EXHIBIT 10.3
FRESH AMERICA CORP
WARRANT AGREEMENT
DATED AS OF MAY 4, 1998
155,483 WARRANTS TO PURCHASE COMMON STOCK
TABLE OF CONTENTS
(NOT PART OF AGREEMENT)
PAGE
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES................. 1
1.1 Form of Warrant Certificates................................... 1
1.2 Execution of Warrant Certificates; Registration
Books.......................................................... 1
1.3 Transfer, Split Up, Combination and Exchange of
Warrant Certificates; Lost or Stolen Warrant
Certificates................................................... 2
1.4 Subsequent Issuance of Warrant Certificates.................... 2
1.5 Effect of Issuance in Registered Form.......................... 3
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE...................... 3
2.1 Exercise of Warrants........................................... 3
2.2 Issuance of Common Stock....................................... 5
2.3 Unexercised Warrants........................................... 5
2.4 Cancellation and Destruction of Warrant
Certificates................................................... 6
2.5 Notice of Expiration........................................... 6
2.6 Fractional Shares.............................................. 6
3. AGREEMENTS OF THE COMPANY............................................ 6
3.1 Reservation of Common Stock.................................... 6
3.2 Common Stock To Be Duly Authorized and Issued,
Fully Paid and Nonassessable................................... 6
3.3 Transfer Taxes................................................. 7
3.4 Common Stock Record Date....................................... 7
3.5 Rights in Respect of Common Stock.............................. 7
3.6 CUSIP Number................................................... 7
3.7 Right of Action................................................ 8
3.8 Right to Receive Distribution of Spinoff Warrants.............. 8
4. ANTIDILUTION ADJUSTMENTS............................................. 10
4.1 Mechanical Adjustments......................................... 10
4.2 Stock Dividends, Subdivisions and Combinations................. 10
4.3 Dividends and Distributions.................................... 11
4.4 Repurchases of Common Stock or Rights.......................... 11
4.5 Issuances of Additional Common Stock or Rights................. 12
4.6 Expiration of Rights........................................... 13
4.7 Spinoff........................................................ 14
4.8 Consolidation; Merger; Sale; Reclassification.................. 14
4.9 De Minimis Changes in Purchase Price........................... 15
4.10 Adjustment of Number of Shares Issuable Pursuant
to Warrants.................................................... 15
4.11 Miscellaneous.................................................. 15
4.12 Other Securities............................................... 16
4.13 Additional Agreements of the Company........................... 16
5. REPORTING COVENANTS.................................................. 17
5.1 Financial and Business Information............................. 17
5.2 Information Concerning Antidilution Adjustments................ 18
6. REGISTRATION RIGHTS.................................................. 19
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6.1 Shelf Registration............................................. 19
6.2 Incidental Registration........................................ 21
6.3 Companies Registration......................................... 23
6.4 Registration Procedures........................................ 23
6.5 Reasonable Investigation....................................... 26
6.6 Registration Expenses.......................................... 27
6.7 Indemnification; Contribution.................................. 27
6.8 Holdback Agreements; Registration Rights to
Others......................................................... 30
6.9 Other Registration of Common Stock............................. 30
6.10 Availability of Information.................................... 30
7. INTERPRETATION OF THIS AGREEMENT..................................... 31
7.1 Certain Defined Terms.......................................... 31
7.2 Descriptive Headings........................................... 47
7.3 Governing Law.................................................. 47
8. MISCELLANEOUS........................................................ 47
8.1 Expenses....................................................... 47
8.2 Amendment and Waiver........................................... 48
8.3 Directly or Indirectly......................................... 49
8.4 Survival of Representations and Warranties;
Entire Agreement............................................... 49
8.5 Successors and Assigns......................................... 49
8.6 Notices........................................................ 49
8.7 Satisfaction Requirement....................................... 50
8.8 Severability................................................... 50
8.9 Counterparts................................................... 50
8.10 Waiver of Jury Trial; Consent to Jurisdiction;
Etc............................................................ 50
Annex 1 -- Addresses of Purchasers
Annex 2 -- Address of Company
Attachment A -- Form of Warrant Certificate
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WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of May 4, 1998 among FRESH AMERICA CORP., a
Texas corporation (together with its successors and assigns, the "COMPANY"), and
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY, XXXX XXXXXXX VARIABLE LIFE INSURANCE
COMPANY and SIGNATURE 1A (CAYMAN), LTD. (together with their respective
successors and assigns, the "PURCHASERS").
AGREEMENT
In consideration of the premises and the mutual agreements set forth
herein, the parties to this Agreement hereby agree as follows:
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES.
1.1 FORM OF WARRANT CERTIFICATES. The warrant certificates (individually,
a "WARRANT CERTIFICATE" and, collectively, the "WARRANT CERTIFICATES")
evidencing the Warrants, and the forms of assignment and of election to purchase
shares to be attached to such certificates, shall be substantially in the form
set forth in Attachment A hereto and may have such letters, numbers or other
marks of identification or designation as may be required to comply with any law
or with any rule or regulation of any governmental authority, stock exchange or
self-regulatory organization. Each Warrant Certificate shall be dated the date
of issuance thereof by the Company, either upon initial issuance or upon
transfer or exchange, and on its face shall initially entitle the holder thereof
to purchase a number of shares of Common Stock equal to the number of Warrants
specified on the face of such Warrant Certificate at a price per share equal to
the Purchase Price, but the number of such shares and the Purchase Price shall
be subject to adjustment as provided herein.
1.2 EXECUTION OF WARRANT CERTIFICATES; REGISTRATION BOOKS.
(A) EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates
shall be executed on behalf of the Company by an officer of the Company
authorized by the Board of Directors. In case the officer of the Company
who shall have signed any Warrant Certificate shall cease to be such an
officer of the Company before issuance and delivery by the Company of such
Warrant Certificate, such Warrant Certificate nevertheless may be issued
and delivered with the same force and effect as though the individual who
signed such Warrant Certificate had not ceased to be such an officer of
the Company, and any Warrant Certificate may be signed on behalf of the
Company by any individual who, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this
Agreement any such individual was not such an officer.
(B) REGISTRATION BOOKS. The Company will keep or cause to be kept at
its office maintained at the address of the Company set forth in Section 0
hereof or at such other office of the Company in the United States of
America of which the Company shall have given notice to each holder of
Warrant Certificates, books for registration and transfer of the Warrant
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Warrant Certificates, the
registration number and the number of Warrants evidenced on its face by
each of the Warrant Certificates and the date of each of the Warrant
Certificates.
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1.3 TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF WARRANT
CERTIFICATES; LOST OR STOLEN WARRANT CERTIFICATES.
(A) TRANSFER, SPLIT UP, ETC. Any Warrant Certificate, with or
without other Warrant Certificates, may be transferred, split up, combined
or exchanged for another Warrant Certificate or Warrant Certificates
representing Warrants entitling the holder to purchase a minimum of one
thousand (1,000) shares of the Common Stock or, if less, the entire number
of Warrants represented by the Warrant Certificate so surrendered,
entitling the registered holder or Transferee thereof to purchase a like
number of shares of Common Stock as the Warrant Certificate or Warrant
Certificates surrendered then entitled such registered holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange
any Warrant Certificate shall make such request in writing delivered to
the Company, and shall surrender the Warrant Certificate or Warrant
Certificates to be transferred, split up, combined or exchanged at the
office of the Company referred to in Section 0 hereof, whereupon the
Company shall deliver promptly to the Person entitled thereto a Warrant
Certificate or Warrant Certificates, as the case may be, as so requested.
(B) LOSS, THEFT, ETC. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate (which evidence shall
be, in the case of any Purchaser or another institutional investor, notice
from such institutional investor of such ownership (or of ownership by
such institutional investor's nominee) and such loss, theft, destruction
or mutilation), and:
(i) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Company; PROVIDED, HOWEVER, that if
the holder of such Warrant Certificate is an institutional investor
or a Purchaser, or a nominee of an institutional investor or a
Purchaser, such Purchaser's or institutional investor's own
unsecured agreement of indemnity shall be deemed to be satisfactory;
or
(ii) in the case of mutilation, upon surrender
and cancellation thereof;
the Company at its own expense will execute and deliver, in lieu thereof,
a new Warrant Certificate, dated the date of such lost, stolen, destroyed
or mutilated Warrant Certificate and of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant Certificate.
1.4 SUBSEQUENT ISSUANCE OF WARRANT CERTIFICATES. Subsequent to the
original issuance, no Warrant Certificates shall be issued except:
(a) Warrant Certificates issued upon any transfer, combination,
split up or exchange of Warrants pursuant to Section 0 hereof;
(b) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 0
hereof; and
(c) Warrant Certificates issued pursuant to Section 0 hereof upon
the partial exercise of any Warrant Certificate to evidence the
unexercised portion of such Warrant Certificate.
1.5 EFFECT OF ISSUANCE IN REGISTERED FORM. Every holder of a Warrant
Certificate by accepting the same consents and agrees with the Company and with
every other holder of a Warrant Certificate that:
(a) the Warrant Certificates are transferable only on the registry
books of the Company if surrendered at the office of the Company referred
to in Section 0 hereof, duly endorsed or accompanied by an instrument of
transfer (in the form attached hereto) and payment of any applicable
transfer tax or stamp tax; and
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(b) the Company may deem and treat the Person in whose name each
Warrant Certificate is registered as the absolute owner thereof and of the
Warrants evidenced thereby (notwithstanding any notations of ownership or
writing on the Warrant Certificates made by anyone other than the Company)
for all purposes whatsoever, and the Company shall not be affected by any
notice to the contrary.
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE.
2.1 EXERCISE OF WARRANTS.
(A) MANNER OF EXERCISE. At any time and from time to time on or
after the Effective Date and prior to the Expiration Date, the holder of
any Warrant Certificate may exercise the Warrants evidenced thereby, in
whole or in part (but not, in the case of any exercise in part, to the
extent that such exercise would result in the issuance of the lesser of
one hundred (100) whole shares of Common Stock and such lesser number of
shares as is issuable by virtue of exercise of all the Warrants held by
such holder), by surrender of such Warrant Certificate, with an election
to purchase (a form of which is attached to each Warrant Certificate)
attached thereto duly executed, to the Company at its office referred to
in Section 0 hereof, together with payment of the Purchase Price for each
share of Common Stock with respect to which the Warrants are then being
exercised. Such Purchase Price shall be payable either:
(i) in cash pursuant to Section 0 hereof;
(ii) by a tender of Notes pursuant to Section 0
hereof;
(iii) by a tender of cash pursuant Section 0
hereof and Notes pursuant to Section 0 hereof; or
(iv) by delivery of Warrant Certificates pursuant to Section 0
hereof.
(B) PAYMENT IN CASH. Upon exercise of any Warrants, the holder of a
Warrant Certificate may pay the Purchase Price (and shall pay the excess
of the Purchase Price for the Warrants being exercised over the amounts so
deemed to be paid by tender of Notes pursuant to Section 0) in cash or by
certified or official bank check payable to the order of the Company or by
wire transfer of immediately available funds to the account of the
Company.
(C) PAYMENT IN NOTES. To the extent that any holder of any Warrant
Certificate surrenders with such Warrant Certificate any Note then held by
such holder, such holder shall be deemed to have paid that portion of the
Purchase Price equal to one hundred percent (100%) of the principal of
such Note which the holder thereof directs the Company to accept as
payment of the Purchase Price, which Note shall be cancelled and not
reissued. To the extent that the principal amount of such tendered Note is
greater than the amount of the Purchase Price paid by surrender thereof,
the Company shall deliver a new Note to the tendering holder thereof, in
accordance with the provisions of the Note Agreement, in the principal
amount equal to the amount not so applied to payment of the Purchase
Price. At the time of the issuance of the shares of Common Stock pursuant
to the exercise of the Warrants of any holder, the Company shall pay all
accrued and unpaid interest on the principal amount of any Note of such
holder cancelled pursuant to this Section 0 up to but excluding the date
of such issuance. For purposes of Rule 144 under the Securities Act, 17
C.F.R. ss.230.144, the Company and the Purchasers agree that a tender of
the principal of any Notes in payment of the exercise price in respect of
the Warrants shall not be deemed a prepayment of the Notes, but rather a
conversion of such Notes, pursuant to the terms of the Notes, the Note
Agreement, this Agreement and the Warrants, into Common Stock.
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(D) NET EXERCISE. In the event that any holder of Warrant
Certificates delivers such Warrant Certificates to the Company and
notifies the Company in writing that such holder intends to exercise all,
or any portion of, the Warrants represented by such Warrant Certificates
to satisfy its obligation to pay the Purchase Price in respect thereof by
virtue of the provisions of this Section 0, such holder shall become
entitled to receive, instead of the number of shares of Common Stock such
holder would have received had the Purchase Price been paid pursuant to
Section 0 or Section 0 hereof, a number of shares of Common Stock in
respect of the exercise of such Warrants equal to the product of:
(i) the number of shares of Common Stock issuable upon such
exercise of such Warrant Certificate (or, if only a portion of such
Warrant Certificate is being exercised, issuable upon the exercise
of such portion); MULTIPLIED BY
(ii) the quotient of:
(A) the difference of:
(I) the Market Price per share of Common Stock at
the time of such exercise; MINUS
(II) the Purchase Price per share of Common Stock
at the time of such exercise;
DIVIDED BY
(B) the Market Price per share of Common Stock at the
time of such exercise.
