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Exhibit 99.4
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT IN COMPLIANCE
WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF SUCH STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
WARRANT NO. 2001-1 July 23, 2001
CATALINA LIGHTING, INC.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
FOR VALUE RECEIVED, Catalina Lighting, Inc., a Florida corporation (the
"Company"), hereby certifies that Sun Catalina Holdings, LLC, a Delaware limited
liability company, or its assigns (the "Holder"), is entitled to purchase, on
the terms and subject to the conditions contained herein, 763,025 shares (the
"Initial Warrant Shares") of the Company's common stock, $.01 par value per
share ("Common Stock"), which, when aggregated with the Warrant Shares issuable
pursuant to Section 3.4 hereof, represents 16.54% of the Common Stock of the
Company outstanding on the date of original issuance of this Warrant, as
calculated on a Fully Diluted Basis, at an exercise price of $0.01 per Warrant
Share (the "Warrant Purchase Price"), at any time and from time to time during
the Exercise Period (as such term is defined below). The number of Warrant
Shares is subject to increase as provided in Section 3, and the number of
Warrant Shares and the Warrant Purchase Price are subject to adjustment as
provided in Section 4. This Warrant is being issued in connection with the
consummation of the transactions contemplated by the Amended and Restated Note
Purchase Agreement, dated as of July 23, 2001, by and between the Company and
the initial Holder, (as it may be amended, supplemented or otherwise modified
and in effect from time to time, the "Note Purchase Agreement").
This Warrant is subject to the following terms and conditions:
1. DEFINITIONS. Unless otherwise indicated in this Warrant, capitalized
terms used and not otherwise defined in this Warrant have the meanings set forth
in the Note Purchase Agreement. In addition, the following capitalized terms
have the following meanings:
"Common Stock" has the meaning set forth in the preamble.
"Company" has the meaning set forth in the preamble.
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"Convertible Securities" means, when used in this Agreement,
any securities or other obligations issued or issuable by the Company or any
other Person that are exercisable or exchangeable for, or convertible into, any
Capital Stock of the Company.
"Current Market Price" per share of Common Stock means, as of
any specified date on which the Common Stock is publicly traded, the average of
the daily market prices of the Common Stock over the 20 consecutive trading days
immediately preceding (and not including) such date. The "daily market price"
for each such trading day shall be (i) the closing sales price on such day on
the principal securities exchange on which the Common Stock is then listed or
admitted to trading or on NASDAQ, as applicable, (ii) if no sale takes place on
such day on any such securities exchange or system, the average of the closing
bid and asked prices, regular way, on such day for the Common Stock as
officially quoted on any such securities exchange or system, (iii) if the Common
Stock is not then listed or admitted to trading on any securities exchange or
system, the last reported sale price, regular way, on such day for the Common
Stock, or if no sale takes place on such day, the average of the closing bid and
asked prices for the Common Stock on such day, as reported by NASDAQ or the
National Quotation Bureau, (iv) if the Common Stock is not then listed or
admitted to trading on any securities exchange and if no such reported sale
price or bid and asked prices are available, the average of the reported high
bid and low asked prices on such day, as reported by a reputable quotation
service, or in The Wall Street Journal. If the daily market price cannot be
determined for the 20 consecutive trading days immediately preceding such date
in the manner specified in the foregoing sentence, then the Common Stock shall
not be deemed to be publicly traded as of such date.
"Designated Office" has the meaning set forth in Section 2.1.
"DOJ" has the meaning set forth in Section 2.3.
"Effective Date" means the issue date of this Warrant.
"Equity Rights" means, when used in this Warrant, any
warrants, options, stock appreciation rights or other rights to subscribe for or
purchase, or obligations to issue, any Capital Stock of the Company, or any
Convertible Securities, including, without limitation, any options or similar
rights issued or issuable under any employee stock option plan, pension plan or
other employee benefit plan of the Company.
"Excluded Shares" means, collectively, (i) shares of Common
Stock or Equity Rights issued in any of the transactions described in Sections
4.1, 4.2, 4.3 or 4.5, (ii) shares of Common Stock issued after the date hereof
upon exercise, exchange or conversion of (A) Equity Rights outstanding on the
date hereof, or (B) Equity Rights issued after the date hereof to employees or
directors of or consultants to the Company or its Subsidiaries, provided, that
each such issuance of Equity Rights has been approved by a majority of the
members of the Company's Board of Directors, or (C) this Warrant, or (D) any
warrant(s) issued in conjunction with any financing contemplated by the Senior
Subordinated Documents on the date hereof, or any refinancing of the Senior
Credit Documents on the date hereof, or (E) any and all Equity Rights granted in
satisfaction of the obligations of the Company under the Management Agreements,
and (iii) shares of Common Stock issued pursuant to a bona fide public offering
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pursuant to a registration statement declared effective by the Commission under
the Securities Act.
"Exercise Notice" has the meaning set forth in Section 2.1.
"Exercise Period" means the period commencing on the Effective
Date and ending on (and including) the Expiration Date.
"Expiration Date" means July 23, 2011.
