Exhibit 4.3
WARRANT AGREEMENT
Between
XXXXXXXXX ESOP CAPITAL PARTNERS,
A MINNESOTA LIMITED PARTNERSHIP
And
X.X. XXXXX DRUG COMPANY
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Dated as of October 3, 1997
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THIS AGREEMENT AND THE RIGHTS CONFERRED HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAW.
THE RIGHTS CONFERRED HEREUNDER MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN
COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS.
TABLE OF CONTENTS
Page
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RECITALS .................................................................... 1
I DEFINITIONS ............................................................... 1
Section 1.01 Defined Terms ......................................... 1
II THE WARRANT .............................................................. 5
Section 2.01 Warrant ............................................... 5
III REPRESENTATIONS AND WARRANTIES .......................................... 5
Section 3.01 Representations and Warranties of the Company ......... 5
IV COVENANTS ................................................................ 7
Section 4.01 Covenants of the Company .............................. 7
Section 4.02 Indemnification ....................................... 8
Section 4.03 Listing on Securities Exchange ........................ 9
Section 4.04 No Parity or Superior Rights .......................... 9
Section 4.05 Dividends and Distributions ........................... 9
Section 4.06 Repurchases and Redemptions ........................... 9
Section 4.07 Preemptive Right ..................................... 10
Section 4.08 Exercise Upon Qualified IOP .......................... 10
V ANTIDILUTION ............................................................. 10
Section 5.01 Initial Exercise Quantity, Adjustment for Initial
Errors ............................................... 10
Section 5.02 Notice to Warrant Holders of Adjustment Transactions . 10
Section 5.03 Adjustment Transactions Barred During Defaults ....... 11
Section 5.04 Adjustment of Exercise Price Upon Occurrence of an
Adjustment Transaction ............................... 11
Section 5.05 Adjustment of Exercise Quantity ...................... 11
Section 5.06 Reduction in Exercise Quantity for Certain Events
Within 18 Months ..................................... 11
Section 5.07 Protection of Warrant Holder Rights .................. 11
Section 5.08 Accountant's Certificate as to Adjustment
Computation .......................................... 12
VI REGISTRATION RIGHTS ..................................................... 12
Section 6.01 "Piggyback" Registration ............................. 12
Section 6.02 Required Registration ................................ 13
Section 6.03 Effectiveness ........................................ 14
Section 6.04 Further Obligations of the Company ................... 14
Section 6.05 Expenses ............................................. 14
Section 6.06 Transfer of Registration Rights ...................... 15
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Section 6.07 Termination of Registration Rights ................... 15
VII PUT AND CALL PROVISIONS; SUBSEQUENT EVENT ADJUSTMENT PAYMENT ......... 15
Section 7.01 Put Right of Holders of the Warrant Securities ....... 15
Section 7.02 Call Right of Company ................................ 16
Section 7.03 Calculation of Subsequent Event Adjustment Payment ... 17
Section 7.04 Termination of Put and Call Rights ................... 17
VIII RESTRICTIONS ON TRANSFER OF WARRANTS AND WARRANT SECURITIES .......... 18
Section 8.01 Restrictions on Transfer ............................. 18
Section 8.02 Bring Along Rights ................................... 18
Section 8.03 Legend on Warrant and Certificates ................... 19
Section 8.04 Termination of Restrictions .......................... 19
Section 8.05 Rule 144 and Rule 144A ............................... 19
IX MISCELLANEOUS ........................................................ 20
Section 9.01 Term ................................................. 20
Section 9.02 No Waiver Under Other Agreements ..................... 20
Section 9.03 Reliance ............................................. 20
Section 9.04 Notice ............................................... 20
Section 9.05 Enforcement .......................................... 21
Section 9.06 Equitable Relief ..................................... 22
Section 9.07 Interpretation, Headings, Severability ............... 22
Section 9.08 Survival of Covenants ................................ 22
Section 9.09 No Required Exercise ................................. 22
Section 9.10 Binding Effect ....................................... 23
Section 9.11 No Waiver by Action .................................. 23
Section 9.12 Waiver, Modification and Amendment ................... 23
Section 9.13 Entire Agreement ..................................... 23
Section 9.14 Governing Law; Consent to Jurisdiction; Waiver of
Jury Trial ........................................... 23
SCHEDULES
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I. List of Holders of Shares, Options and Rights
II. Agreements
ANNEXES
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A. Form of Warrant
B. Notice of Put
C. Notice of Call
ii
WARRANT AGREEMENT
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THIS WARRANT AGREEMENT (the "Agreement"), dated as of October 3, 1997,
between XXXXXXXXX ESOP CAPITAL PARTNERS, A MINNESOTA LIMITED PARTNERSHIP
("Xxxxxxxxx"), and X.X. XXXXX DRUG COMPANY, a Missouri corporation (the
"Company").
WHEREAS, Xxxxxxxxx and the Company have entered into a Note Purchase
Agreement of even date hereof (the "Note Purchase Agreement") pursuant to which
Xxxxxxxxx has agreed to purchase the Company's Senior Subordinated Note in the
principal amount of $12,000,000 (the "Note") and the Company has agreed to grant
to Xxxxxxxxx a warrant in the form attached hereto as Annex A (the "Warrant") to
acquire shares of the Company's Common Stock (the "Common Stock"), and this
Agreement sets forth certain rights and obligations of Xxxxxxxxx and the Company
with respect to the Warrant;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
set forth below, the parties hereto agree as follows:
I. DEFINITIONS
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Section 1.01 Defined Terms. As used in this Agreement, the following
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capitalized terms shall have the meanings stated below, which shall be
applicable equally to the singular and plural forms of the terms so defined.
Capitalized terms used and not otherwise defined in this Agreement shall have
the meanings provided in the Note Purchase Agreement.
"Adjusted EBITDA" shall mean, for any period in question, the Company's
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consolidated earnings before interest, federal, state and local income taxes,
depreciation and amortization expenses, contributions and dividends paid to the
Debtor's Employee Stock Ownership Plan, extraordinary items and executive
management bonuses for such fiscal year, as determined by the independent
certified public accounting firm serving the Company as of the date such
determination is made, in accordance with GAAP, applied on a basis consistent
with that used in preceding fiscal years.
"Affiliate" shall have the meaning provided in the Note Purchase Agreement.
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"Adjustment Transaction" shall mean any of (i) the issuance or sale of
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Common Stock or Common Stock Equivalents in addition to the number of shares
outstanding as of the date hereof as disclosed on Schedule I, except for (1) the
issuance after the date of this Agreement to directors, officers or other
employees of the Company or one of its Subsidiaries of options or warrants to
purchase not more than an aggregate of 5,875 shares of Common Stock for an
exercise price of not less than Fair Value per share at the date of grant or (2)
the sale by the Company for cash of Common Stock to any unrelated third party
for not less than Fair Value, (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 capital
stock of the Company, (v) the consolidation or merger of the Company or any
Subsidiary with or into another corporation, (vi) the sale or transfer or other
disposition of the property of the Company or any Subsidiary as (or
substantially as) an entirety, (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.
"Agreement" shall mean this Warrant Agreement, as the same may be
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supplemented, modified, amended or restated from time to time in the manner
provided herein.
"Business Day" shall mean any day except a Saturday, Sunday or other day on
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which commercial banks in the State of Minnesota are authorized or required by
law to close.
"Call Date" shall have the meaning assigned to it in Section 7.02(a) hereof.
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"Call Exercise Price" shall have the meaning assigned to it in Section 7.02(b)
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hereof.
"Call Period" means the period commencing on the sixth anniversary of the
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Closing Date and terminating upon the expiration of the Exercise Period.
"Call Repurchase Date" shall have the meaning assigned to it in Section
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7.02(c) hereof.
"Call Right" shall have the meaning assigned to it in Section 7.02 hereof.
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"Closing Date" shall mean October 3, 1997, or such other date as may be agreed
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to by the parties hereto.
