EXECUTION ORIGINAL
WARRANT AGREEMENT
BETWEEN
SIENA CAPITAL PARTNERS, L.P.
AND
BROTHERS GOURMET COFFEES, INC.
DATED AS OF SEPTEMBER 20, 1996
THIS WARRANT AGREEMENT HAS BEEN ISSUED PURSUANT TO THAT CERTAIN SECURITIES
PURCHASE AGREEMENT, DATED AS OF SEPTEMBER 20, 1996, BY AND BETWEEN THE COMPANY
(AS DEFINED HEREIN) AND SIENA (AS DEFINED HEREIN) (THE "SECURITIES PURCHASE
AGREEMENT"). THIS WARRANT AGREEMENT IS SUBJECT TO ALL OF THE TERMS AND
CONDITIONS OF THE SECURITIES PURCHASE AGREEMENT AND IS ENTITLED TO THE BENEFITS
THEREOF.
THE WARRANTS AND WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANTS
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANTS
AND WARRANT SECURITIES, AS THE CASE MAY BE, MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, IN THE
ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT
WITH RESPECT TO THE WARRANTS AND WARRANT SECURITIES, AS THE CASE MAY BE, UNDER
THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN
EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "AGREEMENT") is dated as of the 20th day of
September 1996, and executed by and between SIENA CAPITAL PARTNERS, L.P., a
California limited partnership ("SIENA"), and BROTHERS GOURMET COFFEES, INC., a
Delaware corporation (the "COMPANY").
WHEREAS, pursuant to that certain Securities Purchase Agreement between
Siena and the Company dated as of even date herewith (the "SECURITIES PURCHASE
AGREEMENT"), the Company has agreed to grant to Siena or its assigns common
stock warrants in the form attached hereto as EXHIBITS A-1 through A-4 hereto
(the "WARRANTS") to acquire shares of the Company's Common Stock, US$.0001 par
value per share. This Agreement sets forth certain rights and obligations of
the Company and Siena with respect to the Warrants.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements contained in this
Agreement, the parties hereto agree as follows:
I. DEFINITIONS
Section 1.01 DEFINED TERMS. As used in this Agreement, the following
capitalized terms shall have the meanings respectively assigned to them below,
which meanings shall be applicable equally to the singular and plural forms of
the terms so defined. Terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Securities Purchase Agreement.
"ADJUSTMENT TRANSACTION" shall mean any of: (i) the issuance or sale of
Common Stock, Class B Common Stock or Common Stock Equivalents for less than
Fair Value (as hereinafter defined) (other than delivery of shares of Common
Stock upon exercise of this Warrant), in addition to the number of shares
outstanding as of the date hereof, as disclosed herein, including, without
limitation, any issuance of Common Stock, Class B Common Stock or Common Stock
Equivalents in connection with the settlement of that certain litigation
disclosed as Items 1.5(n)1, 2 and 3 in the DISCLOSURE SCHEDULE (the "SETTLEMENT
STOCK"), which Settlement Stock is valued at less than Fair Value as of the date
of such settlement or as of the date such Settlement Stock is actually tendered
to the participants in said litigation, (ii) the declaration of a Dividend upon,
or distribution in respect of, any of the Company's capital stock, payable in
Common Stock or Common Stock Equivalents, (iii) the subdivision or combination
by the Company of its outstanding Common Stock into a larger or smaller number
of shares of Common Stock, as the case may be, (iv) any capital reorganization
or reclassification of the Common Stock or Class B
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Common Stock of the Company, (v) the consolidation or merger of the Company
or any Subsidiary (as hereinafter defined) with or into another corporation,
(vi) the sale or transfer or other disposition of all or substantially all of
the property of the Company, (vii) the dissolution, liquidation or winding up
of the Company or (viii) any event as to which the foregoing clauses are not
strictly applicable, but the failure to make an adjustment in the Exercise
Price hereunder would not fairly protect the purchase rights, without
dilution, represented by the Warrants.
"COMMON EQUITY" shall mean the total equity interest in the Company
represented by the Common Stock and the Class B Common Stock and shall include
Common Equity resulting from any reorganization, reclassification or
recapitalization or similar event.
"COMMON STOCK EQUIVALENTS" shall mean all options, warrants (including the
Warrants), convertible securities, securities and other rights (in each case
whether now existing or hereafter issued or arising) to acquire from the Company
shares of Common Stock or Class B Common Stock (without regard to whether such
options, warrants, convertible securities, securities and other rights are then
exchangeable, exercisable or convertible in full, in part or at all).
"DIVIDEND" means, as to any Person (as hereinafter defined), any
declaration or payment of any dividend (other than a stock dividend) on, or the
making of any pro rata distribution, loan, advance, or investment to, any
shares of capital stock of such Person.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, and any successor
provisions thereto.
"EXERCISE PRICE" shall have the meaning given in each Warrant, as adjusted
from time to time pursuant to the terms of the Warrants and this Agreement.
"EXPIRATION PERIOD" means, with respect to each Warrant, the period
commencing on each Warrant's respective Warrant Effective Date through and
including the seventh anniversary of such Warrant Effective Date or, in the
event the seventh anniversary is not a Business Day (as hereinafter defined),
the next succeeding Business Day.
"EXERCISE QUANTITY" shall mean the number of shares of Common Stock,
determined from time to time, taking into account all shares of Common Stock
theretofore issued upon exercise of the Warrants, required to be issued by the
Company to the Holders of the Warrants. Exercise Quantity shall initially have
the meaning given in each Warrant, and may be adjusted from time to time,
pursuant to the provisions of the Warrants and this Agreement.
"FAIR VALUE" means, so long as, (a) the Company maintains its listing on a
national stock exchange, the NASDAQ system or another inter-dealer quotation
system; and (b) there exists and is continuing a public float having a minimum
value of $15 million based on an average trailing twenty (20) trading-day
period, to the extent such definition is applicable, with reference to the
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Warrant Securities (as hereinafter defined) and the Common Stock on a per share
basis, the current market price per share of the Common Stock as of any date of
determination. Notwithstanding the foregoing, in the event the standards set
forth in the preceding sentence have not been met or with respect to other
appropriate security, property, assets, business or entity, "Fair Value" shall
mean the fair value of such item as determined by mutual agreement reached by
the Holder and the Company or, in the event the parties are unable to agree, an
opinion of an independent investment banking firm or firms in accordance with
the following procedure. In the case of any event which gives rise to a
requirement to determine "Fair Value" pursuant to this Agreement, the Company
shall be responsible for initiating the process by which Fair Value shall be
determined as promptly as practicable, but in any event within sixty (60) days
following such event and if the procedures contemplated herein in connection
with determining Fair Value have not been complied with fully, then any such
determination of Fair Value for any purpose of this Agreement shall be deemed
to be preliminary and subject to adjustment pending full compliance with such
procedures. Upon the occurrence of an event requiring the determination of Fair
Value, the Company shall give the Holder(s) of the Warrants notice of such
event, and the Company and the Holders shall engage in direct good faith
discussions to arrive at a mutually agreeable determination of Fair Value.
In the event the Company and the Holder(s) (as hereinafter defined) are
unable to arrive at a mutually agreeable determination within thirty (30) days
of the notice, the Company and the Holder(s) of the Warrants (who, if more than
one, shall agree among themselves by a majority) shall each retain a separate
independent investment banking firm of national reputation (which firm, in
either case, may be the independent investment banking firm regularly retained
by the Company or any such Holder). Such firms shall jointly determine the Fair
Value of the security, property, assets, business or entity, as the case may be,
in question and deliver their opinion in writing to the Company and to such
Holder within thirty (30) days of their retention. In no event shall the
marketability, or lack thereof, or lack of registration of a security be a
factor in determining the "Fair Value" of such security.
