EXHIBIT 4.7
[FORM OF WARRANT]
MAY 6, 1997
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
No. A-1 Shares of Common Stock
EMPIRE OF CAROLINA, INC.
COMMON STOCK PURCHASE WARRANT
Void after 5 p.m. on May 6, 2003
EMPIRE OF CAROLINA, INC., a Delaware corporation (the
"COMPANY"), hereby certifies that for value received, ___________________, a
__________________, or successors and assigns (the "HOLDER") is entitled to
purchase, subject to the terms and conditions hereinafter set forth, an
aggregate of _____________ fully paid and nonassessable shares of Common Stock
(as hereinafter defined) of the Company, at an exercise price of $1.375 per
share subject to adjustment as provided herein (the "PURCHASE PRICE"), at any
time or from time to time prior to 5:00 P.M., New York City time, on May 6, 2003
(the "EXPIRATION DATE").
1. Definitions. For the purposes of this Warrant, the
following terms have the meanings indicated:
"Applicable Price" shall mean the higher of (a) the Current
Market Price per
share of Common Stock on the applicable record or other relevant date and (b)
the Purchase Price.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"Closing Price" shall mean, with respect to each share of
Common Stock for any day, (a) the last reported sale price regular way or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices regular way, in either case as reported on the principal national
securities exchange on which the Common Stock is listed or admitted for trading,
or (b) if the Common Stock is not listed or admitted for trading on any national
securities exchange, the last reported sale price or, in case no such sale takes
place on such day, the average of the highest reported bid and the lowest
reported asked quotation for the Common Stock, in either case as reported on the
Automated Quotation System of NASDAQ or a similar service if NASDAQ is no longer
reporting such information.
"Common Stock" means the shares of Common Stock, par value
$.10 per share, of the Company and any class or series of common stock of the
Company authorized after the date of this Warrant, or any other class of stock
resulting from successive changes or reclassifications of such Common Stock.
"Company" has the meaning ascribed to such term in the first paragraph of this
Warrant.
"Current Market Price" shall be determined in
accordance with Section 3(e).
"Exercise Date" has the meaning ascribed to such
term in Section 2(d).
"Expiration Date" has the meaning ascribed to such
term in the first paragraph of this Warrant.
"Final Exercise Date" has the meaning ascribed to
such term in Section 9.
"Holder" has the meaning ascribed to such term in
the first paragraph of this Warrant.
"NASDAQ" shall mean the National Association of
Securities Dealers, Inc.
"Person" means any individual, firm, corporation, company,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, Governmental Authority or other entity of any kind, and
shall include any successor (by merger or otherwise) of such entity.
"Purchase Price" has the meaning ascribed to such term in the
first paragraph of this Warrant.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Trigger Price" has the meaning ascribed to such term
in Section 9.
"Warrant Register" has the meaning ascribed to such
term in Section 10(b).
2. Exercise of Warrant.
(a) Exercise; Payment of Purchase Price. This Warrant
may be exercised, in whole or in part, at any time or from time to time on or
prior to the Expiration Date, by surrendering to the Company at its principal
office this Warrant, with the form of Election to Purchase Shares attached
hereto as Exhibit A duly executed by the Holder and accompanied by payment of
the Purchase Price for the number of shares of Common Stock specified in such
form, in United States currency by wire transfer to an account designated by the
Company or delivery of a certified check or bank check payable to the order of
the Company.
(b) Delivery of Shares. As soon as practicable after
surrender of this Warrant and receipt of payment, the Company shall promptly
issue and deliver to the Holder a certificate or certificates for the number of
shares of Common Stock set forth in the Election to Purchase Shares, in such
name or names as may be designated by such Holder, along with a check for the
amount of cash to be paid in lieu of issuance of fractional shares, if any.
(c) Partial Exercise. If this Warrant is exercised
for less than all of the shares of Common Stock purchasable under this Warrant,
the Company shall cancel this Warrant upon surrender hereof and shall execute
and deliver to the Holder a new Warrant of like tenor for the balance of the
shares of Common Stock purchasable hereunder.
(d) When Exercise Effective. The exercise of this
Warrant shall be deemed to have been effective immediately prior to the close of
business on the Business Day on which this Warrant is surrendered to and the
Purchase Price is received by the Company as provided in this Section 2 (the
"EXERCISE DATE"), and the Person in whose name any certificate for shares of
Common Stock shall be issuable upon such exercise, as provided in Section 2(b),
shall be deemed to be the record holder of such shares of Common Stock for all
purposes on the Exercise Date.
If the last day for the exercise of the Warrant is
not a Business Day, then such exercise may be made on the next succeeding
Business Day.
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3. Adjustment of Purchase Price and Number of Shares. The
Purchase Price, the Trigger Price and the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted from time to time upon
the occurrence of the following events:
(a) Dividend, Subdivision, Combination or
Reclassification of Common Stock. If the Company shall, at any time or from time
to time, (i) declare a dividend on the Common Stock payable in shares of its
capital stock (including Common Stock), (ii) subdivide the outstanding Common
Stock, (iii) combine the outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification of
the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then in each such case, the Purchase Price and the Trigger Price in effect at
the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date shall be proportionately adjusted so that
the Holder of any Warrant exercised after such date shall be entitled to
receive, upon payment of the same aggregate amount as would have been payable
before such date, the aggregate number and kind of shares of capital stock
which, if such Warrant had been exercised immediately prior to such date, such
Holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. Any such
adjustment shall become effective immediately after the record date of such
dividend or the effective date of such subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur. If a dividend is declared and such dividend is not
paid, the Purchase Price shall again be adjusted to be the Purchase Price in
effect immediately prior to such record date.