"Fair Market Value" per share of Common Stock means, as of any
specified date:
(i) if the Common Stock is publicly traded on such
date, the Current Market Price per share; or
(ii) if the Common Stock is not publicly traded (or
deemed not to be publicly traded) on such date, the fair market value per share
of Common Stock as determined by an independent valuation of the Catalina
Entities and the business conducted by them by an investment banking firm of
recognized national standing selected by the mutual written agreement of the
Company and the Holder; provided, however, that if the Company and the Holder
are unable to mutually agree on any such investment banking firm within 10 days
after the date upon which the right or obligation to select an investment
banking firm arises, each of the Holder and the Company shall, within three
Business Days thereafter, select one investment banking firm, and the two
selected firms shall, within three Business Days of their selection, select a
third investment banking firm which shall make the relevant determination (which
determination shall be final and binding) within 10 Business Days of the
submission of this matter to such third firm; and provided further, that, in
determining the fair market value per share of Common Stock, such investment
banking firm shall not give effect or take into account any "minority discount"
but shall value the Company in its entirety on an enterprise basis.
"FTC" has the meaning set forth in Section 2.3.
"Fully Diluted Basis" shall mean with respect to the Company,
all Company Common Stock: (i) issued and outstanding as of the Closing Date;
(ii) issuable upon exercise of the Warrant (as if exercised on the Closing Date
after giving effect to the adjustment set forth in Section 3.4); (iii) issued
pursuant to the Stock Purchase Agreement; (iv) issuable upon exercise of any
warrant (A) issued or to be issued in conjunction with any financing
contemplated by the Senior Subordinated Documents on the date hereof (as if
exercised on the Closing Date), or (B) issued or to be issued in conjunction
with any refinancing of the Senior Credit Documents on the date hereof (as if
exercised on the Closing Date); and (v) issued or issuable pursuant to any and
all Equity Rights granted or to be granted in satisfaction of the obligations of
the Company under the Management Agreements (and with respect to such Equity
Rights, if any, as if exercised or converted on the Closing Date).
"Holder" has the meaning set forth in the preamble.
"HSR Act" has the meaning set forth in Section 2.3.
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"Initial Warrant Shares" has the meaning set forth in the
preamble of this Warrant.
"Note Purchase Agreement" has the meaning set forth in the
preamble of this Warrant.
"Other Property" has the meaning set forth in Section 4.5.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder, all as the same
shall be in effect at the time.
"Warrant" means this Warrant, any amendment or other
modification of this Warrant, and any warrants issued upon transfer, division or
combination of, or in substitution for, this Warrant or any other such warrant.
All such Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of Warrant Shares for which they may be exercised.
"Warrant Purchase Price" has the meaning set forth in the
preamble of this Warrant (as adjusted in accordance with the terms of this
Warrant).
"Warrant Shares" means, collectively, the Initial Warrant
Shares and all additional shares of Common Stock of the Company for which this
Warrant becomes exercisable pursuant to Section 3.
2. EXERCISE.
2.1 Exercise; Delivery of Certificates. Subject to the
provisions of Section 2.3, this Warrant may be exercised at the option of the
Holder, in whole or in part, at any time and from time to time during the
Exercise Period, by (a) delivering to the Company at its principal executive
office (the "Designated Office") (i) a notice of exercise, in substantially the
form attached hereto (the "Exercise Notice"), duly completed and signed by the
Holder, and (ii) this Warrant, and (b) paying the Warrant Purchase Price
pursuant to Section 2.2 for the number of Warrant Shares being purchased. The
Warrant Shares being purchased under this Warrant will be deemed to have been
issued to the Holder, as the record owner of such Warrant Shares, as of the
close of business on the date on which payment therefor is made by the Holder
pursuant to Section 2.2. Stock certificates representing the Warrant Shares so
purchased shall be delivered to the Holder within three Business Days after this
Warrant has been exercised (or, if applicable, after the conditions set forth in
Section 2.3 have been satisfied); provided, however, that in the case of a
purchase of less than all of the Warrant Shares issuable upon exercise of this
Warrant, the Company shall cancel this Warrant and, within three Business Days
after this Warrant has been surrendered, execute and deliver to the Holder a new
Warrant of like tenor representing the number of unexercised Warrant Shares.
Each stock certificate representing the number of Warrant Shares purchased or
purchasable under this Warrant shall be registered in the name of the Holder or,
subject to compliance with Applicable Law, such other name as shall be
designated by the Holder.
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2.2 Payment of Warrant Purchase Price. Payment of the Warrant
Purchase Price may be made, at the option of the Holder, by (i) check, (ii) wire
transfer, (iii) instructing the Company to withhold and cancel a number of
Warrant Shares then issuable upon exercise of this Warrant with respect to which
the excess of the aggregate Fair Market Value over the aggregate Warrant
Purchase Price for such canceled Warrant Shares is at least equal to the Warrant
Purchase Price for the shares being purchased, (iv) surrender to the Company of
shares of Common Stock previously acquired by the Holder with a Fair Market
Value equal to the Warrant Purchase Price for the shares then being purchased or
(v) any combination of the foregoing. The Company shall issue fractional shares
of Common Stock upon the exercise of this Warrant.