"Commission" shall mean the U.S. Securities and Exchange Commission.
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"Common Equity" shall mean the total equity interest in the Company
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represented by the Common Stock of the Company and shall include Common Equity
resulting from any reorganization, reclassification of capital stock or
recapitalization of the Company or similar event.
"Common Stock Equivalents" shall mean all options, warrants (including the
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Warrant), convertible securities, securities and other rights (in each case
whether now existing or hereafter issued or arising) to acquire from Company
shares of 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).
"Current Exercise Price" shall mean the Exercise Price, as the same may be
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adjusted from time to time pursuant to the terms of the Warrants and this
Agreement, in effect at any time.
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"Current Exercise Price" shall mean the Exercise Price, as the same may be
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adjusted from time to time pursuant to the terms of the Warrants and this
Agreement, in effect at any time.
"Dividend" means, as to any Person, any declaration or payment of any dividend
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(other than a stock dividend) on, or the making of any pro rata distribution,
loan, advance, or investment to or in any holder of, any shares of capital stock
of such Person.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
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the rules and regulations promulgated thereunder, and any successor provisions
thereto.
"Exercise Period" means the period commencing on the Closing Date and
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terminating on the tenth anniversary of the Closing Date or, in the event the
tenth anniversary of the Closing is not a Business Day, the next succeeding
Business Day.
"Exercise Price" shall mean $.02 per share, as adjusted from time to time
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pursuant to the terms of the Warrant and this Agreement.
"Exercise Quantity" shall mean the number of shares of Common Stock,
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determined from time to time, taking into account all shares of Common Stock
theretofore issued upon exercise of the Warrant, required to be issued by the
Company upon exercise of the Warrant. Exercise Quantity shall mean initially
24,260 shares of Common Stock, and shall be adjusted from time to time pursuant
to the provisions of the Warrant and this Agreement.
"Fair Value" means the fair value of the Company (or other security, property,
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assets, business or entity in question) determined as follows: (i) by mutual
agreement reached by the Holder and the Company or, (ii) in the event that the
Holder and the Company are unable to agree as to Fair Value, as determined by an
independent professional appraiser mutually selected by the Holder and the
Company, or (iii) in the event that the Holder and the Company are unable to
agree as to an appraiser, then the Holder and the Company shall each select an
independent professional appraiser who shall each conduct an appraisal and
jointly select a third independent professional appraiser to conduct a third
appraisal, and the Fair Value shall be the average of the two closer appraisals.
In making any of the appraisals referred to above, no appraiser shall apply any
discounts for illiquidity, lack of control or any other similar factors. All
costs associated with each such appraisal shall be borne by the Company.
Notwithstanding the foregoing, if the Company's Common Stock is listed and
trading on a national stock exchange or on the NASDAQ system and there exists
and is continuing for at least thirty (30) days a public float having a minimum
value of $20 million, Fair Value means, with reference to the Warrant Securities
on a per share basis, the average closing sale price per share of the Common
Stock for the ten trading days immediately preceding any date of determination.
"Holder" shall mean the Person(s) then registered as the owner of the Warrant
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or Warrant Securities, as the case may be, on the books and records of the
Company.
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"Holders of Registrable Securities" shall have the meaning assigned to it in
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Section 6.01 hereof.
"Initial Public Offering" shall mean the Company's initial public offering of
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its Common Stock for cash pursuant to a registration statement under the
Securities Act.
"Note Purchase Agreement" shall mean the Note Purchase Agreement, dated as of
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the date hereof, between Xxxxxxxxx and the Company, as supplemented, modified,
amended or restated from time to time in the manner provided therein.
"Notice of Call" shall have the meaning assigned to it in Section 7.02(a)
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hereof.
"Notice of Put" shall have the meaning assigned to it in Section 7.01(a)
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hereof.
"Obligations" shall have the meaning assigned to it in the Note Purchase
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Agreement.
"Original Issuance Date" shall mean the Closing Date, the date of the issuance
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of the Warrant.
"Person" shall have the meaning assigned to it in the Note Purchase Agreement.
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"Put Date" shall have the meaning assigned to it in Section 7.01(a) hereof.
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"Put Event" shall mean, with respect to the Warrant or Warrant Securities held
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by any Holder, the earliest to occur of (i) the fifth anniversary of the
Closing; or (ii) a payment Event of Default under the Note Purchase Agreement;
or (iii) a violation of the affirmative and negative covenants therein which are
referenced in Section 4.01(g) of this Agreement which covenant violation remains
uncured for a period of thirty (30) days and which results in Xxxxxxxxx
accelerating the indebtedness under the Note Purchase Agreement.
"Put Exercise Price" shall have the meaning assigned to it in Section 7.01(c)
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hereof.
"Put Repurchase Date" shall have the meaning assigned to it in Section 7.01(d)
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hereof.
"Put Right" shall have the meaning assigned to it in Section 7.01 hereof.
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"Registrable Securities" shall have the meaning assigned to it in Section 6.01
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hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
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rules and regulations promulgated thereunder, and any successor provisions
thereto.
"Senior Indebtedness" shall have the meaning assigned to it in the Note
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Purchase Agreement.
"Subsequent Event" shall mean the earliest to occur of (i) an Initial Public
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Offering; (ii) the sale (in a transaction involving the transfer, assignment or
other disposal of the Company's capital stock for value, but not including any
pledge or other hypothecation of such capital stock) of more
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than 33% of the outstanding capital stock of the Company to any Person, other
than an existing shareholder of the Company as of the close of business on the
Call Repurchase Date, any "affiliate" of such shareholder (as such term is
defined in Rule l2b-2 of the rules and regulations promulgated under the
Exchange Act, as in effect from time to time) or any member of the immediate
family of such shareholder; (iii) the sale of all or substantially all of the
assets of the Company or any Subsidiary; (iv) a merger, consolidation or other
business combination involving the Company or any Subsidiary and another entity,
in which either the Company or any Subsidiary or such other entity or other
newly created entity is the surviving corporation; (v) the sale (in a
transaction involving the transfer, assignment or other disposal of the owning
entity's capital stock for value, but not including any pledge or other
hypothecation of such capital stock) of more than 50% of the outstanding capital
stock of a Subsidiary to any Person; provided, that the events referred to in
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(iii), (iv) and (v) shall constitute a Subsequent Event only if the sale or
merger involves a business having revenues of $80 million or more.
"Subsequent Event Adjustment Payment" shall have the meaning assigned to it in
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Section 7.03 hereof.
"Subsequent Event Fair Value" shall have the meaning assigned to it in Section
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7.03 hereof.
"Subsequent Event Notice" shall have the meaning assigned to it in Section
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7.03 hereof.
"Subsidiary" shall mean any corporation as to which an aggregate of more than
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20% of the outstanding voting stock is at any time directly or indirectly owned
by the Company or by one or more of its Subsidiaries.
"Warrant Securities" shall mean the shares of Common Stock (or other
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securities representing Common Stock) purchasable or purchased from time to time
under the Warrant 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. THE WARRANT
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Section 2.01 Warrant. On the Closing Date the Company will grant to
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Xxxxxxxxx, in consideration for the purchase of the Note, a Warrant in the form
attached hereto as Annex X. Xxxxxxxxx and any subsequent Holders of the Warrant
and of Warrant Securities shall have the rights and obligations provided for in
the form of Warrant and in this Agreement. The representations and warranties
by Xxxxxxxxx in Sections 4.01, 4.02 and 4.03 of the Note Purchase Agreement are
hereby incorporated by reference.
III. REPRESENTATIONS AND WARRANTIES
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Section 3.01 Representations and Warranties of the Company. The Company
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hereby represents and warrants as follows:
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(a) The execution and delivery of this Agreement and the Warrant have been
duly and properly authorized by all requisite corporate action of the Company,
its board of directors and shareholders, and no consent of any other Person is
required as a prerequisite to the validity and enforceability of this Agreement
and the Warrant that has not been obtained. The Company has the full legal
right, power and authority to execute and deliver this Agreement and the Warrant
and to perform its obligations hereunder and thereunder.