(b) Issuance of Rights to Purchase Common Stock Below
Current Market Price or Purchase Price. If the Company shall, at any time or
from time to time, fix a record date for the issuance of rights or warrants to
all holders of Common Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Common Stock
or securities convertible into Common Stock at a price per share of Common
Stock, or having a conversion price per share of Common Stock, if a security is
convertible into Common Stock (determined in either such case by dividing (x)
the total consideration payable to the Company upon exercise, conversion or
exchange of such rights, warrants or other securities convertible into Common
Stock by (y) the total number of shares of Common Stock covered by such rights,
warrants or other securities convertible into Common Stock) lower than either
the Current Market Price per share of Common Stock to be issued upon exercise of
this Warrant on such record date (or, if an ex-dividend date has been
established for such record date, on the day next preceding such ex-dividend
date) or the Purchase Price, then the Purchase Price shall be reduced to the
price determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the sum of
the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock which the aggregate offering price
of the total number of shares of Common Stock so to be offered (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at the Applicable Price and the denominator of which shall be the
number of shares of Common Stock
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outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such price for
subscription or purchase 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
determined in good faith by the Board of Directors of the Company. Any such
adjustment shall become effective immediately after the record date for such
rights or warrants. Such adjustment shall be made successively whenever such a
record date is fixed. If such rights or warrants are not so issued, the Purchase
Price shall be adjusted to the Purchase Price in effect immediately prior to
such record date.
(c) Certain Distributions. If the Company shall, at
any time or from time to time, fix a record date for the distribution to all
holders of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing corporation) of
evidences of indebtedness, assets or other property (other than regularly
scheduled cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in capital stock for which
adjustment is made under Section 3(a)) or subscription rights or warrants
(excluding those referred to in Section 3(b)), the Purchase Price shall be
reduced to the price determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction (which shall in no event be
less than zero), the numerator of which shall be the Current Market Price per
share of Common Stock to be issued upon exercise of this Warrant on such record
date (or, if an ex-dividend date has been established for such record date, on
the next day preceding such ex-dividend date), less the fair market value (as
determined in good faith by the Board of Directors of the Company) of the
portion of the assets, evidences of indebtedness, other property, subscription
rights or warrants so to be distributed applicable to one share of Common Stock
and the denominator of which shall be such Current Market Price per share of
Common Stock to be issued upon exercise of this Warrant. Any such adjustment
shall become effective immediately after the record date for such distribution.
Such adjustments shall be made successively whenever such a record date is
fixed. In the event that such distribution is not so made, the Purchase Price
shall be adjusted to the Purchase Price in effect immediately prior to such
record date.
(d) Issuance of Common Stock Below Current Market
Price or Purchase Price. If the Company shall after the date hereof, directly or
indirectly, sell or issue shares of Common Stock (regardless of whether
originally issued or from the Company's treasury), or rights, options, warrants
or convertible or exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock (excluding shares issued (i) in any of the
transactions described in Sections 3(a), (b) and (c), (ii) upon exercise
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of the Warrants, (iii) upon the exercise or conversion of options, warrants or
any other securities convertible into or exchangeable for shares of Common Stock
outstanding as of the date hereof, and (iv) to the Company's employees,
independent contractors or directors under bona fide benefit plans approved or
adopted by the Company's Board of Directors, if such shares would otherwise be
included in this Section 3(d)) at a price per share of Common Stock (determined,
in the case of rights, options, warrants or convertible or exchangeable
securities, by dividing (x) the total consideration received or receivable by
the Company in consideration of the sale or issuance of such rights, options,
warrants or con vertible or exchangeable securities, plus the total
consideration payable to the Company upon exercise or conversion or exchange
thereof, by (y) the total number of shares of Common Stock covered by such
rights, options, warrants or convertible or exchangeable securities)
lower than either the Current Market Price per share of Common Stock to be
issued upon exercise of this Warrant or the Purchase Price immediately prior to
such sale or issuance, then the Purchase Price shall be reduced to a price
determined by multiplying the Purchase Price in effect immediately prior thereto
by a fraction, the numerator of which shall be the sum of the number of shares
of Common Stock outstanding immediately prior to such sale or issuance plus the
number of shares of Common Stock which the aggregate consideration received
(determined as provided below) for such sale or issuance would purchase at the
Applicable Price and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such sale or issuance. Such
adjustment shall be made successively whenever such sale or issuance is made.
For the purposes of such adjustments, the shares of Common Stock which the
holder of any such rights, options, warrants, or convertible or exchangeable
securities shall be entitled to subscribe for or purchase shall be deemed to be
issued and outstanding as of the date of such sale or issuance and the
consideration "received" by the Company therefor shall be deemed to be the
consideration actually received or receivable by the Company (plus any
underwriting discounts or commissions in connection therewith) for such rights,
options, warrants or convertible or exchangeable securities, plus the
consideration stated in such rights, options, warrants or convertible or
exchangeable securities to be payable to the Company for the shares of Common
Stock covered thereby. If the Company shall sell or issue shares of Common Stock
for a consideration consisting, in whole or in part, of property other than cash
or its equivalent, then in determining the "price per share of Common Stock" and
the "consideration" received or receivable by or payable to the Company for
purposes of the first sentence and the immediately preceding sentence of this
Section 3(d), the fair value of such property shall be determined in good faith
by the Board of Directors of the Company. The determination of whether any
adjustment is required under this Section 3(d) by reason of the sale and
issuance of rights, options, warrants or convertible or exchangeable securities
and the amount of such adjustment, if any, shall be made only at the time of
such issuance or sale and not at the subsequent time of issuance of shares of
Common Stock upon the exercise of such rights to subscribe or purchase. Any such
adjustment shall become effective immediately after the record date of such
issuance or sale. Such adjustment shall be made successively whenever any event
listed above shall occur. In the event that such issuance or sale of shares of
Common Stock or rights, options, warrants or convertible or exchangeable
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securities containing the right to subscribe for or purchase shares of Common
Stock, at a price below the Current Market Price or the Purchase Price, is not
made, the Purchase Price shall be adjusted to the Purchase Price in effect
immediately prior to such record date.