2.3 Antitrust Notification. If the Holder determines, in its
sole judgment upon the advice of counsel, that an exercise of this Warrant
pursuant to the terms hereof would be subject to the provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), then the Company shall, within 20 Business Days after receiving notice
from the Holder of the applicability of the HSR Act, file with the United States
Federal Trade Commission (the "FTC") and the United States Department of Justice
(the "DOJ") the notification and report form and any supplemental information
required to be filed by it pursuant to the HSR Act in connection with the
exercise of this Warrant. Any such notification and report form and supplemental
information will be in full compliance with the requirements of the HSR Act. The
Company will furnish to the Holder promptly (but in all events within three
Business Days) such information and assistance as the Holder may reasonably
request in connection with the preparation of any filing or submission required
to be filed by the Holder under the HSR Act. The Company shall respond promptly
after receiving any inquiries or requests for additional information from the
FTC or the DOJ (and in no event more than three Business Days after receipt of
such inquiry or request). The Company shall keep the Holder apprised
periodically and at the Holder's request of the status of any communications
with, and any inquiries or requests for additional information from, the FTC or
the DOJ. The Company shall bear all filing or other fees required to be paid by
the Company and the Holder (or the "ultimate parent entity" of the Holder, if
any) under the HSR Act or any other Applicable Law in connection with such
filings and all costs and expenses (including, without limitation, attorneys'
fees and expenses) incurred by the Company and the Holder in connection with the
preparation of such filings and responses to inquiries or requests. In the event
that this Section 2.3 is applicable to any exercise of this Warrant, the
purchase by the Holder of the Warrant Shares subject to the Exercise Notice, and
the payment by the Holder of the Warrant Purchase Price, shall be subject to the
expiration or earlier termination of the waiting period under the HSR Act.
3. INCREASE IN NUMBER OF WARRANTS.
3.1 Upon Compounding o f Interest on the Note. On each date
that interest compounds on the Note and is not paid in cash, the number of
Warrant Shares for which this Warrant may be exercised shall automatically
increase, at no cost to the Holder, by a number of shares equal to the (i) the
product of (A) the amount of interest added to the principal on the relevant
interest payment date, divided by the original principal amount due under the
Note, multiplied by (B) the number of Initial Warrant Shares after giving effect
to the adjustment set forth in Section 3.4 and as otherwise adjusted pursuant to
Section 3.2 and Section 3.3.
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3.2 Upon Breach of Capitalization Representation. In the event
of a breach by the Company of the representation and warranty set forth in
Section 3.7 of the Note Purchase Agreement (including, without limitation,
Schedule 3.7) with respect to the number of shares of Common Stock issued and
outstanding on the date of original issuance of this Warrant, to the extent that
the number of Warrant Shares evidenced by this Warrant immediately after the
Closing, when aggregated with the Warrant Shares issuable pursuant to Section
3.4 hereof, represent, as calculated herein, a percentage of the issued and
outstanding shares of Common Stock on a Fully Diluted Basis on the date of
original issuance of this Warrant that is less than 16.54%, then the number of
Initial Warrant Shares for which this Warrant may be executed shall
automatically increase, at no cost to the Holder, to the number of Initial
Warrant Shares such that, if such additional Initial Warrant Shares had been
included in this Warrant immediately after the Closing, the number of Initial
Warrant Shares issuable upon exercise of this Warrant, when aggregated with the
Warrant Shares issuable pursuant to Section 3.4 hereof, would have been equal to
16.54% of the issued and outstanding shares of Common Stock on a Fully Diluted
Basis on the date of original issuance of this Warrant, and similar adjustments
shall be made to the number of additional Warrant Shares previously issued
pursuant to Section 3.1.
3.3 Upon Failure to Authorize and Reserve Sufficient Warrant
Shares. If shares of Common Stock of the Company are not duly authorized and
reserved for the issuance of the Warrant Shares by December 31, 2001, the number
of Warrant Shares into which this Warrant may be exercised shall automatically
increase, at no cost to the Holders, by an additional 262,500 shares of Common
Stock.
3.4 Upon an Increase in the Authorized Shares. Upon the
approval by the Company's shareholders of an increase in the authorized capital
of the Company sufficient to authorize all of the Warrant Shares (after giving
effect to the adjustment set forth in this Section 3.4), whether by December 31,
2001 or otherwise, the number of Warrant Shares into which this Warrant may be
exercised shall automatically increase, at no cost to the Holders, by an
additional 3,141,813 shares of Common Stock.
4. ADJUSTMENTS TO THE NUMBER OF WARRANT SHARES AND TO THE WARRANT
PURCHASE PRICE. The number of Warrant Shares for which this Warrant is
exercisable and the Warrant Purchase Price shall be subject to adjustment from
time to time as set forth in this Section 4.
4.1 Stock Dividends, Subdivisions and Combinations. If at any
time the Company:
(a) pays a dividend or other distribution on its
Common Stock in shares of Common Stock or shares of any other class or series of
Capital Stock,
(b) subdivides its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(c) combines its outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
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then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior to the record date for such dividend or distribution or the
effective date of such subdivision or combination shall be adjusted so that the
Holder shall thereafter be entitled to receive upon exercise of this Warrant the
kind and number of shares of Common Stock that the Holder would have owned or
have been entitled to receive immediately after such record date or effective
date had this Warrant been exercised immediately prior to such record date or
effective date. Any adjustment made pursuant to this Section 4.1 shall become
effective immediately after the effective date of such event, but be retroactive
to the record date, if any, for such event.
Upon any adjustment of the number of Warrant Shares purchasable upon
the exercise of this Warrant as herein provided, the Warrant Purchase Price per
share shall be adjusted by multiplying the Warrant Purchase Price immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such adjustment and the denominator of which shall be the
number of Warrant Shares so purchasable immediately thereafter.
4.2 Issuance of Equity Rights. If at any time the Company
issues (without payment of any consideration) to all holders of outstanding
Common Stock any Equity Rights, then the Company shall also distribute such
Equity Rights to the Holder as if this Warrant had been exercised immediately
prior to the record date for such issuance.