The Company shall not be required to issue fractional shares by virtue of
this Section 0, but shall pay the exercising holder cash in lieu of such
fractional share in accordance with Section 0 hereof. For purposes of Rule
144 under the Securities Act, 17 C.F.R. ss.230.144, the Company and the
Purchasers agree that the exercise of any Warrants in accordance with this
Section 0 shall be deemed to be a conversion of such Warrants, pursuant to
the terms of this Agreement and the Warrants, into Common Stock.
2.2 ISSUANCE OF COMMON STOCK. Upon timely receipt of a Warrant
Certificate, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each of the shares to be purchased in the
manner provided in Section 0 hereof and an amount equal to any applicable
transfer tax (if not payable by the Company as provided in Section 0 hereof),
the Company shall thereupon promptly cause certificates representing the number
of whole shares of Common Stock then being purchased to be delivered to or upon
the order of the registered holder of such Warrant Certificate, registered in
such name or names as may be designated by such holder, and, promptly after such
receipt deliver the cash, if any, to be paid in lieu of fractional shares
pursuant to Section 0 hereof to or upon the order of the registered holder of
such Warrant Certificate. For the avoidance of doubt, subsequent to the creation
or issuance of any Share Purchase Rights and prior to the Share Purchase Right
Detachment Date, each share of Common Stock issued upon the exercise of any
Warrant or Warrants shall in each case include the attached Share Purchase
Rights; and subsequent to any Share Purchase Right Detachment Date and prior to
the Share Purchase Right Termination Date, the Company shall issue, in addition
to the shares of Common Stock issuable upon exercise of the Warrants, such Share
Purchase Rights as would have been attached to such shares of Common Stock had
such exercise of the Warrants and issuance of Common Stock occurred immediately
prior to the Share Purchase Right Detachment Date.
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2.3 UNEXERCISED WARRANTS. In case the registered holder of any Warrant
Certificate shall exercise less than all the Warrants evidenced thereby, a new
Warrant Certificate evidencing Warrants equal in number to the number of
Warrants remaining unexercised shall be issued by the Company to the registered
holder of such Warrant Certificate or to its duly authorized assigns.
2.4 CANCELLATION AND DESTRUCTION OF WARRANT CERTIFICATES. All Warrant
Certificates surrendered to the Company for the purpose of exercise, exchange,
substitution or transfer shall be cancelled by it, and no Warrant Certificates
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall cancel and retire any other
Warrant Certificates purchased or acquired by the Company otherwise than upon
the exercise thereof.
2.5 NOTICE OF EXPIRATION. All Warrants that have not been exercised or
purchased in accordance with the provisions of this Agreement shall expire and
all rights of holders of such Warrants shall terminate and cease on the
Expiration Date. The Company agrees to notify each holder of Warrants, not less
than forty-five (45) days but not more than one hundred twenty (120) days, prior
to the Expiration Date in writing, of the Expiration Date and that, on the
Expiration Date, all Warrants remaining unexercised shall expire and all rights
of holders of such Warrants shall terminate and cease.
2.6 FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock upon the exercise of any Warrant. Upon the
exercise of any Warrant, there shall be paid to the holder thereof, in lieu of
any fractional share of Common Stock resulting therefrom, an amount of cash
equal to the product of:
(a) the fractional amount of such share; TIMES
(b) the Market Price, as determined on the trading day immediately
prior to the date of exercise of such Warrant.
3. AGREEMENTS OF THE COMPANY.
3.1 RESERVATION OF COMMON STOCK. The Company covenants and agrees that it
will at all times cause to be reserved and kept available out of its authorized
and unissued shares of Common Stock such number of shares of Common Stock as
will be sufficient to permit the exercise in full of all Warrants issued
hereunder and all other Rights exercisable or convertible into Common Stock. In
addition, at all times subsequent to the creation or issuance of any Share
Purchase Rights and prior to the Share Purchase Right Termination Date, the
Company shall reserve a sufficient number of Share Purchase Rights as will be
sufficient to permit all shares of Common Stock issuable upon exercise in full
of all Warrants issued hereunder and all other Rights exercisable or convertible
into Common Stock to be issued together with the attached or detached Share
Purchase Rights.
3.2 COMMON STOCK TO BE DULY AUTHORIZED AND ISSUED, FULLY PAID AND
NONASSESSABLE. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon the exercise of any Warrants, at the time of delivery of the certificates
representing such shares, shall be duly and validly authorized and issued and
fully paid and nonassessable, free of any preemptive rights in favor of any
Person in respect of such issuance and free of any Lien created by, or arising
out of actions of, the Company, any Subsidiary or any Affiliate.
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3.3 TRANSFER TAXES. The Company covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the initial issuance or delivery of:
(a) each Warrant Certificate;
(b) each Warrant Certificate issued in exchange for any other
Warrant Certificate pursuant to Section 0 or Section 0 hereof; and
(c) each share of Common Stock issued upon the exercise of any
Warrant.
The Company shall not, however, be required to:
(i) pay any transfer tax that may be payable in respect of the
transfer or delivery of certificates representing Warrants or shares of
Common Stock in a name other than that of the registered holder of the
certificate surrendered for exercise, conversion, transfer or exchange
(any such tax being payable by the holder of such certificate at the time
of surrender); or
(ii) issue or deliver any such certificates referred to in the
foregoing clause (i) until any such tax referred to in the foregoing
clause (i) shall have been paid.
3.4 COMMON STOCK RECORD DATE. Each Person in whose name any certificate
for shares of Common Stock is issued upon the exercise of Warrants shall for all
purposes be deemed to have become the holder of record of the Common Stock
represented thereby on, and such certificate shall be dated, the date upon which
the Warrant Certificate evidencing such Warrants was duly surrendered with an
election to purchase attached thereto duly executed and payment of the aggregate
Purchase Price (and any applicable transfer taxes, if payable by such Person)
was made.
3.5 RIGHTS IN RESPECT OF COMMON STOCK. Except as otherwise set forth
herein, prior to the exercise of the Warrants evidenced thereby, the holder of a
Warrant Certificate shall not be entitled to any rights of a stockholder in the
Company with respect to shares for which the Warrants shall be exercisable,
including, without limitation, the right to vote in respect of any matter upon
which the holders of Common Stock may vote or the right to receive dividends or
other distributions and, except as expressly set forth herein, and shall not be
entitled to receive any notice of any proceedings of the Company. Prior to the
exercise of the Warrants evidenced thereby, the holders of the Warrant
Certificates shall not have any obligation or any liability as stockholders of
the Company, whether such obligation or liabilities are asserted by the Company
or by creditors of the Company.
3.6 CUSIP NUMBER. The Company covenants and agrees to maintain:
(a) a private placement number in respect of the
Warrants; and
(b) a CUSIP number in respect of the Common Stock;
in each case, from the CUSIP Service Bureau of Standard & Poor's, a division of
XxXxxx-Xxxx, Inc.
3.7 RIGHT OF ACTION. All rights of action in respect of the Warrants are
vested in the respective registered holders of the Warrant Certificates, and any
registered holder of any Warrant Certificate, without the consent of the holder
of any other Warrant Certificate, may, on its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, its right to
exercise the Warrants evidenced by such Warrant Certificate in the manner
provided in such Warrant Certificate and in this Agreement.
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3.8 RIGHT TO RECEIVE DISTRIBUTION OF SPINOFF WARRANTS.
(A) RIGHT TO RECEIVE SPINOFF WARRANTS. In the event of a Spinoff,
the Company shall, or shall cause the Distributed Entity to, distribute to
each Person who was a registered holder of Warrants on the date of the
Spinoff such holder's ratable share (based on the number of Warrants held
by such holder on the date of the Spinoff) of an aggregate number of
warrants to purchase Spinoff Shares of the Distributed Entity (the
"SPINOFF WARRANTS") equal to the Spinoff Warrant Number. The distribution
of the Spinoff Warrants shall occur on a date fixed by the Company which
is not later than five (5) Business Days after the Spinoff Calculation
Date. The Spinoff Warrants shall:
(i) be immediately exercisable on the date of
issuance thereof;
(ii) expire on the later of the Expiration Date and the date
forty-five (45) days after the issuance thereof;
(iii) each represent (subject to adjustment as provided in the
Spinoff Warrant Agreement) the right to purchase one (1) validly
issued, fully paid and non-assessable Spinoff Share at a purchase
price (subject to adjustment as provided in the Spinoff Warrant
Agreement) equal to the Spinoff Warrant Purchase Price, payable (as
set forth in the Spinoff Warrant Agreement) in cash, in Notes or in
Spinoff Warrants (but not in Warrants); and
(iv) otherwise have terms and provisions substantially
identical to those of the Warrants.
(B) NOTICE OF DECLARATION. In the event of a Spinoff, the Company
shall give written notice thereof to each holder of Warrants (or former
holder of Warrants) entitled to receive a distribution of the Spinoff
Warrants, within five (5) days after the declaration of the dividend or
distribution or the announcement of such reclassification or other similar
arrangement giving rise to such Spinoff, which notice shall:
(i) provide a detailed description of the
Spinoff;
(ii) state the date the Spinoff will occur;
(iii) state the Spinoff Calculation Date;
(iv) explain that the Spinoff Warrant Number and the Spinoff
Warrant Purchase Price shall be determined as of the Spinoff
Calculation Date;
(v) state the date fixed for distribution of the
Spinoff Warrants;
(vi) state the aggregate number of Spinoff Shares to be
distributed, dividended, issued or deemed issued per share of Common
Stock;
(vii) state the number of shares of Common
Stock into which each Warrant is then exercisable; and
(viii) describe the right described in Section
0.
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(C) SPINOFF WARRANT AGREEMENT. On or prior to the date of the
Spinoff, the Company shall cause the Distributed Entity to enter into a
warrant agreement (the "SPINOFF WARRANT AGREEMENT") to govern the terms of
the Spinoff Warrants. The terms and provisions of the Spinoff Warrant
Agreement shall be substantially identical to those set forth in this
Warrant Agreement, including, without limitation, substantially identical
antidilution provisions and agreements of the Distributed Entity as
contained herein with respect to the Company, and shall be in form
acceptable to those holders of Warrants (or former holders of Warrants)
entitled to receive a distribution of the majority of the Spinoff
Warrants. The Company shall also cause to be delivered to each such holder
or former holder an opinion, satisfactory in form and substance to those
holders of Warrants (or former holders of Warrants) entitled to receive a
distribution of the majority of the Spinoff Warrants, of independent
counsel to the effect that such warrant agreement and the certificates
representing the Spinoff Warrants to be issued thereunder are enforceable
in accordance with their terms, that upon payment of the purchase price
therefor the Distributed Entity's common stock to be issued upon exercise
thereof shall be validly issued, fully paid and non-assessable, free and
clear of any lien or encumbrance created by the Company or the Distributed
Entity and as to such other matters as are customarily addressed in
connection with an issuance of warrants as such holders may reasonably
request.
(D) NOTICE OF DISTRIBUTION. Two (2) Business Days following the
Spinoff Calculation Date, the Company shall, or shall cause the
Distributed Entity to, provide a written notice to each holder of Warrants
(or former holder of Warrants) entitled to receive a distribution of the
Spinoff Warrants, which notice shall:
(i) state the date fixed for distribution of the
Spinoff Warrants;
(ii) state the Spinoff Warrant Number and the Spinoff Warrant
Purchase Price, together with a detailed calculation of each;
(iii) provide a detailed calculation of the Market
Capitalization of the Company, the Market Capitalization of the
Distributed Entity, the Market Capitalization Percentage of the
Company and the Market Capitalization Percentage of the Distributed
Entity;
(iv) provide a detailed calculation of the
Pre-Spinoff Ownership Percentage; and
(v) state the number of Spinoff Warrants being issued to each
such holder.
The Company shall, or shall cause the Distributed Entity to, distribute
the Spinoff Warrants to each holder of Warrants (or former holder of
Warrants) entitled to receive a distribution of the Spinoff Warrants on
the date fixed therefor.
(E) DIVIDENDS PAID PARTLY IN SPINOFF SHARES. For purposes of this
Section 0 and Section 0 hereof, any dividend or distribution declared or
paid partly in Spinoff Shares and partly in Common Stock, other Securities
or other Property shall be deemed to be a Spinoff subject to the
provisions of this Section 0 to the extent made in Spinoff Shares and a
separate dividend of Common Stock, other Securities or Property subject to
the provisions of Section 0 hereof to the extent payable in Property other
than Spinoff Shares.
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4. ANTIDILUTION ADJUSTMENTS.
4.1 MECHANICAL ADJUSTMENTS. The number of shares of Common Stock
purchasable upon the exercise of each Warrant, and the Purchase Price, shall be
subject to adjustment as set forth in this Section 0.
4.2 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In the event that the
Company shall, on or after the date hereof:
(a) pay a dividend in shares of Additional Common Stock or make a
distribution in shares of Additional Common Stock;
(b) reclassify by subdivision its outstanding shares of Common Stock
into a greater number of shares; or
(c) reclassify by combination its outstanding shares of Common Stock
into a smaller number of shares;
then, and in each such case, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision or
combination shall be adjusted to that price determined by multiplying the
Purchase Price in effect immediately prior to such event by the quotient of:
(i) the total number of outstanding shares of Common Stock
immediately prior to such event; DIVIDED BY
(ii) the total number of outstanding shares of Common Stock
immediately after such event.
An adjustment made pursuant to this Section 0 shall become effective on the
effective date of such event.