If such firms cannot jointly make such determination within such 30-day
period, then, unless otherwise directed by agreement of the Company and the
Holder(s) of a majority or more of the Warrants, such firms, in their sole
discretion, shall choose another independent investment banking firm of the
Company or such Holder(s), which firm shall make such determination and render
such an opinion. In either case, the determination so made shall be conclusive
and binding on the Company and such Holder(s). The fees and expenses of the
investment banking firm retained by Holder(s) pursuant to this provision shall
be borne by Holder(s). The fees and expenses of all other investment banking
firms retained pursuant to this provision shall be borne by the Company.
"HOLDER" or "HOLDERS" shall mean the Person(s) then registered as the
owner(s) of the
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Warrants or Warrant Securities, as the case may be, on the books and records
of the Company.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, estate,
unincorporated organization, joint venture, court or governmental or political
subdivision or agency thereof.
"REGISTRABLE SECURITIES" shall have the meaning assigned to it in SECTION
6.01 hereof.
"SUBSIDIARY" shall mean any corporation as to which an aggregate of more
than 50% of the outstanding voting stock is at any time directly or indirectly
owned by the Company, or by one or more of its Subsidiaries or by the Company
and one or more of its Subsidiaries.
"WARRANT SECURITIES" shall mean the shares of Common Stock (or other
securities representing Common Stock) purchasable or purchased from time to
time under the Warrants or acquired upon any transfer of any such shares,
together with all additional securities received in payment of dividends or
distributions on or splits of those securities or received as a result of the
adjustments provided for in ARTICLE V hereof.
II. WARRANTS
On the Closing Date, the Company will grant to Siena, for good and
valuable consideration as more particularly described in the Securities
Purchase Agreement and herein, the Initial Warrant in the form attached as
EXHIBIT A-1 hereto, the Second Warrant in the form attached as EXHIBIT A-2
hereto, the Third Warrant in the form attached as EXHIBIT A-3 hereto and the
Fourth Warrant in the form attached as EXHIBIT A-4 hereto. Siena and any
subsequent Holder of the Warrants and of Warrant Securities shall have the
rights and obligations provided for in the Warrants, in this Agreement and in
the Securities Purchase Agreement.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows:
(a) The execution and delivery of this Agreement and the Warrants have
been duly and properly authorized by all requisite corporate action of the
Company and its board of directors, and, except as disclosed in the DISCLOSURE
SCHEDULE, no consent of any other Person is required as a prerequisite to the
validity and enforceability of this Agreement and the Warrants that has not been
obtained. The Company has the full legal right, power and authority to execute
and deliver this Agreement and the Warrants and to perform its obligations
hereunder and thereunder. When issued and delivered pursuant to this Agreement,
the Warrants will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company entitled to the
benefits provided herein and therein.
(b) Except as set forth in the DISCLOSURE SCHEDULE, the Company is not a
party to or otherwise subject to any contract or agreement which restricts or
otherwise affects its right or
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ability to execute and deliver this Agreement or the Warrants or to perform
any obligation hereunder or thereunder (including, without limitation,
issuance of the Warrant Securities). Neither the execution or delivery of
this Agreement or the Warrants, nor compliance therewith (including, without
limitation, issuance of the Warrant Securities), will conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of
any material lien upon any properties of the Company under, or require any
consent, approval, or other action by, notice to or filing with any court or
Governmental Person pursuant to the Certificate of Incorporation or By-laws
of the Company, as currently in effect, any award of any arbitrator, or any
material agreement, instrument or law to which the Company is subject or by
which it is bound.
(c) On the date hereof, the authorized capital stock of the Company will
consist of: (i) 15,000,000 shares of Common Stock; (ii) 2,000,000 shares of
Class B Common Stock, and (iii) 10,000,000 shares of Preferred Stock. As of
June 28, 1996, the Company had issued and outstanding (A) 10,362,605 shares of
Common Stock, (B) 839,332 shares of Class B Common Stock and (C) no shares of
Preferred Stock. All such outstanding shares are validly issued, fully paid and
nonassessable. Except as disclosed in the DISCLOSURE SCHEDULE, there are no
rights, options or warrants of any kind outstanding to purchase or acquire
Common Stock or Class B Common Stock or any other ownership interest in the
Company, nor are there other securities, obligations, agreements or rights of
any kind outstanding which are exercisable for, convertible into or exchangeable
for any Common Stock or Class B Common Stock or any other ownership interests
in the Company or under the terms of which the parties thereto have the right to
purchase or acquire Common Stock, Class B Common Stock or Common Stock
Equivalents. Except as disclosed in the DISCLOSURE SCHEDULE, the issuance by
the Company of the Warrants and the Warrant Securities is not subject to any
preemptive or similar right of any Person pursuant to statute, contract or
understanding.
(d) Except as provided in this Agreement, the Company is not subject to
any obligation to repurchase or otherwise acquire or retire any shares of
capital stock. Except as disclosed in the DISCLOSURE SCHEDULE, there is no
commitment of the Company to issue any shares, warrants, options, or other such
rights, or to distribute to holders of any class of its capital stock any
evidences of indebtedness or assets, or to pay any Dividend or make any other
distribution in respect thereof.
(e) The Warrants are, and the Warrant Securities will be, issued by the
Company to Siena in a transaction exempt from registration and qualification
under the applicable federal and state securities laws.
(f) Except as disclosed in the DISCLOSURE SCHEDULE, there is not in effect
on the date of this Agreement any agreement by the Company (other than this
Agreement) pursuant to which any holders of securities of the Company have a
right to cause the Company to register such securities under the Securities Act.
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(g) The representations and warranties made or deemed made by the Company
in the Securities Purchase Agreement are incorporated herein by reference and
are true and correct on the date of this Agreement and the Holder shall be
entitled to rely thereon as if the same were originally addressed to the Holder.
The representations and warranties incorporated by reference in this Section
shall survive any termination of the Securities Purchase Agreement, the maturity
of the Note or any expiration of such representations or warranties by the terms
of the Securities Purchase Agreement or the Note.
IV. COVENANTS
Section 4.01 COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees that, during the term of this Agreement, unless all of the Holders of the
Warrants agree otherwise in writing:
(a) Each of the Warrant Securities issued and delivered upon the exercise
of the Warrants and payment of the Exercise Price will be duly and validly
authorized and issued, will be fully paid and nonassessable, and will not be
subject to any unpaid tax or any lien, whether respecting their issuance to and
purchase by the Holder of the Warrants or otherwise. The Company will take all
such actions as may be necessary to assure that all such shares of Common Stock
may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of Common Stock may be listed.
(b) The Company shall reserve and at all times keep available for issuance
an authorized number of shares of Common Stock sufficient to permit the full and
immediate exercise of the Warrants and the full and immediate exercise, exchange
and conversion of all other securities, options, warrants and other rights
issued or granted by the Company.
(c) The Company shall not permit the par value of its Common Stock to
exceed, at any time, the Exercise Price and shall take all such actions as may
be necessary or appropriate to ensure that it does not do so.
(d) The Company shall not create or permit the existence of any class of
common stock, preferred stock, or any class or series of securities having
voting rights other than as may be required by statute, or any other class or
series of securities having any liquidation, Dividend or other preference, other
than the Common Stock, the Class B Common Stock and the Preferred Stock.