4.3 Distribution of Assets or Securities. If at any time the
Company makes a distribution (a "Distribution") to its stockholders (other than
in connection with the liquidation, dissolution or winding up of the Company) of
any asset or security other than those referred to in Sections 4.1, 4.2, 4.4 or
4.5, then, at the option of Holder, either:
(a) the Warrant Purchase Price shall be adjusted and
shall be equal to the Warrant Purchase Price in effect immediately prior to the
close of business on the date fixed for the determination of stockholders
entitled to receive such Distribution multiplied by a fraction (which shall not
be less than zero), the numerator of which shall be the Fair Market Value per
share of Common Stock on the date fixed for such determination, less the then
fair market value of the portion of the assets, or the fair market value of the
portion of the securities, as the case may be, so distributed applicable to one
share of Common Stock, and the denominator of which shall be the Fair Market
Value per share of Common Stock. Such adjustment to the Warrant Purchase Price
shall become effective immediately prior to the opening of business on the day
immediately following the date fixed for the determination of stockholders
entitled to receive such Distribution. Upon any adjustment in the Warrant
Purchase Price as provided in this Section 4.3, the number of shares of Common
Stock issuable upon the exercise of this Warrant shall also be adjusted and
shall be equal to the number of Warrant Shares issuable upon exercise of this
Warrant immediately prior to such adjustment multiplied by a fraction, the
numerator of which is the Warrant Purchase Price in effect immediately prior to
such adjustment and the denominator of which is the Warrant Purchase Price as so
adjusted; or
(b) the Holder shall have the right to receive that
portion of the amount distributed which a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
Distribution would have owned or received immediately
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after and as a result of such Distribution. Upon the closing of the
Distribution, the Company shall distribute such portion of the amount
distributed to the Holder.
4.4 Issuance of Equity Securities Under Certain Circumstances.
(a) If, at any time after the date hereof, the
Company shall issue or sell (or, in accordance with Section 4.4(b), shall be
deemed to have issued or sold) any shares of Common Stock, other than Excluded
Shares, without consideration or for a consideration per share that is less than
the Fair Market Value per share of Common Stock (but greater than the Warrant
Purchase Price) as determined as of the date of such issuance or sale, then,
effective immediately upon such issuance or sale, the Warrant Purchase Price
shall be reduced (calculated to the nearest $.001 and without regard to any
other provisions of this Section 4) to an amount equal to the product obtained
by multiplying (i) the Warrant Purchase Price in effect immediately prior to
such issuance or sale, by (ii) a fraction, the numerator of which shall be the
sum of (A) the product obtained by multiplying (1) the number of shares of
Common Stock outstanding (assuming the conversion or exercise, as applicable, of
all outstanding Equity Rights) immediately prior to such issuance or sale by (2)
the Fair Market Value per share of Common Stock as of the date of such issuance
or sale, plus (B) the cash consideration, if any, received by the Company upon
such issuance or sale, and the denominator of which shall be the product
obtained by multiplying (C) the number of shares of Common Stock outstanding
(assuming the conversion or exercise, as applicable, of all outstanding Equity
Rights) immediately after such sale or issuance, by (D) the Fair Market Value
per share of Common Stock as of the date of such issuance or sale. Upon each
such adjustment of the Warrant Purchase Price hereunder, the number of Warrant
Shares which may be obtained upon exercise of this Warrant shall be increased to
the number of shares determined by multiplying (x) the number of Warrant Shares
which could be obtained upon exercise of such Warrant immediately prior to such
adjustment by (y) a fraction, the numerator of which shall be the Warrant
Purchase Price in effect immediately prior to such adjustment and the
denominator of which shall be the Warrant Purchase Price in effect immediately
after such adjustment. Adjustments shall be made successively whenever such an
issuance or sale is made.
(b) For the purpose of determining the adjusted
Warrant Purchase Price under Section 4.4(a), the following shall be applicable:
(i) Issuance of Options. If the Company in
any manner issues or grants any Options or Convertible Securities and the price
per share for which Common Stock is issuable upon the exercise of such Options
or upon conversion or exchange of such Convertible Securities is less than, the
Fair Market Value per share of Common Stock determined as of the date of such
issuance or grant of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options (or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options) shall be deemed to be outstanding and to have
been issued and sold by the Company for such lower price per share. For purposes
of this paragraph, the price per share for which Common Stock is issuable upon
exercise of Options or upon conversion or exchange of Convertible Securities
issuable upon exercise of Options shall be determined by dividing (A) the total
amount, if any, received or receivable by the Company as consideration for the
issuing or granting of such Options, plus the minimum aggregate amount of
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additional consideration payable to the Company upon the exercise of all such
Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the issuance or sale of such Convertible Securities
and the conversion or exchange thereof, by (B) the total maximum number of
shares of Common Stock issuable upon exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options.
(ii) Issuance of Convertible Securities. If
the Company in any manner issues or grants any Convertible Securities having an
exercise or conversion or exchange price per share of Common Stock which is less
than, the Fair Market Value per share of Common Stock determined as of the date
of issuance or sale, then the maximum number of shares of Common Stock issuable
upon the conversion or exchange of such Convertible Securities shall be deemed
to be outstanding and to have been issued and sold by the Company for such lower
price per share. For purposes of this paragraph, the price per share for which
Common Stock is issuable upon conversion or exchange of Convertible Securities
is determined by dividing (A) the total amount received by the Company as
consideration for the issuance or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (B) the total maximum number
of shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities.