4.3 DIVIDENDS AND DISTRIBUTIONS. In the event that the Company shall make
or pay any dividend of, or distribute to holders of shares of Common Stock
(including, without limitation, any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation)
shares of capital stock (other than Common Stock, which shall be subject to
Section 0 and other than Spinoff Shares, which shall be subject to Section 0) or
rights, warrants or options exercisable into such capital stock (other than
Rights, which shall be subject to Section 0 and other than Spinoff Shares, which
shall be subject to Section 0), other Securities, evidences of its indebtedness
or any of its Property (other than cash dividends payable out of current net
income or retained earnings), then, in each case, the Purchase Price in effect
after the record date in respect of which such stock, rights, warrants, options,
other Securities, indebtedness or Property were dividended or distributed shall
be adjusted by multiplying the Purchase Price in effect immediately prior to
such record date by the quotient of:
(a) the difference of:
(i) the Market Price on such record date; MINUS
(ii) the quotient of:
(A) the then fair value (as determined by the Valuation
Agent, whose determination, if so made, shall be conclusive)
of the shares of stock, rights, warrants, options, other
Securities, evidences of indebtedness or Property so
dividended or distributed; DIVIDED BY
9
(B) the number of shares of Common Stock outstanding on
the record date;
DIVIDED BY
(b) the Market Price on such record date.
Such adjustment shall be made whenever any such dividend or distribution is
made, and shall become effective on the date of such dividend or distribution.
4.4 REPURCHASES OF COMMON STOCK OR RIGHTS. In the event that the Company
shall repurchase, redeem, retire or otherwise acquire shares of Common Stock or
Rights for a Consideration Per Share greater than the Closing Price in effect on
the date immediately preceding the date of such repurchase, redemption,
retirement or acquisition, then the Purchase Price in effect immediately after
such event shall be adjusted by multiplying the Purchase Price in effect
immediately prior to such event by the quotient of:
(a) the difference of:
(i) the product of:
(A) the number of shares of Common Stock (calculated on
a Fully-Diluted Basis) immediately prior to such event;
MULTIPLIED BY
(B) the Closing Price in effect on the date immediately
preceding such event;
MINUS
(ii) the Aggregate Consideration Paid;
DIVIDED BY
(b) the product of:
(i) the Closing Price in effect on the date
immediately preceding such event; MULTIPLIED BY
(ii) the difference of:
(A) the number of shares of Common Stock (calculated on
a Fully-Diluted Basis) immediately prior to such event; MINUS
(B) the number of shares of Common Stock (or initially
issuable pursuant to such Rights) so repurchased, redeemed,
retired or otherwise acquired.
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In the event that any of the Aggregate Consideration Paid consists of
Property other than cash, the value of such Property for purposes of computing
the Aggregate Consideration Paid shall be determined by the Valuation Agent as
of a date not more than thirty (30) days prior to the date of determination
thereof and shall be set forth in a written certificate of the Valuation Agent
which shall be delivered to the holders of the Warrants in the manner
contemplated by Section 0.
4.5 ISSUANCES OF ADDITIONAL COMMON STOCK OR RIGHTS. In the event that the
Company shall issue or sell shares of Additional Common Stock or Rights
(excluding Excluded Securities) for no consideration or at a Consideration Per
Share lower than the Market Price in effect on the date of such issuance or
sale, then the Purchase Price in effect immediately after such event shall be
adjusted by multiplying the Purchase Price in effect immediately prior to such
event by the quotient of:
(a) the sum of:
(i) the number of shares of Common Stock outstanding
immediately prior to such event; PLUS
(ii) the quotient of:
(A) the Aggregate Consideration Receivable;
DIVIDED BY
(B) the Market Price;
in each case immediately prior to such event;
DIVIDED BY
(b) the sum of:
(i) the number of shares of Common Stock outstanding
immediately prior to such event; PLUS
(ii) the number of shares of Additional Common Stock so issued
or sold (or initially issuable pursuant to such Rights).
In the event that any of the Aggregate Consideration Receivable consists
of Property other than cash, the value of such Property for purposes of
computing the Aggregate Consideration Receivable shall be determined by the
Valuation Agent as of a date not more than thirty (30) days prior to the date of
determination thereof and shall be set forth in a written certificate of the
Valuation Agent which shall be delivered to the holders of the Warrants in the
manner contemplated by Section 0.
4.6 EXPIRATION OF RIGHTS. Upon the expiration of any Rights in respect of
the issuance of which adjustment was made pursuant to Section 0, without the
exercise thereof, the Purchase Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall, upon such expiration, be
readjusted and shall thereafter be such Purchase Price and such number of shares
of Common Stock as would have been had such Purchase Price and such number of
shares of Common Stock been originally adjusted (or had the original adjustment
not been required, as the case may be) as if:
(a) the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the exercise of such
Rights; and
11
(b) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all of such Rights, whether or not exercised;
PROVIDED that no such readjustment shall have the effect of increasing the
Purchase Price by an amount in excess of the amount of the reduction
initially made in respect of the issuance, sale, or grant of such Rights.
4.7 SPINOFF. In the event of a Spinoff, the Purchase Price of the Warrants
in effect immediately prior to the Spinoff Calculation Date shall be adjusted,
effective on the Spinoff Calculation Date, by multiplying the Purchase Price of
the Warrants in effect immediately prior to the Spinoff Calculation Date by the
Market Capitalization Percentage of the Company, calculated as of the Spinoff
Calculation Date.
4.8 CONSOLIDATION; MERGER; SALE; RECLASSIFICATION. In the
event that there shall be:
(a) any consolidation of the Company with, or merger of the Company
with or into, another corporation in which either:
(i) the Company is not the surviving corporation;
(ii) the shares of Common Stock outstanding immediately prior
to such merger or consolidation are reclassified or substantially
changed); or
(iii) the holders of the Common Stock immediately prior to
such consolidation or merger are issued cash, Securities of any
Person other than the Company or Property (other than Securities of
the Company) and the holder or holders of the common stock of the
Person with whom the Company consolidates or merges become, as a
result of such transaction, the holders of the Common Stock;
(b) any sale or conveyance to another corporation of
the Property of the Company substantially as an entirety;
(c) any reclassification of the Common Stock that
results in the issuance of other Securities of the Company;
or
(d) any detachment from the Common Stock of any Share
Purchase Rights;
in each case, other than in a Spinoff, then, in each such case, lawful provision
shall be made as a part of the terms of such transaction so that the holders of
Warrants shall thereafter have the right to purchase the number and kind of
shares of stock, other Securities, Share Purchase Rights, cash, Property and
Rights receivable upon such consolidation, merger, sale, conveyance,
reclassification or detachment by a holder of such number of shares of Common
Stock as the holder of a Warrant would have had the right to acquire upon the
exercise of such Warrant immediately prior to such consolidation, merger, sale,
conveyance or reclassification, at the Purchase Price then in effect, and,
without further action on the part of any Person, each Warrant will thereafter
represent the right to receive, upon payment of the Purchase Price, such shares
of stock, other Securities, Share Purchase Rights, cash, Property and Rights as
are so receivable. The Company agrees that, as a condition of proceeding with
such consolidation, merger or sale, it shall cause the Person surviving such
merger or consolidation, the Person or Persons holding the shares of the Common
Stock of the Company immediately after such transaction or the Person to whom
such sale or conveyance is made, as the case may be, at the time of such
consolidation, merger or sale, to expressly assume the due and punctual
observance and performance of each and every provision of this Agreement and all
obligations and liabilities of the Company hereunder (subject to the foregoing
sentence), in each case, pursuant to such agreements and instruments as are
reasonably acceptable to the Required Warrantholders.
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4.9 DE MINIMIS CHANGES IN PURCHASE PRICE. No adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Purchase Price; PROVIDED that any
adjustments that, at the time of the calculation thereof, are less than one
percent (1%) of the Purchase Price at such time and by reason of this Section 0
are not required to be made at such time shall be carried forward and added to
any subsequent adjustment or adjustments for purposes of determining whether
such subsequent adjustment or adjustments, as so supplemented, exceed the one
percent (1%) amount set forth in this Section 0 and, if any such subsequent
adjustment, as so supplemented or otherwise, should exceed such one percent (1%)
amount, all adjustments deferred prior thereto and not previously made shall
then be made. All calculations shall be made to the nearest cent ($0.01).
4.10 ADJUSTMENT OF NUMBER OF SHARES ISSUABLE PURSUANT TO WARRANTS. Upon
each adjustment of the Purchase Price as a result of any calculations made
pursuant to Section 0, Section 0, Section 0, Section 0 or Section 0, each
Warrant outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of shares of Common Stock (calculated to the nearest share) obtained by
multiplying the number of shares of Common Stock covered by such Warrant
immediately prior to such adjustment by the quotient of:
(a) the Purchase Price in effect immediately prior to
such adjustment, DIVIDED BY
(b) the Purchase Price in effect immediately after such adjustment.
All Warrants originally issued by the Company hereunder shall, subsequent to any
adjustment made to the Purchase Price hereunder, evidence the right to purchase,
at the adjusted Purchase Price, the number of shares of Common Stock determined
to be purchasable from time to time hereunder upon exercise of such Warrants,
all subject to further adjustment as provided herein. Each such adjustment shall
be valid and binding upon the Company and the holders of Warrants irrespective
of whether the Warrant Certificates theretofore and thereafter issued express
the Purchase Price per share of Common Stock and the number of shares of Common
Stock that were expressed upon the initial Warrant Certificates issued
hereunder.
4.11 MISCELLANEOUS.
(a) Adjustments shall be made pursuant to this Section 0
successively whenever any of the events referred to in Section 0 through
Section 0, inclusive, shall occur.
(b) If any Warrant shall be exercised subsequent to the record date
for any of the events referred to in Section 0 through Section 0,
inclusive, but prior to the effective date thereof, appropriate
adjustments shall be made immediately after such effective date so that
the holder of such Warrant on such record date shall have received, in the
aggregate, the kind and number of shares of Common Stock or other
Securities or Property that it would have owned or been entitled to
receive on such effective date had such Warrant been exercised prior to
such record date.
(c) Shares of Common Stock owned by or held for the account of the
Company or any Subsidiary shall not, for purposes of the adjustments set
forth in this Section 0, be deemed outstanding.
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4.12 OTHER SECURITIES. In the event that at any time, as a result of an
adjustment made pursuant to this Section 0, each holder of Warrants shall become
entitled to purchase any Securities of the Company other than shares of Common
Stock, the number or amount of such other Securities so purchasable and the
Purchase Price of such Securities shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in Section 0 through Section 0, inclusive, hereof, and all
other relevant provisions of this Section 0 that are applicable to shares of
Common Stock shall be applicable to such other Securities.
4.13 ADDITIONAL AGREEMENTS OF THE COMPANY. The Company covenants and
agrees that:
(a) The Company shall not, by amendment to its Charter as in effect
on the date hereof, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, liquidation, issuance or sale of
Securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, or which would have the effect of circumventing
or avoiding the provisions of this Section 0, but shall at all times in
good faith assist in the carrying out of all the provisions of this
Section 0 and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the holders of the Warrant
Certificates against dilution or other impairment.
(b) Before taking any action that would result in an adjustment to
the then current Purchase Price to a price that would be below the then
current par value of Common Stock issuable upon exercise of any Warrant,
the Company will take or cause to be taken any and all necessary corporate
or other action that may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common
Stock upon payment of such Purchase Price as so adjusted.
(c) If the Company shall amend the provisions of any Rights (other
than the Warrants), including, without limitation, the Outstanding Warrant
or any outstanding stock options, or make any adjustment thereto (either
in violation of this Section 0 or pursuant to any antidilution provision)
so as to reduce the Consideration Per Share applicable thereto, increase
the number of shares issuable upon exercise thereof or otherwise change
the economic terms (such as the purchase price, exercise price, conversion
price or conversion ratio) thereof, then the Company shall make
appropriate adjustment, as nearly as practical to those that would be
required by the provisions of Section 0 through Section 0, inclusive, most
nearly analogous to the effect of such amendment, to the Purchase Price,
and, pursuant to Section 0, to the number of shares of Common Stock
issuable upon exercise of the Warrants, as shall be fair and equitable,
such adjustment to be determined by the Valuation Agent.
(d) In the event that any of the events described in any of Section
0 through Section 0, inclusive, give rise to an adjustment to the
purchase, exercise or conversion price or conversion ratio, or number of
shares of Common Stock issuable upon conversion or exercise, of any Rights
(other than the Warrants), including, without limitation, the Outstanding
Warrant or any outstanding stock options, then the adjustments provided
for in Section 0 through Section 0, inclusive, in respect of such event
shall give effect both to the event giving rise to such adjustment under
this Agreement and to all such adjustments made in respect of such other
Rights; PROVIDED, HOWEVER, that no such adjustment shall duplicate any
adjustment required to be made in respect thereof by virtue of the
provisions of Section 0.