(e) As soon as available, and in no event later than the dates filed with
the SEC or any other Governmental Person or other regulatory authority, if such
documents are so filed, the Company shall deliver to the Holder(s) of the
Warrants and the Warrant Securities copies of (i) all annual, quarterly and
monthly financial statements made available by the Company to its stockholders,
(ii) all reports, notices and proxy or information statements sent or made
available
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generally by the Company to its stockholders, and (iii) all regular and
periodic reports and all registration statements, prospectuses and other
information filed by the Company with the Commission, relevant state
authorities or any securities exchange, securities quotation system or other
self-regulatory organization.
(f) The Company shall cooperate with the Holder(s) of the Warrants and the
Warrant Securities in supplying such information as may be reasonably necessary
for the Holder(s) to complete and file any information or other reporting forms
from time to time required by the Commission, relevant state authorities or any
securities exchange, securities quotation system or other self-regulatory
organization, including, without limitation, information pertaining to or
required for the availability of any exemption from the securities laws for the
sale, transfer or other disposition of the Warrants or any of the Warrant
Securities.
Section 4.02 INDEMNIFICATION.
(a) In connection with any registration or qualification of Warrant
Securities hereunder, the Company agrees that Siena and each other Holder of the
Warrants or any Warrant Securities purchased hereunder, any underwriter(s), and
their respective directors, officers, employees, attorneys and agents, as well
as each other Person (if any) controlling any of the foregoing Persons within
the meaning of Section 15 of the Securities Act, or Section 20 of the Exchange
Act, shall not incur any liability for acts and omissions arising out of or
related directly or indirectly to the Warrants, the Warrant Securities, this
Agreement, any registration statement or prospectus or any misstatement or
omission of a material fact therein; and the Company hereby expressly waives
any and all claims and actions which it now has or may hereafter at any time
have against Siena and each other Holder of the Warrants or underlying Warrant
Securities, and their respective directors, officers, employees, attorneys and
agents, arising out of or related directly or indirectly to any and all of the
foregoing acts, omissions and circumstances, except insofar as such liability is
caused by untrue statements or alleged untrue statements or omissions or alleged
omissions and is based upon information furnished in writing by Holder expressly
for use therein.
(b) The Company agrees to defend, indemnify and hold harmless Siena and
each other Holder of the Warrants, this Agreement, or any Warrant Security
purchased hereunder, any underwriter(s), and their respective directors,
officers, employees, attorneys and agents, as well as each other Person (if any)
controlling any of the foregoing Persons within the meaning of Section 15 of the
Securities Act, or Section 20 of the Exchange Act, from and against any and all
claims, liabilities, losses and expenses (including, without limitation, the
disbursements, expenses and fees of their respective attorneys) that may be
imposed upon, incurred by, or asserted against any of them, any of their
respective directors, officers, employees, attorneys and agents, or any such
control Person, under the Securities Act, the Exchange Act or any other statute
or at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), arise out of or are related directly or indirectly
to: (i) the Warrants or the Warrant Securities, (ii) any registration statement
or prospectus, (iii) any alleged untrue
7
statement of any material fact contained, on the effective date thereof, in
any registration statement under which such securities were registered under
the Securities Act or the Exchange Act, or in any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto,
or (iv) any alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and shall reimburse such Persons for any legal or any other expenses
reasonably incurred by such Persons in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any alleged untrue statement or alleged omission made in such registration
statement, preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such respective Person
specifically for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such
indemnified Person, and shall survive the transfer of such securities by such
Person. Promptly after receipt of notice of the commencement of any action
in respect of which indemnity may be sought against the Company, the Company
shall assume the defense of such action (including the employment of counsel,
who shall be counsel reasonably satisfactory to the party seeking indemnity
hereunder) and the payment of expenses insofar as such action shall relate to
any alleged liability in respect of which indemnity may be sought against the
Company. The Company shall not, except with the approval of each party being
indemnified under this SECTION 4.02, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the parties being so
indemnified of a release from all liability in respect to such claim or
litigation.
Section 4.03 LISTING ON THE SECURITIES EXCHANGE. The Company shall, at
its expense, list on any securities exchange where it lists its Common Stock,
and maintain and increase when necessary such listing of all outstanding Warrant
Securities so long as any shares of Common Stock shall be so listed. The
Company shall also so list on each securities exchange, and will maintain such
listing of, any other securities which the holder of the Warrants shall be
entitled to receive upon the exercise thereof if at the time any securities of
the same class shall be listed on such securities exchange by the Company.
Section 4.04 REPURCHASES AND REDEMPTIONS. The Company shall not
repurchase or redeem any of its equity securities or any securities convertible
into or exchangeable for such equity securities or any warrants or other rights
to purchase such equity securities unless it concurrently makes a cash payment
to the Holder(s) of the Warrants equal to the product of: (1) the quotient
obtained by dividing (x) the aggregate amount of cash and the aggregate Fair
Value of any property paid out by the Company in connection with any such
repurchase or redemption by (y) the number of shares of Common Stock and Common
Stock Equivalents outstanding immediately after such repurchase or redemption
(excluding Warrant Securities) and (2) the number of shares of Common Stock
issuable upon the exercise of the Warrants.
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V. ANTIDILUTION
Section 5.01 NO DILUTION OR IMPAIRMENT. The Company hereby acknowledges
that the initial number of shares issuable upon exercise of the Warrants was
calculated based upon 1.88% of the number of shares of Common Stock, Class B
Common Stock and Common Stock Equivalents outstanding and the representation of
the Company that the number of shares of Common Stock and Common Stock
Equivalents outstanding as of the Closing Date (including the Warrant
Securities) was Fourteen Million Eight Hundred Ninety-Five Thousand Thirty-Four
(14,895,034) shares. If for any reason it shall hereafter be determined by the
Company that the actual number of shares of Common Stock, Class B Common Stock
and Common Stock Equivalents outstanding as of the Closing Date was different
from the foregoing, the Company will notify the Holder(s) of such determination
and if the Holder(s) does not dispute the same, the Company shall forthwith
reissue the Warrants with an appropriate proportional increase in the Exercise
Quantity to be effective from the Closing Date. If a Holder shall dispute such
determination and the parties cannot otherwise resolve the dispute promptly and
in good faith, then the Company shall appoint a firm of independent public
accountants of recognized national standing (which may be the regular auditors
of the Company), which shall give their opinion as to the adjustment, if any, to
be made to the Exercise Quantity. Upon receipt of such opinion, the Company
shall promptly mail a copy thereof to the Holder(s) of the Warrants and shall
make the adjustment described therein.
It is the intent of the parties hereto that, after giving effect to any
exercise of the Warrants, the Holder(s) of the Warrants or Warrant Securities
would collectively be the owner of 1.88% of the Common Stock and Common Stock
Equivalents (or have the right to acquire 1.88% of the Common Stock and Common
Stock Equivalents outstanding as such amount may be adjusted in the event of a
cashless exercise of the Warrants according to SECTION 2(a)(II) or (III) thereof
or other adjustments contemplated herein), except such percentage may be reduced
as a consequence of an issuance of Common Stock not requiring any adjustment in
the Exercise Price resulting from any Adjustment Transaction in accordance with
SECTION 5.02 or other adjustments contemplated herein.