(b) The Company is not a party to or otherwise subject to any contract or
agreement which restricts or otherwise affects its right or ability to execute
and deliver this Agreement or the Warrant 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
Warrant, nor compliance therewith (including, without limitation, issuance of
the Warrant Securities) and honoring of the Company's put obligations hereunder,
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 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 body pursuant to, the Articles of Incorporation or Bylaws of the
Company, any award of any arbitrator, or any agreement, instrument or law to
which the Company is subject or by which it is bound.
(c) As of the date hereof, the authorized capitalization of the Company
consists of 200,000 shares of Common Stock, of which 117,471 shares are
outstanding. All such outstanding shares are validly issued, fully paid and
nonassessable and held of record and beneficially owned by those shareholders
identified on Schedule I hereto. Except as set forth on Schedule I hereto,
there are no rights, options or warrants of any kind outstanding to purchase or
acquire 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 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
or Common Stock Equivalents. The issuance by the Company of the Warrant 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 set forth on Schedule II and the repurchase obligations of the
Company ESOP, neither the Company nor any of its Subsidiaries is or will be
subject to any obligation to repurchase or otherwise acquire or retire any
shares of capital stock except as provided in this Agreement. Except as set
forth on Schedule II, there are no commitments of the Company to issue any
shares, warrants, options, or other such fights 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) Except as set forth in Article VI hereof, no Person has a contractual
right to demand or other right to cause the Company to file any registration
statement under the Securities Act relating to any securities of the Company or
any right to participate in any offering of the Company's
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securities. Except as set forth on Schedule II hereto, there are also
no agreements between or among the Company's shareholders or buy-sell agreements
of any kind affecting the Company's securities.
(f) Neither the Company nor any Person authorized or employed by the Company
as agent, broker, dealer or otherwise, has offered the Warrant or the Warrant
Securities for sale to, or solicited any offers to buy the same from any Persons
other than Xxxxxxxxx, and neither the Company nor any Person acting on its
behalf has taken or will take any action which might subject the offering,
issuance or sale of the Warrant or the Warrant Securities to registration under
the Securities Act or violate the provisions of any securities or blue sky law
of any applicable jurisdiction.
(g) Assuming that the representations and warranties of Xxxxxxxxx contained in
Section 3.02 are true and correct, the Warrant is, and the Warrant Securities
will be, issued by the Company to Xxxxxxxxx in a transaction exempt from
registration and qualification under the applicable federal and state securities
laws.
(h) The representations and warranties of the Company contained in the Note
Purchase Agreement are true and correct as of the date hereof, and are hereby
incorporated by reference for the benefit of Xxxxxxxxx and the Holders of the
Warrant and the Warrant Securities to the same extent as if set forth in full
herein, and such representations and warranties shall survive the termination or
expiration of the Note Purchase Agreement and the satisfaction of any or all of
the Obligations thereunder.
IV. COVENANTS
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Section 4.01 Covenants of the Company. The Company hereby covenants and
------------------------
agrees that, during the term of this Agreement, unless Xxxxxxxxx (if it is a
Holder of any of the Warrant or any Warrant Securities) and the Holders of the
Warrant exercisable for a majority of the unissued underlying Warrant Securities
agree otherwise in writing:
(a) Each of the Warrant Securities issued and delivered upon the exercise of
the Warrant 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 Warrant
or otherwise.
(b) The Company shall reserve and at all times keep available for issuance an
authorized number of shares of Warrant Securities sufficient to permit the full
and immediate exercise of the Warrant 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 within 90 days after the Closing Date amend its articles
of incorporation to reduce the par value of its Common Stock to be less than the
Exercise Price and thereafter shall take all such actions as may be necessary or
appropriate to ensure that the par value of the Common Stock does not exceed the
Exercise Price.
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(d) The Company shall not create or permit the existence of any class of
capital stock having voting rights, liquidation rights, Dividend rights or other
rights or preferences senior or superior to Common Stock.
(e) The Company shall deliver to the Holder of the Warrant and the Warrant
Securities copies of the reports, notices and financial statements referred to
in Section 6.02 of the Note Purchase Agreement at the times such therein
provided.
(f) The Company shall cooperate with the Holder of the Warrant and the Warrant
Securities in supplying such information as may be necessary for the Holder 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 Warrant or any of the Warrant Securities.
(g) The affirmative and negative covenants contained in Articles VI and VII of
the Note Purchase Agreement are hereby incorporated by reference for the benefit
of Xxxxxxxxx and the Holders of the Warrant and the Warrant Securities to the
same extent as if set forth in full herein, and such covenants shall survive the
termination or expiration of the Note Purchase Agreement and the satisfaction of
any or all of the Obligations thereunder.
Section 4.02 Indemnification.
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(a) The Company agrees that Xxxxxxxxx and each other Holder of the Warrant 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 Warrant, the Warrant Securities, this Agreement,
any registration statement or prospectus or any misstatement or omission of a
material fact therein (except for misstatements or omissions based on
information provided by such Person to the Company for use in such registration
statement or prospectus); and the Company hereby expressly waives any and all
claims and actions which it now has or may hereafter at any time have against
Xxxxxxxxx and each other Holder of the Warrant 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.
(b) The Company agrees to defend, indemnify and hold harmless Xxxxxxxxx and
each other Holder of the Warrant, 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,
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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, arising out of or related directly or indirectly to the Warrant,
the Warrant Securities, any registration statement or prospectus, or any
misstatement or omission of a material fact therein, except such as are
occasioned by the indemnified Person's own gross negligence or willful
misconduct as finally determined pursuant to applicable law by a governmental
authority having jurisdiction. 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 Securities Exchange. If the Company shall list any
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shares of Common Stock on any securities exchange it will, at its expense, list
thereon, maintain and increase when necessary such listing of all outstanding
Warrant Securities. The Company will also so list on each securities exchange,
and will maintain such listing of, any other securities which the holder of the
Warrant 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 No Parity or Superior Rights. The Company will not grant
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registration rights, rights to receive securities, put and call rights, or any
other rights to any other holder of its securities that are equal or superior to
the rights grant hereunder.
Section 4.05 Dividends and Distributions. The Company shall not declare,
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make or pay any dividend or other distribution, whether in cash, securities or
other property, with respect to its Common Stock except that cash dividends
shall be permitted so long as (i) such additional dividends are not prohibited
by any contractual obligation of the Company, and (ii) a cash payment is made to
the Holder of the Warrant equal to the product of (A) the amount of cash plus
the Fair Value of any property or securities distributed with respect to each
outstanding share of Common Stock, multiplied by (B) the number of shares of
Common Stock then issuable upon exercise of the Warrant.
Section 4.06 Repurchases and Redemptions. Except for repurchases by the
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Company required by the terms of the Company ESOP or ERISA, and repurchases of
Warrant Securities upon the exercise of the Put Rights or Call Rights herein
contained, 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
without the consent of the Holder.
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Section 4.07 Preemptive Right. Except for the issuance after the date of
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this Agreement to directors, officers or other employees of the Company or one
of its Subsidiaries of options or warrants to purchase not more than an
aggregate of 5,875 shares of Common Stock for an exercise price of not less than
Fair Value per share at the date of grant, in the event that at any time after
the date hereof the Company proposes to issue Common Stock or Common Stock
Equivalents, the Company shall give written notice to the Holders describing
such proposal at least 30 days in advance of such issuance. Each Holder of
Warrant or Warrant Securities shall then have the right, exercisable by written
notice given to the Company no later than 20 days after receipt of the Company's
notice, to purchase his pro rata share of the Common Stock or Common Stock
Equivalents proposed to be issued by the Company on the same price and terms as
are proposed by the Company.
