with neither the buyer nor seller under any
compulsion to act, based on financial information of the Company, as of
the date of determination, but taking into account all relevant factors of
the capital stock and without giving effect to any discount for the lack
of liquidity of such or to the fact that the Company may have no equity
securities registered under the Exchange Act or that the holder has a
minority interest in the Company. The costs and expenses of any such
Independent Financial Expert making such valuation shall be paid by the
Company.
"Independent Financial Expert" shall mean a nationally recognized
appraiser or investment banking firm that does not (and whose Affiliates do not)
have a direct or indirect financial interest in the Company or any of the
Holders (other than in its trading accounts or as a participating underwriter in
an offering of securities), that has not been, and at the time it is called upon
to determine Fair Market Value, is not (and none of whose Affiliates is) a
promoter, director or officer of the Company or any of its Affiliates or any of
the Holders or an underwriter with respect to any of the securities of
36
EXHIBIT A
Page 4
the Company, and that has not provided any advice or opinions to the Company
during the two years prior to the date it is called upon to serve as Independent
Financial Expert except as an Independent Financial Expert pursuant hereto;
provided, that if any Holder is a commercial bank, an institutional investor or
an Affiliate thereof, the conduct by such investment banking firm of investment
banking transactions in the ordinary course of its business (including, without
limitation, underwritings of securities, private placements, broker-dealer
transactions and mergers and acquisitions) in which such Holder is a participant
shall not by itself result in the disqualification of such firm from being an
Independent Financial Expert pursuant hereto.
"Offering Price" shall have the meaning ascribed to such term in
Section 4.1(b) hereof.
"Qualified Public Market" shall mean with respect to Class A Common
Stock or other equity securities in the Company, an active trading market on a
national securities exchange or over-the-counter market which consists of such
publicly held Class A Common Stock or other equity securities in the Company,
with a minimum market value of $10,000,000 for such Class A Common Stock or
other equity securities. A "Qualified Public Market" shall be deemed to exist if
the financial parameters set forth in the immediately preceding sentence have
been met for the Class A Common Stock or such other equity securities for a
period of 21 consecutive days.
"Warrant Agreement" shall mean the Warrant Agreement, dated as of
January 26, 1996, among the Company and the Initial Holders, as such agreement
shall be modified, amended and supplemented and in effect from time to time.
"Wellington Subordinated Debt" shall mean the 5.11% Convertible
Subordinated Debentures of the Company due 2001.
Section 2. Exercise of Warrant; Cancellations of Warrant. This
Warrant may be exercised in whole or in part, at any time or from time to time,
during the Exercise Period, by presentation and surrender hereof to the Company
at its principal office at the address set forth on the signature page hereof
(or at such other address as the Company may after the date hereof notify the
Holder in writing), or at the office of its transfer agent or warrant agent, if
any, with the Purchase Form annexed hereto duly executed and accompanied by
either (at the option of the Holder) proper payment in cash
0000B2MI.W51
37
EXHIBIT A
Page 5
or certified or official bank check equal to the Exercise Price for the Warrant
Shares for which this Warrant is being exercised; provided, however, that the
Holder shall not be entitled to exercise this Warrant to the extent that, as a
result of such exercise, the Holder and its Affiliates, directly or indirectly,
would, in the Holder's sole judgment, own, control or have power to vote a
greater quantity of securities of any kind issued by the Company than the Holder
and its Affiliates shall be permitted to own, control or have power to vote
under any law or under any regulation, rule or other requirement of any
government authority at the time applicable to the Holder and its Affiliates
(including, without limitation, any applicable provision of Regulation Y).
Notwithstanding the foregoing, if less than all of this Warrant is to be
exercised, the Holder may, at its option, in lieu of delivery of the check or
cash described in the immediately preceding sentence, elect to exercise this
Warrant and to pay the Exercise Price by delivering to the Company a duly
completed and executed Purchase Form providing for the payment of the Exercise
Price by cancellation of a number of Warrant Shares having a Fair Market Value
equal to the Exercise Price of the Warrant Shares issuable upon such exercise.
