EXHIBIT 4.6
WARRANT AGREEMENT
This Warrant Agreement is entered into this ___ day of November, 2003
(as amended, supplemented or modified from time to time, this "WARRANT
AGREEMENT") by and between NAVARRE CORPORATION, a Minnesota corporation
(together with its successors and permitted assigns, the "ISSUER"), and HILCO
CAPITAL LP, a Delaware limited partnership (together with its successors and
permitted assigns, the "HOLDER").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of the date
hereof (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), between the Holder and the Issuer, Holder has
agreed to lend to the Issuer and its Affiliates (as defined below) up to
$6,000,000 on the terms and conditions set forth in the Credit Agreement as
further evidenced by the Note (as defined in the Credit Agreement);
B. The Issuer will derive significant benefits as a result of the
Holder making the Loan (as defined in the Credit Agreement) to the Issuer and
its Affiliates; and
C. In order to induce the Holder to make the Loan to the Issuer and its
Affiliates, the Issuer has agreed to issue to the Holder the Warrants
hereinafter described.
Now, therefore, in consideration of the premises the parties hereto
agree as follows:
AGREEMENT
1. DEFINITIONS. As used in this Warrant Agreement, unless otherwise
defined herein, terms defined in the Credit Agreement (as in effect on the date
hereof, whether or not the Credit Agreement is thereafter terminated or expires
according to its terms) shall have such defined meanings when used herein and
the following terms shall have the following meanings, unless the context
otherwise requires:
"AFFILIATE" shall mean any Person controlling, controlled by or under
common control with another Person. For purposes of this definition, "control"
means the possession, directly or indirectly, of the power to direct or cause
direction of the management and policies of any Person, whether through
ownership of equity interests, by contract or otherwise. Without limiting the
generality of the foregoing, solely for purposes of this Warrant Agreement and
the Warrants, each of the following shall be an Affiliate: any officer,
director, employee or other agent of a Person, any stockholder, member or
subsidiary of a Person, and any other Person with whom or which a Person has
common stockholders, officers or directors.
"CLOSING DATE" shall mean the date of the closing of the Credit
Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission.
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"COMMON STOCK" shall mean the shares of the Issuer's Common Stock, no
par value, and shall include any stock into which such Common Stock shall have
been changed or any stock resulting from any reclassification of such Common
Stock.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXEMPTED SECURITIES" shall mean (a) the Warrants, (b) the Warrant
Shares and (c) the Plan Shares.
"EXPIRATION DATE" shall mean five (5) years from the Closing Date;
which shall be November ___, 2008.
"EXERCISE PRICE" shall mean the exercise price of a Warrant as set
forth in the Warrant Certificate evidencing such Warrant; provided, however,
that the Exercise Price is subject to adjustment pursuant to the provisions of
Section 12(a) hereof.
"FAIR MARKET VALUE" of a share of Common Stock on any date shall be
determined in a reasonably prompt manner and shall be calculated under clause
(a) or (b) below, as applicable:
(a) (i) the closing price of the Common Stock as of the date in
question under this Warrant, or, if no closing price is available on that date,
then the closing price on the immediately preceding business day on which there
is a closing price, if such security is listed or admitted for trading on any
domestic national securities exchange, as officially reported on the principal
securities exchange on which the Common Stock is listed; or (ii) if not reported
as described in clause (i), the closing sale price of the Common Stock as of the
date in question under this Warrant, or, if no closing sale price is available
on that date, then the closing sale price on the immediately preceding business
day on which there is a closing sale price, as reported by The Nasdaq Stock
Market, or any other system of automated dissemination of quotations of
securities prices then in common use, if so quoted; or
(b) if the closing price of the Common Stock is neither reported as
described in clause (a)(i) above, nor quoted as described in clause (a)(ii)
above, then the Fair Market Value shall be the higher of (i) the Fair Market
Value determined by the Company's Board of Directors in good faith and on a
reasonable basis; and (ii) the Fair Market Value determined in accordance with
the appraisal procedure set forth in clause (c) below.
(c) Issuer and Holder shall, acting reasonably and in good faith,
mutually select a single Qualified Appraiser. Such Qualified Appraiser shall
determine the value of the Warrant Shares, assuming a sale thereof between a
willing buyer and a willing seller, both of whom have full knowledge of the
financial and other affairs of Issuer, and neither of whom is under any
compulsion to sell or to buy. The decision of the Qualified Appraiser shall be
final and binding on all parties. The Fair Market Value of the Warrant Shares
shall not be discounted by virtue of the illiquid nature of such shares or the
fact that such shares do not constitute a majority of the Common Stock
outstanding. Instead, for purposes of the appraisal, the Warrant Shares shall be
deemed to have been sold as part of a transaction in which 100% of the Common
Stock outstanding on a Fully Diluted
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Basis has been sold to a single purchaser. The fees and expenses of the
Qualified Appraiser shall be borne by Holder. In the event that Holder and
Issuer are unable to mutually agree on a Qualified Appraiser within thirty (30)
days following either party's request for a determination of Fair Market Value
or any event that requires such determination, then Fair Market Value shall be
determined pursuant to binding arbitration commenced in Chicago, Illinois within
thirty (30) days following the expiration of the aforementioned 30-day period,
pursuant to the commercial arbitration rules of the American Arbitration
Association, before a single independent arbitrator mutually selected by Issuer
and Holder; provided, that upon the written notification of either party, the
arbitration shall be conducted before a panel of three arbitrators, one each
selected by Holder and Issuer, respectively, and the third appointed jointly by
the two arbitrators selected by the parties. All fees, costs and expenses of
such arbitration shall be borne by Holder.
"FULLY DILUTED BASIS" shall mean, at any time, without duplication, the
number of outstanding shares of Common Stock, after giving effect to (a) all
shares of Common Stock actually outstanding at the time of determination, (b)
all shares of Common Stock issuable upon the exercise of any option, warrant
(including, without limitation, the Warrants) or similar right outstanding at
the time of determination, and (c) all shares of Common Stock issuable upon the
exercise of any conversion or exchange right contained in any security
outstanding at the time of determination and convertible into or exchangeable
for shares of Common Stock, as computed pursuant to Issuer's most recent Annual
Report on Form 10-K filed with the SEC, or if no Form 10-K has been filed with
the SEC in the last twelve (12) months, the Company's most recent annual audited
financial statement.
"NON-PUBLIC WARRANT SHARES" shall mean Warrant Shares that have not
been sold to the public and bear the legend set forth in subsection 15(b). This
term shall include any securities into which Non-Public Warrant Shares are
converted, unless such securities are "margin securities" as that term is
construed under federal securities laws.
"PERSON" shall mean an individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
association, corporation, government or any agency or political division
thereof, or any other entity.
"PLAN SHARES" shall have the meaning set forth in Section 17.
"QUALIFIED APPRAISER" shall mean an independent, experienced appraiser
who is employed by a nationally or regionally recognized investment banking,
accounting or similar firm that is experienced in providing equity valuation
services as part of its regular business.
"REGISTRABLE SECURITIES" shall mean (a) any issued and outstanding
Non-Public Warrant Shares and any Non-Public Warrant Shares which may be
acquired by the Warrant Holders upon exercise of the Warrants and (b) any other
securities of the Issuer (or any successor or assign of the Issuer, whether by
merger, consolidation, sale of assets or otherwise) which may be issued or
issuable to the Warrant Holders with respect to, in
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the exchange for, or in substitution of, the Warrants and/or the Registrable
Securities referenced in clause (a) above by reason of any dividend or stock
split, combination of shares, merger, consolidation, recapitalization,
reorganization, sale of assets or similar transaction. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
for so long as (i) a registration statement with respect to the sale of such
securities shall have been declared effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (ii) such securities may be sold to the public pursuant to Rule
144(k) (or any similar provisions then in force) under the Securities Act or
(iii) such securities shall have ceased to be outstanding.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSIDIARY" shall mean, with respect to a Person, any other Person of
which the outstanding capital stock, membership interest or other equity
interest possessing a majority of the voting power is owned or controlled by
such Person directly or indirectly through one or more Subsidiaries.
"TRIGGERING EVENT" shall mean any of the following events: (a) a
"Change of Control" (as such term is defined in the Credit Agreement), (b) any
combination, consolidation or merger between the Issuer and any Person, unless
(i) the Issuer is the surviving entity and (ii) the holders of Common Stock
immediately prior to such transaction hold, immediately after such transaction,
at least a majority of the equity securities of Issuer, or (c) sale of all or
substantially all of the assets of the Issuer in one or a series of related
transactions.