(iii) Change in Equity Price or Conversion
Rate. If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the issuance, conversion or exchange of any
Convertible Securities or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time, then the
Warrant Purchase Price in effect at the time of such change shall be readjusted
to the Warrant Purchase Price which would have been in effect at such time had
such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or changed conversion rate, as
the case may be, at the time initially granted, issued or sold and the number of
Warrant Shares shall be correspondingly readjusted.
(iv) Calculation of Consideration Received.
If any Common Stock, Options or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, then the consideration received
therefor shall be deemed to be the net amount received by the Company therefor.
If any Common Stock, Options or Convertible Securities are issued or sold for
consideration other than cash, then the amount of consideration received by the
Company shall be the fair value of such consideration determined in good faith
by the Board of Directors of the Company, subject to the Holder's rights under
Section 4.7(e).
(v) Treasury Shares. The number of shares of
Common Stock outstanding at any time does not include shares owned or held by or
for the account of the Company or any Subsidiary of the Company, and the
disposition of any shares so owned or held shall be considered an issue or sale
of Common Stock.
(vi) Record Date. If the Company takes a
record of the holders of Common Stock for the purpose of entitling them (A) to
receive a dividend or other
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Distribution payable in Common Stock, Options or Convertible Securities or (B)
to subscribe for or purchase Common Stock, Options or Convertible Securities,
then such record date shall be deemed to be the date of the issuance or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such Distribution or the date of
the granting or such right of subscription or purchase, as the case may be.
No adjustment shall be made pursuant to this Section 4.4 with respect to the
issuance of Excluded Shares.
4.5 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. If at any time the Company reorganizes its capital,
reclassifies its capital stock, consolidates, merges or combines with or into
another Person (where the Company is not the surviving corporation or where
there is any change whatsoever in, or Distribution with respect to, the
outstanding Common Stock), or the Company sells, transfers or otherwise disposes
of all or substantially all of its property, assets or business to another
Person, other than in a transaction provided for in Sections 4.1, 4.2, 4.3, 4.4
or 4.6, and, pursuant to the terms of such reorganization, reclassification,
consolidation, merger, combination, sale, transfer or other disposition of
assets, (i) shares of capital stock of the successor or acquiring Person or of
the Company (if it is the surviving corporation) or (ii) any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring Person or the Company ("Other
Property") are to be received by or distributed to the holders of Common Stock
who are holders immediately prior to such transaction, then the Holder shall
have the right thereafter to receive, upon exercise of this Warrant, the number
of shares of Common Stock, common stock of the successor or acquiring Person,
and/or Other Property which holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event would have
owned or received immediately after and as a result of such event. In such
event, the aggregate Warrant Purchase Price otherwise payable for the Warrant
Shares issuable upon exercise of this Warrant shall be allocated among such
securities and Other Property in proportion to the respective fair market values
of such securities and Other Property as determined in good faith by the Board
of Directors of the Company, subject to the Holder's rights under Section
4.7(e).
In case of any such event set forth in this Section 4.5, prior
to the exercise of this Warrant, the successor or acquiring Person (if other
than the Company) shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as the Holder may approve in writing
(and memorialized by resolutions of the Board of Directors of the Company) in
order to provide for adjustments of any shares of common stock of such successor
or acquiring Person for which this Warrant thus becomes exercisable, which
modifications shall be as equivalent as practicable to the adjustments provided
for in this Section 4.5. For purposes of this Section 4, "common stock of the
successor or acquiring Person" shall include stock or other equity securities,
or securities that are exercisable or exchangeable for or convertible into
equity securities, of such corporation, or other securities if such Person is
not a corporation, of any class that is not preferred as to dividends or assets
over any other class of stock of such corporation or Person and that is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or
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other securities that are convertible into or exchangeable for any such stock,
either immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Section 4.5 shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers and other dispositions of assets.
4.6 Dissolution, Total Liquidation or Winding-Up. If at any
time there is a voluntary or involuntary dissolution, total liquidation or
winding-up of the Company, other than as contemplated by Section 4.5, then the
Company shall cause to be mailed (by registered or certified mail, return
receipt requested, postage prepaid) to the Holder at the Holder's address as
shown on the Warrant register, at the earliest practicable time (and, in any
event, not less than 30 calendar days before any date set for definitive action)
written notice of the date on which such dissolution, liquidation or winding-up
shall take place, as the case may be. Such notice shall also specify the date as
of which the record holders of shares of Common Stock shall be entitled to
exchange their shares for securities, money or other property deliverable upon
such dissolution, liquidation or winding-up, as the case may be. On such date,
the Holder shall be entitled to receive upon surrender of this Warrant the cash
or other property, less the Warrant Purchase Price for this Warrant then in
effect, that the Holder would have been entitled to receive had this Warrant
been exercised immediately prior to such dissolution, liquidation or winding-up.
Upon receipt of the cash or other property, any and all rights of the Holder to
exercise this Warrant shall terminate in their entirety. If the cash or other
property distributable in the dissolution, liquidation or winding-up has a fair
market value which is less than the Warrant Purchase Price for this Warrant then
in effect, this Warrant shall terminate and be of no further force or effect
upon the dissolution, liquidation or winding-up.