Upon receipt by the Company of this Warrant and such Purchase Form,
together with the Exercise Price for the Warrant Shares for which this Warrant
is being exercised, the Holder shall be deemed to be the holder of record of the
number of Warrant Shares specified in such Purchase Form, notwithstanding that
the transfer books of the Company shall then be closed or that certificates (if
any) representing the Warrant Shares shall not then be actually delivered to the
Holder. The Company shall pay any and all documentary stamp or similar issue
taxes payable in respect of the issue of the Warrant Shares. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant, execute and deliver a new Warrant evidencing the rights of the Holder
thereof to purchase the balance of the Warrant Shares issuable hereunder.
Section 3. Exchange, Transfer, Assignment or Loss of Warrant. This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company for other Warrants of different
denominations, entitling the Holder to purchase in the aggregate the same number
of Warrant Shares. The Holder of this Warrant shall be entitled, without
obtaining the consent of the Company, to transfer or assign its interest in (and
related rights and obligations under) this Warrant in whole or in part to any
Person or Persons, subject to the provisions of Section 6 of the Warrant
Agreement. Upon surrender of this Warrant to the Company, with the Assignment
Form annexed hereto duly executed and funds sufficient to pay any
0000B2MI.W51
38
EXHIBIT A
Page 6
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees named in such
instrument of assignment and, if the Holder's entire interest is not being
assigned, in the name of the Holder, and this Warrant shall promptly be
cancelled. This Warrant may be divided or combined with other Warrants that
carry the same rights upon presentation hereof at the office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued and signed by the Holder hereof. Upon receipt by
the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company shall execute and deliver a new Warrant
of like tenor and date.
Section 4.1. Adjustment of Number of Warrant Shares. The number of
Warrant Shares purchasable pursuant hereto shall be subject to adjustment from
time to time on and after the Date of Issuance as hereinafter provided in this
Section 4.1.
(a) In case the Company shall at any time after the Date of Issuance
(i) declare or pay a dividend in shares of Common Stock or make a distribution
in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (iv)
issue any shares of Common Stock or other assets in a reclassification or
reorganization of such shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing entity), the securities purchasable pursuant hereto
shall be adjusted to the number of Warrant Shares and amount of any other
securities, cash or other property of the Company which the Holder would have
owned or have been entitled to receive after the happening of any of the events
described above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An adjustment
made pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event, retroactive to the record date, if any, for such
event. Any Warrant Shares purchasable as a result of such adjustment shall not
be issued prior to the effective date of such event. If, as a result of an
adjustment made pursuant to this Section 4.1(a), the Holder of any Warrant
thereafter surrendered for exercise shall become entitled to receive shares of
two or more classes of securities of the Company, the Board of Directors of the
Company (with the
39
EXHIBIT A
Page 7
consent of the Required Holders) shall determine the allocation of the adjusted
Exercise Price between or among shares of such classes of securities.
(b) In case the Company shall issue shares of Common Stock or issue
rights, options or warrants to subscribe for or purchase, or other securities
exchangeable for or convertible into, shares of Common Stock (any such rights,
options, warrants or other securities being herein called "Rights") (excluding
(i) shares issued in a transaction covered by Section 4.1(a) hereof, (ii) shares
issued upon conversion, exercise, or exchange of Rights issued after the date
hereof (provided that appropriate adjustments were made hereunder upon the
issuance of such Rights), (iii) the Warrants and any Warrant Shares issued on
exercise thereof, (iv) shares issued upon conversion, exercise or exchange of
Rights issued prior to the date hereof, (v) shares issued to the holders of the
Wellington Subordinated Debt in respect of the interest payment that is due on
February 15, 1996 for such Debt and (vi) shares issued pursuant to an employee
benefit plan of the Company that has been approved by the Board of Directors of
the Company) at an issuance, subscription, offering, exercise or conversion
price (the "Offering Price") per share which is lower than the Fair Market Value
on the date such shares of Common Stock or Rights, as the case may be, are
issued, whether or not such Rights are immediately exercisable or convertible,
the number of Warrant Shares shall be adjusted and shall be determined by
multiplying the number of Warrant Shares immediately prior to any adjustment in
connection with such issuance by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to the date of issuance of such shares of Common Stock or
Rights (assuming that all shares of Common Stock into which all outstanding
rights, options, warrants and convertible securities excluding the Rights are
exercisable or convertible are outstanding) plus the number of additional shares
of Common Stock issued and the number of shares of Common Stock that would be
issued upon exercise of the Rights, and the denominator of which shall be the
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to the date of issuance of such Common Stock or Rights
(assuming that all shares of Common Stock into which all outstanding rights,
options, warrants and convertible securities excluding the Rights are
exercisable or convertible is outstanding) plus the number of shares which the
aggregate Offering Price of the total number of shares of Common Stock so
offered would purchase at the Fair Market Value on the date of such issuance;
provided that to the extent any such Rights so issued expire or are cancelled or
redeemed without having been exercised or converted, the number of Warrant
Shares issuable hereunder shall
40
EXHIBIT A
Page 8
again be adjusted to reflect such expiration, cancellation or redemption of such
Rights. Such adjustment shall be made whenever such shares of Common Stock or
Rights are issued. For purposes of this paragraph (b), the "Offering Price" per
share of Common Stock shall in the case of Rights be determined by dividing (x)
the total amount received or receivable by the Company in consideration of the
issuance of such Rights plus the total consideration payable to the Company upon
exercise thereof by (y) the total number of shares of Common Stock covered by
such Rights.