Section 4.08 Exercise Upon Qualified IPO. Each Warrant shall be subject to
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the requirement that in the event the Company closes an Initial Public Offering
underwritten on a firm commitment basis by an underwriter, or group or
underwriters which is represented by an underwriter or underwriters, which is a
member of the New York Stock Exchange and which results in gross proceeds to the
Company of at least $20 million, the Holder of any outstanding Warrant shall
fully exercise, as of the closing of such Initial Public Offering, any Warrant
as to which the Holder has not already delivered a Notice of Put to exercise the
Put Right pertaining to that Warrant.
V. ANTIDILUTION
------------
Section 5.01 Initial Exercise Quantity; Adjustment for Initial Errors. The
--------------------------------------------------------
Company hereby acknowledges that the number of shares of Common Stock
constituting the initial Exercise Quantity was calculated based upon an
intention that the full exercise of the Warrant would result in the Holder
obtaining shares of Common Stock constituting 15% of the Company's then
outstanding Common Stock and Common Stock Equivalents. If for any reason it
shall hereafter be determined by the Holder of the Warrant that the actual
number of shares of Common Stock and Common Stock Equivalents outstanding as of
the Closing Date caused the calculation of the Exercise Quantity to be
erroneous, then the Holder may notify the Company of such determination and the
Company shall forthwith reissue the Warrant with an appropriate proportional
increase in the Exercise Quantity to be effective from the Closing Date.
Section 5.02 Notice to Warrant Holders of Adjustment Transactions. In the
----------------------------------------------------
event the Company proposes to consider or engage in an Adjustment Transaction,
then, in each such event, the Company shall mail to the Holder of the Warrant
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
transaction, or the date on which a reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation,
dissolution or winding up 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
10
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 transaction.
Section 5.03 Adjustment Transactions Barred During Defaults. The Company
----------------------------------------------
shall not have the right to give a notice of a proposed Adjustment Transaction
or to conclude an Adjustment Transaction at any time when there has occurred and
is continuing an Event of Default under the Note Purchase Agreement or this
Agreement, unless the notice is given in connection with an Adjustment
Transaction the consummation of which will result in the satisfaction in full in
cash of all Obligations of the Company under the Note Purchase Agreement.
Section 5.04 Adjustment of Exercise Price Upon Occurrence of an Adjustment
-------------------------------------------------------------
Transaction. If the 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 Warrant to purchase a percentage of the Company's
equity in accordance with Section 5.01 and otherwise with the essential intent
and purposes hereof. If a Holder of Warrant 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 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 of the Warrant and shall make
the adjustment described therein. An adjustment made pursuant to this Article V
shall become effective immediately after the effective date of any such
Adjustment Transaction. 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.
Section 5.05 Adjustment of Exercise Quantity. Upon any adjustment of the
-------------------------------
Exercise Price as provided in this Article V, the Exercise Quantity shall be
adjusted such that at the Exercise Price resulting from such adjustment, the new
Exercise Quantity shall be obtained by multiplying the former Exercise Quantity
by a fraction (i) the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and (ii) the denominator of which shall be
the Exercise Price resulting from such adjustment.
Section 5.06 Reduction in Exercise Quantity for Certain Events Within 18
-----------------------------------------------------------
Months. In the event that within eighteen (18) months of the date of this
------
Agreement the Company (i) closes an Initial Public Offering which results in
gross cash proceeds to the Company of $20 million or more, or (ii) closes a
transaction consented to by the Holder involving a sale of all or substantially
all of the Company's assets (viewed on a consolidated basis) or a merger,
consolidation or recapitalization involving a change in control of the Company,
then the Exercise Quantity shall be reduced to 13/15th of the Exercise Quantity
prior to such event.
Section 5.07 Protection of Warrant Holder Rights. The Company will not, by
-----------------------------------
amendment of any of its organizational documents or through reorganization,
consolidation, merger, dissolution,
11
issue or sale of securities, sale of assets or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Agreement or the Warrant or impair the ability of the Holder 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 a such action as may be
necessary or appropriate in order to protect the rights of the Holder of the
Warrant against dilution or other impairment.
Section 5.08 Accountant's Certificate as to Adjustment Computation. Whenever
-----------------------------------------------------
the Current Exercise Price is adjusted as provided in this Article V, the
Company will, if requested, promptly obtain a certificate from 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 Current 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 deliver to the Holder of the Warrant a
copy of such certificate.
VI. REGISTRATION RIGHTS
-------------------
Section 6.01 "Piggyback" Registration. 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 upon exercise of
stock options, shares issuable solely pursuant to employee benefit plans or
shares to be registered on any registration form that does not permit secondary
sales), it shall give Xxxxxxxxx and each Holder of Warrant and Warrant
Securities (collectively referred to in this Article VI as "Holder of
Registrable Securities") written notice of such determination at least thirty
(30) days prior to each such filing. If within fifteen (15) days after receipt
of such notice, any Holder shall so request in writing, the Company shall
include in such registration statement (to the extent permitted by applicable
regulation) all or any part of the Warrant and Warrant Securities (collectively
referred to in this Article VI as "Registrable Securities") that such Holder
requests to 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 of Registrable
Securities disapproves of the terms of such underwriting, such Holder may elect
to withdraw therefrom by written notice to the Company and the underwriter, if
any.
If the registration as to which notice is given as provided above is for a
public offering which is firmly underwritten by one or more underwriters, and if
in the good faith judgment of the managing underwriter of such underwritten
public offering the inclusion of the Registrable Securities covered by a request
for registration by the Holder of Registrable Securities would reduce the number
of shares to be offered by the Company or interfere with the successful
marketing of the shares offered by the Company, the number of Registrable
Securities to be included in the underwritten public offering may be reduced in
the following manner: the Common Stock held by persons other than the Holder of
Registrable Securities shall be excluded from the underwritten public offering
to the extent
12
required by the managing underwriter, and if a further reduction in the number
of shares is required by the managing underwriter, such shares to be deleted
shall be selected pro rata from among the Holders of Registrable Securities
requesting inclusion in such registration. Those Registrable Securities which
are thus excluded from the underwritten public offering shall be withheld from
the public market by the holders thereof for a period, not to exceed 180 days,
which the managing underwriter reasonably determines is necessary in order to
effect the underwritten public offering.
Section 6.02 Required Registration. If one or more Holder of Registrable
---------------------
Securities shall notify the Company in writing that such Holders intend to offer
or cause to be offered for public sale an amount of Registrable Securities which
is equal to at least seventy-five percent (75%) in combined interest of the
Registrable Securities, the Company will so notify all Holders of Registrable
Securities, including all Holders who have a right to acquire Registrable
Securities. Upon written request of any Holder given within thirty (30) days
after the receipt by such Holder from the Company of such notification, the
Company will use its best efforts to cause all or any part of the Registrable
Securities that may be requested by any Holder thereof to be registered under
the Securities Act as expeditiously as possible. The Company shall be obligated
to make only one such required registration of the Registrable Securities, and
the Company shall be obligated to make such required registration only on or
after the second anniversary of the Closing Date. The registration right
provided in this paragraph shall terminate if ninety percent (90%) or more in
combined interest of the Registrable Securities have been registered and sold in
a registration pursuant to Section 6.01 above.
Notwithstanding the restrictions on the number of demand registrations imposed
by the preceding paragraph, the Holders of Registrable Securities shall be
entitled to demand up to two short form demand registrations on Form S-3, or its
successor forms, when such registration becomes available following an Initial
Public Offering, provided that only one short form registration may be demanded
in any six-month period. If the Company determines to include securities to be
sold by it In any registration request pursuant to this Section 6.02, such
registration shall be deemed to be an "incidental" piggyback registration under
Section 6.01 of this Article VI, subject to all of the provisions thereof, and
shall not affect the rights provided by this Section 6.02. No "incidental"
piggyback right under Section 6.01 shall be construed to limit any registration
required under this Section 6.02.