Upon any adjustment of the Exercise Price as provided in SECTION 5.02, the
Exercise Quantity shall be adjusted so that the New Exercise Quantity shall be
equal to the product of (x) the former Exercise Quantity and (y) the following
fraction:
The Exercise Price in effect immediately prior to such adjustment
-----------------------------------------------------------------
The Exercise Price resulting from such adjustment
EXHIBIT B hereto sets forth the formula and an illustrative example of the
manner in which the adjustments contemplated herein should be applied.
So long as any Warrants are outstanding, then, without the prior written
consent of the Holders of outstanding Warrants evidencing a majority in number
of the total number of Warrant
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Securities at the time purchasable upon the exercise of all then outstanding
Warrants, the Company will not: (a) amend the Certificate of Incorporation
or the By-Laws of the Company (or any equivalent documents) with respect to
the Company's capital stock; (b) merge or consolidate with or into another
Person or voluntarily reorganize, liquidate, dissolve or wind up its affairs;
(c) make any payment (in cash or property) to or enter into any other
transaction with, any party to this Agreement or any stockholder or
securityholder of the Company or any Affiliate thereof other than payments
made, or transactions expressly contemplated by this Agreement, the
Securities Purchase Agreement or the Senior Debt Agreement; or (d) take any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Agreement or the Warrants or impair the ability
of the Holder(s) to realize the full intended economic value thereof, but
will at all times in good faith assist in the carrying out of all such terms,
and of the taking of all such action as may be necessary or appropriate in
order to protect the rights of the Holder(s) of the Warrants against
dilution or other impairment.
Section 5.02 ADJUSTMENT.
(a) In the event the Company, after the Closing Date, shall propose to
consider or engage in an Adjustment Transaction, then, in each such event, the
Company shall mail to the Holder of the Warrants notice of such proposed action,
which shall specify the date on which the stock transfer books of the Company
shall close, or a record shall be taken, for determining the holders of Common
Stock entitled to receive the benefit of such Adjustment Transaction, or the
date on which the Adjustment Transaction shall take place or commence, as the
case may be, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to receive securities or other property
deliverable upon such action, if any such date is to be fixed. Such notice
shall be mailed at least thirty (30) days prior to the date upon which it is
proposed that such action take place and twenty (20) days prior to any record
date to determine holders of Common Stock entitled to receive the benefit of
such Adjustment Transaction. If an Adjustment Transaction occurs, the Exercise
Price shall be adjusted by the Company so as to fairly preserve, without
dilution, the purchase rights represented by the Warrants in accordance with
SECTION 5.01 and otherwise with the essential intent and purposes hereof. If
the Holder(s) of the Warrants disputes the adjustment of the Exercise Price made
by the Company and the parties cannot otherwise resolve the dispute promptly and
in good faith, then the Company shall at its expense appoint a firm of
independent public accountants of recognized national standing (which may be the
regular auditors of the Company), which shall give their opinion as to the
adjustment, if any, to be made to the Exercise Price as the result of the
relevant Adjustment Transaction. Upon receipt of such opinion, the Company shall
promptly mail a copy thereof to the Holder(s) of the Warrants and shall make the
adjustment described therein. An adjustment made pursuant to this SECTION
5.02(A) shall become effective immediately after the effective date of any such
issue, sale, Dividend, subdivision, combination or reclassification.
Anything herein to the contrary notwithstanding, the Company shall not be
required to make any adjustment of the Exercise Price in the case of the
issuance of shares of Common Stock upon the exercise in whole or part of the
Warrant.
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(b) Whenever the Exercise Price is adjusted as provided in this
SECTION 5.02, the Company will, if requested, promptly obtain a certificate
of a firm of independent public accountants of recognized national standing
selected by the Board of Directors of the Company (who may be the regular
auditors of the Company) setting forth the Exercise Price, and the Exercise
Quantity as so adjusted, the computation of such adjustment and a brief
statement of facts accounting for such adjustment, and will retain such
certificate on file and mail to the Holder(s) of the Warrants a copy of such
certificate from such firm of independent public accountants.
VI. REGISTRATION RIGHTS
Section 6.01 "PIGGYBACK" REGISTRATION RIGHTS. If at any time the
Company shall determine to register under the Securities Act (including
pursuant to a demand of any security holder of the Company exercising
registration rights) any of its Common Stock (except securities to be issued
solely in connection with any acquisition of any entity or business, shares
issuable solely pursuant to employee benefit plans eligible for registration
on SEC Form S-8 or shares to be registered on any registration form that
does not permit secondary sales), it shall send to Siena and to each of the
Holder(s) written notice of such determination at least thirty (30) days
prior to each such filing and, if within twenty (20) days after receipt of
such notice, any Holder shall so request in writing, the Company shall use
its best efforts to include in such registration statement (to the extent
permitted by applicable regulation) all or any part of the Warrant Securities
(collectively referred to in this ARTICLE VI as "REGISTRABLE SECURITIES")
that such Holder requests to be registered, provided, however, that if, in
connection with any offering involving an underwriting of Common Stock to be
issued by the Company, the managing underwriter shall impose a limitation on
the amount of Registrable Securities included in any such registration
statement, then, to the extent that any Registrable Securities remain
available for registration after the underwriter's cutback, the Company shall
be obligated to include in such registration statement with respect to each
Holder requesting inclusion only the product of : (i) the number of
Registrable Securities with respect to which such Holder has requested
inclusion hereunder and (ii) such Holder's pro rata share of the sum of all
Registrable Securities permitted to be registered and all other securities of
the Company, the holders of which Registrable Securities and other securities
have requested that such securities be registered. Any Registrable
Securities which are included in any underwritten offering under this SECTION
6.01 shall be sold upon such terms as the managing underwriters shall
reasonably request but in any event shall be upon terms not less favorable
than those upon which any other selling security holder shall sell any of its
securities. If any Holder disapproves of the terms of such underwriting,
such Holder may elect to withdraw therefrom by written notice to the Company
and the underwriter. The Company shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten offering (the
"COMPANY UNDERWRITER") to permit the Holders who have requested to
participate in the registration for such offering to include such Registrable
Securities in such offering on the same terms and conditions as the
securities of the Company included therein. Notwithstanding the foregoing, if
the Company Underwriter delivers a written opinion to the Holders that the
total amount or kind of securities which they, the Company and any other
11
Persons intend to include in such offering (the "TOTAL SECURITIES") is
sufficiently large so as to prevent the Company from affecting a successful
offering of the Total Securities, then the amount or kind of securities to be
offered for the account of any members of management shall be reduced pro
rata to the extent necessary to reduce the Total Securities to the amount
recommended by the Company Underwriter, and if the amount or kind of Total
Securities is still sufficiently large so as to prevent the Company from
affecting a successful offering of the Total Securities, then the amount or
kind of securities to be offered for the account of the Holders and any other
Persons shall be reduced pro rata to the extent necessary to reduce the Total
Securities to the amount recommended by the Company Underwriter.
Notwithstanding the provisions of this SECTION 6.01, the Company shall have
the right, at any time after it shall have given written notice pursuant to
this SECTION 6.01 (irrespective of whether a written request for inclusion
of Registrable Securities shall have been made), to elect not to file any
such proposed registration statement or to withdraw the same after the filing
and prior to the effective date thereof.