(c) In case the Company shall distribute generally to holders of any
class of its shares of Common Stock, any rights, options, warrants to subscribe
for or purchase, or other securities exchangeable for or convertible into,
shares of Common Stock, evidences of its indebtedness or assets (including
securities and cash dividends), but excluding dividends or distributions
referred to in paragraph (a) above or rights, options, warrants or other
securities referred to in paragraph (b) above (collectively, "Distributions"),
then the number of Warrant Shares issuable hereunder after any such Distribution
shall be adjusted and shall be determined by multiplying the number of Warrant
Shares by a fraction, the numerator of which shall be the Fair Market Value on
the record date for such Distribution, and the denominator of which shall be
such Fair Market Value, less the then fair market value (as reasonably
determined in good faith by the Board of Directors of the Company) of the
portion of the assets or evidences of indebtedness so distributed applicable to
one share of Common Stock. Such adjustments shall be made successively whenever
any such Distribution is made and shall become effective on the date of
Distribution retroactive to the record date for the determination of
stockholders entitled to receive such Distribution. In the event that the
Required Holders disagree with the Company's determination of the fair market
value of any assets or evidences of indebtedness pursuant to this subsection
4.1(c), then such fair market value shall be determined by an Independent
Financial Expert selected by the Required Holders and the Company in accordance
with the procedure set forth in the first sentence of clause (iii) of the
definition of "Fair Market Value". The Company shall bear the costs of the
Independent Financial Expert.
(d) Whenever the number of Warrant Shares are adjusted as herein
provided, the Exercise Price payable upon exercise of this Warrant shall be
adjusted by multiplying such Exercise Price immediately prior to such
41
EXHIBIT A
Page 9
adjustment by a fraction, the numerator of which shall be the number of Warrant
Shares immediately prior to such adjustment, and the denominator of which shall
be the number of Warrant Shares immediately thereafter.
(e) No adjustment in the number of Warrant Shares shall be required
hereunder unless such adjustment would result in an increase or decrease of at
least one percent (1%) of the Exercise Price; provided, however, that any
adjustments which by reason of this subsection (e) 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-hundredth of a cent or to the
nearest one-thousandth of a share, as the case may be.
(f) For the purpose of this subsection 4.1 and subsection 4.2
hereof, the term "shares of Common Stock" shall mean (i) the classes of stock
designated as the Class A Common Stock or Class B Nonvoting Common Stock of the
Company as of the date hereof, (ii) any other class of stock of the Company
resulting from successive changes or reclassification 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, or (iii) any other capital stock of the Company which is
not by its terms restricted in amount or timing to the entitlement to dividends
or in the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company. In the event that at any time, as a
result of an adjustment made pursuant to this subsection 4.1, the Holder shall
become entitled to receive any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so receivable upon
exercise of this Warrant and the Exercise Price of such shares shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
this Section 4.