(e) Determination of Current Market Price. For the
purpose of any computation under paragraphs (b), (c) or (d) of this Section 3 or
any other provision of this Warrant, the Current Market Price per share of
Common Stock on any date shall be deemed to be the average of the daily Closing
Prices per share of Common Stock for the 10 consecutive trading days commencing
15 trading days before such date. If on any such date the shares of Common Stock
are not listed or admitted for trading on any national securities exchange or
quoted by NASDAQ or a similar service, the Current Market Price for such shares
shall be the fair market value of such shares on such date as determined in good
faith by a committee of disinterested members of the Board of Directors of the
Company based on a written opinion of an independent investment banking firm of
nationally recognized stature.
(f) De Minimis Adjustments. No adjustment in the
Purchase Price shall be made if the amount of such adjustment would result in a
change in the Purchase Price per share of less than $.02, but in such case any
adjustment that would otherwise be required to be made shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment that, together with any adjustment so carried forward, would result
in a change in the Purchase Price of $.05 per share. If the Company shall, at
any time or from time to time, issue Common Stock by way of dividends on any
stock of the Company or subdivide or combine the outstanding shares of the
Common Stock, such amounts of $.02 and $.05 (as theretofore increased or
decreased, if such amounts shall have been adjusted in accordance with the
provisions of this clause) shall forthwith be proportion ately increased in the
case of a combination or decreased in the case of a subdivision or stock
dividend so as appropriately to reflect the same. Notwithstanding the provisions
of the first sentence of this Section 3(f), any adjustment postponed pursuant to
this Section 3(f) shall be made no later than the earlier of (i) three years
from the date of the transaction that would, but for the provisions of the first
sentence of this Section 3(f), have required such adjustment, (ii) an Exercise
Date or (iii) the Expiration Date.
(g) Adjustments to Other Shares. In the event that at
any time, as a result of an adjustment made pursuant to Section 3(a), the Holder
shall become entitled to receive, upon exercise of this Warrant, any shares of
capital stock of the Company other than shares of Common Stock, the number of
such other shares so receivable upon exercise of this Warrant shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Common Stock
contained in Sections 3(a), (b), (c) and (d), inclusive, and the provisions of
Sections 2, 4, 5, 6 and 7 with respect to the shares of Common Stock shall apply
on like terms to any such other shares.
(h) Adjustment of Number of Shares Issuable Upon
Exercise. Upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 3(a),
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(b), (c) or (d), this Warrant shall thereafter evidence the right to receive, at
the adjusted Purchase Price, that number of shares of Common Stock (calculated
to the nearest one-hundredth) obtained by dividing (x) the product of the
aggregate number of shares of Common Stock covered by this Warrant immediately
prior to such adjustment and the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price by (y) the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
4. Reorganization, Reclassification, Merger and Sale of
Assets. If there occurs any capital reorganization or any reclassification of
the Common Stock of the Company, the consolidation or merger of the Company with
or into another Person (other than a merger or consolidation of the Company in
which the Company is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of its Common Stock) or the
sale or conveyance of all or substantially all of the assets of the Company to
another Person, then the Holder will thereafter be entitled to receive, upon the
exercise of this Warrant in accordance with the terms hereof, the same kind and
amounts of securities (including shares of stock) or other assets, or both,
which were issuable or distributable to the holders of outstanding Common Stock
of the Company upon such reor ganization, reclassification, consolidation,
merger, sale or conveyance, in respect of that number of shares of Common Stock
then deliverable upon the exercise of this Warrant if this Warrant had been
exercised immediately prior to such reorganization, reclassification,
consolidation, merger, sale or conveyance; and, in any such case, appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company) shall be made to assure that the provisions hereof (including
provisions with respect to changes in, and other adjustments of, the Purchase
Price) shall thereafter be applicable, as nearly as reasonably may be
practicable, in relation to any securities or other assets thereafter
deliverable upon exercise of this Warrant.
5. Certificate as to Adjustments. Whenever the Purchase Price
and the number of shares of Common Stock issuable, or the securities or other
property deliverable, upon the exercise of this Warrant shall be adjusted
pursuant to the provisions hereof, the Company shall promptly give written
notice thereof to the Holder, in accordance with Section 17, in the form of a
certificate signed by the Chairman of the Board, President or one of the Vice
Presidents of the Company, and by the Chief Financial Officer, Treasurer or one
of the Assistant Treasurers of the Company, stating the adjusted Purchase Price,
the number of shares of Common Stock issuable, or the securities or other
property deliverable, upon exercise of the Warrant calculated to the nearest
cent or the nearest one one-hundredth of a share and setting forth in
reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based. Each adjustment shall
remain in effect until a subsequent adjustment is required.
6. Fractional Shares. Notwithstanding an adjustment pursuant
to Section 3(h) in the number of shares of Common Stock covered by this Warrant
or any other provision of this Warrant, the Company shall not be required to
issue fractions of shares
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upon exercise of this Warrant or to distribute certificates which evidence
fractional shares. In lieu of fractional shares, the Company may make payment
to the Holder, at the time of exercise of this Warrant as herein provided,
of an amount in cash equal to such fraction multiplied by the greater of the
Current Market Price of a share of Common Stock on the Exercise Date and the
Purchase Price.