Section 6.02 REQUESTED REGISTRATIONS. At any time, and from time to
time upon the written request of Siena or a majority-in-interest of the
Holders, the Company effects the registration under the Securities Act of all
or part of such Registrable Securities and specifying the number of
Registrable Securities to be registered and the intended method of
disposition thereof (a "REQUESTED REGISTRATION"), the Company will use its
best efforts to affect the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
such Holder(s), and all to the extent requisite to permit the disposition (in
accordance with the intended methods thereof) of the Registrable Securities
so to be registered. Neither the Company nor any of its securityholders
shall have the right to include any of the Company's securities (other than
Registrable Securities) in a registration statement to be filed as part of a
Requested Registration unless: (i) such securities are of the same class as
the Registrable Securities and (ii) if such Requested Registration is an
underwritten offering, the Company or such securityholders, as applicable,
agree in writing to sell their securities on the same terms and conditions as
apply to the Registrable Securities being sold. Notwithstanding anything
herein to the contrary, the Company shall not be required to honor a request
for a Requested Registration if: (a) the Company has previously affected one
effective Requested Registration; (b) the Registrable Securities to be so
registered do not constitute at least five percent (5%) of the total number
of Registrable Securities then outstanding or issuable upon exercise or
conversion of the warrants; or (c) such request is received by the Company
(i) less than ninety (90) days following the effective date of any previous
registration statement filed in connection with a Requested Registration or
(ii) less than forty-five (45) days following the effective date of any
previous registration statement filed in connection with a Piggyback
Registration, regardless of whether any Holder exercised its rights under
this Agreement with respect to such registration.
Section 6.03 EFFECTIVENESS. If necessary to permit distribution of
the Registrable Securities, the Company shall use its best efforts to
maintain the effectiveness for up to one (1) year of the registration
pursuant to which any of the Registrable Securities are being offered, and
from time to time will amend or supplement such registration statement and
the prospectus
12
contained therein as and to the extent necessary to comply with the
Securities Act and any applicable state securities statute or regulation.
Notwithstanding the foregoing, if the registration by the Company of the
resale of Registrable Securities is eligible for SEC Form S-3 or any
successor to such form, the Company shall use its best efforts to maintain
the effectiveness of the registration until all registered Registrable
Securities are sold. The Holder shall notify the Company promptly of the
completion of the offering of its Registrable Securities under any such
effective registration statement.
Section 6.04 FURTHER OBLIGATIONS OF THE COMPANY. Whenever, under the
preceding Sections of this ARTICLE VI, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the
following:
(a) Furnish to each selling Holder such copies of each preliminary and
final prospectus and any other documents as such Holder may reasonably
request to facilitate the public offering of its Registrable Securities;
(b) Use its best efforts to register or qualify the Registrable
Securities to be registered pursuant to this ARTICLE VI under the applicable
securities or blue sky laws of such jurisdictions as any selling Holder may
reasonably request;
(c) Furnish to each selling Holder: (i) a signed counterpart of an
opinion of counsel for the Company, dated the effective date of the
registration statement; and (ii) a copy of any "comfort" letters signed by
the Company's independent public accountants who have examined and reported
on the Company's financial statements included in the registration statement,
covering substantially the same matters as are customarily covered in
opinions of issuer's counsel and in accountants' "comfort" letters delivered
to the underwriters in underwritten public offerings of securities;
(d) Permit each selling Holder or such Holder's counsel or other
representatives to inspect and copy such corporate documents and records as
may reasonably be requested by them in connection with such registration; and
(e) Furnish to each selling Holder, upon request, a copy of all
documents filed and all correspondence from or to the Commission in
connection with any such offering.
Section 6.05 EXPENSES. Except for underwriters' discounts and
brokerage commissions allocable to the Registrable Securities, the Company
shall bear all costs and expenses of each registration contemplated in
SECTIONS 6.01 and 6.02 including, but not limited to, printing, legal and
accounting fees and expenses, SEC and NASD filing fees and blue sky fees and
expenses in any jurisdiction in which the securities to be offered are to be
registered or qualified.
Section 6.06 TRANSFER OF REGISTRATION RIGHTS. The registration
rights of the Holders of Registrable Securities under this ARTICLE VI shall
inure to the benefit of and be exercisable by any transferee of Registrable
Securities.
13
Section 6.07 PARTICIPATION RIGHTS.
The Company will not grant to any Person (other than Siena, the Holders,
any Affiliate thereof or any transferee of Registrable Securities under this
ARTICLE VI) at any time on or after the date of this Agreement the right (a
"PARTICIPATION RIGHT") to request the Company to register any securities of
the Company under the Securities Act by reason of the exercise by any holder
of its rights under this ARTICLE VI unless such Participation Right provides
that such securities shall not be registered and sold at the same time if the
managing underwriter for the offering, including the Registrable Securities,
believes that sale of such securities would adversely affect the amount of,
or price at which, the respective Registrable Securities being registered
under this ARTICLE VI can be sold.
The Company agrees: (1) not to affect any public or private sale or
distribution of its securities, including a sale pursuant to Regulation D
under the Securities Act, during the 10-day period prior to, and during the
90-day period beginning on, the closing date of an underwritten offering made
to pursuant to a registration statement filed pursuant to SECTION 6.02, and
(2) to cause each holder (other than Siena, the Holders, any Affiliate
thereof or any transferee of Registrable Securities under this ARTICLE VI) of
its privately placed equity securities or convertible securities purchased
from the Company at any time prior to, on or after the date of this Agreement
to agree not to affect any public or private sale or distribution of any such
securities during such period, including a sale pursuant to Rule 144 or Rule
144A under the Securities Act (except as part of such underwritten
registration, if permitted).
Notwithstanding anything in this ARTICLE VI to the contrary, in no event
shall this ARTICLE VI be construed as prohibiting, restricting or impairing
the Company's ability to comply with the registration rights agreements or
the registration rights in any warrant it has: (i) entered into prior to the
Closing Date and (ii) disclosed on the DISCLOSURE SCHEDULE.
VII. TRANSFER OF WARRANTS AND WARRANT SECURITIES
Section 7.01 TRANSFER. Except as set forth in SECTION 7.02 below,
the Warrants and the Warrant Securities and all rights thereunder are
transferable, in whole or in part, on the books of the Company to be
maintained for such purpose, upon surrender of such Warrant at the office of
the Company maintained for such purpose, together with a written assignment
of such Warrant duly executed by the Holder hereof or its agent or attorney
and payment of funds sufficient to pay any stock transfer taxes payable upon
the making of such transfer. Upon such surrender and payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument
of assignment, and this Warrant shall promptly be canceled. If and when the
transferred Warrant is assigned in blank, the Company may (but shall not be
obliged to) treat the bearer thereof as the absolute owner of such Warrant
for all purposes and the Company shall not be affected by any notice to the
contrary. The transferred Warrant, if properly assigned in compliance
herewith, may be exercised by an assignee for the purchase of shares of
Common Stock without having a new
14
Warrant issued. The Company will not close its stock transfer books against
a transfer of the Warrants or the Warrant Securities or any exercise of the
Warrants. Any such transfer or exercise tendered while such stock transfer
books shall be closed shall be deemed effective immediately prior to such
closure.
Subject to SECTION 7.02 below, the Warrants may be divided or combined
with other Warrants upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by the Holder thereof or its
agent or attorney. Subject to compliance with this, as to any transfer which
may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice.
The Company shall pay all expenses, taxes (other than income taxes, if
any, of the transferee) and other charges incurred by the Company in the
performance of its obligations in connection with the preparation, issue and
delivery of Warrants under this Section. The Company agrees to maintain at
its aforesaid office books for the registration and transfer of the Warrants.