"VALIDLY ISSUED" shall mean, with respect to any shares of Common
Stock, that such stock has been validly issued and is fully paid and
nonassessable.
"WARRANT CERTIFICATE" shall mean a certificate evidencing one or more
Warrants, substantially in the form of Exhibit A attached hereto, with such
changes therein as may be required to reflect any adjustments made pursuant to
Section 12 hereof and any other terms of this Warrant Agreement.
"WARRANT HOLDER" shall mean the Holder or an Affiliate thereof and such
other Persons to whom the Holder or an Affiliate thereof transfers Warrants in
compliance with the terms of this Warrant Agreement, and for purposes of Section
16 shall include holders of Non-Public Warrant Shares.
"WARRANT OFFICE" shall mean the office or agency of the Issuer at which
the Warrant Register shall be maintained and where the Warrants may be presented
for exercise, exchange, substitution and transfer, which office or agency will
be the office of the Issuer at 0000 00xx Xxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxx
00000, which office or agency may be changed by the Issuer pursuant to notice in
writing to the Persons named in the Warrant Register as the holders of the
Warrants.
"WARRANT REGISTER" shall mean the register, substantially in the form
of Exhibit B attached hereto, maintained by the Issuer at the Warrant Office.
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"WARRANTS" shall mean, collectively, the warrants issued pursuant to
this Warrant Agreement entitling the record holders thereof to purchase from the
Issuer (i) 320,000 shares of Common Stock at an Exercise Price of $2.88 per
share and (ii) subject to the provisions of Section 3 hereof, 55,000 shares of
Common Stock at an Exercise Price per share equal to the Fair Market Value of
the Issuer's Common Stock on the Closing Date.
"WARRANT SHARES" shall mean the shares of Common Stock issued or
issuable upon exercise of the Warrants, as the number of such shares may be
adjusted from time to time pursuant to the Warrant Certificate or this Warrant
Agreement.
2. REPRESENTATIONS AND WARRANTIES. The Issuer hereby represents and
warrants on November __, 2003, as follows:
(a) The Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota, has the
corporate power and authority to conduct its business as currently conducted,
has the corporate power and authority to execute and deliver this Warrant
Agreement and the Warrant Certificates, to issue the Warrants and to perform its
obligations under this Warrant Agreement and the Warrant Certificates, has the
corporate power and authority and legal right to own and lease its properties
and is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which it owns or leases real property or in which the conduct of
its business requires such qualification, except where failure to be so
qualified would not have a material adverse effect on the business, properties,
financial condition or results of operations of the Issuer and its Subsidiaries
taken as a whole.
(b) The execution, delivery and performance by the Issuer of
this Warrant Agreement and the Warrant Certificates, the issuance of the
Warrants and the issuance of the Warrant Shares upon exercise of the Warrants
have been duly authorized by all necessary corporate action and do not and will
not violate, or result in a breach of, or constitute a default under, or require
any consent under, or result in the creation of any lien, charge or encumbrance
upon any of the assets of the Issuer pursuant to, any law, statute, ordinance,
rule, regulation, order or decree of any court, governmental body or regulatory
authority or administrative agency having jurisdiction over the Issuer or its
Subsidiaries or the Issuer's Articles of Incorporation or any contract,
mortgage, loan agreement, note, lease or other instrument binding upon the
Issuer or its Subsidiaries or by which any of their respective properties are
bound.
(c) This Warrant Agreement and the Warrant Certificates
executed and delivered on the date hereof have been duly executed and delivered
by the Issuer. This Warrant Agreement, the Warrant Certificates and the Warrants
constitute legal, valid, binding and enforceable obligations of the Issuer,
except as enforceability may be limited by the application of bankruptcy,
insolvency, moratorium, or similar laws affecting the rights of creditors
generally by equitable principles or by judicial limitations on the right of
specific performance, and except as the enforceability of the indemnification or
contribution provisions hereof may be determined to be unenforceable as against
public policy or under applicable securities laws. The Warrant Shares, when
issued upon exercise of the Warrants in accordance with the terms hereof, will
be duly
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authorized and Validly Issued. The Warrant Shares have been duly authorized and
reserved for issuance upon exercise of this Warrant, and upon such exercise,
will be validly issued, fully paid and nonassessable, free from all taxes, liens
and charges with respect to the issue thereof, and will not be subject to
preemptive rights or other similar rights of shareholders of the Company.
(d) The authorized capital stock of Issuer, prior to
completion of the BCI (as defined below) acquisition, consists of 110,000,000
shares of Common Stock, no par value per share, of which 21,616,187 shares are
currently issued and outstanding, and 10,000,000 shares of preferred stock (of
which 1,750,000 shares have been designated as either Class A or Class B
Convertible Stock), of which no shares are currently issued or outstanding.
Except for the Warrants, and except (i) as set forth on the Issuer's most recent
Annual Report on Form 10-K filed June 30, 2003 and (ii) for options granted
under the Navarre Corporation 1992 Stock Option Plan since June 30, 2003, there
are outstanding on the date hereof no options, warrants or other securities
exercisable or exchangeable for or convertible into shares of Common Stock or
any other rights to acquire Common Stock.
(e) Except for the Warrant Holders and except as set forth on
Schedule 2e hereto, no holder of securities of the Issuer has any right granted
by the Issuer to the registration of such or any other securities of the Issuer
under the Securities Act or any applicable state securities law.
(f) On the date hereof, BCI Eclipse Company, LLC ("BCI")
became a wholly-owned Subsidiary of the Issuer. Issuer owns 80% of the issued
and outstanding capital stock of Encore Software, Inc. ("ENCORE"). Except for
Encore and BCI, the Issuer does not own or hold any rights to acquire any shares
of stock, membership interest or any security or interest in any other Person.
3. ISSUANCE OF WARRANTS.
(a) The Issuer hereby agrees to issue and deliver to Holder
or, at the option of Holder and upon compliance with the transfer provisions of
Section 4, an Affiliate thereof designated by Holder in writing, (i) on the
Closing Date, one or more Warrant Certificates evidencing 320,000 Warrants,
which shall entitle the Holder to purchase, in the aggregate, 320,000 shares of
Common Stock at an Exercise Price of $2.88 per share and (ii) if applicable, one
or more Warrant Certificates evidencing the Warrants to be issued in accordance
with the provisions of subsection 3(b) below, on the date on which the Warrant
Certificates evidencing such Warrants issued pursuant to this Warrant Agreement
are exercised (the "EXERCISE DATE"). If less than all of the Warrants are
exercised on the Exercise Date, the Holder shall be entitled to receive a
Warrant Certificate for the remaining Warrants of like tenor to the Warrant
Certificate surrendered for exercise. The remaining Warrants shall entitle the
Holder to purchase, on the subsequent Exercise Date, the number of Warrants
outstanding on such Exercise Date pursuant to such Warrant Certificate, on and
in accordance with the terms of this Warrant Agreement. Each Warrant shall
entitle the holder of such Warrant to purchase from the Issuer one (1) Validly
Issued share of Common Stock at the applicable Exercise Price
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upon surrender of the applicable Warrant Certificate and payment of the
applicable Exercise Price to the Issuer. The Exercise Price and number of
Warrant Shares purchasable upon exercise of the Warrants are subject to
adjustment as set forth in this Warrant Agreement.
(b) If at any time prior to the Expiration Date the average
Fair Market Value of the Issuer's Common Stock during any (i) consecutive ten
(10) day period or (ii) rolling thirty (30) day period, is less than or equal to
ninety-five percent (95%) of the Fair Market Value of the Common Stock on the
Closing Date, the Issuer hereby agrees to promptly issue and deliver to Holder
or, at the option of Holder and upon compliance with the transfer provisions of
Section 4, an Affiliate thereof designated by Holder in writing, one or more
Warrant Certificates evidencing 55,000 Warrants, which shall entitle Holder to
purchase on the Exercise Date, in the aggregate, 55,000 shares of Common Stock
at an Exercise Price equal to the Fair Market Value of the Common Stock on the
Closing Date.
4. REGISTRATION, TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Issuer shall maintain at the Warrant Office the
Warrant Register for registration of the Warrants and Warrant Certificates and
transfers thereof. On the Closing Date, the Issuer shall register the Warrants
and Warrant Certificates in the Warrant Register in the name of Holder (or, upon
compliance with the transfer provisions of Section 4, an Affiliate thereof). The
Issuer may deem and treat the registered holders of the Warrant Certificates as
the absolute owners thereof and the Warrants represented thereby
(notwithstanding any notation of ownership or other writing on the Warrant
Certificates made by any Person) for the purpose of any exercise thereof or any
distribution to the holders thereof, and for all other purposes, and the Issuer
shall not be affected by any notice to the contrary.