Notwithstanding the foregoing, (a) the Company shall not be obligated to
effect a registration pursuant to this Section 6.02 within sixty (60) days prior
to the Company's estimated date of filing of a registration statement pertaining
to an underwritten public offering of securities for the account of the Company,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective and that the
Company's estimate of the date of filing such registration statement is made in
good faith and (b) if the Company shall furnish to such Holders a certificate
signed by the president of the Company stating that in the good faith judgment
of the Board of Directors it would be seriously detrimental to the Company or
its shareholders for a registration statement to be filed in the near future,
then the Company's obligation under this Section 6.02 to use its best efforts to
file a registration statement shall be deferred for a period not
13
to exceed three (3) months; provided, however, that the Company shall not obtain
------------------
such a deferral more than once in any 13-month period.
Section 6.03 Effectiveness. If necessary to permit distribution of the
-------------
Registrable Securities, the Company will use its best efforts to maintain the
effectiveness for up to one hundred eighty (180) days 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 contained therein as and to the extent necessary to comply with the
Securities Act and any applicable state securities statute or regulation. 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. 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 of the Company's legal
counsel and accountants, Commission 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. The Holder of Registrable Securities included in any
such registration shall bear the legal fees and expenses of its legal counsel.
14
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.
Section 6.07 Termination of Registration Rights. The registration rights
----------------------------------
under this Article VI shall terminate one year after the issuance of the last
Warrant Securities obtainable by complete exercise of the Warrant.
VII. PUT AND CALL PROVISIONS; SUBSEQUENT EVENT
-----------------------------------------
ADJUSTMENT PAYMENT
------------------
Section 7.01 Put Right of Holders of the Warrant Securities. At any time and
------------------------------------------------
from time to time after the occurrence of a Put Event, any Holder of the Warrant
Securities she have the right to sell all or some of its Warrant Securities to
the Company, and the Company shall be obligated to purchase such Warrant
Securities, subject to the following terms and conditions (such fight is
hereinafter referred to as the "Put Right"):
(a) Ninety (90) days' written notice shall be given by the Holder to the
Company of such intention to exercise the Put Right, which notice shall be in
the form of Annex B attached hereto (the "Notice of Put"). The date upon which
such Notice of Put is issued is hereinafter referred to as the "Put Date."
(b) The Company shall give all other Holders of Warrant Securities written
notice of the Company's receipt of a Notice of Put. This notice shall be given
within five (5) Business Days after the Put Date and shall specify the amount of
Warrant Securities covered by the Notice of Put and the Put Repurchase Date, as
hereinafter defined. Such other Holders of Warrant Securities shall then have
the right, by written Notice of Put within five Business Days after receipt of
the Company's notice to such Holders under this Section 7.01(b), to require that
the Company repurchase all or some of such Holders' Warrant Securities on the
Put Repurchase Date on the same terms and at the same time as the Holder who
first gave Notice of Put under Section 7.01(a) hereof.
(c) The purchase price for any Warrant Securities that the Company may be
obligated to purchase upon the exercise of the Put Right by a Holder shall be
determined by multiplying the number of Warrant Securities subject to the Put
Right by the "Put Exercise Price," as hereinafter defined. The "Put Exercise
Price" shall be equal to the highest of: (i) six (6) times the Adjusted EBITDA
of the Company for the 12-month period that ended at the month-end immediately
prior to the Put Date, plus cash or cash equivalents on hand, less all
outstanding indebtedness of the Company for borrowed money, divided by the
number of shares of Common Stock and Common Stock Equivalents outstanding; (ii)
100% of the book value of the Company as of the end of the fiscal quarter
immediately prior to the Put Date, divided by the number of shares of Common
Stock and Common Stock Equivalents outstanding; and (iii) the Fair Value of the
Company, divided by the number, of shares of Common Stock and Common Stock
Equivalents outstanding.
15
(d) The Company shall fix a date (to be not sooner than 90 nor later than 100
days after the Put Date) for repurchase of the Warrant Securities (the "Put
Repurchase Date"). The Company promptly shall notify each Holder with respect
to which a Notice of Put has been given of the fixing of the Put Repurchase Date
and shall specify in that notice the location to which such Warrant Securities
are to be presented and surrendered for repurchase. On the Put Repurchase Date,
the Company shall deliver payment in same day funds to the applicable Holder in
an amount equal to the amount of the Put Exercise Price applicable to such
Holder's Warrant Securities to be repurchased.
(e) At the option of the Holder, the Holder may elect to put the Warrant,
prior to exercise thereof, to the Company upon the same terms and conditions set
forth in this Section 7.01; provided, however, that the Put Exercise Price
-----------------
payable with respect to such Warrant, as computed under the provisions of
Section 7.01(c), shall be reduced by the Current Exercise Price in effect on the
Put Date.
(f) In the event of a partial exercise of a Put Right, the balance of the
Warrant Securities and Warrant shall continue to enjoy the same benefits
provided herein as they enjoyed immediately preceding the exercise.
(g) In the event the Company fails to pay the Holder(s) the Put Exercise Price
on the Put Repurchase Date, then in addition to all other rights and remedies of
the Holder(s), the amount of the unpaid Put Exercise Price shall bear interest
from the Put Repurchase Date until the date when paid in full at an interest
rate equal to that provided in the Note to apply during default.
Section 7.02 Call Right of the Company. Subject to Section 7.02(e) hereof,
-------------------------
at any time after the commencement of the Call Period, the Company shall have
the right to purchase from the Holders of Warrant Securities all or any portion
(pro rata among the Holders) of such Warrant Securities, and the Holders shall
be obligated to sell to the Company the Warrant Securities subject to the
following terms and conditions (such fight is hereinafter referred as the "Call
Right"):
(a) The Company shall give thirty (30) days' prior written notice to the
Holders of its intention to exercise the Call Right. Such notice shall be in
the form of Annex C attached hereto (the "Notice of Call"). The date upon which
such Notice of Call is issued is hereinafter referred to as the "Call Date."
(b) The purchase price for the Warrant Securities to be acquired by the
Company pursuant to the Call Right shall be determined by multiplying the number
of Warrant Securities subject to the Call Right by the "Call Exercise Price," as
hereinafter defined. The "Call Exercise Price" shall be equal to the highest of
(i) seven (7) times the Adjusted EBITDA of the Company for the 12-month period
that ended at the month-end immediately prior to the Call Date, plus cash or
cash equivalents on hand, less all outstanding indebtedness of the Company for
borrowed money, divided by the number of shares of Common Stock and Common Stock
Equivalents outstanding; (ii) 110% of the book value of the Company as of the
end of the fiscal quarter immediately prior to the Call Date, divided by the
number of shares of Common Stock and Common Stock Equivalents outstanding; and
16
(iii) the Fair Value of the Company, divided by the number of shares of Common
Stock and Common Stock Equivalents outstanding.
(c) The Company shall fix a date in the Notice of Call (to be not sooner
than 30 nor later than 40 days after the Call Date) for repurchase of the
Warrant Securities (the "Call Repurchase Date"). The Notice of Call shall
further specify the location to which Warrant Securities are to be delivered for
repurchase. On the Call Repurchase Date, the Company shall deliver payment in
same day funds to the applicable Holder in an amount equal to the amount of the
Call Exercise Price applicable to such Holder's Warrant Securities to be
repurchased.
(d) At the option of the Company, the Company may elect to call the
Warrant, prior to exercise thereof, from the Holders upon the same terms and
conditions set forth in this Section 7.02; provided, however, that the Call
-----------------
Exercise Price payable with respect to such Warrant, as computed under the
provisions of Section 7.02(b), shall be reduced by the Current Exercise Price in
effect on the Call Date.
(e) The Company shall not have the right to give a Notice of Call or to
repurchase any Warrant or Warrant Securities under this Section 7.02 at any time
when there has occurred and is continuing an Event of Default under the Note
Purchase Agreement or this Agreement.