7. Notice of Proposed Actions. In case the Company shall
propose at any time or from time to time (a) to declare or pay any dividend
payable in stock of any class to the holders of Common Stock or to make any
other distribution to the holders of Common Stock (other than a regularly
scheduled cash dividend), (b) to offer to the holders of Common Stock rights or
warrants to subscribe for or to purchase any additional shares of Common Stock
or shares of stock of any class or any other securities, rights or options, (c)
to effect any reclassification of its Common Stock, (d) to effect any
consolidation, merger or sale, transfer or other disposition of all or
substantially all of the property, assets or business of the Company which
would, if consummated, adjust the Purchase Price or the securities issuable upon
exercise of the Warrants, (e) to effect the liquidation, dissolution or winding
up of the Company, or (f) to take any other action that would require a vote of
the Company's stockholders, then, in each such case, the Company shall give to
the Holder, in accordance with Section 17, a written notice of such proposed
action, which shall specify (i) the record date for the purposes of such stock
dividend, distribution of rights or warrants or vote of the stockholders of the
Company, or if a record is not to be taken, the date as of which the holders of
shares of Common Stock of record to be entitled to such dividend, distribution
of rights or warrants, or vote is to be determined, or (ii) the date on which
such reclassification, consolidation, merger, sale, transfer, disposition,
liquidation, dissolution or winding up is expected to become effective, and such
notice shall be so given as promptly as possible but in any event at least ten
(10) Business Days prior to the applicable record, determination or effective
date specified in such notice.
8. No Dilution or Impairment. The Company will not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other 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
action as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against dilution or other impairment. Without limiting
the generality of the foregoing, the Company (a) will not increase the par value
of any shares of stock receivable on the exercise of this Warrant above the
amount payable therefor on such exercise, (b) will at all times reserve and keep
available the maximum number of its authorized shares of Common Stock, free from
all preemptive rights therein, which will be sufficient to permit the full
exercise of this Warrant, and (c) will take all such action as may be necessary
or appropriate in order that all shares of Common Stock as may be issued
pursuant to the exercise of this Warrant will, upon issuance, be duly and
validly issued, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof.
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9. Mandatory Exercise. Notwithstanding the provisions of
Section 2, at any time after May 5, 2000, the Closing Price of shares of Common
Stock for a period of not less than thirty (30) consecutive trading days is
equal to or greater than the following "Trigger Prices" (subject to adjustment
as set forth in Section 3(a)) for any of the following periods:
Period Trigger Price
May 7, 2000 to May 6, 2001 $6.25
May 7, 2001 to May 6, 2002 $7.75
May 7, 2002 to February 28, 2003 $9.25
(each such event being referred to herein as the "Triggering
Event"), the Corporation may elect to cancel all Warrants that have not been
exercised pursuant to Section 2 and that remain outstanding on or prior to the
date that is 45 days from the Triggering Event (the "Final Exercise Date"),
without compensation to the Holders for their loss. To invoke such mandatory
exercise mechanism, the Company shall provide written notice to each Holder of
Warrants, which notice shall be mailed no later than the 35th day before the
Final Exercise Date, by registered mail, return receipt requested, which notice
shall (i) state that a Triggering Event has occurred and inform the Holders of
Warrants that the Company has elected to cancel all Warrants that have not been
exercised on or prior to the Final Exercise Date, (ii) set forth the Purchase
Price then in effect and the number of shares of Common Stock that may be
purchased upon exercise of the Warrants and (iii) inform the Holders that all
Warrants that have not been exercised in compliance with Section 2 by the close
of business on the Final Exercise Date shall automatically be canceled in
accordance with this Section 9 and that all rights of the Holders of such
Warrants as holders will cease with respect to such Warrants at such time. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for such mandatory exercise except
as to a Holder (a) to whom notice was not mailed or (b) whose notice was
defective. Effective at 5:00 P.M. (New York City time) on the Final Exercise
Date, all Warrants then outstanding shall be canceled and the Holders thereof
shall have no further rights thereunder.
10. Replacement of Warrants. On receipt by the Company of an
affidavit of an authorized representative of the Holder stating the
circumstances of the loss, theft, destruction or mutilation of this Warrant (and
in the case of any such mutilation, on surrender and cancellation of such
Warrant) and of such bond and indemnification as the Company may reasonably
require, the Company at its expense will promptly execute and deliver, in lieu
thereof, a new Warrant of like tenor.
11. Transfer.
(a) The term "Holder" as used herein shall also include any
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transferee of this Warrant whose name has been recorded by the Company in the
Warrant Register. Each transferee of this Warrant acknowledges that this Warrant
has not been registered under the Securities Act and may be transferred only
pursuant to an effective registration under the Securities Act or pursuant to an
applicable exemption from the registration requirements of the Securities Act.
(b) The Company shall maintain a register (the "WARRANT
REGISTER") in its principal office for the purpose of registering the Warrant
and any transfer thereof, which register shall reflect and identify, at all
times, the ownership of any interest in the Warrant. Upon the issuance of this
Warrant, the Company shall record the name of the initial purchaser of this
Warrant in the Warrant Register as the first Holder. Upon surrender for
registration of transfer or exchange of this Warrant together with a properly
completed and executed Form of Assignment together with the Certificate attached
hereto as Exhibit B and all documents required to be provided by this Form of
Assignment, at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Warrants of like tenor which shall
be exercisable for a like aggregate number of shares of Common Stock, registered
in the name of the Holder or a transferee or transferees.
12. Registration Rights. The Holder of this Warrant and of the
shares of Common Stock to be issued upon the exercise of this Warrant shall be
entitled to the registration rights set forth in Appendix I attached hereto.
13. No Rights or Liability as a Stockholder. This Warrant does
not entitle the Holder hereof to any voting rights or other rights as a
stockholder of the Company. No provisions hereof, in the absence of affirmative
action by the Holder hereof to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Holder shall give rise to any
liability of such Holder as a stockholder of the Company.
14. Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue or delivery upon exercise of this Warrant, as provided herein,
the maximum number of shares of Common Stock that may be issuable or deliverable
upon such exercise. Such shares shall, when issued or delivered in accordance
with this Warrant, be duly and validly issued and fully paid and non-assessable.
The Company shall issue such shares in accordance with the provisions of this
Warrant, and shall otherwise comply with the terms thereof.
15. Charges, Taxes and Expenses. Issuance of certificates for
shares of Common Stock upon the exercise of this Warrant shall be made without
charge to the Holder hereof for any issue or transfer tax, or other incidental
expense, in respect of the issuance or delivery of such certificates or the
securities represented thereby, all of which taxes and expenses shall be paid by
the Company.
16. Amendment or Waiver. This Warrant and any term hereof may
be
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amended, waived, discharged or terminated only by and with the written
consent of the Company and the Holders of 75% of the Warrants given in writing
upon at least 20 days' notice or at a meeting called for the purpose in
accordance with the By-laws of the Company applicable to meetings of
stockholders.
17. Notices. Any notice or other communication (or delivery)
required or permitted hereunder shall be made in writing and shall be by
telecopier, courier service or personal delivery to the Holder at its address as
it appears in the Warrant Register and to the Company at:
EMPIRE OF CAROLINA, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
Delray Beach, FL 33484
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Chairman and Chief Executive Officer
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
All such notices and communications (and deliveries) shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when delivered
by courier, if delivered by commercial overnight courier service; and when
receipt is acknowledged, if telecopied.
18. Restatement. The company shall be entitled, at its
election and its sole discretion, to restate the provisions of this Warrant in a
form such that, to the extent the Company deems it appropriate to do so, and
subject to any applicable requirements of law or any stock exchange or other
market upon which the Warrants are then listed or traded, the provisions
governing the Warrants and the rights of Holders are set forth in a separate
warrant agreement, rather than in the form of Warrants themselves, to which the
form of Warrant shall make reference for the purpose of incorporating the
provisions of such agreement into the rights and obligations applicable to the
Warrants, provided, however, that no such amendment of form shall change any
right of the Holder or obligation of the Company hereunder in a manner that is
adverse to the Warrant Holders. If the Company elects to so amend the form of
the Warrants, the Company shall so inform the Warrant Holders and give notice
to the Warrant Holders that such replacement has been effected. Thereupon,
(i) no further Warrants shall be issuable in the form of this Warrant in
connection with any transfer or replacement of Warrants or Warrant
certification, and (ii) the Holder of such Warrants may submit Warrants in the
form hereof to the Company for replacement with Warrants in such altered form,
but any Warrant that continues to be held in the form hereof shall continue to
evidence the rights with respect to the Company that are set forth herein.
19. Effect of Failure to Notify. Failure to file any
certificate or notice or to mail any notice, or any defect in any certificate or
notice shall not affect the legality or
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validity of the adjustment to the Exercise Price, the number of shares
purchasable upon exercise of this Warrant, or any transaction giving rise
thereto.
20. Certain Remedies. The Holder shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this Warrant
and to enforce specifically the terms and provisions of this Warrant in any
court of the United States or any state thereof having jurisdiction, this being
in addition to any other remedy to which such Holder may be entitled at law or
in equity.
21. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the state of New York, without regard
to the principles of con flicts of law of such State.
22. Headings. The headings in this Warrant are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
EMPIRE OF CAROLINA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
-13-
EXHIBIT A
[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, to receive ______ shares of Common Stock and
herewith tenders payment for such shares to the order of Empire of Carolina,
Inc. in the amount of $___________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of _______________________, whose address is ____________________________
and that such shares be delivered to __________________ whose address is
____________________________. If said number of shares is less than all of the
shares of Common Stock purchasable hereunder, the undersigned requests that a
new Warrant representing the remaining balance of such shares be registered in
the name of ____________________________, whose address is
_________________________, and that such Warrant be delivered to
_______________________, whose address is _________________________.
Signature:
Date:
Signature Guaranteed:
-14-
EXHIBIT B
ASSIGNMENT FORM
To assign this Warrant, fill in the form below:
I or we assign and transfer this Warrant to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
Date: Your Signature*:
Signature Guarantee:
(Signature must be guaranteed by a participant in a recognized
signature guarantee medallion program)
-15-
(*) Sign exactly as your name appears on this Warrant.
-16-
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
WARRANTS
This certificate relates to ________ Warrants held in (check applicable space)
____ book-entry or ____ certificated form by the undersigned.
In connection with any transfer or exchange of any of the Warrants evidenced by
this certificate, the undersigned confirms that such Warrants are being:
CHECK ONE BOX BELOW:
(1) / / acquired for the undersigned's own account, without transfer; or
(2) / / transferred to the Company; or
(3) / / transferred pursuant to and in compliance with Rule 144A or in
accordance with Regulation S under the Securities Act of 1933, as
amended (the"Securities Act"); or
(4) / / transferred to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that has
furnished to the Company a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Administrators); or
(5) / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act; or
(6) / / transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Company shall refuse to register any of
the Warrants evidenced by this certificate in the name of any person other than
the registered holder thereof; provided, however, that (i) if box (1) is checked
and the Warrants are being
-17-
acquired prior to registration under the securities laws, or (ii) if box (3),
(4) or (5) is checked, the Company may require, prior to registering any such
transfer of the Capital Securities, in its sole discretion, such legal opinions,
certifications and other information as is reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act, such as the
exemption provided by Rule 144 under such Act; provided, further, that if box 3
is checked, the transferee must also certify that it is a qualified
institutional buyer as defined in Rule 144A of the Securities Act.