Notwithstanding any provision to the contrary contained herein, the Warrants
and the Warrant Securities shall be transferable only in compliance with the
provisions of the Securities Act and applicable state securities laws in
respect of the transfer of any Warrant or any Warrant Securities.
Section 7.02 TRANSFER RESTRICTIONS. Neither this Warrant Agreement,
the Warrants nor the Warrant Securities, when issued, have been registered
under the Securities Act or under the securities laws of any state. Neither
this Agreement, the Warrants nor the Warrant Securities, when issued, may be
transferred: (a) if such transfer would constitute a violation of any
federal or state securities laws or a breach of the conditions to any
exemption from registration thereunder and (b) unless and until one of the
following has occurred: (i) registration of this Agreement, the Warrants or
the Warrant Securities, as the case may be, under the Securities Act, and
such registration or qualification as may be necessary under the securities
laws of any state, have become effective, or (ii) the Holder has delivered
evidence reasonably satisfactory to the Company that such registration or
qualification is not required.
Each certificate for Warrant Securities issued upon exercise of a
Warrant and each certificate issued to a subsequent transferee, unless at the
time of exercise such Warrant Securities are registered under the Securities
Act, shall bear a legend substantially in the following form (and any
additional legends required by law) on the face thereof:
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANTS
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANT SECURITIES
MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, IN THE
15
ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN
EFFECT WITH RESPECT TO THE WARRANT SECURITIES UNDER THE SECURITIES ACT AND
UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH
REGISTRATION AND QUALIFICATION.
Section 7.03 REPLACEMENT OF INSTRUMENTS. Upon receipt by the Company
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any certificate or instrument evidencing
any Warrants or Warrant Securities, and (a) in the case of loss, theft or
destruction, upon receipt by the Company of indemnity reasonably satisfactory
to it (provided that, if the owner of the same is a commercial bank or an
institutional lender or investor, its own agreement of indemnity shall be
deemed to be satisfactory), or (b) in the case of mutilation, upon surrender
and cancellation thereof, the Company, at its expense, will execute,
register and deliver, in lieu thereof, a new certificate or instrument for
(or covering the purchase of) an equal number of Warrants or Warrant
Securities.
VIII. MISCELLANEOUS
Section 8.01 TERM. Except as otherwise expressly provided in this
Agreement or the Warrants, this Agreement shall expire seven (7) years after
the Fourth Warrant Effective Date, provided that the Company's obligations to
honor an exercise of the Warrants given prior to such expiration or to
perform any obligation continue and survive notwithstanding the expiration of
this Agreement.
Section 8.02 NO WAIVER UNDER OTHER AGREEMENTS. The terms and
provisions contained in this Agreement are not intended and shall not be
construed to waive, modify, repeal, stay, diminish or otherwise impair or
affect in any manner whatsoever any right or remedy of Siena or the
Holder(s) under the Company's Certificate of Incorporation, By-laws or
similar agreements.
Section 8.03 RELIANCE. Each party to this Agreement shall be
entitled to rely upon any notice, consent, certificate, affidavit, statement,
paper, document, writing or other communication reasonably believed by that
party to be genuine and to have been signed, sent or made by the proper
Person or Persons.
Section 8.04 NOTICE. Unless otherwise specifically provided herein,
all communications under this Agreement and the Warrants shall be in given in
accordance with Section 6.4 of the Securities Purchase Agreement.
Section 8.05 ENFORCEMENT. The Company acknowledges that the Holders
may proceed to exercise or enforce any right, power, privilege, remedy or
interest that they may have under this Agreement or applicable law without
notice, except as otherwise expressly provided herein, without pursuing,
exhausting or otherwise exercising or enforcing any other right, power,
privilege, remedy or interest that they may have against or in respect of any
other party, or any
16
other Person or thing, and without regard to any act or omission of such
party or any other Person.
Section 8.06 EQUITABLE RELIEF. Each party acknowledges and agrees
that it would be impossible to measure in money the damage in the event of a
breach of any of the terms and provisions of this Agreement by any party
hereto, and that, in the event of any such breach, there may not be an
adequate remedy at law, although the foregoing shall not constitute a waiver
of any of the party's rights, powers, privileges and remedies against or in
respect of a breaching party, any other person or thing under this Agreement
or applicable law. It is therefore agreed that, in addition to all other
such rights, powers, privileges and remedies that it may have, each party
shall be entitled to injunctive relief, specific performance or such other
equitable relief as such party may request to exercise or otherwise enforce
any of the terms and provisions of this Agreement and to enjoin or otherwise
restrain any act prohibited thereby, and no party will urge, and each party
hereby waives, any defense that there is an adequate remedy available at law.
Section 8.07 INTERPRETATION; HEADINGS; SEVERABILITY.
(a) The parties acknowledge and agree that since each party and its
counsel have reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision, the normal rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this
Agreement, and its terms and provisions shall be construed fairly as to all
parties hereto and not in favor of or against any party, regardless of which
party was generally responsible for the preparation of this Agreement.
(b) The Section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(c) In the event that any term or provision of this Agreement shall be
finally determined to be superseded, invalid, illegal or otherwise
unenforceable pursuant to applicable law by a governmental authority having
jurisdiction and venue, determination shall not impair or otherwise affect
the validity, legality or enforceability: (i) by or before that authority
of the remaining terms and provisions of this Agreement, which shall be
enforced as if the unenforceable term or provision were deleted, or (ii) by
or before any other authority of any of the terms and provisions of this
Agreement.
(d) If any period of time specified in this Agreement expires on a day
that is not a Business Day, that period shall be extended to and expire on
the next succeeding Business Day.
Section 8.08 SURVIVAL OF COVENANTS. Each of the covenants and other
agreements of the parties contained in this Agreement shall be absolute and,
except as otherwise expressly provided, unconditional, shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until the term of this Agreement has expired, and thereafter with
respect to events occurring prior thereto.
17
Section 8.09 NO REQUIRED EXERCISE. No term or provision of the
Warrants or this Agreement is intended to require, nor shall any such term or
provision be construed as requiring, any Holder of the Warrants to exercise
or put the Warrants.
Section 8.10 BINDING EFFECT. This Agreement shall be binding upon
and enforceable against the parties hereto and their respective successors
and assigns.
Section 8.11 NO WAIVER BY ACTION. The failure or delay of a party at
any time or times to require performance of, or to exercise its rights with
respect to, any term or provision of this Agreement (except as otherwise
expressly provided herein) shall not affect its right at a later time to
enforce any such provision.
Section 8.12 WAIVER; MODIFICATION; AMENDMENT. Each and every
modification to and amendment of this Agreement shall be in writing and
signed by the Company, Siena (if at that time Siena is a Holder) and by the
Holders of a majority in interest of all issued and unissued Warrant
Securities. Each and every waiver of and consent to any departure from any
term or provision hereof (except as otherwise provided herein) shall be in
writing and signed by Siena (if at that time it is a Holder) and by the
Holders of a majority in interest of all issued and unissued Warrant
Securities and by each party against whom enforcement of the waiver or
consent may be sought.
Section 8.13 ENTIRE AGREEMENT. This Agreement, the Securities
Purchase Agreement and the Warrants contain the entire agreement of the
parties and supersede all other representations, warranties, agreements and
understandings, oral or otherwise, among the parties hereto with respect to
the matters contained herein, except as otherwise provided herein.