Section 7.03 Calculation of Subsequent Event Adjustment Payment. In the
--------------------------------------------------
event the Company shall exercise its Call Right with respect to the Warrant
Securities, and there shall occur a Subsequent Event at any time prior to the
first anniversary of the Call Repurchase Date, then the Holders of the Warrant
Securities on the Call Repurchase Date shall be entitled to receive a cash
payment in an amount per share of Warrant Securities that were acquired by the
Company pursuant to the Call Right equal to the "Subsequent Event Adjustment
Payment". As soon as practicable, but not less than sixty (60) days prior to
the effective date of any Subsequent Event, the Company shall deliver a written
notice (the "Subsequent Event Notice") to each Holder that it intends to
consummate a transaction that constitutes a Subsequent Event, which notice shall
describe in reasonable detail the Subsequent Event, the anticipated effective
date of such Subsequent Event and the estimated amount of the Subsequent Event
Adjustment Payment. The Subsequent Event Adjustment Payment shall be paid to
the Holders on the effective date of the Subsequent Event. The Subsequent Event
Adjustment Payment shall be equal to the difference between the "Subsequent
Event Fair Value," as hereinafter defined, and the Call Exercise Price. The
"Subsequent Event Fair Value" shall be equal to the per share Fair Value of the
capital stock of the Company, as determined in any transaction constituting a
Subsequent Event.
Section 7.04 Termination of Put and Call Rights. In the event the Company
----------------------------------
closes an Initial Public Offering, all Call Rights of the Company shall
immediately terminate. In the event that (i) the Company closes an Initial
Public Offering underwritten on a firm commitment basis by an underwriter, or
group of underwriters which is represented by an underwriter or underwriters,
which is a member of the New York Stock Exchange and results in gross proceeds
to the Company of at
17
least $20 million, and (ii) all Obligations under the Note Purchase Agreement
and the Note are repaid, all Put Rights shall immediately terminate.
VIII. RESTRICTIONS ON TRANSFER OF WARRANTS AND
----------------------------------------
WARRANT SECURITIES
------------------
Section 8.01 Restrictions on Transfer. Except as otherwise permitted by
------------------------
Section 8.02, neither the Warrant nor any Warrant Securities shall be
transferable without the prior written consent of the Company except (a) to
Xxxxxxxxx'x partners (or partners of those partners), (b) to an Affiliate of the
Holder thereof, (c) to a successor corporation or other business entity to the
Holder thereof as a result of a merger or consolidation with, or sale of all or
substantially all of the equity ownership interests or assets of, the Holder
thereof, (d) as is or may be required by the Holder thereof to comply with any
Federal or state law or any rule or regulation of any governmental or public
body or authority, (e) in a public offering pursuant to an effective
registration statement under the Securities Act or in a sale constituting an
exempt transaction under Rule 144 or Rule 144A, (f) pursuant to Section 7.01 or
Section 7.02 or (g) to any Person if the Holder thereof shall also transfer or
assign all or part of its interest in the Note to such Person.
Any notice given pursuant to this Section 8.01 by the Holder of the Warrant
or Warrant Securities shall contain (i) the name and address of the proposed
transferee of the Warrant, Warrant Securities or portion thereof, (ii) the
proposed consideration for such transfer, (iii) the number of shares of Common
Stock subject to or issuable pursuant to the Warrant or Warrant Securities
proposed to be transferred and (iv) a brief description of such proposed
transfer.
In the event that a Holder of the Warrant or Warrant Securities has given
the notice described in the preceding paragraph such Holder shall obtain an
opinion of counsel as to whether the proposed transfer may be effected without
registration or qualification under any Federal or state securities or blue sky
law. Such counsel shall, as promptly as practicable, provide the Company and the
Holder with such opinion and of the terms and conditions, if any, to be observed
in such transfer, whereupon the Company shall consent to such transfer and the
Holder shall be entitled to transfer this Warrant or Warrant Securities (or
portion thereof). In the event the Warrant shall be exercised as an incident to
such transfer, such exercise shall relate back and for a purposes of the Warrant
be deemed to have occurred as of the date of such notice regardless of delays
incurred by reason of the provisions of this paragraph, which may result in the
actual exercise on any later date.
Section 8.02 Bring Along Rights. In the event that the holders (other
------------------
than the Holders of the Warrant and the Warrant Securities) of that percentage
of shares of the Company's Common Stock that would be required under its
Articles of Incorporation or By-laws to convey all or substantially all of the
stock or assets of the Company propose to sell their shares of the Company
Common Stock to another Person other than another shareholder of the Company,
then, in that event, such holders shall have the right to demand of the Holders
a sale at the same price of their Warrant and the Warrant Securities. The
foregoing right to demand a bring along by the Holders of the Warrant and the
Warrant Securities is conditioned upon (i) the payment in full of all
Obligations
18
whether then due or not due under the Note Purchase Agreement; (ii) full payment
in cash of all consideration payable to the Holders of the Warrant and Warrant
Securities on account of the proposed sale of the Company's Common Stock; and
(iii) reasonable assurance given to the Holders of the Warrant and Warrant
Securities that the proposed sale is at a per share price and upon terms
substantially the same as could be obtained in a good faith transaction with
unaffiliated third parties. Holders of the Warrant and Warrant Securities shall
receive not less than forty-five (45) days' prior written notice of any such
proposed sale of the Company's Common Stock.
Section 8.03 Legend on Warrant and Certificates. Each Warrant shall bear
----------------------------------
a legend in substantially the following form:
"This Warrant and any shares of Common Stock issuable upon the exercise of
this Warrant have not been registered under the Securities Act of 1933, as
amended, or any state securities law and neither this Warrant nor any such
shares may be transferred in the absence of such registration or an
exemption therefrom under such Act or law."
In case any shares are issued upon the exercise in whole or in part of this
Warrant or are thereafter transferred, in either case under such circumstances
that no registration under the Securities Act is required, each certificate
representing such shares shall bear the following legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or any state securities law and may
not be transferred in the absence of such registration or an exemption
therefrom under such Act or law. In addition, any transfer of these shares
is subject to the conditions specified in the Warrant Agreement dated as of
October 3, 1997. A copy of the form of such Warrant Agreement is on file
with the Secretary of the Company and will be furnished without charge by
the Company to the holder of this certificate upon written request to the
Secretary of the Company."
Section 8.04 Termination of Restrictions. The restrictions imposed under
---------------------------
this Article VIII upon the transferability of this Warrant or of Warrant
Securities, shall cease when (a) a registration statement covering such issuable
Warrant Shares or Warrant Securities becomes effective under the Securities Act,
(b) the Company receives an opinion of counsel that such restrictions are no
longer required in order to ensure compliance with the Securities Act or (c) an
Event of Default as to any Obligation to pay principal or interest or other sum
of money has occurred and is continuing under the Note Purchase Agreement. When
such restrictions terminate, the Company shall, or shall instruct its transfer
agent and registrar to, issue new certificates in the name of the holder not
bearing the legends required under Section 8.04.
Section 8.05 Rule 144 and Rule 144A. After any Initial Public Offering,
----------------------
the Company covenants that it will file all reports required to be filed by it
with the Commission, and that it will take such further action as a Holder may
reasonably request, all to the extent required from time to
19
time to enable such Holder to sell Warrant or Warrant Securities without
registration under the Securities Act pursuant to Rule 144 ("Rule 144") (or any
similar rule then in effect) promulgated by the Commission under the Securities
Act. Upon the request of a Holder, the Company will deliver to such Holder a
notice stating whether it has complied with such requirements. The Company
covenants that it will provide to each Holder or any prospective purchaser of
such Holder's Warrant or Warrant Securities the information required to be
delivered under paragraph (d)(4) of Rule 144A ("Rule 144A") (or any similar rule
then in effect) promulgated by the Commission under the Securities Act in
respect of a transaction qualifying for an exemption under Rule 144A and it will
take such further action as a holder may reasonably request, all to the extent
required from time to time, to enable such holder to sell its Warrant or Warrant
Securities without registration under the Securities Act pursuant to Rule 144A.