(b) Subject to Section 15, the Issuer shall promptly register
the transfer of any outstanding Warrants in the Warrant Register upon surrender
of the Warrant Certificates evidencing such Warrants to the Issuer at the
Warrant Office, accompanied (if so required by it) by a written instrument or
instruments of transfer in form reasonably satisfactory to it and its legal
counsel, duly executed by the registered holder or holders thereof or by the
duly appointed legal representative thereof. Upon any such registration of
transfer, new Warrant Certificates evidencing such transferred Warrants shall be
issued to the transferee and the surrendered Warrant Certificates shall be
canceled. If less than all the Warrants evidenced by Warrant Certificates
surrendered for transfer are to be transferred, new Warrant Certificate(s) shall
be issued to the holder surrendering such Warrant Certificates evidencing such
remaining number of Warrants.
(c) Warrant Certificates may be exchanged at the option of the
holders thereof, when surrendered to the Issuer at the Warrant Office, for
another Warrant Certificate or other Warrant Certificates of like tenor and
representing in the aggregate a like number of Warrants. Warrant Certificates
surrendered for exchange shall be canceled.
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(d) No charge shall be made for any such transfer or exchange
except for any tax or other governmental charge imposed in connection therewith.
Except as provided in subsection 15(b), each Warrant Certificate issued upon
transfer or exchange shall bear the legend set forth in subsection 15(b) if the
Warrant Certificate presented for transfer or exchange bore such legend.
5. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon receipt of evidence
reasonably satisfactory to the Issuer of such loss, theft or destruction of such
Warrant Certificate and, if requested, indemnity reasonably satisfactory to it.
The Issuer acknowledges that a written indemnity by Holder or, if an Affiliate
of Holder is the holder of such lost, stolen or destroyed Warrant Certificate,
by such Affiliate shall be satisfactory to the Issuer for such purpose. No
service charge shall be made for any such substitution, but all expenses and
reasonable charges associated with procuring such indemnity and all stamp, tax
and other governmental duties that may be imposed in relation thereto shall be
borne by the holder of such Warrant Certificate.
6. DURATION AND EXERCISE OF WARRANTS.
(a) The Warrants evidenced by a Warrant Certificate shall be
exercisable in whole or in part by the registered holder thereof on any business
day after the Closing Date and on or before 5:00 P.M., Chicago, Illinois time,
on the Expiration Date.
(b) Subject to the provisions of this Warrant Agreement, the
Warrants evidenced by a Warrant Certificate may be exercised by the registered
holder thereof by the surrender of the Warrant Certificate evidencing the
Warrants to be exercised, with the form of election purchase on the reverse
thereof or attached thereto duly completed and signed, to the Issuer at the
Warrant Office, and upon payment of the aggregate Exercise Price for the number
of Warrant Shares in respect of which such Warrants are being exercised, at the
option of the Warrant Holder, (i) in lawful money of the United States of
America, (ii) by surrender of the Note or a portion thereof having an
outstanding principal balance equal to the Exercise Price (with concurrent
issuance of a replacement Note reflecting the remaining principal balance
thereof), and/or (iii) by surrender to the Issuer of shares of Common Stock then
owned by the Warrant Holder and valued for purposes hereof at Fair Market Value
at the time of exercise. In lieu of exercising Warrants pursuant to the
immediately preceding sentence, the Warrant Holder shall have the right to
require the Issuer to convert the Warrants, in whole or in part and at any time
or times (the "CONVERSION RIGHT"), into Warrant Shares, as follows: upon
exercise of the Conversion Right, the Issuer shall deliver to the Warrant Holder
(without payment by the Warrant Holder of any Exercise Price) that number of
Warrant Shares equal to the quotient obtained by dividing:
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(i) the difference of:
A. the aggregate Fair Market Value
immediately prior to the exercise of the Conversion Right for
all Warrant Shares issuable upon exercise of the portion of
the Warrants being converted, less
B. the aggregate Exercise Price for all such
Warrant Shares immediately prior to the exercise of the
Conversion Right,
by
(ii) the Fair Market Value of one share of Common
Stock immediately prior to the exercise of the Conversion Right.
(c) Upon exercise of any Warrants hereunder the Issuer shall
issue and cause to be delivered to or upon the written order of the registered
holders of such Warrants and in such name or names as such registered holders
may designate, a certificate for the Warrant Share or Warrant Shares issued upon
such exercise of such Warrants. Any Persons so designated to be named therein
shall be deemed to have become holders of record of such Warrant Share or
Warrant Shares as of the date of exercise of such Warrants. If less than all of
the Warrants evidenced by a Warrant Certificate are exercised at any time, a new
Warrant Certificate or Certificates shall be issued for the remaining number of
Warrants evidenced by such Warrant Certificate.
7. FRACTIONAL SHARES. Fractional shares shall not be issued upon the
exercise of the Warrants, but in any case where the Holder would, except for the
provisions of this Section, be entitled under the terms hereof to receive a
fractional share, the Issuer shall, upon the exercise of this Warrant for the
largest number of whole shares then called for, pay a sum in cash equal to the
Fair Market Value of such fractional share over the proportional part of the
Warrant Exercise Price represented by such fractional share.
8. PAYMENT OF TAXES. The Issuer will pay all taxes attributable to the
initial issuance of the Warrants and the initial issuance of Warrant Shares upon
the exercise of the Warrants (other than income tax liability of the holders);
provided that the Issuer shall not be required to pay any tax that may be
payable in respect to any transfer involved in the issue of any Warrant
Certificate or any certificate for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Issuer shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance
thereof shall have paid to the Issuer the amount of such tax or shall have
established to the reasonable satisfaction of the Issuer that such tax has been
paid.
9. SHAREHOLDER RIGHTS. Nothing contained in this Warrant Agreement or
in any of the Warrant Certificates shall be construed as conferring upon the
holders of Warrants the right to vote, consent or receive notice as a
shareholder in respect of the meetings of shareholders or the election of
directors of the Issuer or any other matter, or any rights whatsoever as a
shareholder of the Issuer, except as specifically set forth in this Warrant
Agreement or the Credit Agreement. Nothing contained in this Warrant
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Agreement or in any of the Warrant Certificates shall be construed as imposing
any obligation on the registered holders of Warrants to purchase any securities
or as imposing any liabilities on such holders as shareholders of the Issuer,
whether such obligation or liabilities are asserted by the Issuer or by
creditors of the Issuer.
10. RESERVATION AND ISSUANCE OF WARRANT SHARES; CHARTER PROVISIONS. The
Issuer will at all times have authorized, and reserve and keep available, free
from preemptive rights, for the purpose of enabling it to satisfy any obligation
to issue the Warrant Shares upon the exercise of the Warrants, the number of
shares of Common Stock deliverable upon exercise of all outstanding Warrants and
will take all actions necessary to ensure that the Exercise Price at all times
remains equal to or greater than the par value per share of any Common Stock,
including, without limitation, causing Issuer's articles of incorporation to be
amended to reduce or eliminate the par value of any Common Stock. The transfer
agent for the Common Stock, which may be the Company ("Transfer Agent"), and
every subsequent Transfer Agent for any shares of the Company's capital stock
issuable upon the exercise of any of the purchase rights represented by this
Warrant, are hereby irrevocably authorized and directed at all times until the
Expiration Date to reserve such number of authorized and unissued shares as
shall be requisite for such purpose. The Company shall keep copies of this
Warrant Agreement and the Warrant Certificates on file with the Transfer Agent
for the Common Stock and with every subsequent Transfer Agent for any shares of
the Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company shall supply such Transfer Agent with
duly executed stock certificates for such purpose. All Warrants surrendered upon
the exercise of the rights thereby evidenced shall be canceled, and such
canceled Warrants shall constitute sufficient evidence of the number of shares
of stock which have been issued upon the exercise of such Warrants. Subsequent
to the Expiration Date, no shares of stock need be reserved by the Company in
respect of any unexercised portion of the Warrants.
11. OBTAINING OF GOVERNMENTAL APPROVALS AND SECURITIES EXCHANGE
LISTINGS. Subject, in the case of any registration under the Securities Act, to
the limitations set forth in Section 16, the Issuer will, at its own expense,
from time to time take all action that may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities that are or become requisite in connection with the issuance,
sale, transfer and delivery of the Warrant Certificates and the exercise of the
Warrants and the issuance, sale, transfer and delivery of the Warrant Shares and
all action that may be necessary so that such Warrant Shares, immediately upon
their issuance upon the exercise of Warrants, will be listed on each securities
exchange, if any, on which any of the shares of Common Stock are then listed.