Signature
Signature Guarantee:
Signature
(Signature must be guaranteed by a participant in a signature
guarantee medallion program)
-18-
APPENDIX I
REGISRATION RIGHTS
Terms used in this Appendix that are defined in the Warrant to
which this Appendix is attached have the meaning given to them in the Warrant.
(a) Shelf Registration. Within 180 days from the
Closing Date, the Company shall cause to be filed a registration statement (a
"Shelf Registration") on Form S-3 or any other appropriate form under the
Securities Act for an offering to be made on a delayed or continuous basis
pursuant to Rule 415 thereunder or any similar rule that may be adopted by the
Securities and Exchange Commission (the "Commission") and permitting (i) sales
of Warrants, both in ordinary course brokerage or dealer transactions or in any
other transfer for consideration not involving an underwritten public offering,
and (ii) the sale of shares of Common Stock to the Warrant Holders upon the
exercise of this Warrant (together, the "Registrable Securities") (and in both
cases shall register or qualify the shares to be sold in such offering under
such other securities or "blue sky" laws, if any, as would be required pursuant
to paragraph (d)(ii) hereof). In addition, shares of Common Stock ("HPA Party
Common Stock") that are acquired upon the exercise of Warrants by HPA, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇, or any direct or indirect transferee of Warrants
from any of them in transactions not involving a public offering (an "HPA
Person"), shall constitute Registrable Securities and, subject to paragraph (c)
below, shall be registered as part of the Shelf Registration promptly upon such
party's request. Prior to the filing of the Shelf Registration or any supplement
or amendment thereto, the Company will furnish copies of the Shelf Registration
or such amendment to one counsel designated by HPA, and will not file the Shelf
Registration or such amendment without the prior consent of such counsel, which
consent shall not be unreasonably withheld. The Company shall use its reasonable
efforts to (1) cause the Shelf Registration to be declared effective by the
Commission as soon as practicable after its filing with the Commission and (2)
keep the Shelf Registration continuously effective, subject to paragraph (c)
below. The Company shall, if necessary, supplement or make amendments to the
Shelf Registration, if required by the registration form used by the Company for
the Shelf Registration or by the instructions applicable to such registration
form or by the Securities Act or the rules or regulations thereunder or as may
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reasonably be requested by HPA. The Company shall pay all Registration Expenses
incurred in connection with the Shelf Registration.
(b) Piggyback Registration. At any time prior to May
6, 2000 (or, with respect to the HPA Party Common Stock, so long as shares of
HPA Party Common Stock are held by an HPA Party who is an affiliate of the
Company for purposes of Rule 144 (as defined below)), whenever the Company
proposes to file a registration statement under the Securities Act with respect
to an underwritten public offering of Common Stock by the Company for its own
account or for the account of any other holder of Common Stock, the Company
shall give written notice (the "Offering Notice") of such proposed filing to
each Holder of at least 100,000 Warrants at least 30 days before the anticipated
filing date. Such Offering Notice shall offer all such Holders the opportunity
to register such number of Warrants or HPA Party Common Stock as each such
Holder may request in writing, which request for registration (each, a
"Piggyback Registration") must be received by the Company within 15 days after
the Offering Notice is given. The Company shall use all reasonable efforts to
cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the Holders of the Registrable Securities requested to be
included in the registration for such offering to include such Registrable
Securities in such offering on the same terms and conditions as the securities
of the Company included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of a proposed underwritten offering advise the
Company in writing that in its or their opinion the number of Registrable
Securities proposed to be sold in such offering exceeds the number of
Registrable Securities that can be sold in such offering without adversely
affecting the market for the Company's securities or the price that may be
obtained in such offering, the Company will include in such registration the
number of Registrable Securities that in the opinion of such managing
underwriter or underwriters can be sold without adversely affecting the market
for the Company's common stock or the price to be received in such offering. In
such event, the number of Registrable Securities, if any, to be offered for the
accounts of Holders shall be reduced pro rata on the basis of the relative
number of any Registrable Securities requested by each such Holder to be
included in such registration to the extent necessary to reduce the total number
of Registrable Securities to be included in such offering to the number
recommended by such managing underwriter or underwriters, provided that if any
other Person has rights to a Piggyback Registration with respect to the same
underwritten public offering, the rights of the Holders to sell their
-20-
securities together with such other Persons holding Piggyback Rights shall be
cut back proportionately (in relation to the number of shares that each Person
so participating in the Piggyback Registration has requested to be included
compared to the number of all shares with respect to which inclusion has been
properly requested (with Warrants to be considered shares for the purposes of
this calculation)), except to the extent that the instrument providing for such
other Piggyback Rights specifically provides that the rights held by such other
Person either take precedence over or shall be subordinated to the Piggyback
Rights held by the Holders hereunder. The Company shall pay all Registration
Expenses incurred in connection with any Piggyback Registration.
(c) Termination of Registration Rights; Provision of
Rule 144 Information. As used in this section "affiliate" has the meaning given
to it in Rule 144 under the Securities Act ("Rule 144"). The registration rights
provided hereunder shall continue so long as any Warrants remain outstanding and
shall then terminate (except in the case of HPA Party Common Stock), provided
that (i) the Company shall be entitled to remove from registration under
paragraph (a) Warrants held by Persons (other than HPA Persons who are
affiliates of the Company) who have acquired such Warrants for consideration
pursuant to a transaction covered by the registration provided by paragraph (a),
and (ii) at any time after two years after the date of the issuance of the
Warrants, so long as the Warrants are freely tradable under Rule 144 in the
hands of Persons who are not affiliates of the Company, (A) the Company shall be
entitled to remove Warrants held by non-affiliates from registration under
paragraph (a) and, (B) if no HPA Person remains an affiliate of the Company, or
no HPA Person who is an affiliate of the Company owns more than 1% of the then
outstanding Warrants, registration of the Warrants under paragraph (a) shall no
longer be required. Registration may terminate with respect to HPA Party Common
Stock when, and to the extent that, no HPA Person who remains an affiliate of
the Company owns more than 1% of the then outstanding shares of Common Stock.