Section 4.2. Reorganization, Merger, etc. If any capital
reorganization, reclassification or similar transaction involving the capital
stock of the Company (other than as specified in Section 4.1(a) hereof), any
consolidation, merger or business combination of the Company with another
corporation, or the sale or conveyance of all or any substantial part of its
assets to another corporation, shall be effected in such a way that holders of
the shares of Common Stock shall be entitled to receive stock, securities or
assets (including, without limitation, cash) with respect to or in exchange for
shares of the Common Stock, then, prior to and as a condition of such
reorganization, reclassification, similar transaction, consolidation, merger,
business combination, sale
42
EXHIBIT A
Page 10
or conveyance, lawful and adequate provision shall be made whereby the Holder
shall thereafter have the right to purchase and receive upon the basis and upon
the terms and conditions specified in this Warrant and in lieu of the Warrant
Shares of the Company immediately theretofore purchasable and 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
Warrant Shares equal to the number of Warrant Shares immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby
had such reorganization, reclassification, similar transaction, consolidation,
merger, business combination, sale or conveyance not taken place. The Company
shall not effect any such consolidation, merger, business combination, sale or
conveyance unless prior to or simultaneously with the consummation thereof the
survivor or successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such assets shall
assume by written instrument executed and sent to the Holder, the obligation to
deliver to the Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Holder may be entitled to receive.
4.3. Voluntary Adjustment by the Company. The Company may at its
option, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company, including such reductions in the Exercise
Price as the Company considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients; provided, however, that no such adjustment in
Exercise Price shall affect the number of Warrant Shares.
4.4. Other Events. If any event occurs as to which the foregoing
provisions of Section 4.1 or 4.2 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors of
the Company, fairly and adequately protect the purchase rights represented by
the Warrants in accordance with the essential intent and principles of such
provisions, then such Board of Directors shall make such adjustments in the
application of such provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good faith opinion of such
Board of Directors, to protect such purchase rights as aforesaid.
43
EXHIBIT A
Page 11
4.5. Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Warrant Shares, this
Warrant may continue to express the same price and number and kind of shares as
are stated on the front page hereof.
4.6. Exceptions to Adjustment. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment of the
number of Warrant Shares issuable hereunder in the case of the issuance of the
Warrants or the issuance of shares of the Class A Common Stock upon exercise of
the Warrants.
4.7. Treasury Shares. The number of shares of the Class A Common
Stock or any other class of capital stock of the Company outstanding at any time
shall not include shares owned or held by or for the account of the Company or
any of its subsidiaries, and the disposition of any such shares shall be
considered an issue or sale of the Class A Common Stock or such other class of
capital stock for the purposes of this Section 4.
4.8. Company to Prevent Dilution. In case at any time or from time
to time conditions arise by reason of action taken by the Company or any of its
subsidiaries which are not adequately covered by the provisions of this Section
4, or which might adversely affect the exercise rights of the registered
Warrantholders in any material respect, the Board of Directors of the Company
shall appoint a firm of independent certified public accountants of recognized
national standing, which may be the firm regularly retained by the Company,
which shall give their opinion upon the adjustment, if any, necessary with
respect to the number of Warrant Shares into which this Warrant is exercisable,
on a basis consistent with the standards established in the other provisions of
this Section 4, so as to preserve, without dilution, the exercise rights of the
registered Warrantholders. Upon receipt of such opinion, the Board of Directors
of the Company shall forthwith make the adjustments described therein.
4.9. Adjustment Notices to Holder. Upon any increase or decrease in
the number of Warrant Shares purchasable upon the exercise of this Warrant the
Company shall, within 15 days thereafter, deliver written notice thereof to the
Holder, which notice shall state the increased or decreased number of Warrant
Shares purchasable upon the exercise of this Warrant and the changed Exercise
Price, if any, setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are
44
EXHIBIT A
Page 12
based. In addition, within 95 days after the end of each fiscal year of the
Company, the Company shall deliver to the Holders a certificate of the Company's
independent public accountants as to the correctness of any such adjustments and
calculations that have been made during such fiscal year and to the effect that
such adjustments and calculations have been made in accordance with the terms
hereof. If the Company shall fail to so timely deliver any notice required
pursuant to this Section 4.9, the Exercise Period shall be extended until the
Holder shall have received the proper notification under this Section 4.9.
5.1. Special Covenants of the Company. The Company covenants and
agrees that until all Warrants have been exercised in full:
(a) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, directly or indirectly avoid or seek to avoid the
observance or performance of any of the terms of this Warrant or the
Warrant Agreement, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Holder
against dilution or other impairment. Without limiting the generality of
the foregoing, the Company (i) will not increase the par value of any
shares of stock receivable upon the exercise of the Warrants above the
Exercise Price payable therefor upon such exercise, and (ii) will take all
such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and non-assessable shares of
stock upon the exercise of all Warrants from time to time outstanding
(including as a result of a reduction in the purchase price pursuant to
the terms hereof).