12. ADJUSTMENTS.
(a) Prior to the Expiration Date, the Exercise Price payable
upon the exercise of the Warrants is subject to adjustment from time to time
upon the occurrence of any of the events enumerated in this Section 12(a).
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(i) In the event that the Issuer shall at any time
after the Closing Date:
A. split or subdivide the outstanding shares
of Common Stock, the Exercise Price shall be proportionately
adjusted downward; or
B. combine the outstanding shares of Common
Stock into a smaller number of shares, the Exercise Price
shall be proportionately adjusted upward.
(ii) In the event that the Issuer shall at any time
after the date of this Warrant Agreement:
A. issue any shares of Common Stock at a
price per share less than the Exercise Price as of the date of
such issuance, other than Exempted Securities, or issue any
other securities convertible into shares of Common Stock
having a conversion price per share less than the Exercise
Price as of the date of such issuance, other than Exempted
Securities (in each case, a "SUB-PRICE ISSUANCE"); or
B. issue options, rights or warrants to
subscribe for or purchase Common Stock (or other securities
convertible into shares of Common Stock) other than Exempted
Securities at an exercise price per share (or having a
conversion price per share, if a security convertible into
shares of Common Stock) less than the Exercise Price as of the
date of issuance of such options, rights, warrants or
convertible securities (in each case, a "SUB-PRICE OPTION"),
the Exercise Price shall be reduced to the lowest net conversion price
or exercise price of the shares subject to the "sub-price issuance" or
"sub-price option", as the case may be.
In case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined by agreement between the holders of a majority of the Warrants
outstanding and the Issuer or, in the absence of such an agreement, by a
Qualified Appraiser engaged by the Issuer and reasonably acceptable to the
holders of a majority of the Warrants outstanding (in either case the cost of
which engagement will be borne by Holder).
Such adjustment shall be made successively whenever the date of such issuance is
fixed (which date of issuance shall be the record date for such issuance if a
record date therefor is fixed). If such shares or options, rights, warrants or
convertible securities are not so issued ("CANCELLATION OF ISSUANCE"), or any
such option, right, warrant or convertible security expires according to its
terms without having been exercised or converted ("EXPIRATION"), the Exercise
Price shall be, as of the date of "cancellation of issuance" or "expiration",
the Exercise Price which would have been in effect at the time of such
11
cancellation of issuance or expiration had such options, rights, warrants or
convertible securities not been issued.
(b) Prior to the Expiration Date, in the event of:
(i) any capital reorganization of the Issuer;
(ii) any reclassification of the Common Stock (other
than a subdivision or combination of outstanding shares of Common
Stock);
(iii) the consolidation of the Issuer with or the
merger of the Issuer with or into any other Person; or
(iv) the sale of the properties and assets of the
Issuer as, or substantially as, an entirety to any other Person,
each Warrant outstanding at the time of such event shall thereafter entitle the
holder of such Warrant to own or receive the aggregate number and kind of shares
that, if such Warrant had been exercised immediately prior to such time, such
holder would have owned or have become entitled to receive by virtue of such
event.
The Issuer shall not effect any such reorganization, reclassification,
consolidation, merger or sale unless prior to or simultaneously with the
consummation thereof, the successor Person (if other than the Issuer) resulting
from such consolidation or merger or the Person purchasing such assets shall
assume, by written instrument reasonably satisfactory to the holders of a
majority of the Warrants, the obligation to deliver to the holder of each
Warrant the shares of stock, securities or assets to which, in accordance with
the foregoing provisions, such holder is entitled and all other obligations of
the Issuer under this Warrant Agreement.
The provisions of this Warrant Agreement shall apply to any shares
issued or issuable as a result of an event described in subsection 12(b). The
provisions of this Section 12 shall thereafter be adjusted (if necessary) with
respect to such new shares to provide the holders of the Warrants all rights
that they possessed under this Warrant Agreement prior to such event. Any such
adjustments shall be made successively whenever such an event shall occur.
(c) Without respect to any adjustments in the Exercise Price
or kind of securities or other assets purchasable upon the exercise of the
Warrant, Warrant Certificates theretofore or thereafter issued may continue to
express the same Exercise Price and kind of shares as are stated on the Warrant
Certificates initially issuable pursuant to this Warrant Agreement.
(d) If any question shall at any time arise with respect to
the number of Warrant Shares, or other securities or assets, purchasable
following any adjustment pursuant to this Section 12, such question shall be
determined by agreement between the holders of a majority of the Warrants and
the Issuer or, in the absence of such an agreement, by a Qualified Appraiser
engaged by the Issuer (in either case the cost of
12
which engagement will be borne by Holder) and reasonably acceptable to the
holders of a majority of Warrants and such determination shall be binding upon
the Issuer and the holders of the Warrants.
(e) Any adjustment pursuant to this Section 12, whether to the
kind of Warrant Shares or to the Exercise Price, shall be made successively
whenever an event referred to herein shall occur. As a condition precedent to
the taking of any action that would require an adjustment pursuant to this
Section 12, the Issuer shall take any and all actions necessary in order that it
may thereafter issue Validly Issued Warrant Shares to the Holders of the
Warrants for all shares that they are entitled to receive after adjustment.
13. CONSIDERATION. Anything in this Warrant Agreement to the contrary
notwithstanding, all grants or issuances of options or other rights to acquire
shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) under or pursuant to a management stock option, stock
purchase or other incentive or employee benefit plan, and all issuances of
shares of Common Stock (or securities convertible into or exchangeable for
Common Stock) under or pursuant to such a plan or upon exercise of such options
or other rights (or conversion or exchange of such convertible or exchangeable
securities) shall, for purposes of subsection 12(a), be deemed to be granted and
issued for no consideration except to the extent cash or notes are paid
therefor; provided that the foregoing provisions shall not apply to options or
other rights to acquire securities of the Issuer that constitute Exempted
Securities.
14. NOTICES AND INFORMATION TO WARRANT HOLDERS.
(a) Upon any adjustment of the Exercise Price payable upon
exercise of the Warrants pursuant to Section 12, the Issuer shall promptly but
in any event within 20 days thereafter, cause to be given to each of the
registered holders of the Warrants at its address appearing on the Warrant
Register by registered mail, postage prepaid, return receipt requested, a
certificate signed by its chairman, chief executive officer or chief financial
officer setting forth the Exercise Price payable upon exercise of the Warrants
as so adjusted and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. Where appropriate, such
certificate may be given in advance and included as a part of the notice
required to be mailed under the other provisions of this Section 14.
(b) In the event:
(i) that the Issuer shall authorize the issuance to
all holders of Common Stock of rights or warrants to subscribe for or
purchase capital stock of the Issuer or of any other subscription
rights or warrants; or
(ii) that the Issuer shall authorize the distribution
to all holders of Common Stock of evidences of its indebtedness or
assets (including, without limitation, distributions of securities or
cash or distributions payable in Common Stock); or
13
(iii) of any consolidation or merger to which the
Issuer is a party and for which approval of any shareholders of the
Issuer is required, or of the conveyance or transfer of the properties
and assets of the Issuer substantially as an entirety, or of any
capital reorganization or reclassification or change of the Common
Stock; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Issuer; or
(v) that the Issuer proposes to take any other action
that would require an adjustment pursuant to this Warrant Agreement in
the number of Warrant Shares or other securities or assets to which
each Warrant Holder is entitled;
then the Issuer shall cause to be given to each of the registered holders of the
Warrants at its address appearing on the Warrant Register at least 10 calendar
days prior to the applicable record date, if any, hereinafter specified, or, if
no such record date is specified, 20 calendar days prior to the taking of any
action referred to in clauses (i) through (v) above (or, if the equity
securities of the Issuer have been registered under the Exchange Act, at such
time and in such manner as notice is given to holders of Common Stock of the
Issuer generally), by registered mail, postage prepaid, return receipt
requested, a written notice stating (x) the date as of which the holders of
record of Common Stock to be entitled to receive any such rights, warrants or
distribution are to be determined, or (y) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective, or (z) the date on which such other action
is to be effected, and the date as of which it is expected that holders of
record of Common Stock shall be entitled to exchange their shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up or other action. Notwithstanding anything herein to the contrary, for so long
as the Issuer's securities (or those of any of its Subsidiaries) are subject to
the Exchange Act or are traded on a national stock exchange or over-the-counter
market or are quoted on NASDAQ, the Issuer shall not be required to provide or
disclose information to any Warrant Holder in violation of applicable law or
stock exchange or NASDAQ rules or other quotation system.