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5. REPORTING COVENANTS
5.1 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Warrants:
(A) QUARTERLY FINANCIAL STATEMENTS -- as soon as practicable after
the end of each quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such fiscal year),
and in any event within fifty (50) days thereafter:
(i) a consolidated balance sheet as at the end
of such quarter; and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows for such quarter and (in the
case of the second and third quarters) for the portion of the fiscal
year ending with such quarter;
for the Company and the Subsidiaries, setting forth in each case, in
comparative form, the financial statements for the corresponding periods
in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements
generally, and certified as complete and correct by the chief financial
officer of the Company; PROVIDED, that delivery of copies of the Company's
Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission within the time period specified above shall be deemed to
satisfy the requirements of this Section 0 so long as such Quarterly
Report contains or is accompanied by the information specified in this
Section 0;
(B) ANNUAL FINANCIAL STATEMENTS -- as soon as practicable after the
end of each fiscal year of the Company, and in any event within one
hundred twenty (120) days thereafter:
(i) a consolidated balance sheets as at the end
of such year; and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows for such year;
for the Company and the Subsidiaries, setting forth in comparative form,
the financial statement for the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP, and accompanied by an audit
report thereon of independent certified public accountants of recognized
national standing, which report shall state without qualification
(including, without limitation, qualifications related to the scope of the
audit, the compliance of the audit with generally accepted auditing
standards, or the ability of the Company or a material subsidiary thereof
to continue as a going concern), that such financial statements have been
prepared and are in conformity with GAAP; PROVIDED, that the delivery of
the Company's Annual Report on Form 10-K for such fiscal year filed with
the Securities and Exchange Commission within the time period specified
above shall be deemed to satisfy the requirements of this Section 0 so
long as such Annual Report contains or is accompanied by the reports and
other information otherwise specified in this Section 0;
(C) SEC AND OTHER REPORTS -- promptly upon their becoming available:
(i) each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to stockholders
generally; and
(ii) each regular or periodic report (including, without
limitation, each Form 10-K,
15
Form 10-Q and Form 8-K), and each amendment thereto filed by the
Company or any Subsidiary with the Securities and Exchange
Commission (and any successor agency); and
(D) REQUESTED INFORMATION -- with reasonable promptness, such other
data and information as from time to time may be requested by any holder
of Warrants.
5.2 INFORMATION CONCERNING ANTIDILUTION ADJUSTMENTS.
(A) NOTICE OF ADJUSTMENT. Whenever the number of shares of Common
Stock issuable upon the exercise of Warrants is adjusted or the Purchase
Price in respect thereof is adjusted, as herein provided, the Company
shall promptly give to each holder of Warrants notice of such adjustment
or adjustments and shall promptly deliver to each holder of Warrants a
certificate of the chief financial officer of the Company setting forth:
(i) the number of shares of Common Stock issuable upon the
exercise of each Warrant and the Purchase Price of such shares after
such adjustment;
(ii) a brief statement of the facts requiring
such adjustment; and
(iii) the computation by which such
adjustment was made.
(B) ANNUAL CERTIFICATE. So long as any Warrant is outstanding,
within one hundred twenty (120) days of the end of each fiscal year of the
Company, the Company shall deliver to each holder of Warrants a
certificate of the chief financial officer of the Company setting forth:
(i) the number of shares of Common Stock issuable upon the
exercise of each Warrant and the Purchase Price of such shares as of
the end of such fiscal year;
(ii) a brief statement of the facts requiring each adjustment,
if any, required to be made in such fiscal year; and
(iii) the computation by which each such
adjustment was made.
(C) CONFIRMATION BY ACCOUNTANTS. At the request of a holder of
Warrants in connection with any dispute concerning the accuracy or
validity of any certificate of the chief financial officer pursuant to
Section 0 or Section 0, such certificate shall be confirmed by a
certificate from the independent certified public accountants of the
Company.
(D) NOTICES OF CERTAIN EVENTS. Whenever the Company shall publicly
announce the authorization of any Notice Event, the Company shall, not
less than fifteen (15) days prior to the record date with respect to such
event (or, if no record date for the same shall be fixed, not less than
fifteen (15) days prior to the occurrence of such Notice Event), give to
each holder of Warrants, written notice of such event setting forth any
change in the number of shares of Common Stock the Company estimates will
be issuable upon the exercise of each Warrant, the estimated Purchase
Price after any adjustment required to be made hereunder and a brief
statement of the facts requiring such adjustment and the computation by
which the Company expects such adjustment will be made. Notwithstanding
the foregoing, no failure of the Company to give any such notice shall
affect the validity of the action taken unless such failure was in bad
faith.
16
6. REGISTRATION RIGHTS.
6.1 SHELF REGISTRATION.
(A) FILING AND EFFECTIVENESS. On or prior to the Shelf Filing Date,
the Company will file a "shelf" registration statement (the "SHELF
REGISTRATION") on form S-3 or such other appropriate form pursuant to Rule
415 under the Securities Act or any similar rule that may be adopted by
the SEC with respect to dispositions of all of the Registrable Securities
in such manner or manners specified by the holders thereof. The Company
agrees to cause the Shelf Registration to be declared effective as
promptly as is practicable after such filing (and in any event, prior to
the Shelf Effective Date) and agrees to keep the Shelf Registration
effective (and to take any and all other actions necessary in order to
permit public resale of the Registrable Securities covered by the Shelf
Registration) for a period (the "SHELF EFFECTIVE PERIOD") beginning on the
date such Shelf Registration shall first be declared effective under the
Securities Act and ending upon the earlier to occur of April 30, 2000 and
such date as no Registrable Securities shall remain, subject to the terms
and conditions set forth in this Agreement. The Company further agrees, if
necessary, to supplement or make amendments to such Shelf Registration, if
required by the registration form utilized by the Company for the Shelf
Registration or by the instructions applicable to such registration form
or by the Securities Act, and the Company agrees to furnish to the holders
of the Registrable Securities covered by the Shelf Registration copies of
any such supplement or amendment prior to its being used or filed with the
SEC.
(B) APPROVAL OF SHELF REGISTRATIONS. If the Requisite Holders shall
have approved the filing of any Shelf Registration as provided in Section
0, but any holder of Registrable Securities objects to such filing on the
grounds that the disclosure contained in the Shelf Registration contains
any misstatement of a material fact or omits to state a fact required to
be stated therein or necessary to make the statements therein not
misleading, then such holder shall have the right, in its sole discretion,
to withdraw from the Shelf Registration. If the Company receives notice of
such withdrawal from any holder wishing to withdraw from the Shelf
Registration, then the Company shall not name such holder in the
registration statement or, in the case of withdrawal in connection with
any amendment or supplement to a registration statement in which such
holder is already named, shall amend such registration statement to delete
references to such holder, and to withdraw the Registrable Securities of
such holder, from the registration statement. The Shelf Registration shall
not be considered effective with respect to any such withdrawing holder.
(C) SELECTION OF UNDERWRITERS. If any offering pursuant to a Shelf
Registration is in the form of an underwritten offering, the underwriters
of such offering shall be one or more underwriting firms of recognized
standing selected by the Requisite Holders and reasonably acceptable to
the Company. In the event of an underwritten offering pursuant to the
Shelf Registration, no securities of the Company (other than the
Registrable Securities) shall be included in any such offering without the
prior written consent of all holders of Registrable Securities
participating in such offering.
(D) ACCELERATION OF REQUIREMENT TO FILE SHELF REGISTRATION. In the
event that the Company becomes aware that any event described in clause
(b), clause (c) or clause (d) of the definition of "Effective Date" will
or will be likely to occur on or before the Shelf Effective Date, then,
and in each such case, the Company shall file the Shelf Registration as
soon as possible, and, in any event, on or before the date which is thirty
(30) days after the Company becoming aware of any such occurrence, and
shall use its diligent best efforts to cause the Shelf Registration to be
declared effective under the Securities Act as soon after such filing as
is practicable.
(E) TEMPORARY SUSPENSION OF USE OF REGISTRATION STATEMENT.
Notwithstanding anything to the contrary in this Section 6, if at any time
and from time to time after the first date of effectiveness of the Shelf
17
Registration, the Company may notify the holders of Registrable Securities
in writing in the manner contemplated by Section 8.6 hereof of a Potential
Material Event, which notice shall inform the holders of Registrable
Securities that they shall not offer or sell any Registrable Securities as
described in the following sentence. From the time of receipt of such
notice to the earliest to occur of:
(i) the public disclosure by the Company of the
Potential Material Event;
(ii) receipt of written notice from the Company that such
Potential Material Event no longer exists; and
(iii) the date thirty (30) days after the
date of the notice of such Potential Material Event;
the holders of Registrable Securities shall not offer or sell any
Registrable Securities pursuant to the Shelf Registration; PROVIDED,
HOWEVER, that the Company may not:
(A) deliver more than one (1) notice of a Potential Material
Event in respect of any one (1) Potential Material Event; or
(B) deliver any notice of a Potential Material Event for a
period of sixty (60) days following the expiration or earlier
termination of any other period during which the holders of
Registrable Securities may not by virtue of the provisions of this
Section 6.11 sell or offer to sell Registrable Securities.
The Company shall promptly (and in no event more than two (2) Business
Days after the occurrence of such event) notify each holder of the
occurrence of any event described in Section 0 or Section 0; and any such
notice and any notice given pursuant to Section 0 shall state that each
holder of Registrable Securities may resume offers and sales of the
Registrable Securities under the Shelf Registration. If any amended
prospectus or prospectus supplement shall be necessary as a result of the
occurrence of the Potential Material Event so that the prospectus does not
contain any untrue statement of any material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, the Company shall supply such amended prospectus or
prospectus supplement to each holder of Registrable Securities together
with such notice, and such notice shall inform the holders of Registrable
Securities concerning use of such amended prospectus or prospectus
supplement. The Company shall file each amended prospectus or prospectus
with the SEC in compliance with the provisions of Rule 424 under the
Securities Act.
6.2 INCIDENTAL REGISTRATION.
(A) FILING OF REGISTRATION STATEMENT. If the Company at any time
proposes to register any of its Common Stock (an "INCIDENTAL
REGISTRATION") under the Securities Act (other than pursuant to a
registration statement on Form S-4 or Form S-8 or any successor forms
thereto, in connection with an offer made solely to existing Security
holders or employees of the Company), for sale in an underwritten Public
Offering closing on or after the Effective Date, it will each such time
give prompt written notice to all holders of Registrable Securities of its
intention to do so, which notice shall be given to all such holders at
least fifteen (15) Business Days prior to the date that a registration
statement relating to such registration is proposed to be filed with the
SEC. Upon the written request of any such holder to include its shares
under such registration statement (which request shall be made within ten
(10) Business Days after the receipt of any such notice and shall specify
the Registrable Securities intended to be disposed of by such holder), the
Company will use its best efforts
18
to effect the registration of all Registrable Securities that the Company
has been so requested to register by such holder; PROVIDED, HOWEVER, that
if, at any time after giving written notice of its intention to register
any Securities for sale in connection with an underwritten Public Offering
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any
reason not to register such Securities, the Company may, at its election,
give written notice of such determination to each such holder and,
thereupon, shall be relieved of its obligation to register any Registrable
Securities of such Persons in connection with such registration.
(B) SELECTION OF UNDERWRITERS. Notice of the Company's intention to
register such Securities shall designate the proposed underwriters of such
offering (which shall be one or more underwriting firms of recognized
standing) and shall contain the Company's agreement to use its best
efforts, if requested to do so, to arrange for such underwriters to
include in such underwriting the Registrable Securities that the Company
has been so requested to register pursuant to this Section 0, it being
understood that the holders of Registrable Securities shall have no right
to select different underwriters for the disposition of their Registrable
Securities.
(C) PRIORITY ON INCIDENTAL REGISTRATIONS. If the managing
underwriter shall advise the Company in writing (with a copy to each
holder of Registrable Securities requesting sale) that, in such
underwriter's opinion, the number of shares or Securities requested to be
included in such Incidental Registration exceeds the number that can be
sold in such offering within a price range acceptable to the Company (such
writing to state the basis of such opinion and the approximate number of
shares or Securities that may be included in such offering without such
effect), the Company will include in such Incidental Registration, to the
extent of the number of shares of Securities that the Company is so
advised can be sold in such offering:
(i) in the case of any registration initiated by the Company
for the purpose of selling Securities for its own account:
(A) FIRST, shares that the Company proposes to issue and
sell for its own account; and
(B) SECOND, Registrable Securities requested to be sold
by the holders thereof pursuant to this Section 0 and all
Securities proposed to be registered by the Other
Stockholders, PRO RATA among such holders on the basis of the
number of shares requested to be so registered by such
holders; and
(ii) in the case of a registration initiated by any Other
Stockholder pursuant to demand or required registration rights in
favor of such Other Stockholder:
(A) FIRST, Securities requested to be sold by the Other
Stockholders requesting such Registration;
(B) SECOND, Registrable Securities requested to be sold
by the holders thereof pursuant to this Section 0 and all
Securities proposed to be registered by the Other Stockholders
(other than those referred to in Section 0(c)(ii)(A)), PRO
RATA among such holders on the basis of the number of shares
requested to be so registered by such holders; and
(C) THIRD, shares that the Company proposes to issue and
sell for its own account.
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6.3 COMPANIES REGISTRATION. If the Securities Act (whether by statutory
amendment, amendment of the rules and regulations thereunder or both) is amended
after the date hereof to provide for a Companies Registration Scheme, and the
Company is or becomes eligible to participate in the Companies Registration
Scheme, then the Company, promptly following the request of the Required
Holders, shall use its reasonable best efforts to register promptly under the
Companies Registration Scheme so as to facilitate the resale under the
registration statement contemplated by such Companies Registration Scheme of the
Registrable Securities in accordance with the method or methods of distribution
contemplated by the Holders.