Section 8.14 CERTIFICATE. Siena shall have received: (i) a
certificate, dated the date of this Agreement, of the Secretary or an
Assistant Secretary of the Company, (A) attaching a true and complete copy of
the resolutions of the Board of Directors of the Company, and of all
documents evidencing other necessary corporate or shareholder action (in form
and substance satisfactory to Siena and to its counsel) taken by the Company
in connection with the matters contemplated by this Agreement, (B) attaching
a true and complete copy of the Certificate of Incorporation and the By-Laws
of the Company, (C) setting forth the incumbency of the officer or officers
of the Company who sign this Agreement, and each Warrant, including therein a
signature specimen of such officer or officers, and (D) attaching a
certificate of good standing of the Secretary of State or other appropriate
official of the State of Delaware and (ii) such other documents and evidence
relating to the matters contemplated by this Agreement as Siena or its
counsel shall reasonably require.
Section 8.15 NO INCONSISTENT AGREEMENTS OR RIGHTS. The Company shall
not enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement.
Section 8.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS
18
AGREEMENT, THE WARRANTS AND THE WARRANT SECURITIES AND ALL AMENDMENTS,
SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF COLORADO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS SITTING IN THE STATE OF CALIFORNIA AND AGREES AND
CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDINGS
RELATING HERETO BY ANY MEANS ALLOWED UNDER CALIFORNIA, COLORADO OR FEDERAL
LAW. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE COMPANY SHALL APPOINT AN AGENT FOR SERVICE OF PROCESS IN
CALIFORNIA AND SHALL NOTIFY SIENA IN WRITING OF SUCH APPOINTMENT AND ANY
FUTURE CHANGE THEREIN. THE COMPANY AND SIENA EACH HEREBY AGREE TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR ANY OTHER AGREEMENTS
RELATING TO THE SECURITIES OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE
WARRANTS, THE WARRANT SECURITIES OR ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING THERETO.
[Signature page follows]
19
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed as of the day and year first above written.
SIENA:
SIENA CAPITAL PARTNERS, L.P.,
a California limited partnership
By: Charleville Capital, L.P.,
a California limited partnership,
its general partner
By: Aneis Advisors, Inc.,
a California corporation,
its general partner
By:
----------------------------------
Name:
Title:
THE COMPANY:
BROTHERS GOURMET COFFEES, INC.,
a Delaware corporation
By:
---------------------------------------
Name:
Title:
20
Exhibit A-1
to
Form of Warrant Agreement
INITIAL WARRANT
Exhibit A-2
to
Form of Warrant Agreement
SECOND WARRANT
Exhibit A-3
to
Form of Warrant Agreement
THIRD WARRANT
Exhibit A-4
to
Form of Warrant Agreement
FOURTH WARRANT
Exhibit B
to
Form of Warrant Agreement
FORMULA FOR ADJUSTING EXERCISE PRICE
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS. THE WARRANT SECURITIES MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR
CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION WITH RESPECT TO THE WARRANT SECURITIES UNDER THE SECURITIES ACT
AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH
QUALIFICATION AND REGISTRATION.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF ARE SUBJECT
TO THE TERMS AND PROVISIONS OF A SECURITIES PURCHASE AGREEMENT AND WARRANT
AGREEMENT BOTH DATED AS OF SEPTEMBER 20, 1996, BETWEEN BROTHERS GOURMET
COFFEES, INC. AND SIENA CAPITAL PARTNERS, L.P. (AS THE SAME MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, EXTENDED OR RESTATED FROM TIME TO TIME, (THE
"SECURITIES PURCHASE AGREEMENT" AND THE "WARRANT AGREEMENT," RESPECTIVELY)).
AMONG OTHER THINGS, THE SECURITIES PURCHASE AGREEMENT AND THE WARRANT
AGREEMENT CONTAIN PROVISIONS FOR RESTRICTIONS ON TRANSFER AND REGISTRATION
RIGHTS. COPIES OF THE SECURITIES PURCHASE AGREEMENT AND THE WARRANT AGREEMENT
ARE AVAILABLE AT THE EXECUTIVE OFFICES OF THE COMPANY.
COMMON STOCK PURCHASE WARRANT
SEPTEMBER 20, 1996
EFFECTIVE DATE: SEPTEMBER 20, 1996
Capitalized terms used and not otherwise defined in this Warrant shall have
the meanings respectively assigned to them in the Warrant Agreement referred
to in the legend above.
BROTHERS GOURMET COFFEES, INC., a Delaware corporation, having its executive
offices at One Boca Place, 0000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 (the
"COMPANY"), does hereby certify and agree that, for good and valuable
consideration (the existence, sufficiency and receipt of which are hereby
acknowledged by the Company), SIENA CAPITAL PARTNERS, L.P., a California
limited partnership, its successors and assigns ("HOLDER"), hereby is
entitled to purchase from the Company, during the term set forth in Section 1
hereof,
up to an aggregate amount of 100,000 shares (the "EXERCISE QUANTITY")
of duly authorized, validly issued, fully paid and non-assessable shares of
Common Stock, par value US$.0001 per share, of the Company (the "COMMON
STOCK"), all upon the terms and provisions and subject to adjustment of such
Exercise Quantity provided in the Warrant Agreement and this Common Stock
Purchase Warrant (the "WARRANT"). The exercise price per share of Common
Stock for which this Warrant is exercisable shall be the lesser of (i) $3.00
per share, or (ii) the average closing price of the Common Stock on the
securities exchange or other inter-dealer quotation system on which the
Common Stock is then listed over the thirty (30) trading day period
immediately prior to the Initial Warrant Effective Date, as adjusted from
time to time pursuant to the terms of this Warrant and the Warrant Agreement
(the "EXERCISE PRICE").
1. TERM OF THE WARRANT. The term of this Warrant commences as of the
date hereof, and shall expire at 5:00 P.M., New York City time, on the
seventh anniversary hereof. In the event that this Warrant would expire on a
day that is not a Business Day, then the term of this Warrant automatically
shall be extended to 5:00 P.M., New York City time, on the next succeeding
Business Day.
2. EXERCISE OF WARRANT.
(a) This Warrant may be exercised by the Holder of this Warrant at
any time during the term hereof in whole, or in part from time to time (but
not for fractional shares, unless this Warrant is exercised in whole), by
presentation and surrender of this Warrant to the Company, together with the
annexed Exercise Form duly completed and executed and payment in the
aggregate amount equal to the Exercise Price multiplied by the number of
shares of Common Stock being purchased. At the option of Holder, payment of
the Exercise Price may be made either by (i) certified check payable to the
order of the Company, (ii) surrender of certificates then held representing,
or deduction from the number of shares issuable upon exercise of this
Warrant, of that number of shares which has an aggregate Fair Value
determined in accordance with the Warrant Agreement on the date of exercise
equal to the aggregate Exercise Price for all shares to be purchased pursuant
to this Warrant or (iii) by any combination of the foregoing methods. Upon
the Company's receipt of this Warrant, the completed and signed Exercise Form
and the requisite payment, the Company shall issue and deliver (or cause to
be delivered) to the exercising Holder stock certificates aggregating the
number of shares of Common Stock purchased. In the event of a partial
exercise of this Warrant, the Company shall issue and deliver to the Holder a
new Warrant at the same time such stock certificates are delivered, which new
Warrant shall entitle the Holder to purchase the balance of the Exercise
Quantity not purchased in that partial exercise and shall otherwise be upon
the same terms and provisions as this Warrant.