(c) The Issuer shall provide Holder with 20 calendar days'
prior written notice of any action not specified above that involves a
distribution to all holders of shares of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Issuer is the continuing entity) or evidences of its indebtedness, cash or other
assets (including securities other than shares of Common Stock).
14
15. RESTRICTIONS ON TRANSFER.
(a) Each of the Holder and its Affiliates who are issued
Warrants pursuant to this Agreement:
(i) represents that it is an "accredited investor" as
defined by Rule 501(a) promulgated pursuant to the Securities Act and
is acquiring the Warrants for its own account for investment and not
with a view to any distribution or public offering within the meaning
of the Securities Act, except in any case pursuant to the registration
of such Warrants or Warrant Shares under the Securities Act or pursuant
to a valid exemption from such registration requirement;
(ii) acknowledges that the Warrants and the Warrant
Shares issuable upon exercise thereof have not been registered under
the Securities Act; and
(iii) agrees that it will not sell or otherwise
transfer any of its Warrants or Warrant Shares except upon the terms
and conditions specified herein and that it will cause any transferee
thereof to agree to take and hold the same subject to the terms and
conditions specified herein, provided that, upon compliance with the
requirements of subsection 15(c) hereof, the Warrant Holders may sell
the Warrants or the Warrant Shares purchased upon exercise of the
Warrants in one or more private transactions not requiring registration
under the Securities Act.
(b) Except as provided in subsection 15(d) hereof each Warrant
Certificate and each certificate for the Warrant Shares issued to the Holder or
an Affiliate thereof or to a subsequent transferee thereof pursuant to
subsection 15(c) shall include a legend in substantially the following form
(with such changes therein as may be appropriate to reflect whether such legend
refers to Warrants or Warrant Shares), provided that such legend shall not be
required if such transfer is being made pursuant to an effective registration
statement filed with the Commission in accordance with the Securities Act, in
connection with a sale that is exempt from registration pursuant to Rule 144
under the Securities Act or if the opinion of counsel referred to in subsection
15(c) is to the further effect that neither such legend nor the restrictions on
transfer in this Section 15 are required in order to ensure compliance with the
Securities Act:
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES FOR WHICH THE
WARRANTS ARE EXERCISABLE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE
WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT TO OTHER PROVISIONS OF
15
THE WARRANT AGREEMENT, DATED AS OF ________, 2003, BETWEEN THE ISSUER AND HILCO
CAPITAL LP, A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF
UPON WRITTEN REQUEST AND WITHOUT CHARGE.
(c) Prior to any assignment, transfer or sale of any Warrant
or any Warrant Shares, the holder thereof shall give written notice to the
Issuer of such holder's intention to effect such assignment, transfer or sale,
which notice shall set forth the date of such proposed assignment, transfer or
sale and the identity of the proposed transferee. Each holder wishing to effect
such a transfer of any Warrant or Warrant Shares shall also furnish to the
Issuer an agreement by the transferee thereof that it is taking and holding the
same subject to the terms and conditions specified herein and a written opinion
of such holder's counsel, in form reasonably satisfactory to the Issuer and its
counsel, to the effect that the proposed transfer may be effected without
registration under the Securities Act and any applicable state securities laws.
(d) The restrictions set forth in this Section 15 shall
terminate and cease to be effective with respect to any Warrants or Warrant
Shares registered under the Securities Act or upon receipt by the Issuer of an
opinion of counsel to the holders, in form reasonably satisfactory to the Issuer
and its counsel, to the effect that compliance with such restrictions is not
necessary in order to comply with the Securities Act with respect to the
transfer of the Warrants and the Warrant Shares. Whenever such restrictions
shall so terminate the holder of such Warrants and/or Warrant Shares shall be
entitled to receive from the Issuer, without expense (other than transfer taxes,
if any), Warrant Certificates or certificates for such Warrant Shares not
bearing the legend set forth in subsection 15(b) at which time the Issuer will
rescind any transfer restrictions relating thereto.
(e) With a view to making available to the Holder and its
Affiliates and subsequent holders of the Warrants or the Warrant Shares the
benefits of certain rules and regulations of the Commission (including, without
limitation, Rules 144 and 144A under the Securities Act) which may permit the
sale of Warrants and Warrant Shares to the public or certain other institutions
without registration, the Issuer agrees to use its best efforts to take such
actions as may be necessary to make available to the Holder and its Affiliates
and such subsequent holders such benefits, including, without limitation, to:
(i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities
Act or any successor provision thereto;
(ii) file with the Commission in a timely manner all
reports and other documents required of the Issuer under the Securities
Act and the Exchange Act from and after the date the Issuer first
becomes subject to the provisions of Section 13 or 15(d) of the
Exchange Act; and
16
(iii) so long as the Holder or an Affiliate thereof
owns any Warrants or Warrant Shares, furnish to the Holder forthwith
upon written request a written statement by the Issuer as to its
compliance with the reporting requirements of Rule 144 or any successor
provision thereto, and of the Securities Act and the Exchange Act.
16. REGISTRATION.
(a) Upon the written demand of holders of a majority of the
Registrable Securities to the Issuer (a "DEMAND REGISTRATION"), at any time on
or after the first (1st) anniversary of the Closing Date, requesting that the
Issuer effect the registration under the Securities Act of Registrable
Securities of such holders, the Issuer will promptly give written notice (a
"DEMAND NOTICE") of such Demand to all other holders. Each other holder may
request that the Issuer effect the registration under the Securities Act of
additional Registrable Securities of such holder by delivering written notice to
the Issuer specifying such number of Registrable Securities within 20 days of
receipt of the Demand Notice. Within such 20-day period the Issuer shall give
written notice (a "REGISTRATION NOTICE") to all holders that the Issuer will be
filing a registration statement pursuant to this subsection 16(a). The Issuer
will thereupon use its reasonable best efforts to (i) promptly file such
registration statement with the SEC and (ii) promptly and in good faith after
delivery of the Demand Notice cause such registration statement to be declared
effective under the Securities Act with respect to the Registrable Securities
which holders have requested to be registered pursuant to the Demand Notice and
with respect to the additional Registrable Securities which holders have
requested to be registered pursuant to the Registration Notice. During the
pendency of the effectiveness of any such registration statement, the Issuer
shall, as promptly as practicable, provide each holder of Registrable Securities
with a copy of all correspondence between the Issuer and the SEC related in any
way to such registration statement. Promptly within 20 days of the Registration
Notice, the Issuer will notify all holders whose Registrable Securities are to
be included in the registration of the number of additional Registrable
Securities requested to be included therein by the other holders. If the
registration of which the Issuer gives notice pursuant to subsection 16(a) is
for an underwritten public offering, only Registrable Securities which are to be
included in the underwriting may be included in such registration, and the
selling holders shall, after reasonable consultation with the Issuer, have the
right to designate the managing underwriter(s) in any such underwritten public
offering with the consent of the Issuer (which consent shall not be unreasonably
withheld). Holders who include Registrable Securities in a registration pursuant
to subsection 16(a) shall bear the cost of any underwriters' discounts and
commissions relating to their Registrable Securities which are sold.
(b) The Issuer is obligated to effect only one (1) Demand
Registration under subsection 16(a) and, with respect to such registration, the
Issuer shall bear all expenses other than underwriting discounts and
commissions, if any, in connection with registrations, filings or qualifications
pursuant to subsection 16(a), including, without limitation, all registration,
filing and qualification fees, printers' and accounting fees, the fees and
disbursements of counsel for the Issuer and the fees and disbursements of one
counsel for the selling Warrant Holders, provided that (i) a registration will
not constitute
17
a Demand Registration under subsection 16(a) until it has been declared
effective under the Securities Act and (ii) if a registration statement filed
pursuant to subsection 16(a) is terminated or withdrawn by the Issuer before the
earlier of (A) such time as all Registrable Securities covered thereby have been
sold and (B) the end of the twelfth (12th) full month after the effective date
of such registration, such registration will not constitute a Demand
Registration and the Issuer shall be obligated to pay the expenses of an
additional Demand Registration under subsection 16(a) (provided that if such
registration statement is withdrawn by the holders of Registrable Securities,
such registration shall constitute a Demand Registration under this subsection).
Each holder of Registrable Securities shall be deemed to have agreed by
acquisition of such Registrable Securities not to exercise a Demand Registration
right under subsection 16(a) within thirty (30) days after the filing of any
registration statement of the Issuer as to which the Issuer gave the notice
required by subsection 16(c).