6.4 REGISTRATION PROCEDURES. The Company will use its best efforts to
effect each Registration, and to cooperate with the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable, and the Company will as expeditiously as possible:
(a) subject, in the case of an Incidental Registration, to the
proviso to Section 0, prepare and file with the SEC the registration
statement and use its best efforts to cause the Registration to become
effective; PROVIDED, HOWEVER, that:
(i) before the initial filing of any registration statement,
the Company will furnish to the holders of the Registrable
Securities covered by such registration statement, their counsel,
and the underwriters, if any, and their counsel, copies of all such
documents proposed to be filed at least ten (10) days prior thereto,
which documents will be subject to the reasonable review, within
such ten (10) day period, of such holders, their counsel and the
underwriters; and
(ii) before filing any prospectus or any amendments or
supplements to any registration statement or prospectus, the Company
will furnish to the holders of the Registrable Securities covered by
such registration statement, their counsel, and the underwriters, if
any, and their counsel, copies of all such documents proposed to be
filed a reasonable period of time (in light of the nature of the
amendments or changes contained therein, which shall in every event
be at least one (1) day and shall never be required to be more than
ten (10) days) prior thereto, which documents will be subject to the
reasonable review, within such period, of such holders, their
counsel and the underwriters;
(b) subject, in the case of an Incidental Registration, to the
proviso to Section 0, prepare and file with the SEC such amendments and
post-effective amendments to any registration statement and any prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered
by such registration statement; and cause the prospectus to be
supplemented by any required prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act;
(c) furnish to each holder of Registrable Securities included in
such Registration and the underwriter or underwriters, if any, without
charge, at least one signed copy of the registration statement and any
post-effective amendment thereto, upon request, and such number of
conformed copies thereof and such number of copies of the prospectus
(including each preliminary prospectus and each prospectus filed under
Rule 424 under the Securities Act), any amendments or supplements thereto
and any documents incorporated by reference therein, as such holder or
underwriter may reasonably request in order to facilitate the disposition
of the Registrable Securities being sold by such holder (it being
understood that the Company consents to the use of the prospectus and any
amendment or supplement thereto by each holder of Registrable Securities
covered by such registration statement and the underwriter or
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the prospectus or any amendment or
supplement thereto);
20
(d) notify each holder of the Registrable Securities of any stop
order or other order suspending the effectiveness of any registration
statement, issued or threatened by the SEC in connection therewith, and
take all reasonable actions required to prevent the entry of such stop
order or to remove it or obtain withdrawal of it at the earliest possible
moment if entered;
(e) if requested by the managing underwriter or underwriters, if
any, or any holder of Registrable Securities in connection with any sale
pursuant to a registration statement, promptly incorporate in a prospectus
supplement or post-effective amendment such information relating to such
underwriting as the managing underwriter or underwriters, if any, or such
holder reasonably requests to be included therein; and make all required
filings of such prospectus supplement or post-effective amendment as soon
as practicable after being notified of the matters incorporated in such
prospectus supplement or post-effective amendment;
(f) on or prior to the date on which a Registration is declared
effective, use its best efforts to register or qualify, and cooperate with
the holders of Registrable Securities included in such Registration, the
underwriter or underwriters, if any, and their counsel, in connection with
any necessary registration or qualification of the Registrable Securities
covered by such Registration for offer and sale under the securities or
"blue sky" laws of each state and other jurisdiction of the United States
as any such holder or the managing underwriter, if any, reasonably
requests in writing; use its best efforts to keep each such registration
or qualification effective, including through new filings, or amendments
or renewals, during the period such registration statement is required to
be kept effective; and do any and all other acts or things necessary or
advisable to enable the disposition in all such jurisdictions reasonably
requested of the Registrable Securities covered by such Registration;
PROVIDED, HOWEVER, that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service
of process in any such jurisdiction where it is not then so subject;
(g) in connection with any sale pursuant to a Registration,
cooperate with the holders of Registrable Securities and the managing
underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends)
representing Securities to be sold under such Registration, and enable
such Securities to be in such denominations and registered in such names
as the managing underwriter or underwriters, if any, or such holders may
request;
(h) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or
authorities within the United States and having jurisdiction over the
Company or any Subsidiary as may reasonably be necessary to enable the
seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Securities;
(i) enter into such agreements (including underwriting agreements in
customary form) and take such other actions as the Requisite Holders shall
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(j) use its best efforts to obtain:
(i) at the time of effectiveness of each Registration, a
"comfort letter" from the Company's independent certified public
accountants covering such matters of the type customarily covered by
"cold comfort letters" as the Requisite Holders and the underwriters
reasonably request; and
(ii) at the time of any underwritten sale pursuant to the
registration statement, a "bring-down comfort letter," dated as of
the date of such sale, from the Company's independent certified
public accountants covering such matters of the type customarily
covered by comfort letters as the Requisite Holders and the
underwriters reasonably request;
21
(k) use its best efforts to obtain, at the time of any underwritten
sale pursuant to each Registration, an opinion or opinions, favorable to
the Requisite Holders in form and scope, from counsel for the Company in
customary form;
(l) notify each seller of Registrable Securities covered by such
Registration, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such Registration, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and promptly prepare, file with the SEC
and furnish to such seller or holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers or prospective purchasers
of such Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they are made;
(m) otherwise comply with all applicable rules and regulations of
the SEC, and make generally available to its security holders (as
contemplated by Section 11(a) under the Securities Act) an earnings
statement satisfying the provisions of Rule 158 under the Securities Act
no later than ninety (90) days after the end of the twelve (12) month
period beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the registration statement,
which statement shall cover said twelve (12) month period;
(n) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by each Registration from
and after a date not later than the effective date of such Registration;
and
(o) obtain and maintain the registration of the Common Stock under
either section 12(b) or section 12(g) of the Exchange Act; and use its
best efforts to cause all Registrable Securities covered by each
Registration to be listed subject to notice of issuance, prior to the date
of first sale of such Registrable Securities pursuant to such
Registration, on:
(i) either the New York Stock Exchange, Inc., or
the NASDAQ National Market; and
(ii) each other securities exchange, if any, on which the
Common Stock is then listed.
The Company may require each holder of Registrable Securities that will be
included in such Registration to furnish the Company with such information in
respect of such holder of its Registrable Securities that will be included in
such Registration as the Company may reasonably request in writing and as is
required by applicable laws or regulations.
6.5 REASONABLE INVESTIGATION. The Company shall:
(a) give the holders of Registrable Securities, their underwriters,
if any, and their respective counsel and accountants the opportunity to
participate in the preparation of the registration statement, each
prospectus included therein or filed with the SEC and each amendment
thereof or supplement thereto;
(b) give each such holder and underwriter reasonable opportunities
to discuss the business of the Company with its officers, counsel and the
independent public accountants who have certified its financial
statements;
22
(c) make available for inspection by any holder of Registrable
Securities included in any Registration, any underwriter participating in
any disposition pursuant to any Registration, and any attorney, accountant
or other agent retained by any such seller or underwriter, all financial
and other records, pertinent corporate documents and properties of the
Company reasonably requested by any such Person; and
(d) cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Person in connection with
such Registration;
in each such case, as shall be reasonably necessary, in the good faith opinion
of such holder or such underwriter, to enable it to conduct a "reasonable
investigation" within the meaning of section 11(b)(3) of the Securities Act and
to satisfy the requirement of reasonable care imposed by section 12(a)(2) of the
Securities Act.
6.6 REGISTRATION EXPENSES. The Company will pay all Registration Expenses
in connection with each registration of Registrable Securities, including,
without limitation, any such registration not effected by the Company.
6.7 INDEMNIFICATION; CONTRIBUTION.
(A) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify, to
the fullest extent permitted by law, each holder of Registrable
Securities, its officers, directors and agents, if any, and each Person,
if any, who controls such holder within the meaning of section 15 of the
Securities Act, against all losses, claims, damages, liabilities (or
proceedings in respect thereof) and expenses (under the Securities Act or
common law or otherwise), joint or several, resulting from any violation
by the Company of the provisions of the Securities Act or any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (and as amended or supplemented if
amended or supplemented) or any preliminary prospectus or caused by any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case
of any prospectus, in light of the circumstances under which they were
made) not misleading, except to the extent that such losses, claims,
damages, liabilities (or proceedings in respect thereof) or expenses are
caused by any untrue statement or alleged untrue statement contained in or
by any omission or alleged omission from information concerning any holder
furnished in writing to the Company by such holder expressly for use
therein. If the offering pursuant to any registration statement provided
for under this Section 0 is made through underwriters, no action or
failure to act on the part of such underwriters (whether or not such
underwriter is an Affiliate of any holder of Registrable Securities) shall
affect the obligations of the Company to indemnify any holder of
Registrable Securities or any other Person pursuant to the preceding
sentence. If the offering pursuant to any registration statement provided
for under this Section 0 is made through underwriters, the Company agrees,
to the extent required by such underwriters, to enter into an underwriting
or other agreement providing for indemnity of such underwriters, their
officers, directors and agents, if any, and each Person, if any, who
controls such underwriters within the meaning of section 15 of the
Securities Act to the same extent as hereinbefore provided with respect to
the indemnification of the holders of Registrable Securities; PROVIDED
that the Company shall not be required to indemnify any such underwriter,
or any officer or director of such underwriter or any Person who controls
such underwriter within the meaning of section 15 of the Securities Act,
to the extent that the loss, claim, damage, liability (or proceedings in
respect thereof) or expense for which indemnification is claimed results
from such underwriter's failure to send or give a copy of an amended or
supplemented final prospectus to the Person asserting an untrue statement
or alleged untrue statement or omission or alleged omission at or prior to
the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such amended or
supplemented final prospectus prior to such written confirmation and the
underwriter was provided with such amended or supplemented final
prospectus.
(B) INDEMNIFICATION BY THE HOLDERS. In connection with any
registration statement in which a
23
holder of Registrable Securities is participating, each such holder,
severally and not jointly, shall indemnify, to the fullest extent
permitted by law, the Company, each underwriter (if the underwriter so
requires) and their respective officers, directors and agents, if any, and
each Person, if any, who controls the Company or such underwriter within
the meaning of section 15 of the Securities Act, against any losses,
claims, damages, liabilities (or proceedings in respect thereof) and
expenses resulting from any untrue statement or alleged untrue statement
of a material fact or any omission or alleged omission of a material fact
required to be stated in the registration statement or prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein (in the case of any prospectus,
in light of the circumstances under which they were made) not misleading,
but only to the extent that such untrue statement is contained in or such
omission is from information so concerning a holder furnished in writing
by such holder expressly for use therein; PROVIDED, HOWEVER, that such
holder's obligations hereunder shall be limited to an amount equal to the
proceeds to such holder of the Registrable Securities sold pursuant to
such registration statement.
(C) CONTROL OF DEFENSE. Any Person entitled to indemnification under
the provisions of this Section 0 shall give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and unless in such indemnified party's reasonable judgment
a conflict of interest between such indemnified and indemnifying parties
may exist in respect of such claim, permit such indemnifying party to
assume the defense of such claim, with counsel reasonably satisfactory to
the indemnified party; and if such defense is so assumed, such
indemnifying party shall not enter into any settlement without the consent
of the indemnified party if such settlement attributes liability to the
indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent (which shall not be
unreasonably withheld); and any underwriting agreement entered into with
respect to any registration statement provided for under this Section 0
shall so provide. In the event an indemnifying party shall not be
entitled, or elects not, to assume the defense of a claim, such
indemnifying party shall not be obligated to pay the fees and expenses of
more than one counsel or firm of counsel for all parties indemnified by
such indemnifying party in respect of such claim, unless in the reasonable
judgment of any such indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties
in respect to such claim.
(D) CONTRIBUTION. If for any reason the foregoing indemnity is
unenforceable, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other; or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative
benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any other
relevant equitable considerations.
Notwithstanding the foregoing, no holder of Registrable Securities shall
be required to contribute any amount in excess of the amount such holder
would have been required to pay to an indemnified party if the indemnity
under Section 0(b) hereof was enforceable. No Person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. The obligation of any Person to
contribute pursuant to this Section 0 shall be several and not joint.
(E) ADVANCEMENT OF EXPENSES. An indemnifying party shall make
payments of all
24
amounts required to be made pursuant to the foregoing provisions of this
Section 0 to or for the account of the indemnified party from time to time
promptly upon receipt of bills or invoices relating thereto or when
otherwise due or payable. Without limiting the generality of the
foregoing, each indemnifying party, as an interim measure during the
pendency of any claim, action, investigation, inquiry or proceeding
arising out of or based upon any matter or subject for which indemnity (or
contribution in lieu thereof) would be available to any indemnified party
under any provision of this Section 0, shall promptly reimburse each
indemnified party, as often as invoiced therefor (but in no event more
often than monthly), for all reasonable legal or other expenses incurred
in connection with the investigation or defense of any such claim, action,
investigation, inquiry or proceeding, notwithstanding the absence of any
judicial determination as to the propriety or enforceability of the
indemnifying party's obligation to reimburse the indemnified party for
such expenses and notwithstanding the possibility that the obligations to
pay such expenses might later have been held to be improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
is held to be improper, the indemnified party agrees to promptly return
the amount so advanced to the indemnifying party, together with interest,
compounded monthly, at the prime rate (or other commercial lending rate
for borrowers of the highest credit standing) listed from time to time in
The Wall Street Journal which represents the base rate on corporate loans
posted by a substantial majority of the nation's thirty (30) largest
banks. Any such interim reimbursement payments which are not made to the
indemnified party within thirty (30) days of a request therefor shall bear
interest at such prime rate from the date of such request to the extent
such reimbursement payments are ultimately determined to be proper
obligations of the indemnifying party. To the extent required by any
underwriter in connection with the execution of any underwriting agreement
pursuant to which the holders of Registrable Securities shall be selling
any shares of Common Stock, the Company shall agree to advancement of the
expenses of such underwriter to at least the same extent as provided in
this Section 0.
(F) SURVIVAL. The indemnity and contribution agreements contained in
this Section 0 shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of
Registrable Securities, its officers, directors, agents or any Person, if
any, who controls such holder as aforesaid, and shall survive the transfer
of such Securities by such holder.