IX. MISCELLANEOUS
-------------
Section 9.01 Term. Except as otherwise expressly provided in this
----
Agreement, this Agreement shall expire ten years after the date of this
Agreement; provided that the Company's obligations to honor an exercise of the
Warrant or a Notice of Put given prior to such expiration or to perform any
obligation to make the Subsequent Event Adjustment Payment shall continue and
survive notwithstanding the expiration of this Agreement.
Section 9.02 No Waiver Under Other Agreements.
--------------------------------
(a) 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: (i) any right or remedy of Xxxxxxxxx
under the Company's Articles, By-laws or similar agreements, the Note Purchase
Agreement or any of the Ancillary Agreements; (ii) any duty or obligation of the
Company under the Note Purchase Agreement or any of the Ancillary Agreements, or
(iii) any obligation of any other party under any of the Ancillary Agreements
owing to or intended to confer a benefit upon Xxxxxxxxx or its successors or
assigns.
(b) The submission of a Notice of Put shall not constitute a waiver by
Xxxxxxxxx of any term or provision of the Note Purchase Agreement or any of the
Ancillary Agreements.
Section 9.03 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 9.04 Notice. Unless otherwise specifically provided herein, all
------
communications under this Agreement and the Warrant shall be in writing and
shall be deemed to have been duly given (i) on the date of service if served
personally on the party to whom notice is to be given, (ii) on the day of
transmission if sent by facsimile transmission to the number given below, and
telephonic confirmation of receipt is obtained promptly after completion of
transmission, (iii) on the day after
20
delivery to Federal Express or similar overnight courier, or (iv) on the fifth
day after mailing, if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, and properly
addressed, return receipt requested, to the party as follows:
If to Xxxxxxxxx: Xxxxxxxxx XXXX Xxxxxxx Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx or Xxxxxx Xxxxx
with a copy to: Xxxxxxxxx & Xxxxxx P.L.L.P.
(which shall not 4200 IDS Center
constitute notice) 00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. XxXxxx, Esq.
If to the Company: X.X. Xxxxx Drug Company
0000 Xxxxx 00xx Xxxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
Attn: President
with a copy to: Xxxxxxxxx Xxxxxxx Xxxxxxx Weary Xxxxxxxx LLP
(which shall not Two Pershing Avenue
constitute notice) 0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx, Esq.
to any Holder of To the most recent address set
a Warrant or of forth in the Company's register
Registered Securities of Warrant or stock register,
(other than Xxxxxxxxx): as the case may be.
Any party hereto may change its address for purposes of this Section 9.04 by
giving the other party written notice of the new address in the manner set forth
above.
Section 9.05 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 fight, power, privilege, remedy or
interest that they may have against or in respect of any other party, or any
other Person or thing, and without regard to any act or omission of such party
or any other Person.
21
Section 9.06 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 9.07 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, that 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 9.08 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.
Section 9.09 No Required Exercise. No term or provision of the Warrant or
--------------------
this Agreement is intended to require, nor shall any such term or provision be
construed as requiring, any Holder of the Warrant to exercise or put the
Warrant.
22
Section 9.10 Binding Effect. This Agreement shall be binding upon and
--------------
enforceable against the, parties hereto and their respective successors and
assigns.
Section 9.11 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 9.12 Waiver, Modification and Amendment. Each and every
----------------------------------
modification to and amendment of this Agreement shall be in writing and signed
by the Company, Xxxxxxxxx (if at that time Xxxxxxxxx is a Holder) and by the
Holders of two-thirds 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
Xxxxxxxxx (if at that time it is a Holder) by the Holders of two-thirds 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 9.13 Entire Agreement. This Agreement and the Warrant contain the
----------------
entire agreement of the parties concerning the subject matter hereof 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 9.14 Governing Law: Consent to Jurisdiction; Waiver of Jury Trial.
------------------------------------------------------------
THIS AGREEMENT AND THE WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF MINNESOTA. AT THE OPTION OF THE HOLDER, THIS
AGREEMENT AND THE WARRANT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA
STATE COURT SITTING IN MINNEAPOLIS OR ST. XXXX, MINNESOTA, AND THE COMPANY
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE COMPANY COMMENCES
ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT
OR THE WARRANT, OR ALLEGING ANY BREACH OF THIS AGREEMENT OR THE WARRANT, THE
HOLDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE. THE COMPANY HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
BASED ON OR PERTAINING TO THIS AGREEMENT OR THE WARRANT.
23
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed as of the day and year first above written.
XXXXXXXXX ESOP CAPITAL PARTNERS, X.X. XXXXX DRUG COMPANY
A Minnesota Limited Partnership
By: Xxxxxxxxx Capital Investment Partners,
A Minnesota Limited Partnership
Its: General Partner By /s/ Xxxxxx X. Xxxxxx
----------------------------------
Its
-------------------------------
By: Xxxxxxxxx Capital, Inc.
Its: General Partner
By /s/ Xxxxx Xxxxxxxxx
---------------------------------------------------
A Principal
24
SCHEDULE I
----------
LIST OF HOLDERS OF SHARES,
WARRANTS, OPTIONS AND RIGHTS
----------------------------
See attached.
25
X.X. Xxxxx Drug Company Stockholder List
Shares of
Cert # Common Stock Shareholder
------ ------------ -----------
279 3,875 X.X. Xxxxx Drug Company Employee
Stock Ownership Plan
0000 Xxxxx 00xx Xxxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
(original fully paid shares)
286 6,300 Xxxxxx X. Xxxxxx
0000 Xxxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
299 42,620 X.X. Xxxxx Drug Company Employee
Stock Ownership Plan
0000 Xxxxx 00xx Xxxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
(held as collateral by LaSalle)
300 64,676 X. X. Xxxxx Drug Company Employee
Stock Ownership Plan
0000 Xxxxx 00xx Xxxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
X.X. Xxxxx Drug Company Stock Option Holders
Shares of
Common Stock Option Holder
------------ -------------
4,000 Xxxxxx X. Xxxxxx
0000 Xxxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
4,000 Xxxxxxx Xxxxxx
0000 Xxxxx Xxxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
2,500 Xxxxxx Xxxxxxxxx
00000 XX 00xx
Xxxxxx Xxxx, Xxxxxxxx 00000
2,500 Xxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
2,500 Xxxxxx Xxx
0000 Xxxxxxx Xxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
2,500 Xxx Xxxxx
00 Xxxxxxxx Xxxx
Xx. Xxxxxx, Xxxxxxxx 00000
1,000 Xxxxxxx Xxxxxxxx
0 Xxxxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
1,000 Xxxxxx Xxxxxx
00 Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
SCHEDULE II
-----------
OBLIGATIONS TO REPURCHASE,
ACQUIRE OR RETIRE SHARES
------------------------
See X.X. Xxxxx Drug Company Stock Ownership Plan (summary plan description is
attached).
SUMMARY PLAN DESCRIPTION
(1) General. The legal names, address and Federal employer identification
number of the Employer are -
X.X. XXXXX DRUG COMPANY
X.X. Xxx 000
Xx. Xxxxxx, XX 00000
00-0000000
The following employer has also adopted the Plan:
C.D.S. TRANSPORTATION, INC.
X.X. Xxx 000
Xx. Xxxxxx, XX 00000
00-0000000
The Employer has previously established a retirement plan ("Plan") to supplement
your income upon retirement. That plan is an employee stock ownership plan
("ESOP"). On October 1, 1996, the board of directors adopted an amendment to the
ESOP. This revised summary plan description covers the ESOP, as amended. In
addition to retirement benefits, the Plan may provide benefits in the event of
your death or disability or in the event of your termination of employment prior
to normal retirement. If after reading this summary you have any questions,
please ask the Plan Administrator. We emphasize this summary plan description is
a highlight of the more important provisions of the Plan control.