(c) If, at any time on or after the first (1st) anniversary of
the Closing Date, the Issuer proposes to register any of its securities under
the Securities Act (except pursuant to a registration statement filed on Form
S-8 or Form S-4 or such other form as shall be prescribed under the Securities
Act for the same purposes or a registration statement filed in connection with
an interest or dividend reinvestment plan) (any such registration, a "PIGGY-BACK
REGISTRATION"), it will at each such time give written notice (which notice
shall state the intended method of disposition thereof by the prospective
sellers) to all holders of Warrants or Warrant Holders of its intention to do so
and the proposed minimum offering price per share of the Registrable Securities
and upon the written request of any holder thereof given within 10 days after
the Issuer's giving of such notice, the Issuer will use its reasonable best
efforts to effect the registration of any Registrable Securities which it shall
have been so requested to register by including the same in such Piggy-back
Registration statement all to the extent required to permit the sale or other
disposition thereof in accordance with the intended method of sale or other
disposition. If the Piggy-back Registration of which the Issuer gives notice
pursuant to this subsection 16(c) is for an underwritten public offering, only
Registrable Securities that are to be included in the underwriting may be
included in such Piggy-back Registration, and the Issuer shall have the right to
designate the managing underwriter(s) in any such underwritten public offering;
provided that any registration statement filed pursuant to this subsection 16(c)
may be withdrawn at any time at the discretion of the Issuer. The Piggy-back
Registration rights provided for in this subsection 16(c) shall terminate on the
second (2nd) anniversary of the Expiration Date.
(d) If a registration under subsection 16(a) or 16(c) shall be
in connection with an underwritten public offering:
(i) if the managing underwriter(s) delivers an
opinion to the Warrant Holders and all other Persons seeking to include
securities of the Issuer held by them in the registration statement
("OTHER SECURITY HOLDERS") that the total amount of securities which
they, the Issuer and any Other Security Holders intend to include in
such offering is sufficiently large to materially and adversely affect
the success of such offering:
18
A. if the registration statement was filed
pursuant to a demand under subsection 16(a) or under any other
agreement providing demand registration rights to Other
Security Holders ("DEMAND REGISTRATION RIGHT(S)"), the amount
of securities to be offered for the accounts of all Persons
seeking to include securities of the Issuer in the
registration statement shall be reduced in the following order
of priority to the extent necessary to cause the amount to be
included in the registration statement not to exceed the
amount recommended by such managing underwriter(s):
1. first, the amount of securities
to be offered for the accounts of all Warrant Holders
and Other Security Holders who did not exercise a
Demand Registration Right (or join in any such demand
within a time period provided in a Demand
Registration Right) shall be reduced pro rata (based
upon the amount of securities each such Person sought
to include in the offering) to zero, if necessary;
2. next, the amount of securities
to be offered for the account of the Issuer shall be
reduced to zero, if necessary; and
3. finally, the amount of
securities to be offered for the accounts of the
Warrant Holders or the Other Security Holders
exercising their Demand Registration Right shall be
reduced pro rata (based upon the amount of securities
each such Person sought to include in the offering);
provided, however, that if the registration statement was filed pursuant to a
Demand Registration Right under subsection 16(a) and Warrant Holders are
required to reduce by more than 10% the Registrable Securities included in the
registration statement, the Warrant Holders initially making such demand will be
entitled to withdraw such demand and, if such demand is withdrawn, such
registration will not count as a permitted Demand Registration under subsection
16(b) and the Issuer will pay all expenses in connection with such registration
in accordance with subsection 16(b); and
B. if the registration statement was not
filed pursuant to a Demand Registration Right, the amount of
securities to be offered for the accounts of all Warrant
Holders and all Other Security Holders shall be reduced pro
rata (based upon the amount of securities each Person sought
to include in the offering) to the extent necessary to reduce
the total amount of securities to be included in the offering
to the amount recommended by such managing underwriter(s)
(which amount may be zero, if so recommended by such managing
underwriter(s));
(ii) each Warrant Holder shall be deemed to have
agreed by acquisition of such Warrants or Non-Public Warrant Shares not
to effect any sale
19
or distribution, including any sale pursuant to Rule 144, of any
Warrants or Non-Public Warrant Shares or any other equity security of
the Issuer or of any security convertible into or exchangeable or
exercisable for any equity security of the Issuer (other than as part
of such underwritten public offering) within any period requested by
the managing underwriter(s) not to exceed the period beginning seven
days before and ending 90 days after the effective date of such
registration statement (and the Issuer hereby also so agrees and agrees
to use its best efforts to cause each holder of more than 1.0% of any
class of equity securities of the Issuer, or of any security
convertible into or exchangeable or exercisable for 1.0% of any class
of equity securities of the Issuer so to agree).
(e) As a condition to the inclusion of a holder's Registrable
Securities in any registration statement, each such holder of Registrable
Securities requesting registration thereof will furnish to the Issuer such
information with respect to such holder as is required to be disclosed in the
registration statement (and the prospectus included therein) by the applicable
rules, regulations and guidelines of the Commission. Failure of a holder to
furnish such information or agreement shall not affect the obligation of the
Issuer under this Section 16 to the remaining holders who furnish such
information.
(f) If and whenever the Issuer is required under this Section
16 to use its reasonable best efforts to effect the registration of Registrable
Securities under the Securities Act, the Issuer shall:
(i) as soon as practicable and subject to the
limitations set forth in subsection 16(c), prepare and file with the
Commission a registration statement on the appropriate form with
respect to such Registrable Securities and use its best efforts to
cause such registration statement to become effective as soon as
practicable after such filing;
(ii) as soon as practicable, prepare and file with
the Commission such amendments and supplements (including
post-effective amendments and supplements) to the registration
statement covering such Registrable Securities and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective and usable for resale for a period necessary to
complete the distribution of such securities, but in no event in excess
of 12 months plus any period during which the holders of Registrable
Securities are obligated to refrain from selling because the Issuer is
required to amend or supplement the prospectus under subsection
16(f)(iv), and to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by
such registration statement during such period in accordance with the
intended method of disposition of the sellers set forth therein;
(iii) as soon as practicable, furnish to each seller
of such Registrable Securities registered or to be registered under the
Securities Act, and to each underwriter, if any, of such Registrable
Securities, such number of copies of a prospectus and preliminary
prospectus in conformity with the requirements of
20
the Securities Act, and such other documents as such seller or
underwriter may reasonably request in order to facilitate the public
sale or other disposition of such Registrable Securities;
(iv) as soon as practicable, notify each seller of
such Registrable Securities if, at any time when a prospectus relating
to such Registrable Securities is required to be delivered under the
Securities Act, any event shall have occurred as a result of which the
prospectus then in use with respect to such Registrable Securities
would include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or for any other reason it shall be
necessary to amend or supplement such prospectus in order to comply
with the Securities Act and prepare and furnish to all sellers as
promptly as possible, and in any event within thirty (30) days of such
notice, a reasonable number of copies of a supplement to or an
amendment of such prospectus that will correct such statement or
omission or effect such compliance;
(v) as soon as practicable, use its reasonable best
efforts to register or qualify such Registrable Securities under such
other securities or blue sky laws of such jurisdictions as such seller
shall reasonably request and do any and all other acts and things that
may be reasonably necessary to enable such seller to consummate the
public sale or other disposition in each such jurisdiction of the
Registrable Securities owned by such seller and included in such
registration statement, provided that the Issuer shall not be required
to consent to the general service of process or to qualify to do
business in any jurisdiction where it is not then qualified, use its
reasonable best efforts to keep the holders of such Registrable
Securities informed of the Issuer's best estimate of the earliest date
on which such registration statement or any post-effective amendment or
supplement thereto will become effective and will promptly notify such
holders and the managing underwriters, if any, participating in the
distribution pursuant to such registration statement of the following:
A. when such registration statement or any
post-effective amendment or supplement thereto becomes
effective or is approved;
B. of the issuance by any competent
authority of any stop order suspending the effectiveness or
qualification of such registration statement or the prospectus
then in use or the initiation or threat of any proceeding for
that purpose; and C. of the suspension of the qualification of
any Registrable Securities included in such registration
statement for sale in any jurisdiction;
(vi) make available to its security holders, as soon
as practicable, an earnings statement covering a period of at least
twelve months that
21
satisfies the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(vii) cooperate with the sellers of such Registrable
Securities and the underwriters, if any, of such Registrable
Securities, give each seller of such Registrable Securities, and the
underwriters, if any, of such Registrable Securities and their
respective counsel and accountants, such access to its books and
records and such opportunities to discuss the business of the Issuer
with its officers and independent public accountants as shall be
necessary to enable them to conduct a reasonable investigation within
the meaning of the Securities Act and, in the event that Registrable
Securities are to be sold in an underwritten offering, enter into an
underwriting agreement containing customary representations and
warranties, covenants, conditions and indemnification provisions,
including without limitation the furnishing to the underwriters of a
customary opinion of independent counsel to the Issuer and a customary
"comfort" letter from the Issuer's independent public accountants;
(viii) provide a CUSIP number for all Registrable
Securities not later than the effective date of the registration
statement;
(ix) as to all registrations under subsection 16(c),
pay all costs and expenses incident to the performance and compliance
by the Issuer with this Section 16, including, without limitation:
A. all registration and filing fees;
B. all printing expenses;
C. all fees and disbursements of counsel and
independent public accountants for the Issuer;
D. all blue sky fees and expenses (including
fees and expenses of counsel in connection with blue sky
surveys);
E. all transfer taxes;
F. the entire expense of any special audits
required by the rules and regulations of the Commission;
G. the cost of distributing prospectuses in
preliminary and final form as well as any supplements thereto;
and
H. the fees and expenses of one counsel for
the holders of the Registrable Securities being registered;
and as to the registration under subsection 16(a) that is in respect of an
underwritten offering, as expeditiously as possible, take such actions as the
underwriters reasonably request in order to expedite or facilitate the
disposition of the Registrable Securities to be
22
included in such offering (including, without limitation, effecting a stock
split, stock dividend or a combination of shares of Common Stock).