4.7 Other Provisions Applicable to Adjustments Under this
Section. The following provisions shall be applicable to the adjustments
provided for pursuant to this Section 4:
(a) When Adjustments To Be Made. The adjustments
required by this Section 4 shall be made whenever and as often as any specified
event requiring such an adjustment shall occur. For the purpose of any such
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) Record Date. If the Company fixes a record date
of the holders of Common Stock for the purpose of entitling them to (i) receive
a dividend or other Distribution payable in shares of Common Stock or in shares
of any other class or series of capital stock or securities convertible into or
exchangeable for Common Stock or shares of any other class or series of capital
stock or (ii) subscribe for or purchase shares of Common Stock or such other
shares or securities, then all references in this Section 4 to the date of the
issuance or sale of such shares of Common Stock or such other shares or
securities shall be deemed to be references to that record date.
(c) When Adjustment Not Required. If the Company
fixes a record date of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or Distribution or subscription or purchase
rights to which the provisions of Section 4.1 would apply, but shall, thereafter
and before the Distribution to stockholders, legally abandon its plan to
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pay or deliver such dividend, Distribution, subscription or purchase rights,
then thereafter no adjustment shall be required by reason of the taking of such
record and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
(d) Notice of Adjustments. Whenever the number of
shares of Common Stock for which this Warrant is exercisable or the Warrant
Purchase Price shall be adjusted or recalculated pursuant to this Section 4, the
Company shall immediately prepare a certificate to be executed by the chief
financial officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment or recalculation and the method by which such
adjustment or recalculation was calculated, specifying the number of shares of
Common Stock for which this Warrant is exercisable and (if such adjustment was
made pursuant to Section 4.5) describing the number and kind of any other shares
of stock or Other Property for which this Warrant is exercisable, and any
related change in the Warrant Purchase Price, after giving effect to such
adjustment, recalculation or change. The Company shall mail (by registered or
certified mail, return receipt requested, postage prepaid) a signed copy of the
certificate to be delivered to the Holder within three Business Days of the
event which caused the adjustment or recalculation. The Company shall keep at
the Designated Office copies of all such certificates and cause them to be
available for inspection at the Designated Office during normal business hours
by the Holder or any prospective transferee of this Warrant designated by the
Holder.
(e) Challenge to Good Faith Determination. Whenever
the Board of Directors of the Company is required to make a determination in
good faith of the fair market value of any matter under this Warrant, or any
matter that may affect the value of this Warrant, such determination may be
challenged by the Holder. If the Holder (or such Holders, as the case may be)
wishes to challenge any such fair market value determination, it (or they) shall
furnish written notice to the Company of its (or their) intention to challenge
the same. If the Company and the Holder (or such Holders, as the case may be)
cannot resolve the dispute between or among themselves, then such dispute shall
be submitted for final determination to an investment banking firm pursuant to
the valuation procedures set forth in clause (ii) under the definition of Fair
Market Value. The Company shall bear any and all costs incurred by the Company
and the Holder (or such Holders, as the case may be) in connection with the
determination of the Fair Market Value of this Warrant or the Warrant Shares,
and any challenge or dispute thereof, including, without limitation, all fees
and expenses of any investment banking, valuation or accounting firms engaged by
the Company or the Holder and of attorneys in connection with such calculation.
(f) Independent Application. Except as otherwise
provided herein, all subsections of this Section 4 are intended to operate
independently of one another (but without duplication). If an event occurs that
requires the application of more than one subsection, all applicable subsections
shall be given independent effect without duplication.
(g) Par Value. Notwithstanding any provision herein,
in the event that any adjustment to the Warrant Purchase Price reduces the
Warrant Purchase Price to an amount that is less than the par value of the
Common Stock at the time of exercise of this Warrant, the Company shall transfer
from additional paid in capital to stated capital that amount necessary so that
the Warrant Shares will be, upon issuance, fully paid and non-assessable.
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5. MISCELLANEOUS.
5.1 Restrictive Legend. This Warrant, any Warrant issued upon
transfer of this Warrant and any Warrant Shares issued upon exercise of this
Warrant or any portion thereof shall be imprinted with the following legend, in
addition to any legend required under applicable state securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED
EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION OR QUALIFICATION THEREFROM.
The legend shall be appropriately modified upon issuance of
certificates for shares of Common Stock.
Upon request of the holder of a Common Stock certificate, the
Company shall issue to that holder a new certificate free of the foregoing
legend, if, with such request, such holder provides the Company with an opinion
of counsel reasonably acceptable to the Company to the effect that the
securities evidenced by such certificate may be sold without restriction under
Rule 144 (or any other rule permitting resales of securities without
restriction) promulgated under the Securities Act.
5.2 Holder Entitled to Benefits Under Other Agreements. The
Holder is entitled to certain benefits and privileges with respect to this
Warrant and the Warrant Shares pursuant to the terms of the Note Purchase
Agreement and certain other Investment Documents. Without limiting the
generality of the foregoing, the Warrant Shares issuable upon exercise of this
Warrant (or upon conversion of any shares of Common Stock issued upon such
exercise) shall constitute "Registrable Securities" (as such term is defined in
the Registration Rights Agreement dated of even date herewith (the "Registration
Rights Agreement") between the Company and the initial Holder). Each Holder is
also entitled to all of the benefits available to a holder of any Registrable
Securities under the Registration Rights Agreement.