6.8 HOLDBACK AGREEMENTS; REGISTRATION RIGHTS TO OTHERS.
(a) In connection with each underwritten sale of Registrable
Securities, the Company agrees, and each holder of Registrable Securities
by acquisition of such Registrable Securities agrees, to enter into
customary holdback agreements concerning sale or distribution of
Registrable Securities and other equity Securities of the Company, except,
in the case of any holder of Registrable Securities, to the extent that
such holder is prohibited by applicable law or exercise of fiduciary
duties from agreeing to withhold Registrable Securities from sale or is
acting in its capacity as a fiduciary or investment adviser. Without
limiting the scope of the term "fiduciary," a holder shall be deemed to be
acting as a fiduciary or an investment adviser if its actions or the
Registrable Securities proposed to be sold are subject to the Employee
Retirement Income Security Act of 1974, as amended, or the Investment
Company Act of 1940, as amended, or if such Registrable Securities are
held in a separate account under applicable insurance law or regulation.
25
(b) If the Company shall at any time after the date hereof provide
to any holder of any Securities of the Company rights with respect to the
registration of such Securities under the Securities Act, such rights
shall not be in conflict with or adversely affect any of the rights
provided in this Section 0 to the holders of Registrable Securities.
6.9 OTHER REGISTRATION OF COMMON STOCK. If any shares of Common Stock
required to be reserved for purposes of exercise of Warrants or conversion of
any class of Common Stock into any other class of Common Stock require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered or approved, as
the case may be.
6.10 AVAILABILITY OF INFORMATION. At any time that any class of the Common
Stock is registered under section 12(b) or section 12(g) of the Exchange Act,
the Company will comply with the reporting requirements of sections 13 and 15(d)
of the Exchange Act (whether or not it shall be required to do so pursuant to
such Sections) and will comply with all other public information reporting
requirements of the SEC from time to time in effect. In addition, the Company
shall file such reports and information, and shall make available to the public
and to the holders of Registrable Securities such information, as shall be
necessary to permit such holders to offer and sell Registrable Securities
pursuant to the provisions of Rules 144 promulgated under the Securities Act.
The Company will also cooperate with each such holder in supplying such
information as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the SEC as a
condition to the availability of an exemption from the registration provisions
of the Securities Act in connection with the sale of any Registrable Securities.
The Company will furnish to each such holder, promptly upon their becoming
available, copies of all financial statements, reports, notices and proxy
statements sent or made available generally by the Company to its stockholders,
and copies of all regular and periodic reports and all registration statements
and prospectuses filed by the Company with any securities exchange or with the
SEC.
7. INTERPRETATION OF THIS AGREEMENT.
7.1 CERTAIN DEFINED TERMS. For the purpose of this Agreement, the
following terms shall have the meanings set forth below or set forth in the
Section hereof following such term:
ACQUIRING PERSON -- means and includes, with respect to any Share Purchase
Rights, any holders of Common Stock or other persons (as such term is used in
Section 13(d) and Section 14(d)(2) of the Exchange Act as in effect on the
Closing Date) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act as in effect on the Closing Date)
participating in or sponsoring one or more Share Purchase Triggering Events
specified in the Share Purchase Rights Plan.
ADDITIONAL COMMON STOCK -- means Common Stock, including treasury shares,
issued after the date hereof, except Common Stock issued upon the exercise of
any one or more Warrants.
AFFILIATE -- means, at any time, a Person (other than a Subsidiary or the
Purchasers):
(a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Company;
(b) that beneficially owns or holds ten percent (10%) or more of any
class of the Voting Stock of the Company; or
(c) ten percent (10%) or more of the Voting Stock (or in the case of
a Person that is not a corporation, ten percent (10%) or more of the
equity interest) of which is beneficially owned or held by the Company or
any Subsidiary;
26
at such time.
As used in this definition,
CONTROL -- means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
AGREEMENT, THIS -- and references thereto shall mean this Warrant
Agreement as it may from time to time be amended or supplemented.
AGGREGATE CONSIDERATION PAID -- means, in the case of a repurchase,
redemption, retirement or acquisition of shares of Common Stock, the aggregate
amount paid by the Company in connection therewith and, in the case of a
repurchase, redemption, retirement or acquisition of Rights, the sum of:
(a) the aggregate amount paid by the Company for such
Rights; PLUS
(b) the aggregate consideration or premiums stated in such Rights to
be payable for the shares of Common Stock covered thereby.
For purposes of clause (a) above, in the event of the repurchase,
redemption, retirement or acquisition of any Rights together with other
Securities or obligations of the Company or any other Person in which the
purchase price for the Rights and such other Securities or obligations is
expressed as a single purchase price (including, without limitation, upon the
issuance or sale of Preferred Stock or debt Securities which are convertible
into Common Stock), the aggregate amount paid by the Company for such Rights
shall include only the portion of such single purchase price attributable to
such Rights, and not the portion attributable to such other Securities or
obligations. The portion of such purchase price attributable to such Rights in
such case shall be equal to the product of:
(i) such single purchase price; MULTIPLIED BY
(ii) the quotient of:
(A) the fair market value (as determined by the Valuation
Agent) of such Right, independent of the value of such other
Securities or obligations (computed using the Black-Scholes option
pricing model or such other pricing model as the Valuation Agent
determines is appropriate, and applying such reasonable assumptions
concerning price variances with respect to the Common Stock and such
other variables as the Valuation Agent considers appropriate);
DIVIDED BY
(B) the fair market value (as determined by the Valuation
Agent) of such Right together with such other Securities or
obligations (computed using such methodology and making such
assumptions as the Valuation Agent determines is appropriate).
27
AGGREGATE CONSIDERATION RECEIVABLE -- means, in the case of an issuance or
sale of shares of Additional Common Stock, the aggregate amount paid to the
Company in connection therewith and, in the case of an issuance or sale of
Rights, or any amendment thereto, the sum of:
(a) the aggregate amount paid to the Company for such
Rights; PLUS
(b) the aggregate consideration or premiums stated in such Rights to
be payable for the shares of Additional Common Stock covered thereby;
in each case without deduction for any fees, expenses or
underwriters discounts.
For purposes of clause (a) above, in the event of the issuance or sale of
any Rights together with other Securities or obligations of the Company or any
other Person in which the purchase price for the Rights and such other
Securities or obligations is expressed as a single purchase price (including,
without limitation, upon the issuance or sale of Preferred Stock or debt
Securities which are convertible into Common Stock), the aggregate amount paid
to the Company for such Rights shall include only the portion of such single
purchase price attributable to such Rights, and not the portion attributable to
such other Securities or obligations. The portion of such purchase price
attributable to such Rights in such case shall be equal to the product of:
(i) such single purchase price; MULTIPLIED BY
(ii) the quotient of:
(A) the fair market value (as determined by the Valuation
Agent) of such Right, independent of the value of such other
Securities or obligations (computed using the Black-Scholes option
pricing model or such other pricing model as the Valuation Agent
determines is appropriate, and applying such reasonable assumptions
concerning price variances with respect to the Common Stock and such
other variables as the Valuation Agent considers appropriate);
DIVIDED BY
(B) the fair market value (as determined by the Valuation
Agent) of such Right together with such other Securities or
obligations (computed using such methodology and making such
assumptions as the Valuation Agent determines is appropriate).
AGREEMENT, THIS -- means this Warrant Agreement, as it may be from time to
time amended or supplemented.
BOARD OF DIRECTORS -- means the board of directors of the Company or any
committee thereof that, in the instance, shall have the lawful power to exercise
the power and authority of such board of directors.
BUSINESS DAY -- means a day other than a Saturday, a Sunday or a day on
which banks in the State of New York are required or permitted by law (other
than a general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.
CHARTER -- means the Restated Articles of Incorporation of the Company.
CLOSING PRICE -- means, on any date with respect to any share of common
stock of any Person:
(a) the last sale price, regular way, on such date or, if no such
sale takes place on such date, the average of the closing bid and asked
prices on such date, in each case as officially reported on the principal
national securities exchange on which such common stock is then listed or
admitted to trading; and
28
(b) if no such common stock is then listed or admitted to trading on
any national securities exchange, but is listed on the NASDAQ National
Market or the NASDAQ SmallCap Market, as the case may be, the last trading
price of such common stock on such date as reported by NASDAQ, or if there
shall have been no trading on such date, the average of the reported
closing bid and asked prices on such date as shown by NASDAQ.
When used in this Agreement without reference to a particular Person or common
stock, "Closing Price" means the Closing Price of the Common Stock.
COMMON STOCK -- means the Common Stock, par value $0.01 per share, of the
Company; PROVIDED, HOWEVER, that subsequent to any creation or issuance by the
Company of any Share Purchase Rights and prior to the earlier of the Share
Purchase Right Detachment Date and the Share Purchase Right Termination Date,
the term "Common Stock," and references to any shares thereof, shall in each
case include the attached Share Purchase Rights.
COMPANIES REGISTRATION SCHEME -- means an amendment or amendment to the
Securities Act (whether by statutory amendment, amendment of the rules and
regulations thereunder or both), such as, without limitation, as proposed in the
Report of the Advisory Committee on the Capital Formation and Regulatory
Processes of the Securities and Exchange Commission, dated July 24, 1996,
pursuant to which:
(a) issuers of Securities are permitted to register all issuances of
securities on an integrated company registration statement; and
(b) under the provisions of such amendment, such registration could
cover the re-offering or resale by the holders thereof of shares of Common
Stock issued upon the exercise of the Warrants, if any, outstanding at
such time.
29
COMPANY -- shall have the meaning specified in the introductory paragraph
hereof.
CONSIDERATION PER SHARE -- means, with respect to shares of Common Stock
or Rights, the quotient of:
(a) the Aggregate Consideration Paid (in the case of a repurchase,
redemption, retirement or other acquisition for value of Common Stock or
Rights) or the Aggregate Consideration Receivable (in the case of an
issuance or sale of Common Stock or Rights by the Company), as the case
may be, in respect of such shares of Common Stock or such Rights; DIVIDED
BY
(b) the total number of such shares of Common Stock or, in the case
of Rights, the total number of shares of Common Stock into which such
Rights are exercisable or convertible.
DISTRIBUTED ENTITY -- means any subsidiary or other Person in which the
Company owns any ownership interest at any time, the capital stock, the Spinoff
Shares of which are dividended or otherwise distributed (including, without
limitation, in any recapitalization) to the stockholders of the Company in
respect of the Common Stock in a Spinoff.
EFFECTIVE DATE -- means the earliest to occur of:
(a) May 1, 1999;
(b) any merger, consolidation, amalgamation or similar combination
of the Company with or into any other Person (other than a merger,
consolidation, amalgamation or similar combination in which the Company is
the surviving corporation and in which the stockholders of the Company
retain the Common Stock held by them immediately prior to the occurrence
of such event);
(c) the sale, conveyance or transfer of all or substantially all of
the Property of the Company to any other Person or group of Persons; and
(d) the fixing or establishment of a record date for determination
of the holders of the Common Stock entitled to receive any distribution of
cash, Securities or other Property to the holders of the Common Stock in
connection with a transaction described in clause (b) or clause (c) above.
EXCHANGE ACT -- means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
EXCLUDED SECURITIES -- means and includes:
(a) shares of Common Stock or Rights issued in any of the
transactions described in Section 0 through Section 0, inclusive, hereof,
and in respect of which an adjustment has been made pursuant to such
Section;
(b) shares of Common Stock issuable upon exercise of the Warrants or
any other Rights (including, without limitation, the Outstanding Warrant
and outstanding stock options) outstanding on the date hereof;
(c) shares of Common Stock issued to the public in a bona fide
public offering registered under the Securities Act to Persons other than:
(i) Affiliates;
(ii) employees of the Company; or
(iii) existing holders of Common Stock or
Rights;
PROVIDED, HOWEVER, that a bona fide public offering sold through an
underwriter and held open to the public generally shall not fail to meet
the requirements of this clause (c) merely by virtue of the fact that one
or more Affiliates, employees or existing holders of Common Stock or
Rights may have been purchasers from the underwriters therein so long as
no pre-existing arrangement or agreement to so purchase shares in
connection with such offering was in existence or in effect; and
(d) shares of Common Stock issued as the consideration in a
transaction involving a bona fide acquisition by the Company of another
Person (whether by acquisition of capital stock of such Person or all or
substantially all of the Property of such Person, or by merger or
consolidation of such Person into the Company or any Subsidiary) so long
as the economic terms of such acquisition were negotiated at arm's length
and so long as neither such Person nor the Person or Persons to whom such
Common Stock is issued are:
(i) Affiliates;
(ii) employees of the Company; or
(iii) existing holders of Common Stock or Rights;
30
PROVIDED, HOWEVER, that in the event that the acquired Person is a
corporation the common stock of which is registered under either section
12(b) or section 12(g) of the Exchange Act, the issuance of shares of
Common Stock to all stockholders of the acquired Person in a bona fide
acquisition shall not fail to meet the requirements of this clause (d)
merely by virtue of the fact that one or more Affiliates, employees or
existing holders of Common Stock or Rights may have been the beneficial
owners (as such term is defined in Rule 13d-3 under the Exchange Act, 17
C.F.R. ss.240.13d-3) of five percent (5%) or less of the common stock of
such acquired Person and so long as no pre-existing arrangement or
agreement to so issue shares in connection with such offering was in
existence or in effect;
(e) Rights consisting of stock options granted with an exercise
price not less than the Closing Price thereof as of the date of the grant
issued to employees, consultants or independent contractors of the Company
pursuant to any stock option plan approved by the Board of Directors at
any time, so long as, and to the extent that:
(i) the aggregate number of shares of Common Stock issuable
upon exercise of all such outstanding stock options (whether or not
then currently exercisable) does not at any time exceed fifteen
percent (15%) of the aggregate number of shares of Common Stock on a
Fully Diluted Basis at such time, such number of shares to be
appropriately adjusted in respect of the occurrence of any of the
events described in Section 0 hereof; and
(ii) no other holder of any Rights or any other Securities of
the Company shall have the right to any preemptive, subscription or
similar right in respect of such issuance;
and shares of Common Stock issuable upon the exercise of such stock
options; PROVIDED, HOWEVER, that the Company may at any time reduce the
exercise price of any such options to a price which, on the date of such
reduction, is not less than the Closing Price calculated as of such date;
and
(f) Share Purchase Right Securities issued or sold by the Company or
any Acquiring Person upon exercise of any Share Purchase Rights in
accordance with the provisions of any Share Purchase Right Agreement, and
any Common Stock, if any, issued upon the exercise or conversion of any
such Share Purchase Right Securities in accordance with the provisions of
the Share Purchase Rights and the Share Purchase Right Agreement.