(g) To the extent permitted by law, the Issuer will indemnify
and hold harmless each seller of Registrable Securities, each director, officer,
employee and agent of each seller, and each other Person, if any, who controls
such seller within the meaning of the Securities Act or the Exchange Act from
and against any and all losses, claims, damages, liabilities and legal and other
expenses (including costs of investigation) caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement under which such Registrable Securities were registered under the
Securities Act, any prospectus or preliminary prospectus contained therein or
any amendment or supplement thereto, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to such seller and furnished to the Issuer in writing by
such seller expressly for use therein, and provided that the Issuer will not be
liable to any Person who participates as an underwriter in the offering or sale
of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act under the indemnity
agreement in this subsection 16(g) with respect to any preliminary prospectus or
the final prospectus or the final prospectus as amended or supplemented, as the
case may be, to the extent that any such loss, claim, damage or liability of
such underwriter or controlling Person results from the sale by such underwriter
of Registrable Securities to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Issuer has previously furnished copies thereof to such
underwriter, or from a sale to a Person in a state where the offering has not
been registered or qualified, if the Issuer has notified the seller and any
underwriter involved in such sale of the states where the offering has been
registered or qualified.
(i) It shall be a condition to the obligation of the
Issuer to effect a registration of Registrable Securities under the
Securities Act pursuant hereto that:
A. each seller, severally and not jointly,
indemnify and hold harmless the Issuer and each Person, if
any, who controls the Issuer within the meaning of the
Securities Act or the Exchange Act to the same extent as the
indemnity from the Issuer in the foregoing paragraph, but only
with reference to any breach by such seller of any agreement
between such seller and the Issuer with respect to the
offering and with reference to information relating to such
seller furnished to the Issuer in writing by such seller
expressly for use in the registration statement, any
prospectus or preliminary prospectus contained therein or any
amendment or supplement thereto; and
23
B. each seller, in the event that
Registrable Securities are to be sold in an underwritten
offering, enters into an underwriting agreement containing
customary representations and warranties, covenants,
conditions and indemnification provisions.
(ii) In case any claim shall be made or any
proceeding (including any governmental investigation) shall be
instituted involving any indemnified party in respect of which
indemnity may be sought pursuant to this subsection 16(g), such
indemnified party shall promptly notify the indemnifying party in
writing of the same, provided that failure to notify the indemnifying
party shall not relieve it from any liability it may have to an
indemnified party otherwise than under this subsection 16(g).
(iii) The indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party in such proceeding
and shall pay the fees and disbursements of such counsel. In any such
proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and disbursements of such counsel shall be at
the expense of such indemnified party unless:
A. the indemnifying party shall have failed
to retain counsel for the indemnified party as aforesaid,
B. the indemnifying party and such
indemnified party shall have mutually agreed to the retention
of such counsel; or
C. representation of such indemnified party
by the counsel retained by the indemnifying party would, in
the reasonable opinion of the indemnified party, be
inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented
by such counsel in such proceeding, provided that the Issuer
shall not be liable for the fees and disbursements of more
than one additional counsel for all indemnified parties (in
addition to local counsel).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
(h) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subsection 16(g) is
due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Issuer or the applicable
sellers of Registrable Securities, as the case may be, shall contribute to the
aggregate losses, claims, damages and liabilities incurred (including legal or
other expenses reasonably incurred in connection with the investigating or
defending of same) by the other and for which such indemnification was sought.
In determining the amount of contribution to which the
24
respective parties are entitled, there shall be considered the relative benefits
received by each party from the offering of the securities included in the
registration statement (taking into account the portion of the proceeds of the
offering realized by each), the relative fault of each such party, each party's
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, and any other equitable considerations
appropriate in the circumstances; provided, however, that:
(i) in no case shall any seller of Registrable
Securities be required to contribute any amount if it has no relative
fault for the action giving rise to such losses, claims or liabilities
or, in any other case, be required to contribute any amount in excess
of the total public offering price of the Registrable Securities sold
by it; and
(ii) no Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
For purposes of this subsection 16(h), each Person who controls any seller of
Registrable Securities or the Issuer shall have the same rights to contribution
as such seller or the Issuer. Any party entitled to contribution shall, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against the Issuer or the seller of Registrable Securities under this subsection
16(h), notify the Issuer or such seller, as the case may be, but the omission to
so notify the Issuer or such seller, as the case may be, shall not relieve it
from any other obligation it may have hereunder or otherwise.
(i) The Issuer shall not grant to any holder of securities of
the Issuer any registration rights that have a priority greater than or equal to
those granted to holders of Registrable Securities pursuant to this Section 16
without the prior written consent of the holders of at least a majority of the
aggregate outstanding Registrable Securities, voting as a single group.
(j) The rights set forth in this Section 16 may be assigned in
connection with any direct or successive transfer of the Warrants or the Warrant
Shares, provided that the Issuer shall have no obligations hereunder unless and
until it is notified of such assignment.
17. ISSUANCE OF OPTIONS, ETC. The Issuer shall not issue any options or
rights to acquire stock (or securities convertible into or exercisable for
stock), except (a) for the securities associated with the Warrants or (b) stock
options to employees pursuant to a Board of Directors-approved employee stock
option or stock purchase plan or other Board of Directors-approved incentive or
employee benefit plan (the "PLAN SHARES").
18. AMENDMENTS, WAIVERS AND SURVIVAL. Any provision of this Warrant
Agreement may be amended, supplemented, waived, discharged or terminated by a
written instrument signed by the Issuer and the holders of not less than a
majority of the outstanding Warrants (or in the case of Sections 15 and 16, the
holders of a majority of
25
the aggregate outstanding Warrants and Non-Public Warrant Shares, voting as a
single group); provided, that the Exercise Price may not be increased, the
number of Warrant Shares issuable upon exercise of the Warrants may not be
reduced and this Section may not be amended except with the consent of the
holders of all outstanding Warrants and/or Non-Public Warrant Shares, voting as
a single group. The rights of the Holder in Section 16 of this Warrant Agreement
shall expressly survive any cancellation, expiration or other termination of
this Warrant Agreement.
19. SPECIFIC PERFORMANCE. The holders of the Warrants and/or Non-Public
Warrant Shares shall have the right to specific performance by the Issuer of the
provisions of this Warrant Agreement. The Issuer hereby irrevocably waives, to
the extent that it may do so under applicable law, any defense based on the
adequacy of a remedy at law that may be asserted as a bar to the remedy of
specific performance in any action brought against the Issuer for specific
performance of this Warrant Agreement by the holders of the Warrants and/or
Non-Public Warrant Shares.
20. NOTICES.
(a) Any notice or demand to be given or made by the Warrant
Holders or the holders of Warrant Shares to or on the Issuer pursuant to this
Warrant Agreement shall be sufficiently given or made if actually delivered or
sent by registered mail, return receipt requested, postage prepaid, addressed to
the Issuer at the Warrant Office.
(b) Any notice to be given by the Issuer to the Warrant
Holders or the holders of Warrant Shares shall be sufficiently given or made if
actually delivered or sent by registered mail, return receipt requested, postage
prepaid, addressed to such holder as such holder's name and address shall appear
on the Warrant Register or the Common Stock registry of the Issuer, as the case
may be.