(2) Identification of Plan. The Plan is known as -
X.X. XXXXX DRUG COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
The Employer has assigned 002 as the Plan identification number. The plan year
is the period on which the Plan maintains its records: January 1 through
December 31.
(3) Type of Plan. The Plan is commonly known as an employee stock ownership
plan. Section (8), "Employer's Contributions," explains how you share in
the Employer's annual contributions to the trust fund and the extent to
which the Employer has an obligation to make annual contributions to the
trust fund.
Under this Plan, the trust fund is intended to be invested primarily, and
possibly exclusively, in Employer securities, to the extent they can be acquired
by the Plan. There are certain risks inherent in this type of plan because it
will not be as diversified in its investments as certain other types of
retirement plans. There may also be a lack of investment return in the event
that the Employer securities do not yield dividends, interest or other earnings.
However, the Plan is funded completely by Employer contributions and will enable
you to share in any appreciation in the Employer securities to the extent such
Employer securities are vested and allocated to your account. The Plan has been
established with the belief that by having a retirement plan which is based upon
the Employer's growth and success, this will stimulate all employees to work at
their full capacity for the best interests of the Employer.
Annex A
-------
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT AND SUCH SHARES MAY BE OFFERED, SOLD OR
TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY
APPLICABLE STATE SECURITIES LAWS.
____________________
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF ARE SUBJECT TO
THE TERMS AND PROVISIONS OF A WARRANT AGREEMENT DATED AS OF OCTOBER 3, 1997
BETWEEN X.X. XXXXX DRUG COMPANY (THE "COMPANY") AND XXXXXXXXX ESOP CAPITAL
PARTNERS, A MINNESOTA LIMITED PARTNERSHIP (AS THE SAME MAY BE SUPPLEMENTED,
MODIFIED, AMENDED, EXTENDED OR RESTATED FROM TIME TO TIME, THE "WARRANT
AGREEMENT"). AMONG OTHER THINGS, THE WARRANT AGREEMENT CONTAINS PROVISIONS FOR
PUTS, CALLS, RESTRICTIONS ON TRANSFER AND REGISTRATION RIGHTS. A COPY OF THE
WARRANT AGREEMENT IS AVAILABLE AT THE EXECUTIVE OFFICES OF THE COMPANY.
COMMON STOCK PURCHASE WARRANT
-----------------------------
October 3, 1997
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 and in that in certain Note Purchase Agreement, dated as of
October 3, 1997 between Xxxxxxxxx ESOP Capital Partners, a Minnesota Limited
Partnership ("Xxxxxxxxx") and X.X. Xxxxx Drug Company, a Missouri corporation
(the "Company"), as the same has been or may be supplemented, modified, amended,
renewed or restated from time to time (the "Note Purchase Agreement").
X.X. Xxxxx Drug Company, a Missouri corporation, does hereby certify and
agree that Xxxxxxxxx or its successors and assigns are hereby entitled to
purchase from the Company an Exercise Quantity initially equal to 24,260 of the
Company's Common Stock (the "Common Stock"), all upon the terms and provisions
and subject to adjustment as 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 $.02 per share, as adjusted
from time to time pursuant to the terms of this Warrant and the Warrant
Agreement (the "Exercise Price").
_____________________
1 . Term of Warrant. The term of this Warrant commences as of the date
---------------
hereof and shall expire at 5:00 P.M., Minneapolis time, on the tenth anniversary
hereof, October 3, 2007. 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., Minneapolis 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), 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) 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, that
number of shares which has an aggregate current market price 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 so
request in writing at the time of exercise, and 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, replacement, put or call 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 0000 Xxxxx 00xx Xxxxxxx, Xx. Xxxxxx, Xxxxxxxx 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, put or call 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
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 Holder may request such an exchange by surrender of this
Warrant to the Company, together with a written exchange request specifying the
desired number of warrants and allocation of the Exercise Quantity purchasable
under the existing Warrant.
(c) Subject to the provisions of Article VIII of the Warrant Agreement,
this Warrant may be transferred, 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. 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.
5. Rights and Obligations of the Company and the Warrant 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).
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.
X.X. Xxxxx Drug Company
By
---------------------------------
Its
-------------------------------
Attest:
----------------------
Secretary
COMMON STOCK WARRANT
--------------------
EXERCISE FORM
-------------
X.X. Xxxxx Drug Company
0000 Xxxxx 00xx Xxxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
Attention: President
The undersigned Holder of the within Warrant hereby irrevocably elects to
exercise the within Warrant to the extent of ______ shares of Common Stock of
the Company.
The undersigned herewith encloses the Warrant and:
[_] a check (payable to the order of the Company) in the amount of
$__________ in payment of the purchase price thereof, and/or
[_] the undersigned hereby authorizes the deduction of __________ shares in
payment of the Exercise Price.
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 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 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.
Dated:
---------------- ------------------------------------------
(Name of Registered Holder - Please Print)
By
----------------------------------------
(Signature of Registered Holder or
of Duly Authorized Signatory)
Title
-------------------------------------
Annex B
-------
NOTICE OF PUT
-------------
X.X. Xxxxx Drug Company
0000 Xxxxx 00xx Xxxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
Attention: President
This Notice of Put is given pursuant to Section 7.01 of the Warrant
Agreement, dated as of October 3, 1997 (the "Agreement") between X.X. Xxxxx Drug
Company (the "Company") and Xxxxxxxxx ESOP Capital Partners, A Minnesota Limited
Partnership ("Xxxxxxxxx"). Unless otherwise defined herein, terms used herein
shall have the meanings assigned to them in the Agreement.
The undersigned Holder of Warrant Securities hereby elects to exercise its
fight to put its Warrant as set forth below:
1. The total Put Exercise Price applicable to all of Holder's Warrant
Securities is $_____________, which has been calculated as set forth on the
attached schedule.
2. The amount to be paid to Holder for the Warrant Securities covered by
this Notice of Put is $_____________ (the "Put Payment").
3. The Warrant Securities covered by this Notice of Put are enclosed
herewith.
Please deposit the amount of the Put Payment to the account of the Holder at
______________________, Account No. _____________ by no sooner than ninety (90)
and no later than one hundred (100) calendar days from the date of this Notice.
Dated:
---------------- ------------------------------------------
(Name of Registered Holder - Please Print)
By
----------------------------------------
(Signature of Registered Holder or
of Duly Authorized Signatory)
Title
-------------------------------------
Annex C
-------
NOTICE OF CALL
--------------
[Name of Holder]
[Holder's Address]
[City/State/Zip Code]
This Notice of Call is given pursuant to Section 7.02 of the Warrant
Agreement dated as of October 3, 1997 (the "Warrant Agreement") between X.X.
Xxxxx Drug Company (the "Company") and Xxxxxxxxx ESOP Capital Partners, A
Minnesota Limited Partnership ("Xxxxxxxxx"). Unless otherwise defined herein,
terms used herein shall have the meanings assigned to them in the Agreement.
The Company hereby elects to exercise its right to call the Warrant
Securities to the extent set forth below:
1. The total Call Exercise Price applicable to all of Holder's Warrant
Securities is $______________, which has been calculated as set forth on the
attached schedule.
2. The amount to be paid to Holder for the Warrant Securities covered by
this Notice of Call is $__________ (the "Call Payment").
Please deliver the Warrant Securities covered by this Notice to
________________________________ [address for presentation and surrender] for
presentation and surrender by no later than ____________________ [the Call
Repurchase Date). Upon receipt of such Warrant Securities, the Company will
deposit the amount of the Call Payment to the account of the Holder at
____________________________, or to such other account as the Holder may direct,
no sooner than thirty (30) and no later than forty (40) calendar days from the
date of this Notice.
X.X. Xxxxx Drug Company
By
---------------------------------
Its
-------------------------------