5.3 Other Covenants. Without limiting the generality of
Section 5.2, the Company covenants and agrees that, as long as this Warrant
remains outstanding or any Warrant Shares are issuable with respect to this
Warrant, the Company will perform all of the following covenants for the express
benefit of the Holder: (a) the Warrant Shares shall, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable shares of Common
Stock; (b) each Holder shall, upon the exercise thereof in accordance with the
terms hereof, receive good and marketable title to the Warrant Shares, free and
clear of all voting and other trust arrangements to which the Company is a
party, and to which the Holder is not a party, or by which it is bound,
preemptive rights of any stockholder, liens, encumbrances, equities and claims
whatsoever, including, but not limited to, all Taxes, Liens and other charges
with respect to the issuance
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thereof; (c) promptly following the Closing, the Company shall solicit the
written consent of its shareholders or call a special meeting of shareholders to
increase the number of duly authorized shares of Common Stock to ________ shares
of Common Stock. From and after the date that the number of duly authorized
shares of Common Stock of the Company is increased above the number of shares of
Common Stock duly authorized on the Closing Date, and prior to the Expiration
Date, the Company shall have reserved for issuance a sufficient number of
authorized but unissued shares of Common Stock, or other securities or property
for which this Warrant may then be exercisable, to permit this Warrant (or if
this Warrant has been divided, all outstanding Warrants) to be exercised in
full; and (d) the Company shall provide each Holder with notice of all corporate
actions in the same manner and to the same extent as the shareholders of the
Company.
5.4 Dividends. If the Company declares or pays a dividend or
makes any other distribution upon its Common Stock (other than any stock
dividend for which an adjustment is made pursuant to Section 4), then the
Company will pay to the Holder of this Warrant at the time of payment thereof
such dividend or distribution which would have been paid to such Holder had such
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to such dividends are to be
determined.
5.5 Issue Tax. The issuance of this Warrant and of shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder for any issue tax in respect thereof.
5.6 Closing Of Books. The Company will at no time close its
transfer books against the transfer of this Warrant or of any Warrant Shares in
any manner which interferes with the timely exercise hereof.
5.7 No Voting Rights; Limitation Of Liability. Except as
expressly set forth in this Warrant, nothing contained in this Warrant shall be
construed as conferring upon the Holder (a) the right to vote or consent as a
stockholder in respect of meetings of stockholders for the election of directors
of the Company or any other matter, (b) the right to receive dividends, except
as set forth in Section 4 or (c) any other rights as a stockholder of the
Company, except as set forth in Section 4. No provisions hereof, in the absence
of affirmative action by the Holder to purchase shares of Common Stock, and no
mere enumeration herein of the rights or privileges of the Holder, shall give
rise to any liability of the Holder for the Warrant Purchase Price or as a
shareholder of the Company, whether such liability is asserted by the Company or
by its creditors.
5.8 Modification And Waiver. This Warrant and any provision
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement is sought.
5.9 Notices. All notices, demands, requests, consents,
approvals or other communications (collectively, "Notices") required or
permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand
delivery,
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telegram, telex or facsimile, addressed as set forth below, or to such other
address as such party shall have specified most recently by written notice.
Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given on the next business day
following delivery of such notice to a reputable air courier service.
To Company: Catalina Lighting, Inc.
00000 XX 00xx Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telefax: (000) 000-0000
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq. or
Xxxxxx X. Xxxxxxx, Esq.
Telefax: (000) 000-0000
and a copy to: X. Xxxxxx Xxxxxxxx, PA
0000 X.X. 0xx Xxxxx
Xxxxxxxxxxx, XX 00000
Telefax: (000) 000-0000
To Purchaser: Sun Catalina Holdings, LLC
c/o Sun Capital Partners, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx
Xxxxxx X. Xxxxxx
C. Xxxxx Xxxxx, Esq.
Telefax: (000) 000-0000
with a copy to: Xxxxxx, Xxxxx & Bockius LLP
One Oxford Centre, Thirty-Second Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telefax: (000) 000-0000
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5.10 Successors and Assigns. The Company may not assign any of
its rights, or delegate any of its obligations, under this Warrant without the
prior written consent of the Holder (which consent may be withheld for any
reason or no reason at all). The Holder may not assign this Warrant, in whole or
in part, or delegate its obligations at any time or from time to time without
the prior written consent of the Company; provided, that no such consent shall
be required for any transfer or assignment of a proportional part of this
Warrant coincident with an assignment of the Note by the Holder permitted under
Section 14 of the Note. Each assignment of this Warrant, in whole or in part,
shall be registered on the books of the Company to be maintained for such
purpose, upon surrender of this Warrant at the Designated Office, together with
appropriate instruments of assignment, duly filled in and executed. Upon such
surrender and delivery, the Company shall, at its own expense, within three
Business Days execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees specified in such assignment and in the denominations
specified therein and this Warrant shall promptly be canceled. If any portion of
this Warrant is not being assigned, the Company shall, at its own expense,
within three Business Days issue to the Holder a new Warrant evidencing the
portion not so assigned. If the Holder assigns this Warrant to one or more
Persons, any decisions that the Holder is entitled to make at any time hereunder
shall be made by the Holders holding more than 50% of the aggregate number of
Warrant Shares issuable upon exercise of all of the then exercisable Warrants.
This Warrant shall be binding upon and inure to the benefit of
the Company, the Holder and their respective successors and permitted assigns,
and shall include, with respect to the Company, any Person succeeding the
Company by merger, consolidation, combination or acquisition of all or
substantially all of the Company's assets, and in such case, except as expressly
provided herein and in the Note Purchase Agreement, all of the obligations of
the Company hereunder shall survive such merger, consolidation, combination or
acquisition.