(b) If any Warrant Shares required to be reserved for the purposes
of exercise of this Warrant require registration with or approval of any
governmental authority under any federal law (other than the Securities
Act) or under any state law before such Warrant Shares may be issued upon
exercise of this Warrant, the Company will, at its expense, as
expeditiously as possible use its best efforts to cause such Warrant
Shares to be duly registered or approved, as the case may be.
45
EXHIBIT A
Page 13
(c) At any time the Class A Common Stock is listed on any national
securities exchange (as defined in the Exchange Act), the Company will, at
its expense, obtain and maintain the approval for listing on each such
exchange upon official notice of issuance of all Warrant Shares receivable
upon the exercise of the Warrants at the time outstanding and maintain the
listing of such Warrant Shares after their issuance; and the Company will
so list on such national securities exchange, will register under the
Exchange Act (and any similar state statute then in effect), and will
maintain such listing of, any other securities that at any time are
issuable upon exercise of the Warrants, if and at the time that any
securities of the same class shall be listed on such national securities
exchange by the Company.
(d) The Company will give notice to the Holder within five days
after the Company shall have filed with the Commission or with any
national securities exchange an application to register any securities of
the Company pursuant to the Exchange Act.
(e) The Company covenants and agrees to give the Holder prior
written notice of the expiration of the Exercise Period of the Warrants.
Such notice shall be delivered not less than thirty (30) days but not more
than sixty (60) days prior to such expiration; provided, that if the
Company fails to give such notice, the expiration of such Exercise Period
shall not occur, until thirty (30) days after such notice is delivered.
5.2. Pro Rata Purchase. If at any time the Company or any of its
Affiliates shall offer to purchase any shares of Class A Common Stock, the
Company shall make each offer pro rata to all holders of outstanding Warrant
Shares and Warrants, and any purchase shall be allocated pro rata among the
holders of Warrant Shares and Warrants accepting the offer to purchase.
Section 6. Notification by the Company. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Class A Common Stock or any other class of its capital stock; or
46
EXHIBIT A
Page 14
(ii) the Company shall offer for subscription pro rata to the
holders of its Class A Common Stock or any other class of its capital
stock any additional shares of stock of any class or any other securities
convertible into or exchangeable for shares of stock or any rights or
options to subscribe thereto; or
(iii) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving
the capital stock of the Company, or a sale or conveyance of all or a
substantial part of the assets of the Company, or a consolidation, merger
or business combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
then, in any one or more of such cases, the Company shall give written notice to
the Holder, at the earliest time legally and reasonably practicable (and not
less than 20 days before any record date or other date set for definitive
action) of the date on which (A) the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription rights or
options or (B) such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up shall take place
or be voted on by stockholders of the Company, as the case may be. Such notice
shall also specify the date as of which the holders of the Class A Common Stock
of record shall participate in said dividend, distribution, subscription rights
or options or shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification, sale,
conveyance, consolidation, merger, dissolution, liquidation or winding-up, as
the case may be. If the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities Act or to a
favorable vote of stockholders, the notice required by this Section 6 shall so
state.
Section 7. No Voting Rights; Limitations of Liability. Prior to
exercise, this Warrant will not entitle the Holder to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Holder to purchase Class A Common Stock, and no
enumeration herein of the rights or privileges of the Holder shall give rise to
any liability of the Holder for the purchase
47
EXHIBIT A
Page 15
price of Class A Common Stock acquirable by exercise hereof or as a stockholder
of the Company.
Section 8. Date of Issuance.
The date the Company initially issues this Warrant will be deemed to be
the "Date of Issuance" hereof and of each new Warrant issued in exchange,
transfer or replacement hereof, regardless of the number of times new
certificates representing the unexpired and unexercised rights formerly
represented by this Warrant shall be issued.
Section 9. Amendment and Waiver.
(a) No failure or delay of the Holder in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Holder are cumulative and not exclusive of any rights or remedies which it
would otherwise have. The provisions of this Warrant may be amended, modified or
waived with (and only with) the written consent of the Company and the Required
Holders.