For a period of at least two years, and continuing while any
HPA Person remains an affiliate of the Company and continues to hold Warrants or
HPA Party Common Stock, the Company shall be required (i) to file such reports
under the Exchange Act, or otherwise make publicly available such information,
as may be required by section (c) of Rule 144 in order for sales to be permitted
under the provisions of Rule 144 and (ii) to provide confirmation of such filing
or availability upon request to any Holder or HPA Person
-21-
who seeks to rely upon Rule 144 (other than section (k) thereof) in the sale of
Warrants or HPA Party Common Stock.
(d) Registration Procedures. Whenever Registrable
Securities are to be registered pursuant hereto, the Company shall use its best
efforts to effect the registration of Registrable Securities in accordance with
the intended method of disposition thereof as expeditiously as practicable and,
in connection with any such request, the Company shall as expeditiously as
possible:
(i) furnish to each seller of Registrable
Securities such number of copies of the registration statement, each amendment
and supplement thereto (in each case including all exhibits thereto), the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as each seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;
(ii) if required, use best efforts to register or
qualify such Registrable Securities under such other securities or "blue sky"
laws of such jurisdictions as any seller reasonably requests in writing and to
do any and all other acts and things that may be reasonably necessary or
advisable to register or qualify for sale in such jurisdictions the
Registrable Securities owned by such seller; provided, however, that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) subject itself to taxation
in any such jurisdiction, (iii) consent to general service of process in any
such jurisdiction or (iv) provide any undertaking required by such other
securities or "blue sky" laws or make any change in its charter or by-laws that
the Board of Directors of the Company determines in good faith to be contrary
to the best interest of the Company and its stockholders;
(iii) use best efforts to cause the Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable the seller or
sellers thereof to consummate the disposition of such Registrable Securities;
-22-
(iv) notify each seller of such Registrable
Securities at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and prepare and file
with the Commission a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided, in the use of a Piggyback Registration, that prior to
the filing of such supplement or amendment, the Company will furnish copies
thereof to the Holders whose shares or Warrants are included in such
registration, any underwriters and counsel for such Holders, and will not file
such supplement or amendment without the prior consent of such counsel, which
consent shall not be unreasonably withheld;
(v) enter into customary agreements (including an
underwriting agreement in customary form) if the offering is an underwritten
offering) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities;
(vi) make available for inspection by any seller of
Registrable Securities and any attorney, accountant or other agent retained by
any such seller (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as are reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors, employees and agents to supply all information reasonably requested
by any such Inspector in connection with such registration statement. Records
that the Company determines, in good faith, to be confidential and that it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is, in the reasonable
judgment of any Inspector, necessary to avoid or correct a misstatement or
omission of a material fact in the registration statement or (ii) the release
of such Records is ordered pursuant to a subpoena or other order from a court
or governmental agency of competent jurisdiction or required (in the written
opinion of counsel to such Holder or
-23-
underwriter, which counsel shall be reasonably acceptable to the Company)
pursuant to applicable state or federal law. Each seller of Registrable
Securities shall be required to agree, however, that it will, upon learning that
disclosure of such Records are sought by a court or governmental agency, give
notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
(vii) if such sale is pursuant to an underwritten
offering, use reasonable efforts to obtain a "cold comfort" letter and updates
thereof from the Company's independent public accountants in customary form
and covering such matters of the type customarily covered by "cold comfort"
letters as the managing underwriter or underwriters reasonably request; and
(viii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three months
after the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
Provided that the applicable listing requirements continue to
be satisfied, the Company shall use its best efforts to maintain the listing of
the Common Stock on the American Stock Exchange or, if such stock is delisted
from the American Stock Exchange, to provide for the listing of the Common Stock
on NASDAQ/NMS; and provided that such a listing continues to be in effect, the
Company shall cause any Common Stock received upon the exercise of the Warrants
to be listed on the applicable market. In the case of the Warrants, if (i) at
least 500,000 Warrants have been sold pursuant to one or more Piggyback
Registrations or (ii) Holders of at least 20% of the then outstanding Warrants
request the Company to make a determination whether the public distribution and
float of the Warrants will qualify for such a listing and the Company determines
that the applicable standards have been met, the Company shall use its best
efforts to cause the Warrants to be registered under the Securities Exchange
Act of 1934 (the "Exchange Act") and to be listed for trading on each
securities market, if any, on which the Common Stock is then listed or, with
the consent of the Company (which shall not be unreasonably withheld), on any
other United
-24-
States securities exchange that is registered under the Exchange Act or
over-the-counter market that is maintained by the National Association of
Securities Dealers, Inc.
The Company may require each seller or prospective seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such infor mation regarding the distribution of such securities
and other matters as may be required to be included in the registration
statement.