EXPIRATION DATE -- means the later to occur of:
(a) May 1, 2003; and
(b) the first date upon which the entire then-remaining principal
amount of the Notes, together with all accrued and unpaid interest thereon
and all other amounts due in respect thereof, is fully and finally paid in
cash.
FAIR VALUE -- means, with respect to any share of common stock of any
Person at any time, the quotient of:
(a) the difference of:
(i) the sum of:
(A) the fair salable value of such Person as a going
concern, giving effect to all Property thereof and subject to
all liabilities thereof, that would be realized in an arm's
length sale between an informed and willing buyer and an
informed and willing seller,
31
under no compulsion to buy or sell, respectively, as of a date
that is within fifteen (15) days of the date as of which the
determination is to be made, determined by agreement among the
holders of the Warrants and the Company and, if, in the
Company's view after reasonable negotiation no such agreement
can be reached, by the Valuation Agent, such determination in
either case to be made without regard to the absence of a
liquid or ready market for such common stock; PLUS
(B) the aggregate exercise or conversion price of all
Warrants and all other Valuable Rights of such Person
(including, without limitation, Valuable Rights of such Person
in respect of any shares of Preferred Stock convertible at
such time into shares of common stock of such Person) in
existence and remaining unexercised on such date;
MINUS
(ii) if there shall then exist any outstanding shares of
Preferred Stock (other than Preferred Stock convertible at such time
into shares of common stock of such Person, which shares represent
Valuable Rights of such Person at such time), the aggregate
liquidation preference of (or, if less, the aggregate price, if any,
at which such Person could elect to redeem) such shares of Preferred
Stock (together with all accrued and unpaid dividends thereon);
DIVIDED BY
(b) the sum of:
(i) the total number of shares of common stock
then outstanding; PLUS
(ii) the aggregate number of shares of common stock issuable
in respect of all Valuable Rights of such Person (including, without
limitation, Valuable Rights of such Person in respect of any shares
of Preferred Stock convertible at such time into shares of common
stock of such Person) at such time.
FULLY DILUTED BASIS -- means, with respect to any calculation of the
number of shares of common stock of any Person at any time, the sum of:
(a) the number of shares of common stock of such Person outstanding
at such time; PLUS
(b) the aggregate number of shares of common stock of such Person
issuable upon the exercise, conversion or exchange, as the case may be, of
all Rights of such Person outstanding at such time, regardless of whether
such Rights of such Person are then exercisable, convertible or
exchangeable and, with respect to any Rights of such Person, regardless of
whether the consideration given up by the holder of such Right of such
Person in connection with the exercise, conversion or exchange thereof
would exceed the value of the common stock of such Person received upon
such exercise, conversion or exchange.
GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.
INCIDENTAL REGISTRATION -- Section 0.
32
INITIAL PURCHASE PRICE -- means Twenty-Two Dollars and Seventy Cents
($22.70) per share.
INITIATING HOLDERS -- means, at any time, the holders (other than the
Company or any Affiliate thereof) of at least fifty-one percent (51%) (by number
of shares) of the Registrable Securities at such time (excluding any Registrable
Securities held directly or indirectly by the Company or any Affiliate thereof).
LIEN -- means any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property (for purposes of this
definition, the "Owner"), whether such interest is based on the common law,
statute or contract, and includes but is not limited to:
(a) the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes, and the filing of any financing statement
under the Uniform Commercial Code of any jurisdiction, or an agreement to
give any of the foregoing;
(b) reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting real Property;
(c) stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements affecting the Owner's rights in
stock owned by the Owner; and
(d) any interest in any Property held by the Owner evidenced by a
conditional sale agreement, capitalized lease or other arrangement
pursuant to which title to such Property has been retained by or vested in
some other Person for security purposes.
The term "Lien" does not include negative pledge clauses in loan agreements and
equal and ratable security clauses in loan agreements.
MARKET CAPITALIZATION -- means, with respect to any Person, at any time of
determination, the product of:
(a) the Market Price of the common stock of such Person at such time
of determination; MULTIPLIED BY
(b) the number of shares of the common stock of such Person
outstanding at such time.
MARKET CAPITALIZATION PERCENTAGE -- means, with respect to any Person, at
any time of determination, the quotient of:
(a) the Market Capitalization of such Person as of the Spinoff
Calculation Date; DIVIDED BY
(b) the sum of:
(i) the Market Capitalization of the
Distributed Entity as of the Spinoff Calculation
Date; PLUS
(ii) the Market Capitalization of the Company as of the
Spinoff Calculation Date.
MARKET PRICE -- means, per share of common stock of any Person, as of any
date of determination, the arithmetic mean of the daily Closing Prices for the
twenty (20) consecutive trading days before such date of
34
determination; PROVIDED that if such common stock is then neither listed or
admitted to trading on any national securities exchange, the NASDAQ National
Market or the NASDAQ SmallCap Market, then "Market Price" means the Fair Value
of one share of such common stock, as determined by the Valuation Agent as of
the date of determination. When used in this Agreement without reference to a
particular Person or common stock, "Market Price" means the Market Price of the
Common Stock.
NASD -- means the National Association of Securities Dealers, Inc.
NASDAQ -- means the NASDAQ Stock Market, Inc., a subsidiary of the NASD.
NASDAQ NATIONAL MARKET -- has the meaning ascribed thereto in Rule 4200(r)
of NASDAQ.
NASDAQ SMALLCAP MARKET -- has the meaning ascribed thereto in Rule 4200(t)
of NASDAQ.
NOTE AGREEMENT -- means the Note Agreement, dated as of the date hereof,
among the Company and the Purchasers, pursuant to which the Notes were issued.
NOTES -- means the 12% Senior Subordinated Notes due May 1, 2003 issued
pursuant to the Securities Purchase Agreement and the Note Agreement.
NOTICE EVENT -- means any event that would require an adjustment in the
Purchase Price pursuant to Section 0 hereof.
OTHER STOCKHOLDERS -- means and includes, at any time, all holders of
Securities of the Company at such time (other than the holders of Registrable
Securities).
OUTSTANDING WARRANT -- means that certain warrant to purchase five
thousand (5,000) shares of the Common Stock issued to Xxxxx Xxxxxx & Associates.
PERSON -- means an individual, partnership, corporation, limited liability
company, joint venture, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
POTENTIAL MATERIAL EVENT shall mean and include the following:
(a) the possession by the Company of material
undisclosed information not ripe for disclosure in a
registration statement; or
(b) any undisclosed material engagement or material activity by the
Company which would, in the good faith determination of the Board of
Directors of the Company, be adversely affected by disclosure in a
registration statement at such time.
PREFERRED STOCK -- means and includes, with respect to any Person, all
capital stock of such Person of any class which is preferred as to payment upon
a liquidation or dissolution of such Person or both, over the common stock of
such Person.
PRE-SPINOFF OWNERSHIP PERCENTAGE -- means, with respect to any Spinoff,
the quotient, expressed as a percentage, of:
(a) the number of shares of Common Stock issuable immediately prior
to the Spinoff upon exercise of all Warrants remaining outstanding at such
time; DIVIDED BY
35
(b) the aggregate number of shares of Common Stock at such time
calculated on a Fully Diluted Basis.
PROPERTY -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
PUBLIC OFFERING -- shall mean any sale of Common Stock in a transaction
either registered under, or requiring registration under, section 5 of the
Securities Act.
PURCHASE PRICE -- means, prior to any adjustment pursuant to Section 0 of
this Agreement, the Initial Purchase Price and thereafter, the Initial Purchase
Price as thereafter successively adjusted and readjusted from time to time.
PURCHASERS -- shall have the meaning specified in the introductory
paragraph hereof.
REGISTRABLE SECURITIES -- means, at any time:
(a) any shares of Common Stock that have been issued upon the
exercise of any Warrant;
(b) any shares of Common Stock into which such shares of Common
Stock shall have been converted at any time; and
(c) any shares of Common Stock that are issuable upon the exercise
of the Warrants or the conversion of Common Stock referred to in clause
(a) or clause (b) above.
For purposes of Section 0 hereof and the definitions of "Initiating Holders" and
"Requisite Holders" herein, holders of Warrants at any time shall be deemed to
be holders of Registrable Securities described in clauses (b) and (c) of this
definition that are at such time issuable upon exercise in full of such
Warrants, whether or not such holders are then entitled so to exercise such
Warrants pursuant to the terms thereof.
As to any particular Registrable Securities once issued, such Securities
shall cease to be Registrable Securities:
(i) when a registration statement with respect to the sale of such
Securities shall have become effective under the Securities Act and such
Securities shall have been disposed of in accordance with such
registration statement;
(ii) when they shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act;
(iii) when they shall have been otherwise transferred and subsequent
disposition of them shall not require registration or qualification under
the Securities Act or any similar state law then in force; or
(iv) when they shall have ceased to be outstanding or (with respect
to Registrable Securities described in clause (c) of this definition)
issuable upon exercise of the Warrants.
REGISTRATION -- means the Shelf Registration and each Incidental
Registration.
REGISTRATION EXPENSES -- means all expenses incident to the Company's
performance of or compliance with Section 6.1 through Section 0, inclusive,
including, without limitation:
36
(a) all registration and filing fees;
(b) 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);
(c) expenses of printing certificates for the Registrable Securities
in a form eligible for deposit with Depositary Trust Company;
(d) messenger and delivery expenses;
(e) internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties);
(f) fees and disbursements of counsel for the Company and its
independent certified public accountants (including the expenses of any
management review, cold comfort letters or any special audits required by
or incident to such performance and compliance);
(g) securities acts liability insurance (if the
Company elects to obtain such insurance);
(h) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration;
(i) fees and expenses of other Persons retained by
the Company; and
(j) reasonable fees and expenses of counsel for holders of
Registrable Securities, selected by the Requisite Holders;
but not including any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities or fees and expenses of more than one
counsel representing the holders of Registrable Securities or any other selling
expenses, discounts or commissions incurred in connection with the sale of
Registrable Securities.
REQUIRED WARRANTHOLDERS -- means, at any time, the holders of at least
fifty-one percent (51%) of all Warrants outstanding (excluding any Warrants
directly or indirectly held by the Company, any Subsidiary or any Affiliate) at
such time.
REQUISITE HOLDERS -- means, with respect to any registration or proposed
registration of Registrable Securities pursuant to Section 0 hereof, any holder
or holders (other than the Company or any Affiliate or Subsidiary) holding at
least fifty-one percent (51%) of the shares of Registrable Securities (excluding
any shares of Registrable Securities directly or indirectly held by the Company
or any Affiliate or Subsidiary) to be so registered.
RIGHT -- means and includes:
(a) any warrant (including, without limitation, in the case of the
Company, any Warrant and the Outstanding Warrant) or any option
(including, without limitation, employee stock options) to acquire common
stock of such Person;
(b) any right issued to holders of the common stock of such Person,
or any class thereof, permitting the holders thereof to subscribe to
shares of Additional Common Stock (in the case of the Company) or
additional common stock or additional Rights of such Person (pursuant to a
rights offering or otherwise);
37
(c) any right to acquire common stock of such Person pursuant to the
provisions of any Security convertible or exchangeable into such common
stock; and
(d) any similar right permitting the holder thereof to subscribe for
or purchase shares of common stock of such Person.
References in this Agreement to a Right or Rights of a Person means a Right or
Rights, regardless of whether or not issued by such Person, relating to the
common stock of such Person. When used in this Agreement without reference to a
particular Person, "Right" means a Right of the Company.
SECURITIES PURCHASE AGREEMENT -- means the Securities Purchase Agreement,
dated as of the date hereof, between the Company and the Purchaser, relating to
the offering and sale of the Notes and the Warrants.
SEC -- means, at any time, the Securities and Exchange Commission or any
other federal agency at such time administering the Securities Act.
SECURITIES ACT -- means the Securities Act of 1933, as amended.
SECURITY -- shall have the meaning specified in section 2(1) of the
Securities Act.
SHARE PURCHASE RIGHT -- means any Right created by the Company after the
date hereof which meets the following criteria:
(a) such Right is distributed to each holder of the Common Stock as
of the record date for the distribution thereof;
(b) such Right remains attached to each share of Common Stock
(including, without limitation, shares issued on or after the record date
for the distribution thereof but prior to any date of detachment thereof)
pending the occurrence of one or more Share Purchase Triggering Events;
(c) such Right shall become detached from, and may be transferred
separately from, the shares of Common Stock upon the occurrence of one or
more Share Purchase Triggering Events; and
(d) such Right shall become exercisable by all holders thereof other
than an Acquiring Person, upon the occurrence of one or more Share
Purchase Triggering Events (which may or may not be the Share Purchase
giving rise to the detachment of the Share Purchase Rights) specified in
the Share Purchase Rights Plan, into Share Purchase Right Securities.