(b) In the event the Holder of this Warrant desires that any or
all of the stock certificates to be issued upon the exercise hereof be
registered in a name or names other than that of the Holder of this Warrant,
the Holder must (i) so request in writing at the time of exercise if
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the transfer is not a registered transfer, (ii) provide to the Company an
opinion of counsel reasonably satisfactory to the Company to the effect that
the proposed transfer may be effected without registration under the
Securities Act, and (iii) pay to the Company funds sufficient to pay all
stock transfer taxes (if any) payable in connection with the transfer and
delivery of such stock certificates.
(c) Upon the due exercise by the Holder of this Warrant, whether
in whole or in part, that Holder (or any other person to whom a stock
certificate is to be so issued) shall be deemed for all purposes to have
become the Holder of record of the shares of Common Stock for which this
Warrant has been so exercised, effective immediately prior to the close of
business on the date this Warrant, the completed and signed Exercise Form and
the requisite payment were duly delivered to the Company, irrespective of the
date of actual delivery of certificates representing such shares of Common
Stock so issued.
3. SURRENDER OF WARRANT; EXPENSES.
(a) Whether in connection with the exercise, exchange,
registration of transfer or replacement of this Warrant, surrender of this
Warrant shall be made to the Company during normal business hours on a
Business Day (unless the Company otherwise permits) at the executive offices
of the Company located at One Boca Place, 0000 Xxxxxx Xxxx, Xxxx Xxxxx,
Xxxxxxx 00000 or to such other office or duly authorized representative of
the Company as from time to time may be designated by the Company by written
notice given to the Holder of this Warrant.
(b) The Company shall pay all costs and expenses incurred in
connection with the exercise, registering, exchange, transfer, replacement or
put of this Warrant, including the costs of preparation, execution and
delivery of warrants and stock certificates, and shall pay all taxes (other
than any taxes measured by the income of any Person other than the Company)
and other charges imposed by law payable in connection with the transfer or
replacement of this Warrant.
4. WARRANT REGISTER; EXCHANGE; TRANSFER: LOSS.
(a) The Company at all times shall maintain at its chief executive
offices an open register for all Warrants, in which the Company shall record
the name and address of each Person to whom a Warrant has been issued or
transferred, the number of shares of Common Stock or other securities
purchasable thereunder and the corresponding purchase prices.
(b) This Warrant may be exchanged for two or more warrants
entitling the identical Holder hereof to purchase the same aggregate Exercise
Quantity at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant. The identical Holder may request such
an exchange by surrender of this Warrant to the Company,
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together with a written exchange request specifying the desired number of
warrants and allocation of the Exercise Quantity purchasable under the
existing Warrant.
(c) This Warrant may be transferred only in accordance with the
provisions of ARTICLE VII of the Warrant Agreement, in whole or in part, by
the Holder or any duly authorized representative of such Holder. A transfer
may be registered with the Company by submission to it of this Warrant,
together with the annexed Assignment Form duly completed and executed, and if
the transfer is not a registered transfer, an opinion of counsel reasonably
satisfactory to The Company. Within five (5) Business Days after the
Company's receipt of this Warrant and the Assignment Form so completed and
executed, the Company will issue and deliver to the transferee a new Warrant
representing the portion of the Exercise Quantity transferred at the same
Exercise Price per share and otherwise having the same terms and provisions
as this Warrant, which the Company will register in the new Holder' s name.
(d) In the event of the loss, theft or destruction of this
Warrant, the Company shall execute and deliver an identical new Warrant to
the Holder in substitution therefor upon the Company's receipt of (i)
evidence reasonably satisfactory to the Company of such event (with the
affidavit of an institutional Holder being sufficient evidence), and (ii) if
requested by the Company, an indemnity agreement from any institutional
Holder or an indemnity bond from anyone else reasonably satisfactory in form
and amount to the Company.
(e) The Company will not close its books against the transfer of
this Warrant or any of the Warrant Securities in any manner which interferes
with the timely exercise of this Warrant. The Company will from time to time
take all such action as may be necessary to assure that the par value per
share of the unissued Common Stock acquirable upon exercise of this Warrant
is at all times equal or less than the Exercise Price then in effect.
5. RIGHTS AND OBLIGATIONS OF THE COMPANY AND THE HOLDER. The Company
and the Holders of this Warrant are entitled to the rights and bound by the
obligations set forth in the Warrant Agreement, all of which rights and
obligations are hereby incorporated by reference herein. This Warrant shall
not entitle its Holder to any rights of a stockholder in the Company (other
than as provided in SECTION 2(c) of this Warrant and the Warrant Agreement).
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized representative and its corporate seal, if any, to be
impressed hereupon and attested to by its Secretary or Assistant Secretary.
BROTHERS GOURMET COFFEES, INC.,
a Delaware corporation
By: _____________________________
Name:
Title:
Attest:
_____________________________
Secretary
5
COMMON STOCK WARRANT
EXERCISE FORM
Brothers Gourmet Coffees, Inc.
One Boca Place
0000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: ____________________
The undersigned Holder of the within Warrant hereby irrevocably elects
to exercise the within Warrant to the extent of [______] shares of Common
Stock, $____ par value per share, of the Company.
The undersigned herewith encloses the Warrant and
/ / a certificate representing that number of shares of Common Stock of
the Company having an aggregate current market price of $_______ in payment
of the Exercise Price;
/ / a check (payable to the order of the Company) in the amount of
$___________ in payment of the Exercise Price; and/or
/ / the undersigned hereby elects to effect a cashless exercise and
authorizes the Company to deduct from the shares issuable upon exercise a
number of shares of Common Stock of the Company having an aggregate current
market price on the date hereof of $________________.
Instructions for Registering the Securities
On the Stock Transfer Books of the Company
Name of Transferee:_________________________________________
State of Organization (if applicable):______________________
Federal Tax Identification or
Social Security Number: ______________________
Address: _______________________________________________
If this exercise of the Warrant is not an exercise in full, then the
undersigned Holder hereby requests that a new Warrant of like tenor
(exercisable for the balance of the Exercise Quantity of shares of Common
Stock underlying this Warrant) be issued and delivered to the undersigned
Holder at the address on the warrant register of the Company.
Dated: _____________________ _________________________________________
(Name of Registered Holder - Please Print)
By: ________________________________
(Signature of Registered Holder or of Duly
Authorized Signatory)
Title: ________________________
COMMON STOCK WARRANT
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned Holder of the within Warrant hereby
sells, assigns and transfers unto the transferee whose name and address are
set forth below all of the rights of the undersigned under the within Warrant
(to the extent of the portion of the within Warrant being transferred hereby,
which portion is ___________________).
Name of Transferee: _______________________________________________
State of Organization (if applicable): ____________________________
Federal Tax Identification or
Social Security Number: ____________________________
Address: _____________________________________________________
If such portion of the Warrant being transferred shall not consist of
all of the within Warrant, then the undersigned hereby requests that, as
provided in the within Warrant, a new warrant of like tenor respecting the
balance of the Exercise Quantity of shares of Common Stock underlying this
Warrant not being transferred pursuant hereto be issued in the name of and
delivered to the undersigned. The undersigned does hereby irrevocably
constitute and appoint ________________________ attorney to register the
foregoing transfer on the books of the Company maintained for that purpose,
with full power of substitution in the premises.
/ / As required by the Warrant, enclosed herewith is the opinion of
legal counsel for the undersigned.
Dated: ________________________ _________________________________________
(Name of Registered Holder - Please Print)
By: ______________________________
(Signature of Registered Holder or of Duly
Authorized Signatory)
Title: ________________________