Upon receipt of any notice from the Company of the happening
of any event of the kind described in clause (iv), each holder of Registrable
Securities shall forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such ▇▇▇▇▇▇'s receipt of the copies of the supplemented or amended
prospectus contemplated by this clause (iv) and, if so directed by the Company,
such holder shall deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice. If the Company gives any such notice, the Company shall extend
the period during which such registration statement shall be maintained
effective pursuant to this Agreement by the number of days during the period
from and including the date of the giving of such notice pursuant to clause (iv)
to and including the date when each seller of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated in clause (iv). Notwithstanding anything to
the contrary set forth above in this paragraph, the Company may not require the
holders of Registrable Securities to discontinue disposition of Registrable
Securities for purposes of effecting a public offering of any securities of the
Company by any of its securityholders (other than an offering made pursuant to a
registration on Form S-8). Notwithstanding the foregoing, if the Company
furnishes to the Holders a certificate signed by the Chief Financial Officer of
the Company stating that (i) in the good faith judgment of the Board of
Directors of the Company it would be significantly disadvantageous to the
Company and its stockholders for any such Shelf Registration to be amended or
supplemented and (ii) the need for such an amendment or supplement is not caused
by a proposed secondary public offering of securities of the Company by any of
its securityholders (other than an offering made pursuant to a registration on
Form S-8), the Company may defer such amending or supplementing of such Shelf
Registration for not more than 45 days and in such event the Holders shall be
required to
-25-
discontinue disposition of any Registrable Securities covered by such Shelf
Registration during such period. Notwithstanding the foregoing, in connection
with any amendment or supplement required to reflect a public offering of
securities by the Company, the Company shall file such amendment or supplement
no later than the same day that it files a registration statement relating to
such offering and shall provide written notice of the filing of such amendment
or supplement to the holders of Registrable Securities promptly following such
filing.
(e) Registration Expenses. The Company shall pay all
expenses incident to its performance of or compliance with this Agreement,
regardless of whether such registration becomes effective including, without
limitation, (a) all Commission, stock exchange or market and National
Association of Securities Dealers, Inc. registration and filing fees, (b) all
fees and expenses incurred in complying with securities or "blue sky" laws
(including reasonable fees and disbursements of counsel in connection with "blue
sky" qualifications of the Registrable Securities), (c) all printing, messenger
and delivery expenses, (d) all fees and disbursements of the Company's
independent public accountants and counsel, (e) all fees and expenses of any
special experts retained by the Company in connection with any Piggyback
Registration pursuant to the terms of this Agreement, and (f) the fees and
disbursements of one counsel retained collectively by the Holders for a
registration; provided, however, that the Company shall not pay the costs and
expenses of any counsel, accountants or other representatives retained by the
Holders, individually or in the aggregate.
(f) Indemnification; Contribution.
(1) Indemnification by the Company. The
Company shall indemnify, to the fullest extent permitted by law, each Holder,
its officers, directors and agents and each Person, if any, who controls such
Holder (within the meaning of the Securities Act) (it being understood that, for
these purposes, an HPA Person who is an affiliate of the Company shall be
considered a Holder in respect of HPA Party Common Stock), against any and all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission to state therein a
material fact required to be stated therein or
-26-
necessary to make the statements therein (in the case of a prospectus, in light
of the circumstances under which they were made) not misleading, except insofar
as the same are caused by or contained in any information with respect to such
Holder furnished in writing to the Company by such Holder expressly for use
therein or by such ▇▇▇▇▇▇'s failure to deliver a copy of the prospectus or any
supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same or by the delivery of prospectuses by
such Holder after the Company notified such Holder in writing to discontinue
delivery of prospectuses. The Company also shall indemnify any underwriters of
the Registrable Securities, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the
Holders.
(2) Indemnification by Holders. In
connection with any registration statement in which a Holder is participating,
each such Holder shall furnish to the Company in writing such information and
affidavits with respect to such Holder as the Company reasonably requests for
use in connection with any such registration statement or prospectus and agrees
to indemnify, severally and not jointly, to the fullest extent permitted by law,
the Company, its officers, directors and agents and each Person, if any, who
controls the Company (within the meaning of the Securities Act) against any and
all losses, claims, damages, liabilities and expenses resulting from any untrue
or alleged untrue state ment of a material fact or any omission or alleged
omission of a material fact required to be stated in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue or alleged
untrue statement or omission is contained in or improperly omitted from, as the
case may be, any information or affidavit with respect to such Holder so
furnished in writing by such Holder. Each Holder also shall indemnify any
underwriters of the Registrable Securities, their officers and directors and
each Person who controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification of
the Company.
(3) Conduct of Indemnification
Proceedings. Any party that proposes to assert the right to be indemnified
hereunder shall, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim is to be
-27-
made against an indemnifying party or parties hereunder, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified
party in connection with the defense. If the indemnifying party assumes the
defense, the indemnifying party shall have the right to settle such action
without the consent of the indemnified party; provided, however, that the
indemnifying party shall be required to obtain such consent (which consent
shall not be unreasonably withheld) if the settlement includes any admission
of wrongdoing on the part of the indemnified party or any decree or
restriction on the indemnified party or its officers or directors; provided,
further, that no indemnifying party, in the defense of any such action, shall,
except with the consent of the indemnified party (which consent shall not be
unreasonably withheld), consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from
all liability with respect to such action against the indemnified party. The
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (a) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (b)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(c) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on
-28-
behalf of the indemnified party) or (d) the indemnifying party has not in fact
employed counsel to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, dis bursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time from all such indemnified party
or parties unless (x) the employment of more than one counsel has been
authorized in writing by the indemnifying party or parties, (y) an indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it that are different from or in addition to those
available to the other indemnified parties or (z) a conflict or potential
conflict exists (based on advice of counsel to an indemnified party) between
such indemnified party and the other indemnified parties, in each of which
cases the indemnifying party shall be obligated to pay the reasonable fees and
expenses of such additional counsel or counsels. An indem nifying party shall
not be liable for any settlement of any action or claim effected without
its written consent (which consent shall not be unreasonably withheld).
(4) Contribution. If the indemnification provided for herein from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to herein,
then the indemnifying party, to the extent such indemnification is unavailable,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions that resulted in such losses, claims, damages,
liabilities or expenses. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in subparagraph (3)
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hereof, any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding.
If indemnification is available hereunder, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
subparagraphs (1) and (2) hereof without regard to the relative fault of said
indemnifying parties or indemnified party.
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