SHARE PURCHASE RIGHT DETACHMENT DATE -- means the date upon which any
Share Purchase Right becomes detached from, and may be transferred separately
from, the shares of Common Stock.
SHARE PURCHASE RIGHT TERMINATION DATE -- means the earlier to occur of the
expiration, termination or redemption by the Company of all Share Purchase
Rights.
SHARE PURCHASE RIGHT PLAN -- means the plan or agreement pursuant to which
the Share Purchase Rights are issued and governing the terms thereof.
SHARE PURCHASE RIGHT SECURITIES -- means and includes any of the following
Securities issuable upon exercise of a Share Purchase Right:
38
(a) shares of Common Stock or Rights of the Company,
or Securities containing Rights of the Company;
(b) shares of other capital stock of the Company or other Securities
convertible or exchangeable into capital stock of the Company; or
(c) shares of capital stock of an Acquiring Person or any Affiliate
thereof or other Securities convertible or exchangeable into any such
capital stock.
SHARE PURCHASE TRIGGERING EVENT -- means and includes any and all of the
following:
(a) the acquisition by any Acquiring Person of a percentage of the
outstanding Common Stock specified in the Share Purchase Right Plan (but
in no event less than ten percent (10%) of the outstanding Common Stock);
(b) the making by any Acquiring Person of a tender offer for the
Common Stock or any substantial portion thereof;
(c) the commencement of, or the occurrence of any event in
furtherance of, any actual or threatened election contest (as contemplated
by Rule 14a-11 under the Exchange Act) or other actual or threatened
solicitation of proxies or contest by or on behalf of a Person other than
the Board of Directors which, if fully completed, would result in a
majority of the directors of the Company following consummation of such
contest or proposal and the election or elections of directors at which
such contest or proposal is directed being Persons who were not directors
immediately prior to the commencement of such contest or proposal; or
(d) any similar or other action which would, if completed, result in
an Acquiring Person either owning a majority of the Common Stock or
controlling the Board of Directors.
SHELF EFFECTIVE DATE -- means May 1, 1999, or such earlier date as would
be required by Section 0.
SHELF EFFECTIVE PERIOD -- Section 0.
SHELF FILING DATE -- means January 1, 1999, or such earlier date as would
be required by Section 0.
SHELF REGISTRATION -- Section 0.
SPINOFF - means and includes:
(a) any payment or making of any dividend in, or making of any
distribution of, any Spinoff Shares to the stockholders of the Company in
respect of the Common Stock; or
(b) any reclassification of the Common Stock in any manner or other
similar arrangement such that Spinoff Shares are issued to or deemed
issued to the Company's stockholders.
SPINOFF CALCULATION DATE -- means, with respect to any Spinoff, the
thirtieth (30th) trading day following the consummation of such Spinoff.
39
SPINOFF SHARES -- means and includes any capital stock, partnership or
membership interest, or warrant, option or other right to acquire any such
capital stock, partnership or membership interests, or other similar equity
interest of any Distributed Entity, in each case, which is dividended or
otherwise distributed (including, without limitation, in any recapitalization)
to the stockholders of the Company in respect of the Common Stock in a Spinoff.
SPINOFF WARRANT AGREEMENT -- Section 0.
SPINOFF WARRANT NUMBER -- means, at any time, with respect to any Spinoff,
the quotient of:
(a) the product of:
(i) the Pre-Spinoff Ownership Percentage;
MULTIPLIED BY
(ii) the aggregate number of Spinoff Shares, calculated as of
the Spinoff Calculation Date on a Fully Diluted Basis (but prior to
giving effect to the issuance of the Spinoff Warrants);
DIVIDED BY
(b) the difference of:
(i) one hundred percent (100%); MINUS
(ii) the Pre-Spinoff Ownership Percentage.
SPINOFF WARRANT PURCHASE PRICE -- means, on any date of determination,
with respect to any Spinoff, the quotient of:
(a) the product of:
(i) the Market Capitalization Percentage of the
Distributed Entity as of such date; MULTIPLIED BY
(ii) the number of Warrants outstanding on such
date; MULTIPLIED BY
(iii) the Purchase Price on such date prior to giving effect
to any adjustment in the Purchase Price (including, without
limitation, that required by Section 0) resulting from the Spinoff;
DIVIDED BY
(b) the Spinoff Warrant Number.
SPINOFF WARRANTS -- Section 0.
SUBSIDIARY -- means, at any time, each corporation, association, limited
liability company or other business entity which qualifies as a subsidiary of
the Company that is properly included in a consolidated financial statement of
the Company and its subsidiaries in accordance with GAAP at such time.
TRANSFEREE -- means any registered transferee of all or any part of any
one or more Warrant Certificates acquired by the Purchasers under this
Agreement.
40
VALUABLE RIGHT -- means, with respect to any Person at any time, a Right,
the effective conversion, exercise or purchase price of which on the date of
determination is less than the Market Price in respect of the shares of common
stock of such Person issuable upon conversion, exercise or purchase pursuant to
such Right on such date.
VALUATION AGENT -- means the Board of Directors, unless the Required
Warrantholders shall disagree in good faith with the determination of the Board
of Directors, in which case the determination shall be made by a firm of
independent certified public accountants, an investment banking firm or
appraisal firm (which firm shall own no material amount of Securities of, and
shall not be an Affiliate, Subsidiary or a related Person of, the Company) of
recognized national standing retained by the Company and reasonably acceptable
to the Required Warrantholders.
VOTING STOCK -- means, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time any stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency), and, in the case of the Company, shall include the Common Stock.
WARRANT -- shall mean each Warrant to purchase shares of the Common Stock
issued pursuant to this Agreement.
WARRANT CERTIFICATE -- Section 0.
7.2 DESCRIPTIVE HEADINGS. The descriptive headings of the several Sections
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
7.3 GOVERNING LAW. THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
8. MISCELLANEOUS.
8.1 EXPENSES. The Company agrees to pay, and save the Purchasers and any
Transferees harmless against liability for the payment of, all out-of-pocket
expenses (including, without limitation, the reasonable fees and disbursements
of special counsel for the Purchasers and any Transferee) arising in connection
with the transactions herein contemplated, including, without limitation:
(a) the cost, if any, of complying with Section 0
hereof;
(b) any subsequent proposed modification of, or proposed consent
requested or initiated by or on behalf of the Company under, this
Agreement, the Warrant Certificates or the Warrants, whether or not such
proposed modification shall be effected or proposed consent granted
(including, without limitation, all document production and duplication
charges and the reasonable fees and expenses of one special counsel
engaged by the holders of Warrants in connection therewith); and
(c) the enforcement of (or determination of whether or how to
enforce) any rights under this Agreement, the Warrant Certificates or the
Warrants or in responding to any subpoena or other legal process or
informal investigative demand issued in connection with this Agreement or
the transactions contemplated hereby or by reason of the Purchasers' or
any Transferee's having acquired any Warrant Certificate, including,
without limitation, the reasonable fees and expenses of one special
counsel engaged by the holders of the Warrants and incurred by the holders
of the Warrants and the costs and expenses incurred in any bankruptcy case
involving the Company or any Subsidiary.
41
The obligations of the Company under this Section 0 shall survive the transfer
of any Warrant Certificate or portion thereof or interest therein by any
Purchaser or any Transferee and the exercise or expiration of any Warrant.
8.2 AMENDMENT AND WAIVER. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with and only with the
written consent of the Company and:
(a) in the case of Section 0 through Section 0, Section 0, Section 0
or Section 0 hereof (other than this Section 0), or of any term defined in
Section 0 to the extent used therein, the written consent of the Required
Warrantholders;
(b) the provisions of Section 0 hereof, and of any term defined in
Section 0 hereof as used in Section 0 hereof, may be amended, modified or
supplemented only by a writing duly executed by or on behalf of the
Initiating Holders and the Company; PROVIDED, HOWEVER, that compliance by
the Company with the provisions of Section 0 hereof,
with respect to any particular registration, may be waived
by the Requisite Holders; and
(c) in the case of this Section 0, or of any term defined in Section
0 to the extent used herein, the written consent of all holders of
Warrants then outstanding and all Registrable Securities then outstanding
(excluding any Warrants or Registrable Securities directly or indirectly
held by the Company, any Subsidiary or any Affiliate);
PROVIDED, HOWEVER, that:
(i) no such amendment or waiver of any of the provisions of this
Agreement pertaining to the Purchase Price or the number or kind of shares
of Common Stock that may be purchased upon exercise of each Warrant; and
(ii) no change delaying the occurrence of the Effective Date or
accelerating the occurrence of the Expiration Date;
shall be effective as to the holder of any Warrant unless
consented to in writing by such holder.
8.3 DIRECTLY OR INDIRECTLY. Where any provision in this Agreement refers
to any action to be taken by any Person, or that such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person, including actions taken by or on behalf of any
partnership in which such Person is a general partner.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein and in the Securities Purchase
Agreement in connection herewith shall survive the execution and delivery of
this Agreement and the Warrant Certificates, the transfer by any Purchaser of
any Warrant Certificate or portion thereof or interest therein and the exercise
or expiration of any Warrant, and may be relied upon by the Purchasers or any
Transferee, regardless of any investigation made at any time by or on behalf of
such Purchaser or Transferee. Subject to the preceding sentence, this Agreement
and the Warrant Certificates embody the entire agreement and understanding among
the Company and the Purchasers, and supersede all prior agreements and
understandings, relating to the subject matter hereof.
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8.5 SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not. Notwithstanding the foregoing sentence, the Company may not assign any of
its rights, duties or obligations hereunder or under the Warrants without the
prior written consent of all holders of the Warrants then outstanding.
8.6 NOTICES. All communications hereunder or under the Warrants shall be
in writing and shall be delivered either by national overnight courier or by
facsimile transmission (confirmed by delivery by national overnight courier sent
on the day of the sending of such facsimile transmission), and shall be
addressed to the following addresses:
(a) if to a Purchaser, at its address set forth on Annex 1 to this
Agreement, or at such other address as such Purchaser shall have specified
to the Company in writing;
(b) if to any other holder of any Warrant Certificate, addressed to
such other holder at such address as such other holder shall have
specified to the Company in writing or, if any such other holder shall not
have so specified an address to the Company, then addressed to such other
holder in care of the last holder of such Warrant Certificate that shall
have so specified an address to the Company; and
(c) if to the Company, at the address set forth on Annex 2 to this
Agreement, or at such other address as the Company shall have specified to
each holder of Warrants in writing.
Any communication addressed and delivered as herein provided shall be deemed to
be received when actually delivered to the address of the addressee (whether or
not delivery is accepted) or received by the telecopy machine of the recipient.
Any communication not so addressed and delivered shall be ineffective.
8.7 SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Purchasers or to any holder or holders of
Warrant Certificates, the determination of such satisfaction shall, unless
specifically required herein in any instance to be "reasonable" or words to
similar effect, be made by such Purchasers, holder or holders, as the case may
be, in the sole and exclusive judgment (exercised in good faith) of the Person
or Persons making such determination.
8.8 SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
8.10 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; ETC.
(A) WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE WARRANTS OR ANY OF THE DOCUMENTS, AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY.
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(B) CONSENT TO JURISDICTION. ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE WARRANTS OR ANY OF THE
DOCUMENTS, AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR
PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY
BREACH UNDER THIS AGREEMENT, THE WARRANTS OR ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY MAY BE BROUGHT BY SUCH PARTY IN ANY FEDERAL DISTRICT
COURT LOCATED IN NEW YORK CITY, NEW YORK, OR ANY NEW YORK STATE COURT
LOCATED IN NEW YORK CITY, NEW YORK AS SUCH PARTY MAY IN ITS SOLE
DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE
IN PERSONAM JURISDICTION OF EACH SUCH COURT, AND EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING
BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY
CLAIM THAT IT IS NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY SUCH
COURT. IN ADDITION, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT OR
TRANSACTION CONTEMPLATED HEREBY BROUGHT IN ANY SUCH COURT, AND HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(C) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY AGREES THAT
PROCESS PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL AT THE
ADDRESSES PROVIDED HEREIN FOR NOTICES SHALL CONSTITUTE, TO THE EXTENT
PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE WARRANTS OR
ANY DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY, OR ANY ACTION
OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF
ANY BREACH HEREUNDER OR UNDER ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS
EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES POSTAL
SERVICE OR ANY COMMERCIAL DELIVERY SERVICE.
(D) OTHER FORUMS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT
THE ABILITY OF ANY PURCHASER TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN
ANY MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE
COMPANY IN SUCH OTHER JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY BE
PERMITTED BY APPLICABLE LAW.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; NEXT PAGE IS A SIGNATURE PAGE.]
44
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed and delivered by one of its duly authorized officers or
representatives.
FRESH AMERICA CORP.
By:________________________________
Name:
Title:
XXXX XXXXXXX MUTUAL LIFE
INSURANCE COMPANY
By:________________________________
Name:
Title:
XXXX XXXXXXX VARIABLE LIFE
INSURANCE COMPANY
By:________________________________
Name:
Title:
SIGNATURE (1A) CAYMAN, LTD.
By: Xxxx Xxxxxxx Mutual Life
Insurance Company,
Portfolio Advisor
By:________________________________
Name:
Title:
45