21. COSTS AND EXPENSES. The Issuer shall pay all reasonable costs and
expenses (including without limitation reasonable attorneys' fees) incurred by
the Holder in connection with the preparation, negotiation and enforcement of,
and exercise of rights under, this Warrant Agreement and the Warrant
Certificates, any amendment, modification or supplement of this Warrant
Agreement or the Warrant Certificates, any waiver by the Holder of any provision
under this Warrant Agreement or the Warrant Certificates, and any action or
proceeding by the Holder for specific performance or other equitable relief in
connection with this Warrant Agreement or the Warrant Certificates.
22. BINDING AGREEMENT. This Warrant Agreement shall be binding upon and
inure to the sole and exclusive benefit of the Issuer, its successors and
assigns, the Holder, Affiliates of the Holder (if they hold Warrants or Warrant
Shares) and the registered holders from time to time of the Warrants and the
Warrant Shares (and with respect to Section 16 the other indemnitees
thereunder).
23. COUNTERPARTS. This Warrant Agreement may be executed in one or more
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Delivery of an executed
counterpart of this
26
Warrant Agreement by telefacsimile shall be equally as effective as delivery of
a manually executed counterpart of this Warrant Agreement. Any party delivering
an executed counterpart of this Warrant Agreement by telefacsimile shall also
deliver a manually executed counterpart of this Warrant Agreement, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Warrant Agreement.
24. GOVERNING LAW, JURISDICTION, VENUE AND SERVICE. THIS AGREEMENT
SHALL BE INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE
STATE OF ILLINOIS WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES. THE
ISSUER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF XXXX
COUNTY, ILLINOIS AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
OF ILLINOIS OR, AT THE SOLE OPTION OF THE HOLDER, OF ANY OTHER COURT IN WHICH
THE HOLDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY, AS WELL AS TO THE
JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS,
FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ANY OF
ITS OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER RELATED DOCUMENTS OR WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY. THE ISSUER EXPRESSLY WAIVES ANY
CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED UPON
LACK OF VENUE. THE ISSUER FURTHER WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT. THE ISSUER AGREES AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE
BY MESSENGER OR OVERNIGHT COURIER SERVICE (WITH DELIVERY SIGNATURE), CERTIFIED
MAIL (RETURN RECEIPT REQUESTED) OR REGISTERED MAIL DIRECTED TO THE ISSUER AT THE
WARRANT OFFICE AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT OR THREE (3) BUSINESS DAYS AFTER THE SAME SHALL HAVE
BEEN POSTED TO EITHER SUCH ADDRESS.
25. WAIVER OF TRIAL BY JURY. THE HOLDER AND THE ISSUER HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO
THIS WARRANT AGREEMENT OR THE OTHER DOCUMENTS TO BE EXECUTED AND DELIVERED IN
CONNECTION HEREWITH.
26. BENEFITS OF THIS WARRANT AGREEMENT. Nothing in this Warrant
Agreement shall be construed to give to any Person other than the Issuer and the
registered holders of the Warrants and the Warrant Shares (and with respect to
Section 16
27
the other indemnitees thereunder) any legal or equitable right, remedy or claim
under this Warrant Agreement.
27. VOTING AND CONSENTS TO BE ON A FULLY CONVERTED BASIS. Wherever this
Warrant Agreement calls for the written consent or vote of any combination of
the holders of the Warrants and the Non-Public Warrant Shares, voting as a
single group, the Warrants shall be counted as if they had been exercised for
Warrant Shares.
[SIGNATURE PAGE FOLLOWS]
28
(SIGNATURE PAGE TO WARRANT AGREEMENT)
IN WITNESS WHEREOF the parties hereto have caused this Warrant
Agreement to be duly executed and delivered by their proper and duly authorized
officers, as of the date and year first above written.
NAVARRE CORPORATION,
a Minnesota corporation
By:
-----------------------
Xxxxx X. Xxxxxxxxxx
Chief Financial Officer
(SIGNATURE PAGE TO WARRANT AGREEMENT)
Hilco Capital LP
By:
-----------------------
Vice President
EXHIBIT A TO WARRANT AGREEMENT
FORM OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES FOR WHICH THE
WARRANTS ARE EXERCISABLE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE
WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT TO OTHER PROVISIONS OF THE
WARRANT AGREEMENT, DATED AS OF NOVEMBER __, 2003 BETWEEN THE ISSUER AND HILCO
CAPITAL LP, A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF
UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN PUT RIGHTS
AND EXCHANGE RIGHTS MORE FULLY SET FORTH IN THE WARRANT AGREEMENT.
EXERCISABLE ONLY ON OR BEFORE
NOVEMBER __, 2008
Warrant Certificate
This Warrant Certificate is one of the Warrant Certificates referred to in the
Warrant Agreement, dated as of November __, 2003 between the NAVARRE
CORPORATION, a Minnesota corporation (the "Issuer"), and HILCO CAPITAL LP (the
"Warrant Agreement"). Such Warrant Agreement is hereby incorporated by reference
and made a part of this instrument and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Issuer and the holders. All defined terms used in this Warrant
Certificate that are not otherwise defined herein shall have the meanings
ascribed to them in the Warrant Agreement.
This Warrant Certificate certifies that HILCO CAPITAL LP, or its registered
assigns, is the registered holder of Warrants (the "Warrants") to purchase
__________ shares of "Common Stock" of the Issuer. Each Warrant evidenced hereby
entitles the holder hereof, subject to the conditions set forth herein and in
the Warrant Agreement, to purchase from the Issuer before 5:00 P.M., Chicago,
Illinois time, on November __, 2008 (the "Expiration Date"), one (1) Validly
Issued share of the Common Stock of the Issuer (the "Warrant Share") to the
extent set forth in the Warrant Agreement, at a price of $________ per Warrant
(the "Exercise Price"), upon surrender of this Warrant Certificate, execution of
the annexed Form of Election to Purchase and payment of the
Exercise Price at the office of the Issuer at ________________________________,
or such other address as the Issuer may specify in writing to the registered
holder of the Warrants evidenced hereby (the "Warrant Office"). The Exercise
Price and number of Warrant Shares purchasable upon exercise of the Warrants are
subject to adjustment as set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 P.M., Chicago, Illinois time, on the
Expiration Date and (except as otherwise provided in the Warrant Agreement) all
rights of the registered holders of the Warrants shall cease after 5:00 P.M.,
Chicago, Illinois time, on the Expiration Date.
The Issuer may deem and treat the registered holders of the Warrants evidenced
hereby as the absolute owners thereof (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof
and of any distribution to the holders hereof and for all other purposes, and
the Issuer shall not be affected by any notice to the contrary.
Warrant Certificates, when surrendered at the office of the Issuer at the
above-mentioned address by the registered holder hereof in Person or by a legal
representative duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentment for registration of a transfer of this Warrant Certificate
at the office of the Issuer at the above-mentioned address, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued in exchange for this Warrant
Certificate to the transferee(s) and, if less than all of the Warrants evidenced
hereby are to be transferred, to the registered holder hereof, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
[SIGNATURE PAGE FOLLOWS]
(SIGNATURE PAGE TO WARRANT CERTIFICATE)
IN WITNESS WHEREOF the Issuer has caused this Warrant Certificate to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto.
NAVARRE CORPORATION
By:
--------------------------
Name:
------------------------
Its:
--------------------------
ANNEX TO FORM OF WARRANT CERTIFICATE
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____ Warrant Shares and
herewith tenders payment for such Warrant Shares to the order of the Issuer in
the amount of $_______________ in accordance with the terms hereof. The
undersigned requests that a certificate for such Warrant Shares be registered in
the name of _______________________________________________ whose address is
_____________________________________ and that such certificate be delivered to
___________________ whose address is ________________________. If said number of
Warrant Shares is less than all of the Warrant Shares purchasable under this
Warrant Certificate, the undersigned requests that a new Warrant Certificate
representing the remaining balance of the Warrant Shares be registered in the
name of ______________________ whose address is ___________________________ and
that such Warrant Certificate be delivered to _________________________ whose
address is ________________________.
Signature:
------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the
face of the Warrant Certificate.)
Date:
-------------------------------------
EXHIBIT B TO WARRANT AGREEMENT
WARRANT REGISTER
Warrant Original Number Number of Names and
Certificate of Warrants and Warrants Addresses of
Number Warrant Shares Exercised Warrant Holders
B-1
SCHEDULE 2(e)
Registration Rights
None, except for those registration rights granted in connection with the BCI
transaction.