(b) Any such amendment, modification or waiver effected pursuant to
this Section 9 shall be binding upon the Holder and the holders of all others
Warrants and Warrant Shares, upon each future holder thereof, upon the Company
and its stockholders. In the event of any such amendment, modification or
waiver, the Company shall give prompt written notice thereof to all
Warrantholders and, if appropriate, notation thereof shall be made on all
Warrants thereafter surrendered for registration of transfer or exchange.
(c) No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
Section 10. No Fractional Warrant Shares. The Company shall not be
required to issue stock certificates representing fractions of Warrant Shares,
but may at its option in respect of any final fraction of a Warrant Share make a
payment in cash based on the then current market price of the Class A Common
Stock (as determined in accordance with Section 4.1(c) hereof) after giving
effect to the full exercise or conversion of the Warrants.
48
EXHIBIT A
Page 16
Section 11. Reservation of Warrant Shares. The Company will
authorize, reserve and keep available at all times, free from preemptive rights,
a sufficient number of Warrant Shares to satisfy the requirements of this
Warrant and any other outstanding Warrants.
Section 12. Notices. All notices, requests, consents and other
communications hereunder shall be in writing (including, telegraphic, telex,
facsimile or cable communication) and delivered, mailed, telegraphed, telexed,
telecopied or cabled:
(i) if to the Holder, to its address as set forth in records of the
Company or the warrant agent for the Warrants, if a warrant agent is
appointed; and
(ii) if to the Company, to Autotote Corporation, at 000 Xxxxxxxx
Xxxx, Xxxxxx, Xxxxxxxx 00000-0000, Telecopier No.: 000-000-0000,
Attention: Xxxxxx Xxxxxx, with a copy to Autotote Corporation, at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopier No.: 000-000-0000,
Attention: General Counsel or at such other addresses as may have been
furnished to the Holder in writing by the Company.
All such notices and communications shall, when mailed, telegraphed,
telexed, facsimiled, or cabled or sent by overnight courier, be effective 3
Business Days after deposited in the mails, certified, return receipt requested,
when delivered to the telegraph company or cable company or one day following
delivery to an overnight courier, as the case may be, or sent by telex or
facsimile device.
Section 13. Headings. The headings of the Sections and subsections
of this Warrant are inserted for convenience only and shall not be deemed to
constitute a part of this Warrant.
49
EXHIBIT A
Page 17
Section 14. Governing Law; Consent to Jurisdiction. THIS WARRANT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. If any action or proceeding shall be brought by the Holder or the
Company in order to enforce any right or obligation in respect of this Warrant,
the Company and the Holder hereby consent and will submit to the jurisdiction of
any state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Warrant, and
agree that venue will be proper in any such court.
Section 15. Binding Effect. The terms and provisions of this Warrant
shall inure to the benefit of the original Holder and its successors and assigns
and shall be binding upon the Company and its successors and assigns, including,
without limitation, any Person succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
Section 16. Registration Rights. Each Warrantholder shall be
entitled to the benefits of registration rights pursuant to the Warrant
Agreement subject to the restrictions on sale or transfer of this Warrant or the
Warrant Shares subject hereto, as the case may be, pursuant to the Warrant
Agreement.
50
EXHIBIT A
Page 17
IN WITNESS WHEREOF, the signature of a duly authorized officer of
the Company has been affixed hereto as of January 26, 1996.
AUTOTOTE CORPORATION
By_____________________________
Title:
Attest: _________________
51
PURCHASE FORM
Dated ________________
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ___ shares of the Class A Common Stock
issuable hereunder and hereby makes payment [of $________ in payment of the
exercise price thereof] [by cancellation of a number of Warrant Shares subject
to the Warrant having a Fair Market Value equal to the Exercise Price for the
Warrant Shares being purchased pursuant to this Purchase Form].
_________________
INSTRUCTIONS FOR REGISTRATION OF
COMMON STOCK
Name ______________________________________________________
(please typewrite or print in block letters)
Address ___________________________________________________
Signature ____________________________________________
52
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________________ hereby sells,
assigns and transfers unto
Name ______________________________________________________
(please typewrite or print in block letters)
Address ___________________________________________________
its right to purchase ___ shares of the Class A Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint ______ Attorney, to
transfer the same on the books of the Company, with full power of substitution
in the premises.
Date: ________________________
Signature ________________________