5.11 Captions; Construction and Interpretation. The captions
in this Warrant are for convenience of reference only, do not constitute a part
of this Agreement and are not to be considered in construing or interpreting
this Warrant. All section, preamble, recital, exhibit, schedule, disclosure
schedule, annex, clause and party references are to this Warrant unless
otherwise stated. No party, nor its counsel, shall be deemed the drafter of this
Warrant for purposes of construing the provisions of this Warrant, and all
provisions of this Warrant shall be construed in accordance with their fair
meaning, and not strictly for or against any party.
5.12 Lost Warrant or Certificates. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant or of a stock certificate evidencing Warrant Shares
and, in the case of any such loss, theft or destruction, upon receipt of an
indemnity reasonably satisfactory to the Company or, in the case of any such
mutilation, upon surrender and cancellation of this Warrant or stock
certificate, the Company shall make and deliver to the Holder, within three
Business Days of receipt by the Company of such documentation, a new Warrant or
stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate.
5.13 No Impairment. The Company shall not by any action,
including, without limitation, amending its charter documents or regulations or
through any reorganization, reclassification, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or
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any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate to protect the rights of the Holder against
impairment. Without limiting the generality of the foregoing, the Company will
(i) not increase the par value (if any) of any shares of Common Stock receivable
upon the exercise of this Warrant above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (ii) take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant, free and clear of all liens, encumbrances, equities
and claims, and (iii) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
5.14 Governing Law. This Warrant shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed within the
State of New York, without giving effect to any choice-of-law provisions thereof
that would compel the application of the substantive laws of any other
jurisdiction. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the United States District Court sitting in the Southern
District of New York, and of the Supreme Court of the State of New York sitting
in New York county and any appellate court from any thereof, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.
5.15 Remedies. If the Company fails to perform, comply with or
observe any covenant or agreement to be performed, complied with or observed by
it under this Warrant, the Holder may proceed to protect and enforce its rights
by suit in equity or action at law, whether for specific performance of any term
contained in this Warrant or for an injunction against the breach of any such
term or in aid of the exercise of any power granted in this Warrant or to
enforce any other legal or equitable right, or to take any one or more of such
actions. The Company hereby agrees that the Holder shall not be required or
otherwise obligated to, and hereby waives any right to demand that the Holder,
post any performance or other bond in connection with the enforcement of its
rights and remedies hereunder. The Company agrees to pay all fees, costs, and
expenses, including, without limitation, fees and expenses of attorneys,
accountants and other experts retained by the Holder, and all fees, costs and
expenses of appeals, incurred or expended by the Holder in connection with the
enforcement of this Warrant or the collection of any sums due hereunder, whether
or not suit is commenced. None of the rights, powers or remedies conferred under
this Warrant shall be mutually exclusive, and each right, power or remedy shall
be cumulative and in addition to any other right, power or remedy whether
conferred by this Warrant or now or hereafter available at law, in equity, by
statute or otherwise.
5.16 Waiver of Trial By Jury. Each of the Company and the
Holder hereby irrevocably and unconditionally waives the right to a trial by
jury in any action, suit, counterclaim or other proceeding (whether based on
contract, tort or otherwise) arising out of,
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connected with or relating to this Warrant or the transactions contemplated
hereby, or the actions of the Holder in the negotiation, administration,
performance or enforcement hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and issued by its duly authorized representatives on the date first above
written.
CATALINA LIGHTING, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------
Name: Xxxxxx Xxxxx
Title: President and
Chief Executive Officer
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CATALINA LIGHTING, INC.
FORM OF EXERCISE SUBSCRIPTION
(To be signed only upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise its Warrant to
purchase __________________________________________________ (_______) shares of
Common Stock for an aggregate Warrant Purchase Price
of_________________________________ Dollars ($______).
[If the Holder has determined upon advice of counsel that compliance
with the HSR Act is required, include the following sentences: "The undersigned
has determined that this exercise is subject to the HSR Act and requests that
the Company file the requisite notification and report form with, and pay all
requisite filing fees to, the FTC and the DOJ as promptly as possible. The
purchase of the shares described above and the payment of the Warrant Purchase
Price are subject to the expiration or earlier termination of the waiting period
under the HSR Act."]
The Warrant Purchase Price to be paid as follows (check as applicable):
___ Company check in the amount of $_________;
___ Wire transfer in the amount of $_________;
___ Cancellation of _________________________ Warrant Shares; or
___ Surrender of __________________ shares of Common Stock.
The undersigned hereby requests that [if the Holder has determined upon
advice of counsel that compliance with the HSR Act is required, include the
following phrase: "upon the expiration or earlier termination of the waiting
period under the HSR Act"] a certificate(s) for the shares of Common Stock be
issued in the name of ___________________, and delivered to, _______________,
whose address is _________________________.
The undersigned represents that it is acquiring such shares of Common
Stock for its own account for investment purposes only and not with a view to or
for sale in connection with any distribution thereof, and, as to the
undersigned, the representations and warranties of the Purchaser set forth in
Section 4 of the Note Purchase Agreement are true and correct on the date hereof
as if made by the undersigned on this date.
Dated: _______________
Name of the Holder (must conform precisely to the
name specified on the face of the Warrant)
Signature of authorized representative of the Holder
Print or type name of authorized representative
Social Security Number or Employer
Tax Identification Number of the Holder:
Address of the Holder:
