1
EXHIBIT 10.23
EXECUTION COPY
THE ▇▇▇▇▇▇ GROUP, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
WARRANT PURCHASE AGREEMENT
The Banks referred to below
c/o Fleet National Bank, as Administrative Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dated as of: May 7, 2001
Ladies and Gentlemen:
The undersigned, The ▇▇▇▇▇▇ Group, Inc., a Massachusetts
corporation (hereinafter, together with its successors and assigns, the
"Company"), proposes to issue and sell to each of Fleet National Bank, Antares
Capital Corporation, Captiva IV Finance Ltd., Chase Manhattan Bank, Citizens
Bank of Massachusetts, Comerica Bank, First Massachusetts Bank, Franklin
Floating Rate Trust, Great Point CLO 1999-1 Ltd., ▇▇▇▇▇▇ Financial, Inc., Key
Corporate Capital, Inc., LaSalle Bank National Association, Syndicated Loan
Funding Trust, Magnetite Asset Investors LLC, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Prime Rate
Portfolio, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Senior Floating Rate Fund, Inc., National City Bank,
Pilgrim America High Income Investments Ltd., Pilgrim CLO 1999-1 Ltd.,
SEQUILS-Pilgrim I, Ltd., Pilgrim Prime Rate Trust, The Provident Bank, Star
Bank, National Association, Transamerica Business Credit Corporation, Travelers
Corporate Loan Fund Inc., The Travelers Insurance Company, ▇▇▇ ▇▇▇▇▇▇ Prime Rate
Income Trust and ▇▇▇ ▇▇▇▇▇▇ Senior Income Trust (together with their respective
successors and assigns, each a "Bank" and, collectively, the "Banks"), Common
Stock Purchase Warrants of the Company in the form of Exhibit A hereto, on the
terms and subject to the conditions contained in this Agreement.
Accordingly, the parties hereto agree as follows:
2
-2-
ARTICLE I
CERTAIN DEFINED TERMS
As used herein, the following terms shall have the respective meanings
assigned to them in this Article I:
"Adjusted Net Worth" shall mean, in connection with any liquidation or
sale of assets by the Company, the consolidated net worth of the Common Stock of
the Company, determined in accordance with generally accepted accounting
principles, taking into account (i) the total consideration received by the
Company for such transactions, (ii) the transaction costs, (iii) any liabilities
of the Company to be discharged or assumed by a third party in connection with
such transaction, and (iv) the aggregate liquidation value of any of the then
outstanding shares of Preferred Stock of the Company.
"Affiliate" means, with respect to any Person, any other Person (i)
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such person or (ii) that directly
or indirectly holds a material interest in such person, or in which such person
directly or indirectly holds a material interest.
"Amendment" shall mean the Fourth Amendment to Amended and Restated
Revolving Credit and Term Loan Agreement and Limited Waiver dated as of the date
hereof among the Company, certain subsidiaries of the Company, Fleet National
Bank, as administrative agent, and certain other financial institutions party
thereto.
"Articles of Organization" shall have the meaning ascribed to that term
in Section 2.1(a) hereof.
"Bank" shall have the meaning ascribed to that term in the preamble
hereto.
"Bank Affiliate" shall have the meaning ascribed to that term in
Article XII hereof.
"Call Closing Date" shall have the meaning ascribed to that term in
Section 9.1 hereof.
"Call Notice" shall have the meaning ascribed to that term in
Section 9.1 hereof.
"Call Repurchase Price" shall have the meaning ascribed to that term in
Section 9.2 hereof.
"Capital Transaction" means any of the following: (i) one or more
mergers, consolidations, liquidations or sales of more than fifty percent (50%)
of the assets of the Company or other similar corporate actions pursuant to
which the Company or the holders of Common Stock and/or Preferred Stock receive
cash, securities, or other property, or (ii) the Common Stock and/or Preferred
Stock of the Company is sold in a transaction or a series of related
transactions to one or more
3
-3-
Persons who is not one of the Principals (as defined in the Credit Agreement)
and which Person or Persons hold, in the aggregate, a majority of the voting
power of the capital stock of the Company after the transaction(s).
"Closing" shall have the meaning ascribed to that term in Article IV
hereof.
"Closing Date" means the date of the Closing.
"Closing Price" means, with respect to shares of Common Stock on any
day, (i) the last reported sales price on such day on the principal stock
exchange or Nasdaq National Market System or Nasdaq SmallCap Market on which
such Common Stock is then listed or admitted to trading, as of the end of the
"regular" trading day, (ii) if no sale takes place on such day on any such
exchange, system or market, the average of the last reported closing bid and
asked prices on such day as officially quoted on any such exchange, system or
market, (iii) if the Common Stock is not then listed or admitted to trading on
any stock exchange, the Nasdaq National Market System or the Nasdaq SmallCap
Market, the average of the last reported closing bid and asked prices on such
day in the over-the-counter market, as furnished by the National Association of
Securities Dealers Automated Quotation System or the National Quotation Bureau,
Inc. (or any similar firm then engaged in such business), or (iv) if such prices
in the over-the-counter market are not available, the fair market value set by,
or in a manner established by, the Board of Directors of the Company, acting in
good faith.
"Commission" means the Securities and Exchange Commission.
"Common Stock" shall have the meaning ascribed to that term in
Section 2.1(a) hereof.
"Company" shall have the meaning ascribed to that term in the preamble
hereto.
"Credit Agreement" shall mean the Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of February 5, 1999, as amended and in effect
from time to time, among the Company, certain subsidiaries of the Company, Fleet
National Bank, as administrative agent, and certain other financial institutions
party thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any federal statute or code which is a successor thereto.
"Existing Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 26, 1997 among the Company and certain holders of
Common Stock, as amended and in effect from time to time.
"Fair Market Value" means the fair value per share of the applicable
shares as of the applicable date on the basis of a sale of such shares in an
arms length private sale between a willing buyer and a willing seller, neither
acting under compulsion. In determining such Fair Market Value, no discount
shall be taken for constituting a minority interest and no upward adjustment or
discount shall
4
-4-
be taken relating to the fact that the shares in question are subject to the
restrictions and entitled to the rights provided hereunder. Such Fair Market
Value shall be determined in good faith by the Board of Directors of the
Company; provided that if the Investors object in writing within fifteen (15)
days of being notified of the Board of Directors' determination of the Fair
Market Value, then the Fair Market Value shall be determined by an independent
appraiser selected by the Company and the Investors. The determination of the
independent appraiser (which determination shall not be less than the
determination of the Company's Board of Directors) shall be delivered to each of
the Company and the Investors within thirty (30) days of such independent
appraiser's selection and shall be conclusive and binding upon the Company and
each of the Investors to which such call relates. All expenses of the
independent appraiser shall be borne 50% by the Company and 50% by the Investors
to which such call relates on a pro rata basis based on the number of shares for
which such Warrants held by each of such Investors are exercisable and the
number of such Warrant Shares held by each of such Investors.
"Form S-3", "Form S-4" and "Form S-8" means the forms so designated,
promulgated by the Commission for registration of securities under the
Securities Act, and any forms succeeding to the functions of such forms, whether
or not bearing the same designation.
"Holders" means, collectively, all Investors, including all transferees
of Investors; and the term "Holder" shall mean any one of the Holders.
"Indemnified Party" shall have the meaning ascribed to that term in
Section 8.6(c) hereof.
"Indemnifying Party" shall have the meaning ascribed to that term in
Section 8.6(c) hereof.
"Investor Consent" means, at any particular date, the consent, approval
or vote of the Majority Investors.
"Investor Shares" means, in relation to any Investor at any particular
date, (i) all shares of Common Stock held of record by such Investor (other
than, with respect to Fleet National Bank, the shares of Common Stock acquired
by FSC Corp. prior to the date hereof) on such date, and (ii) all shares of
Common Stock issuable by the Company to such Investor upon conversion of or in
exchange for or upon exercise of rights under all other capital stock or other
securities (including the Warrants and any other warrants and options) of the
Company held of record by such Investor on such date; and, in this Agreement,
each Investor shall be deemed to hold of record on any particular date the total
number of shares of Common Stock issuable by the Company upon conversion of or
in exchange for or upon exercise of rights under all capital stock or other
securities (including the Warrants and any other warrants or options) of the
Company then held of record by such Investor.
"Investors" means, collectively, (i) each of the Banks so long as such
Banks shall continue to own and hold of record any of the Securities, (ii) each
transferee
5
-5-
of any of the Banks so long as such transferee shall continue to own and hold of
record any of the Securities, and (iii) each transferee of any other Investor so
long as such transferee shall continue to own and hold of record any of the
Securities; provided that the term Investors shall not include any transferee
which acquires Securities pursuant to an effective registration statement or in
an open market transaction pursuant to Rule 144.
"Majority Investors" means, in relation to the Investors at any
particular date, Investors holding of record or deemed to be holding of record,
at such date, at least fifty-one percent (51%) of the total number of all
Investor Shares then held or deemed held of record by all Investors on such
date.
"Majority of Registrable Securities" means, in relation to any
registration, more than fifty percent (50%) of all Registrable Securities
included or to be included in such registration.
"Nasdaq" means the National Association of Securities Dealers automated
quotation system.
"Person" means an individual, corporation, partnership, joint venture,
limited liability company, trust, or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Piggyback Registration" shall have the meaning ascribed to that term
in Section 8.1(c) hereof.
"Preferred Capital Stock" shall have the meaning ascribed to that term
in Section 7.5(b) hereof.
"Preferred Stock" shall have the meaning ascribed to that term in
Section 2.1(a) hereof.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any Prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the prospectus, including post-effective amendments, and all material
incorporated by reference in such prospectus.
"Put Repurchase Price" shall have the meaning ascribed to that term in
Section 9.1 hereof.
"Qualified Public Offering" shall mean the Company's underwritten
public offering pursuant to an effective registration statement under the
Securities Act covering the offer and sale of shares of Common Stock in which
not less than $20,000,000 of gross proceeds from such public offering are
received by the Company for the account of the Company.
"register, registered and registration" refers to a registration
effected by preparing and filing a Registration Statement in compliance with the
Securities
6
-6-
Act and the declaration or ordering by the Commission of effectiveness of such
Registration Statement.
"Registrable Securities" means, in relation to the Holders at any
particular time: (A) all shares of Common Stock issuable upon conversion of or
in exchange for or upon exercise of rights under any capital stock or other
securities (including, without limitation, options and warrants) of the Company
held of record by Holders at such time; and (B) all shares of Common Stock held
of record at such time by Holders (other than, with respect to Fleet National
Bank, the shares of Common Stock acquired by FSC Corp. prior to the date
hereof).
"Registration Expenses" shall have the meaning ascribed to that term in
Section 8.6(a) hereof.
"Registration Period" shall have the meaning ascribed to that term in
Section 8.1(g) hereof.
"Registration Statement" means any Registration Statement of the
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
"Rule 144" means Rule 144 issued by the Commission under the Securities
Act, or any subsequent rule pertaining to the disposition of securities without
registration.
"Securities" means the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended, or any
federal statute or code which is a successor thereto.
"Stock Option Plan" means the Company's 1997 Stock Option Plan, as
amended from time to time.
"Subsidiary" means, in relation to the Company at any particular time,
any other corporation at least fifty percent (50%) of the outstanding voting
shares in the capital of which shall be owned or controlled (whether directly or
indirectly) by the Company and/or by any one or more of the Company's other
Subsidiaries.
"Trading Day" shall mean any day on which trading takes place (a) if
the Common Stock is then listed or admitted to trading on the Nasdaq National
Market, on the Nasdaq National Market, (b) if the Common Stock is then listed or
admitted to trading on the Nasdaq SmallCap Market, on the Nasdaq SmallCap
Market, (c) if the Common Stock is then listed or admitted to trading on a
national securities exchange, on the principal national securities exchange on
which the Common Stock is then listed or admitted to trading or (d) otherwise,
in the over-the-counter market and prices reflecting such trading are published
by the National Association of Securities Dealers Automated Quotation System or
the National Quotation Bureau, Inc.
7
-7-
"Underwriters' Maximum Number" shall have the meaning ascribed to that
term in Section 8.1(e) hereof.
"underwritten registration" or "underwritten offering" refers to any
registration in which securities of the Company are sold or to be sold pursuant
to a firm commitment underwriting.
"Warrants" shall have the meaning ascribed to that term in Section
2.2(a) hereof and shall in any event include all other warrants delivered in
exchange or in substitution therefor.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of any of the Warrants.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Banks as follows:
SECTION 2.1. CAPITALIZATION OF COMPANY.
(a) The authorized capital stock of the Company consists of: 25,000,000
shares of common stock, par value $.001 per share (the "Common Stock"). The
Common Stock has the voting powers, rights, and privileges stated therefor in
the Company's Articles of Organization, as amended (the "Articles of
Organization").
(b) The Company's issued and outstanding securities consist of
20,336,567 shares of Common Stock. All of such shares of Common Stock have been
duly and validly issued and are fully paid and non-assessable.
(c) Except for the Warrants, the Company has not granted or issued any
options, warrants or other rights to acquire any shares of Preferred Stock or
Common Stock, and there are no outstanding agreements of the Company for the
purchase or sale of any shares of Preferred Stock or Common Stock or outstanding
securities exercisable for or convertible into shares of Preferred Stock or
Common Stock, other than options granted under the Stock Option Plan exercisable
for up to 4,232,765 shares of Common Stock.
SECTION 2.2. AUTHORIZATION OF WARRANTS.
(a) The Board of Directors of the Company has duly and properly
authorized (i) the issuance to the Banks of the Company's Common Stock Purchase
Warrants in the form of Exhibit A annexed hereto (the "Warrants") evidencing
rights to subscribe for and purchase from the Company 1,293,123 shares of the
Company's Common Stock constituting in the aggregate 5% of the issued and
outstanding Common Stock determined on a fully-diluted basis (including, but not
limited to, issued options) as of May 7, 2001 and (ii) the issuance to the
holders of the Warrants of the shares of Common Stock issuable
8
-8-
by the Company upon exercise of the Warrants. Upon the issuance of the shares of
Common Stock issuable by the Company upon exercise of the Warrants, such shares
shall be duly and validly issued, fully paid and nonassessable.
(b) Subject to the prior expiration of the Warrants pursuant to Section
2.4 of the Warrants, the Warrants will be exercisable at a price, subject to
adjustment as therein provided, of $5.04 per Warrant Share. The Warrants will be
in the form of Exhibit A annexed to this Agreement.
SECTION 2.3. APPROVALS; NO CONFLICTS, ETC.
(a) No approval, consent, authorization or other order of, and no
designation, filing, registration, qualification or recording with, any
governmental authority, domestic or foreign, stock exchange or similar governing
body is required for the Company's performance of this Agreement or the
consummation of the transactions contemplated hereby, other than approvals,
filings and registrations with the Commission, Nasdaq, and similar governmental
authorities or governing bodies in connection with the exercise of registration
rights under Article VIII hereof.
(b) The execution and delivery of this Agreement by the Company, and
the performance of its obligations hereunder and the consummation of the
transactions contemplated hereby, do not result in any breach or violation of,
or any default under, any term or provision of (i) the Company's Articles of
Organization or By-laws, (ii) any indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note agreement, debt instrument or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its property is subject, or (iii) any statute, judgment, decree,
order, rule or regulation applicable to the Company or of any arbitrator, court,
regulatory body, administrative agency or any other governmental agency or body,
domestic or foreign, having jurisdiction over the Company or any of its
respective activities or properties.
(c) There is no action, suit, proceeding or investigation pending or,
to the knowledge of the Company, threatened, against the Company before or by
any court, regulatory body or administrative agency or any other governmental
agency or body, domestic or foreign, which challenges the validity of any action
taken or to be taken pursuant to or in connection with this Agreement or the
issuance of the Warrants or the Warrant Shares.
SECTION 2.4. OFFERING. Subject to the representations and warranties of
the Banks in Article VI hereof, the offer, sale and issuance of the Securities
as contemplated by this Agreement are not subject to the registration
requirements of the Securities Act, and neither the Company, nor anyone acting
on its behalf, has taken or will take any action that would cause such
registration requirements to be applicable.
SECTION 2.5. REGISTRATION RIGHTS. Except for the Existing Registration
Rights Agreement, the Company is not under any obligation to register under the
9
-9-
Securities Act any of its currently outstanding securities or any of its
securities which may hereafter be issued.
ARTICLE III
SALE AND PURCHASE OF
WARRANTS AT CLOSING
At the Closing hereunder, the Company will issue and sell to the Banks
or their designees, and, subject to the terms and conditions hereof and in
reliance upon the written representations and warranties of the Company, the
Banks or their designees will severally purchase from the Company, the Warrants,
in the respective amounts set forth on Schedule 3.1 attached hereto. The
aggregate purchase price for the Warrants shall be the Banks entering into the
Amendment, and no additional consideration shall be payable to the Company with
respect to the issuance of the Warrants.
ARTICLE IV
THE CLOSING
The closing under this Agreement (the "Closing") will take place at the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ at 10:00
a.m., local time, on May 7, 2001, or at such other time and on such other date
as may be mutually agreed upon in writing by the Banks and the Company. At the
Closing, the Company will (among other things) deliver to the Banks the Warrants
purchased by the Banks hereunder, duly executed by the Company, and the Banks
will deliver to the Company the aggregate purchase price payable by the Banks
for the Warrants by executing and delivering to the Company the Amendment. In
addition, at the Closing, the Company will deliver to the Banks an opinion of
counsel in form and substance satisfactory to the Banks.
ARTICLE V
ADDITIONAL REPRESENTATIONS OF COMPANY
The Company hereby repeats, on and as of the date hereof, each of the
representations and warranties made by it in Section 7 of the Credit Agreement
(except to the extent of changes resulting from transactions contemplated or
permitted by the Credit Agreement and changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse to the
Company, and to the extent that such representations and warranties relate
expressly to an earlier date).
ARTICLE VI
REPRESENTATIONS OF THE BANKS
Each of the Banks represents and warrants to the Company that:
10
-10-
(a) Such Bank is purchasing Warrants from the Company in accordance
with the terms hereof for such Bank's own account without a view to any
distribution thereof in violation of the Securities Act, but, subject,
nevertheless, to any requirement of law that the disposition of such Bank's
property shall at all times be within such Bank's control. Such Bank has been
informed and understands that the Securities have not been registered pursuant
to the provisions of Section 5 of the Securities Act and must be held
indefinitely unless such Securities are subsequently registered under the
provisions of the Securities Act or an exemption from such registration is
available.
(b) Such Bank is an "accredited investor" within the meaning of Rule
501(a) promulgated under the Securities Act.
(c) Such Bank understands that each stock certificate or instrument
representing or evidencing any Securities shall bear a legend in or
substantially in the following form:
"THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR ANY APPLICABLE STATE
SECURITIES LAW.
ThIS WARRANT AND THE SHARES ISSUABLE HEREUNDER ARE SUBJECT TO A
CALL RIGHT OF THE COMPANY AND CERTAIN OTHER RESTRICTIONS CONTAINED
IN A WARRANT PURCHASE AGREEMENT DATED AS OF MAY 7, 2001 AMONG THE
COMPANY AND CERTAIN HOLDERS OF WARRANTS OF THE COMPANY. UPON
WRITTEN REQUEST TO THE COMPANY'S SECRETARY, A COPY OF THE WARRANT
PURCHASE AGREEMENT WILL BE PROVIDED WITHOUT CHARGE TO APPROPRIATELY
INTERESTED PERSONS.
ARTICLE VII
COVENANTS OF COMPANY
The Company hereby covenants with each of the Investors that, except as
otherwise expressly permitted or provided, in any particular instance, by a
written Investor Consent:
SECTION 7.1. RECORDS AND ACCOUNTS. The Company will (i) keep, and cause
each of its Subsidiaries to keep, true and accurate records and books of account
in which full, true and correct entries will be made in accordance with
generally accepted accounting principles and (ii) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves.
11
-11-
SECTION 7.2. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The
Company will deliver to each of the Investors:
(a) as soon as practicable, but in any event not
later than ninety (90) days after the end of each fiscal year
of the Company, the consolidated balance sheet of the Company
and its Subsidiaries and the consolidating balance sheet of
the Company and its Subsidiaries (with any reference to
consolidating statements of Subsidiaries in this Section 7.2
to mean that term as applied to the accounts and financial
statements, as applicable, of business lines), each as at the
end of such year, and the related consolidated statement of
income and consolidated statement of cash flow and
consolidating statement of income for such year, each setting
forth in comparative form the figures for the previous fiscal
year and all such consolidated and consolidating statements to
be in reasonable detail, prepared in accordance with generally
accepted accounting principles, and certified without
qualification by PricewaterhouseCoopers LLP or by other
independent certified public accountants of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event not
later than (i) forty-five (45) days after the end of each
fiscal quarter of the Company and (ii) sixty (60) days after
the end of the last fiscal quarter of the Company, copies of
the unaudited consolidated balance sheet of the Company and
each of its Subsidiaries and the unaudited consolidating
balance sheet of the Company and each of its Subsidiaries,
each as at the end of such quarter, and the related
consolidated statement of income and consolidated statement of
cash flow and consolidating statement of income for the
portion of the Company's fiscal year then elapsed, each
setting forth in comparative form the figures for the previous
fiscal year and a comparison setting forth the corresponding
figures from the budgeted or projected figures for such
period, all in reasonable detail and prepared in accordance
with generally accepted accounting principles, together with a
certification by the principal financial or accounting officer
of the Company that the information contained in such
financial statements fairly presents the financial position of
the Company and its Subsidiaries on the date thereof (subject
to year-end adjustments);
(c) as soon as practicable, but in any event within
(i) thirty (30) days after the end of each of the first two
(2) months in each fiscal quarter of the Company, (ii)
forty-five (45) days after the end of the last month in each
fiscal quarter, other than the last month of any year, and
(iii) sixty (60) days after the end of the last month in each
fiscal year of the Company, unaudited monthly consolidated
financial statements of the Company and its Subsidiaries for
such month and unaudited monthly consolidating financial
statements of the Company and its Subsidiaries for such month,
each setting forth in comparative form the figures for the
previous fiscal year and a comparison setting forth the
corresponding figures from the budgeted
12
-12-
or projected figures for such period and prepared in
accordance with generally accepted accounting principles,
together with a certification by the principal financial or
accounting officer of the Company that the information
contained in such financial statements fairly presents the
financial condition of the Company and its Subsidiaries on the
date thereof (subject to year-end adjustments);
(d) contemporaneously with the filing or mailing
thereof, copies of all materials filed with the Commission or
sent to the stockholders of the Company; and
(e) from time to time such other financial data and
information (including accountants' management letters) as any
Investor may reasonably request.
So long as the Credit Agreement remains in effect, the Company may
satisfy its obligations under this Section 7.2 by delivering to the Agent (as
defined in the Credit Agreement), for the benefit of each Investor, the
information which it is required to deliver to the Banks under the corresponding
covenants contained in the Credit Agreement at the times required by such
covenants. In the event the Credit Agreement is no longer in effect, the Company
may satisfy its obligations under this Section 7.2 by delivering to the
Investors the information required under Section 7.2 (a) and (b) hereof or,
contemporaneously with the filing thereof, copies of the Company 's Form 10-Q
and Form 10-K filed with the Commission.
SECTION 7.3. INSPECTION.
(a) The Company shall permit the Investors, through any of their duly
authorized representatives, to visit and inspect any of the properties of the
Company or any of its Subsidiaries, to examine the books of account of the
Company and its Subsidiaries (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances and accounts of the Company and
its Subsidiaries with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals as any Investor may
reasonably request. Any information concerning the Company or any of its
Subsidiaries obtained by any Investor in connection with any such visit,
inspection or examination will be kept confidential by such Investor.
SECTION 7.4. ISSUANCE OF PREFERRED CAPITAL STOCK, ETC.
(a) The Company will not at any time after the Closing Date issue
(whether by way of a dividend payment or otherwise), sell or grant to any Person
or Persons, (i) any shares of Preferred Capital Stock, (ii) any securities
convertible into or exchangeable for or carrying any rights to acquire any
shares of Preferred Capital Stock, or (iii) any options, warrants or any other
rights to acquire any shares of Preferred Capital Stock; provided, however, that
the Company may issue Preferred Capital Stock to (A) the holders of any note or
other indebtedness of the Company in exchange for the cancellation of such note
or other indebtedness provided that the aggregate liquidation preference of such
Preferred Capital Stock does not exceed the face amount of such note or other
indebtedness, (B) any
13
-13-
Person in exchange for cash equal to or greater than the liquidation preference
for such Preferred Capital Stock, (C) any Person in connection with the purchase
of assets from such Person provided that the number of shares of Preferred
Capital Stock issued in connection therewith is equal to the quotient obtained
by dividing the amount of the purchase price to be paid in Preferred Capital
Stock by the Fair Market Value of a share of Preferred Capital Stock, and (D)
any Person in connection with a merger or consolidation with such Person
provided that the number of shares of Preferred Capital Stock issued in
connection therewith is equal to the quotient obtained by dividing the amount of
the consideration to be paid in Preferred Capital Stock by the Fair Market Value
of a share of Preferred Capital Stock.
(b) The term "Preferred Capital Stock" shall mean: any class or any
series of any class of the capital stock of the Company: (i) which shall be
entitled, upon any distribution of any assets of the Company, whether by
dividend or by liquidation or by redemption, to any preference ranking prior or
superior to the Common Stock; or (ii) which shall be entitled, upon any
redemption of any shares of such capital stock, whether at the option of the
Company, at the option of the holders thereof, or upon the happening of any
specified events, to any preference in redemption payments ranking prior or
superior to the Common Stock; or (iii) the holders of which shall be or may
become entitled, at any time or upon the happening of any specified events or
conditions, to more than one vote for each share of such capital stock held by
such holders; or (iv) which shall be convertible into, or exchangeable for,
whether at the option of the Company, at the option of the holders thereof, or
upon the happening of any specified events or conditions, any shares of
Preferred Capital Stock of any class or series.
SECTION 7.5. AMENDMENTS TO CHARTER DOCUMENTS; ETC. The Company may
modify, amend or supplement the Company's Articles of Organization or By-laws
provided the rights of each stockholder of the Company are similarly affected by
such modification, amendment or supplement.
ARTICLE VIII
REGISTRATION RIGHTS
The Company hereby grants to the Investors certain rights to
participate with the Company in any registration by the Company of Common Stock
under the Securities Act. The provisions governing such registration rights are
set out in this Article VIII. The Company and the Investors hereby absolutely
and unconditionally agree to be bound and governed by, and specifically make and
adopt, all of the terms and provisions contained in this Article VIII. A Holder
shall, for all purposes of this Article VIII, unless the context shall otherwise
require, be deemed to hold, at any particular time, all shares of Common Stock
issuable upon conversion of or in exchange for or upon exercise of rights under
all capital stock or other securities (including, without limitation, options
and warrants) of the Company held of record by such Holder at such time.
SECTION 8.1. PIGGYBACK REGISTRATIONS.
14
-14-
(a) Rights to Piggyback.
(i) If (and on each occasion that) the Company proposes to
register any of its securities under the Securities Act, either for the
Company's own account or for the account of any of its securityholders
(other than the Holders of Registrable Securities in their capacity as
Holders) (each such registration being herein called a "Piggyback
Registration"), the Company will give written notice to all Holders of
Registrable Securities of the Company's intention to effect such
Piggyback Registration not later than the earlier to occur of (A) the
tenth day following the receipt by the Company of notice of exercise of
any registration rights by any Persons (other than the Holders of
Registrable Securities in their capacities as Holders), and (B) thirty
(30) days prior to the anticipated filing date of such Piggyback
Registration. The Holders of Registrable Securities shall not make any
public disclosure that the Company proposes to register any of its
securities prior to the time such information is publicly available.
(ii) Subject to the provisions contained in paragraphs (c) and
(d) of this Section 8.1 and in the last sentence of this clause (ii),
(A) the Company will be obligated and required to include in each
Piggyback Registration all Registrable Securities with respect to which
the Company shall receive from Holders of Registrable Securities,
within thirty (30) days after the date on which the Company shall have
given written notice of such Piggyback Registration to all Holders of
Registrable Securities pursuant to Section 8.1(a)(i) hereof, the
written requests of such Holders for inclusion in such Piggyback
Registration, and (B) the Company will use its best efforts in good
faith to effect promptly the registration of all such Registrable
Securities. The Holders of Registrable Securities shall be permitted to
withdraw all or any part of the Registrable Securities of such Holders
from any Piggyback Registration at any time prior to the effective date
of such Piggyback Registration. The Company will not be obligated or
required to include any Registrable Securities in any registration
effected solely to implement an employee benefit plan or a transaction
to which Rule 145 of the Commission is applicable.
(b) Piggyback Registration Expenses. The Company will pay all
Registration Expenses of each Piggyback Registration attributable to Registrable
Securities or otherwise incurred or sustained in connection with or arising out
of the inclusion in each such Piggyback Registration of Registrable Securities.
(c) Priority on Piggyback Registrations. If a Piggyback Registration is
an underwritten registration, and the managing underwriters shall give written
advice to the Company that, in the reasonable opinion of such managing
underwriters, marketing factors require a limitation on the total number of
securities to be underwritten (the "Underwriters' Maximum Number"), then: (i)
the Company shall include in such registration that number of securities which
the Company (or other securityholder for whose account the registration is made)
proposes to offer and sell in such registration and which does not exceed the
Underwriters' Maximum Number; (ii) if the registration is made for the account
of a
15
-15-
securityholder exercising its registration rights and the Underwriters' Maximum
Number exceeds the number of securities which such securityholder proposes to
offer and sell in such registration, then the Company shall be entitled to
include in such registration that number of securities which the Company
proposes to offer and sell for its own account in such registration and which
does not exceed the Underwriters' Maximum Number, (iii) if the Underwriters'
Maximum Number exceeds sum of the number of securities which the Company shall
be required to include in such registration for the account of the
securityholder requesting such registration and the number of securities which
the Company proposes to offer and sell for its own account in such registration,
then the Company will be obligated and required to include in such registration
the number of securities requested to be included in such registration by the
Holders of Registrable Securities and any other securityholders of the Company
having piggyback rights to the extent that such number does not exceed such
excess, and such securities shall be allocated pro rata among such Holders of
Registrable Securities and other securityholders on the basis of the number of
securities requested to be included therein by each such Holder of Registrable
Securities and other securityholder; and (iv) if the Underwriters' Maximum
Number exceeds the sum of the number of securities which the Company shall be
required to include in such registration pursuant to clauses (i) and (iii) and
the number of securities which the Company proposes to offer and sell for its
own account in such registration, then the Company may include in such
registration that number of other securities which persons shall have requested
be included in such registration and which shall not be greater than such
excess.
(d) Selection of Underwriters. In any Piggyback Registration, the
Company shall (unless the Company shall otherwise agree) have the right to
select the investment bankers and managing underwriters in such registration.
SECTION 8.2. LOCKUP AGREEMENTS.
(a) Restrictions on Public Sale by Holders of Registrable Securities.
Each Holder of Registrable Securities, if the Company or the managing
underwriters so request in connection with such registration, will not, without
the prior written consent of the Company or such underwriters, effect any public
sale or other distribution of any equity securities of the Company, including
any sale pursuant to Rule 144, during the seven (7) days prior to, and during
the one hundred eighty (180) day period (such period not to exceed 90 days if
such registration is other than the Company's initial public offering)
commencing on, the effective date of such underwritten registration, except in
connection with such underwritten registration, except, in each case, to the
extent such Holder is prohibited by applicable law or exercise of fiduciary
duties from agreeing to withhold Registrable Securities from sale or is acting
in its capacity as a fiduciary or investment adviser as set forth in an opinion
of counsel provided to the Company; provided that each officer and director of
the Company and each holder of more than one percent (1%) of the issued and
outstanding shares of Common Stock shall enter into similar agreements. Without
limiting the scope of the term "fiduciary", a Holder shall be deemed to be
acting as a fiduciary or an investment adviser if its actions or the Registrable
Securities to be sold are subject to the Employee Retirement Income Security Act
of 1974, as amended, or the Investment Company Act of 1940, as
16
-16-
amended, or if such Registrable Securities are held in a separate account under
applicable insurance law or regulation.
(b) Restrictions on Public Sale by Company. The Company agrees not to
effect any public sale or other distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such equity
securities, during the period commencing on the seventh day prior to, and ending
on the one hundred and eightieth day following (such period not to exceed 90
days if such registration is other than the Company's initial public offering),
the effective date of any underwritten Piggyback Registration, except in
connection with any such underwritten registration and except for any offering
pursuant to an employee benefit plan and registered on Form S-8 or a transaction
registered on Form S-4.
SECTION 8.3. REGISTRATION PROCEDURES. Whenever the Holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities and use its best efforts to cause such
Registration Statement to become effective (provided, that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company will furnish to counsel selected by the Holders of Registrable
Securities covered by such Registration Statement, copies of all such documents
proposed to be filed, which documents will be subject to the timely review of
such counsel and the Company will not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto, including
documents incorporated by reference, to which the Holders of a Majority of the
Registrable Securities covered by such Registration Statement shall reasonably
object);
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
not more than six (6) months and, comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Registration Statement during such effective period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
Registration Statement and cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;
(c) upon request, furnish to each seller of Registrable Securities such
number of copies of such Registration Statement, each amendment and supplement
thereto, the Prospectus included in such Registration Statement (including each
preliminary Prospectus and each Prospectus filed under Rule 424 of the
Securities Act) and such other documents as each such seller may reasonably
request in order to facilitate the disposition of the Registrable
17
-17-
Securities owned by each such seller (it being understood that the Company
consents to the use of the Prospectus and any amendment or supplement thereto by
such seller in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement thereto);
(d) use its 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, use its best efforts to keep each such
registration or qualification effective, including through new filings,
amendments or renewals, during the period such Registration Statement is
required to be kept effective, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller; provided that the Company will not be required (i) to qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph (d), (ii) to subject itself to taxation in any
such jurisdiction or (iii) to consent to general service of process in any such
jurisdiction;
(e) 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 any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company will promptly prepare (and, when
completed, give notice to each seller of Registrable Securities) 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 fact necessary to make the
statements therein not misleading; provided that upon such notification by the
Company, each seller of such Registrable Securities will not offer or sell such
Registrable Securities until the Company has notified such seller that it has
prepared a supplement or amendment to such Prospectus and delivered copies of
such supplement or amendment to such seller;
(f) cause all such Registrable Securities to be listed, prior to the
date of the first sale of such Registrable Securities pursuant to such
registration, on each securities exchange on which similar securities issued by
the Company are then listed and, if not so listed, to be listed on the Nasdaq
National Market System;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration Statement;
(h) enter into all such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the Holders of
a Majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, effecting a stock split
or a combination of shares);
18
-18-
(i) make available for inspection on a confidential basis by any
seller, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such seller or underwriter (in each case after reasonable prior notice), all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and independent
accountants to supply on a confidential basis all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such Registration Statement;
(j) permit any Holder of Registrable Securities which Holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company within the meaning of Section 15 of the
Securities Act, to participate in the preparation of such registration or
comparable statement and to permit the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such Holder and
its counsel should be included, provided that such material shall be furnished
under such circumstances as shall cause it to be subject to the indemnification
provisions provided pursuant to Section 8.6(b) hereof;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related Prospectus or suspending the qualification of
any Registrable Securities included in such Registration Statement for sale in
any jurisdiction, the Company will use its best efforts promptly to obtain the
withdrawal of such order;
(l) if requested by the managing underwriter or underwriters or any
holder of Registrable Securities in connection with any sale pursuant to a
Registration Statement, promptly incorporate in a Prospectus supplement or
post-effective amendment such information relating to such underwriting as the
managing underwriter or underwriters or such Holder reasonably requests to be
included therein, and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters incorporated in such Prospectus supplement or post-effective amendment;
(m) cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be sold under such registration, and
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or such Holders
may request;
(n) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
within the United States and having jurisdiction over the Company as may
reasonably be necessary to enable the seller or sellers thereof or the
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities;
19
-19-
(o) use its best efforts to obtain:
(i) at the time of effectiveness of each registration, a
"comfort letter" from the Company's independent certified public
accountants covering such matters of the type customarily covered by
"cold comfort letters" as the Holders of a Majority of the Registrable
Securities covered by such registration and the underwriters reasonably
request; and
(ii) at the time of any underwritten sale pursuant to a
Registration Statement, a "bring-down comfort letter", dated as of the
date of such sale, from the Company's independent certified public
accountants covering such matters of the type customarily covered by
comfort letters as the Holders of a Majority of the Registrable
Securities covered by such Registration Statement and the underwriters
reasonably request;
(p) use its best efforts to obtain, at the time of effectiveness of
each Piggyback Registration and at the time of any sale pursuant to each
registration, an opinion or opinions, favorable in form and scope to the Holders
of a Majority of the Registrable Securities covered by such registration, from
counsel to the Company in customary form; and
(q) otherwise comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders (as contemplated
by Section 11(a) under the Securities Act) an earnings statement satisfying the
provisions of Rule 158 under the Securities Act no later than ninety (90) days
after the end of the twelve month period beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
Registration Statement, which statement shall cover said twelve month period.
SECTION 8.4. COOPERATION BY PROSPECTIVE SELLERS, ETC.
(a) Information Requests. Each prospective seller of Registrable
Securities will furnish to the Company in writing such information as the
Company may reasonably require from such seller in connection with any
Registration Statement with respect to such Registrable Securities.
(b) Failure to Cooperate. The failure of any prospective seller of
Registrable Securities to furnish any information or documents in accordance
with any provision contained in this Article VIII shall not affect the
obligations of the Company under this Article VIII to any remaining sellers who
furnish such information and documents unless, in the reasonable opinion of
counsel to the Company or the underwriters, such failure impairs or may impair
the viability of the offering or the legality of the Registration Statement or
the underlying offering.
(c) Suspension of Sales. The Holders of Registrable Securities included
in any Registration Statement will not (until further notice) effect sales
thereof after receipt of telegraphic or written notice from the Company to
suspend sales to permit the Company to correct or update such Registration
Statement or Prospectus; but the obligations of the Company with respect to
maintaining any
20
-20-
Registration Statement current and effective shall be extended by a period of
days equal to the period such suspension is in effect.
(d) Removal of Shares from Registration. At the end of any period
during which the Company is obligated to keep any Registration Statement current
and effective as provided by Section 8.3 hereof (and any extensions thereof
required by the preceding paragraph (c) of this Section 8.4), the Holders of
Registrable Securities included in such Registration Statement shall discontinue
sales of shares pursuant to such Registration Statement upon receipt of notice
from the Company of its intention to remove from registration the shares covered
by such Registration Statement which remain unsold, and such Holders shall
notify the Company of the number of shares registered which remain unsold
promptly after receipt of such notice from the Company.
(e) Warrants or Options. Notwithstanding any other provision herein to
the contrary, no Holder of Registrable Securities which constitute warrants or
options shall be required to exercise such warrants or options in connection
with any registration until the actual sale of the shares of Common Stock
issuable upon exercise of such warrants or options. The Company shall enter into
such agreements and shall otherwise cooperate with the Holders of Registrable
Securities in order to ensure that such Holders are not required to exercise any
warrants or options prior to the date of the actual sale of the shares of Common
Stock issuable upon exercise of such warrants or options.
SECTION 8.5. REGISTRATION EXPENSES.
(a) Expenses Borne by the Company. All costs and expenses incurred or
sustained in connection with or arising out of each registration pursuant to
Section 8.2 hereof, including, without limitation, all registration and filing
fees, fees and expenses of compliance with securities or Blue Sky laws
(including reasonable fees and disbursements of counsel for the underwriters in
connection with the Blue Sky qualification of Registrable Securities), printing
expenses, messenger, telephone and delivery expenses, fees and disbursements of
counsel for the Company and of counsel for the sellers of Registrable Securities
(subject to the limitations contained in paragraph (b) of this Section 8.5),
fees and disbursements of all independent certified public accountants
(including the expenses relating to the preparation and delivery of any special
audit or "cold comfort" letters required by or incident to such registration),
and fees and disbursements of underwriters (excluding discounts and commissions,
but including underwriters' liability insurance if the Company or if the
underwriters so require), the reasonable fees and expenses of any special
experts retained by the Company of its own initiative or at the request of the
managing underwriters in connection with such registration, and fees and
expenses of all (if any) other Persons retained by the Company (all such costs
and expenses being herein called, collectively, the "Registration Expenses"),
will be borne and paid by the Company. The Company will, in any case, pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, the expense of liability insurance referred to above, and
the fees and expenses incurred in connection with the
21
-21-
listing of the securities to be registered on each securities exchange on which
similar securities of the Company are then listed.
(b) Attorneys' Fees; Taxes. In connection with each registration of
Registrable Securities pursuant to this Article VIII, the Company will reimburse
the Holders of Registrable Securities being registered in such registration for
the reasonable fees and disbursements of one law firm which acts as counsel
chosen by the Holders of a Majority of Registrable Securities. The Company will
not bear the cost of nor pay for any stock transfer taxes imposed in respect of
the transfer of any Registrable Securities to any purchaser thereof by any
Holder of Registrable Securities in connection with any registration of
Registrable Securities pursuant to this Article VIII.
(c) Payment by Holder. To the extent that Registration Expenses
incident to any registration are, under the terms of this Article VIII, not
required to be paid by the Company, each Holder of Registrable Securities
included in such registration will pay all Registration Expenses which are
clearly solely attributable to the registration of such Holder's Registrable
Securities so included in such registration, and all other Registration Expenses
not so attributable to one Holder will be borne and paid by all sellers of
securities included in such registration in proportion to the number of
securities so included by each such seller.
SECTION 8.6. INDEMNIFICATION.
(a) Indemnification by Company. The Company will indemnify each Holder
requesting or joining in a registration and each underwriter of the securities
so registered, the officers, directors and partners of each such Person and each
Person who controls any thereof (within the meaning of the Securities Act),
against any and all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of any material fact contained in any Prospectus, offering
circular or other document incident to any registration, qualification or
compliance (or in any related Registration Statement, notification or the like)
or any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
any action or inaction required of the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, officer, director, partner, controlling Person, and underwriter for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Company in an instrument duly executed by such Holder, officer, director,
partner, controlling Person, or underwriter and stated to be exclusively and
specifically for use therein.
(b) Indemnification by Each Holder. Each Holder requesting or joining
in a registration will indemnify each underwriter of the securities so
registered, the
22
-22-
Company and its officers and directors and each Person, if any, who controls any
thereof (within the meaning of the Securities Act) and their respective
successors in title and assigns against any and all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of any material fact contained in
any Prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related Registration
Statement, notification or the like) or any omission (or alleged omission) to
state therein any material fact required to be stated therein or necessary to
make the statement therein not misleading, and such Holder will reimburse each
underwriter, the Company and each other Person indemnified pursuant to this
paragraph (b) for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that this paragraph (b) shall apply only
if (and only to the extent that) such statement or omission was made in reliance
upon information furnished to the Company in any instrument duly executed by
such Holder and stated to be specifically for use in such Prospectus, offering
circular or other document (or related Registration Statement, notification or
the like) or any amendment or supplement thereto. The maximum liability under
this paragraph (b) of each Holder joining in any registration shall be limited
to the aggregate amount of all sales proceeds actually received by such Holder
upon the sale of such Holder's Registrable Securities in connection with such
registration.
(c) Indemnification Proceedings. Each party entitled to indemnification
pursuant to this Section 8.6 (the "Indemnified Party") shall give notice to the
party required to provide indemnification pursuant to this Section 8.6 (the
"Indemnifying Party") promptly after such Indemnified Party acquires actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
acceptable to the Indemnified Party, and the Indemnified Party may participate
in such defense at such party's expense; and provided further, that if any
Indemnified Party shall have reasonably concluded that there may be one or more
legal defenses available to such Indemnified Party which are different from or
additional to and are inconsistent with those available to the Indemnifying
Party, or that such claim or litigation involves or could have an effect upon
matters beyond the scope of the indemnity agreement provided in this Section
8.6, the Indemnifying Party shall not have the right to assume the defense of
such action on behalf such Indemnified Party and such Indemnifying Party shall
reimburse such Indemnified Party and any Person controlling such Indemnified
Party for that portion of the fees and expenses of any counsel retained by the
Indemnified Party which are reasonably related to the matters covered by the
indemnity agreement provided in this Section 8.6; and provided, further, that
the failure by any Indemnified Party to give notice as provided in this
paragraph (c) shall not relieve the Indemnifying Party of its obligations under
this Section 8.6 except to the extent that the failure results in a failure of
actual notice to the Indemnifying Party and such Indemnifying Party is damaged
(or the indemnification liability of such Indemnifying Party hereunder would be
increased) solely as a result of the failure to give notice. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each
23
-23-
Indemnified Party, consent to entry of any judgment or enter into any settlement
which 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
in respect to such claim or litigation. The reimbursement required by this
Section 8.7 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.
(d) Contribution in Lieu of Indemnification. If the indemnification
provided for in this Section 8.6 from the Indemnifying Party is unavailable to
an Indemnified Party hereunder in respect of any losses, claims, damages,
liabilities or expense (or actions in respect thereof) referred to therein, then
the Indemnifying Party 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 (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault of such indemnifying 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,
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; provided,
however, that in no event shall the liability of any Holder hereunder be greater
in amount than the difference between the dollar amount of the proceeds received
by such Holder upon the sale of the Registrable Securities giving rise to such
contribution obligation and all amounts previously contributed by such Holder
with respect to such losses, claims, damages, liabilities and expenses referred
to above shall be deemed to include, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.6(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
SECTION 8.7. RULE 144 REQUIREMENTS; FORM S-3. The Company will make
every effort in good faith to take all steps necessary to ensure that the
Company will be eligible to register securities on Form S-3 (or any comparable
form adopted by the Commission), and to make publicly available and available to
the Holders of Registrable Securities, pursuant to Rule 144 or Rule 144A of the
Commission under the Securities Act, such information as shall be necessary to
enable the Holders of Registrable Securities to make sales of Registrable
Securities pursuant to such Rules. The Company will furnish to any Holder of
Registrable Securities, upon request made by such Holder at any time, a written
statement signed by the Company, addressed to such Holder, describing briefly
the action the Company
24
-24-
has taken or proposes to take to comply with the current public information
requirements of Rule 144 or Rule 144A. The Company will, at the request of any
Holder of Registrable Securities, upon receipt from such Holder of a certificate
certifying (i) that such Holder has held such Registrable Securities for a
period of not less than one (1) year, and (ii) that such Holder has not been an
affiliate (as defined in Rule 144) of the Company for more than the ninety (90)
preceding days, remove from the stock certificates representing such Registrable
Securities that portion of any restrictive legend which relates to the
registration provisions of the Securities Act.
SECTION 8.8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration pursuant to this Article VIII
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled,
under the provisions contained in this Article VIII, to approve such
arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required by the terms of such underwriting arrangements, provided, however, that
no such indemnities or underwriting agreements shall provide for indemnification
or contribution obligations of any Holder to a greater extent than the
obligations of such Holder set forth in Section 8.6(b) hereof. Any Holder of
Registrable Securities to be included in any underwritten registration shall be
entitled at any time to withdraw such Registrable Securities from such
registration in the event that such Holder shall disapprove of any of the terms
of the related underwriting agreement.
SECTION 8.9. NO INCONSISTENT AGREEMENTS. Except for the Existing
Registration Rights Agreement, the Company will not, at any time after the
effective date of this Agreement, enter into any agreement or contract (whether
written or oral) with respect to any of its securities which is inconsistent in
any respect with the registration rights granted by the Company to Investors
pursuant to Article VIII of this Agreement or otherwise conflicts with the
provisions hereof.
SECTION 8.10. REGISTRABLE SECURITIES HELD BY THE COMPANY. Whenever the
consent or approval of Holders of Registrable Securities is required pursuant to
this Article VIII, Registrable Securities held by the Company shall not be
counted in determining whether such consent or approval was duly and properly
given by such Holders pursuant to and in compliance with any of the terms of
Article VIII of this Agreement.
SECTION 8.11. TERM. The agreements of the Company contained in this
Article VIII shall continue in full force and effect so long as any Holder holds
any Registrable Securities.
ARTICLE IX
PUT AND CALL OPTIONS
SECTION 9.1. RIGHT TO PUT SECURITIES; PUT CLOSING. The Company will
give each Investor at least thirty (30) days' prior written notice of any
Capital Transaction.
25
-25-
Each Investor may, at their option, by giving the Company at least five (5) days
notice before such Capital Transaction, sell and the Company shall be required
to repurchase all of such Investor's Securities then outstanding and the
repurchase price (the "Put Repurchase Price"), for purposes of this Section 9.1,
shall be equal to (a) in the case of each portion of any Warrant exercisable for
one Warrant Share, the Put Repurchase Price per Warrant Share as determined
pursuant to clause (b) below less the exercise price for such share and (b) in
the case of each Warrant Share, (i) in the case of a merger or any other stock
transaction, the highest price per share received by any holder of Common Stock
in connection with such transaction, and (ii) in the case of any liquidation or
sale of assets, the quotient of (A) the Adjusted Net Worth of the Company
immediately prior to such liquidation or immediately after such sale, as
applicable, divided by (B) the sum of the number of shares of Common Stock then
outstanding plus the number of shares of Common Stock then issuable upon the
exercise of then outstanding warrants, options or convertible securities, in
each case to the extent then exercisable.
SECTION 9.2. RIGHT TO CALL SECURITIES; CALL CLOSING. The Company may,
by notice to each of the Investors (the "Call Notice") elect to purchase from
such Investors (and each of the Investors hereby agrees to sell to the Company)
out of funds legally available therefor, at the Repurchase Price, all but not
less than all of the Securities as are then outstanding and have not been sold
pursuant to an effective Registration Statement on a date specified in such
notice not fewer than thirty (30) nor more than ninety (90) days after the date
of the Call Notice. The closing under this Section 9.2 shall take place at the
offices of the Company at 10:00 a.m. local time on the date so specified or at
such other time and place as the Company and the Investors may agree upon (the
"Call Closing Date"). At the closing, each of the Investors will deliver to the
Company a certificate or certificates evidencing the Warrant Shares and/or the
Warrant or Warrants owned by such Investor, to be repurchased by the Company
pursuant to such call (properly endorsed or accompanied by stock powers or
assignments with signature(s) guaranteed or similar appropriate documentation of
authority to transfer), and the Company shall pay such Investor the Repurchase
Price for such Warrants and/or Warrant Shares in cash or in immediately
available funds. The repurchase price (the "Call Repurchase Price"), for
purposes of this Section 9.2, shall be an amount equal to the greater of (i) in
the case of each portion of any Warrant exercisable for one Warrant Share, (a)
the Fair Market Value per share less the exercise price per share and (b) $20.00
per share less the exercise price per share, and (ii) in the case of each
Warrant Share, the Fair Market Value per share and $20.00 per share.
SECTION 9.3. PAYMENT. The Company shall be required to pay the Put
Repurchase Price simultaneously with the consummation of the Capital Transaction
and the payment of the Put Repurchase Price shall be a condition precedent to
the closing of such Capital Transaction. The Company agrees not close such
Capital Transaction without paying the Put Repurchase Price to the Investors.
The Company shall be required to pay the Call Repurchase Price at any closing
under Section 9.2 hereof. Each such repurchase price shall be paid out of funds
legally available therefor in cash or immediately available funds. In the event
that any portion of the aggregate Call Repurchase Price is not paid as a result
of any insufficiency of legally available funds, the failure to obtain any
consent required
26
-26-
the Credit Agreement or otherwise, the call under Section 9.2 hereof shall
automatically be rescinded as to all holders. The Company may assign its call
rights to an Affiliate provided such Affiliate agrees in writing to be bound by
the terms and provisions of this Agreement.
SECTION 9.4. TERMINATION OF PUT & CALL. Each Investor's right to put
Securities pursuant to Section 9.1 and the Company's right to call Securities
pursuant to Section 9.2 shall terminate on the completion of a Qualified Public
Offering.
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
SECTION 10.1. SURVIVAL OF REPRESENTATIONS. The representations and
warranties of the Company and of the Banks and the Investors contained in this
Agreement, or any agreement, instrument or document delivered pursuant to any of
the provisions of this Agreement, shall survive the execution and delivery of
this Agreement, any examination or investigation conducted by or on behalf of
the Company or the Banks, and the Closing hereunder.
SECTION 10.2. INDEMNIFICATION FOR MISREPRESENTATIONS. The Company
agrees to indemnify and hold each of the Banks harmless from and against, and to
pay to each of the Banks, on demand by any Bank from time to time, the full
amount of any loss, claim, damage, liability, cost or expense (including
reasonable attorneys' fees) resulting to any Bank from any false, incorrect or
misleading representation or warranty of the Company contained in this
Agreement, or any agreement, instrument or document delivered by the Company to
any Bank pursuant to any of the provisions of this Agreement.
SECTION 10.3. EXPENSES. Whether or not all or any of the arrangements
or transactions contemplated by this Agreement or by any of the Warrants shall
be consummated, the Company agrees to pay to the Investors, on demand by the
Investors at any time and as often as the occasion therefor may require: (a) all
of the reasonable legal fees, plus all reasonable out-of-pocket expenses and
disbursements, of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for Fleet National Bank,
which have been or shall be incurred or sustained at any time in connection with
the preparation, negotiation, execution or delivery of this Agreement, any of
the Warrants or any other agreements, instruments or documents relating thereto;
and (b) all reasonable out-of-pocket costs and expenses which shall be incurred
or sustained by any Investor at any time in connection with any modifications or
amendments to or consents, approvals or waivers under this Agreement or any of
the Warrants, or in connection with any litigation, proceeding or dispute
arising out of or relating to this Agreement or any of the Warrants or
relationships created thereby, or in connection with any action or proceeding
taken by any Investor to protect or preserve all or any of the rights, remedies,
powers or privileges of such Investor under any of such documents or to enforce
any of the covenants, agreements or obligations of the Company under any of such
documents (including, without limitation, all of the reasonable fees and
disbursements of legal counsel for each Investor).
27
-27-
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. NOTICES.
(a) All notices and other communications pursuant to this Agreement
shall be in writing, either delivered in hand, mailed by United States
registered or certified first-class mail, postage prepaid, sent by overnight
courier, or sent by telegraph, telecopy, facsimile or telex and confirmed by
delivery via courier or postal service, addressed as follows:
(i) if to the Company, at the address of the Company set forth
on the first page hereof, or at such other address as shall have been
furnished to each of the Investors in writing by the Company, and a
copy thereof shall in any event be simultaneously transmitted to ▇▇▇▇▇▇
▇▇▇▇▇▇, P.C., ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; or
(ii) if to any Investor, at such addresses (in each case) as
shall have been furnished to the Company and to the other Investors by
such Investor in writing, and a copy thereof shall in any event be
simultaneously transmitted to ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ ▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(b) Any notice or other communication pursuant to this Agreement shall
be deemed to have been duly given or made and to have become effective (i) if
delivered by hand, overnight courier or facsimile to a responsible officer of
the party to which it is directed, at the time of receipt thereof by such
officer or the sending of such facsimile or (ii) if sent by registered or
certified first-class mail, postage prepaid, on the third business day following
the mailing thereof.
SECTION 11.2. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO TAKE EFFECT
AS A SEALED INSTRUMENT. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
SECTION 11.3. AMENDMENTS AND WAIVERS.
(a) Except as otherwise provided by paragraph (b) of this Section 11.3,
and except as otherwise expressly required by any other provisions of this
Agreement, none of the terms or provisions contained in this Agreement, and none
of the agreements, obligations or covenants of the Company contained in this
Agreement, may be amended, modified, supplemented, waived or terminated unless
(i) the Company shall execute an instrument in writing agreeing or consenting to
such amendment, modification, supplement, waiver or termination, and (ii) the
Company shall receive a prior written Investor Consent therefor.
28
-28-
(b) Each of the terms and provisions contained in this Section 11.3 or
in the definitions of Investor Consent or Majority Investors contained in
Article I hereof may be amended, modified, supplemented, waived or terminated
only by a written instrument or consent signed by the Company and by each of the
Investors holding of record any Securities at the effective date thereof.
(c) In connection with any action taken or to be taken pursuant to
paragraph (a) of this Section 11.3, there shall be no obligation or requirement
on the part of the Company, any of the Investors or any other Persons (i) to
solicit or to attempt to solicit from all of the Investors the consent or
approval of all of the Investors for such action, or (ii) to submit any notices
of any kind to all of the Investors in advance of any action proposed to be
taken pursuant to paragraph (a) of this Section 11.3. However, copies of all
written consents or approvals given by Investors in connection with any action
taken or to be taken pursuant to and in compliance with paragraph (a) of this
Section 11.3 shall be sent by the Company, promptly after the receipt thereof by
the Company, to each Investor who shall have failed or refused to give a written
consent or approval for such action.
(d) Any action taken pursuant to and in compliance with paragraph (a)
of this Section 11.3 shall be binding upon the Company and upon all of the
Investors, including all of the Investors who shall have failed or refused to
give a written consent or approval for such action.
SECTION 11.4. PROPORTIONAL ADJUSTMENTS. There are references in this
Agreement to a specific price per share of the Company's Common Stock or to a
specific number of shares in the capital of the Company. The specific price per
share and the specific number of shares so stated are effective as of the
Closing Date. The specific price per share and the specific number of shares so
stated shall (in each case) be proportionally adjusted from time to time if (and
on each occasion that) there shall be effected by the Company any stock
dividend, stock split, subdivision of shares, combination of shares,
reclassification, recapitalization or other similar corporate reorganization
affecting the Common Stock of the Company. The exact amount and the effective
date of each adjustment effected pursuant to this Section 11.4 shall be
determined in good faith and on a reasonable basis by the Board of Directors of
the Company. The Company shall promptly notify each Investor in writing of each
such adjustment.
SECTION 11.5. INTEGRATION. Annexed to this Agreement is Exhibit A. Such
Exhibit is an integral part of this Agreement and are hereby incorporated by
reference.
SECTION 11.6. RIGHTS AND OBLIGATIONS SEVERAL. The rights and
obligations of each of the parties hereto shall be several (and not joint),
except as otherwise expressly provided by this Agreement.
SECTION 11.7. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on
the part of any Investor in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
29
-29-
SECTION 11.8. ENTIRE AGREEMENT. This Agreement and the Warrants
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede any prior understandings or agreements
concerning the subject matter hereof.
SECTION 11.9. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
SECTION 11.10. BINDING EFFECT. All of the covenants and agreements of
the Company contained in, and all of the rights granted by the Company pursuant
to, this Agreement, shall inure to the benefit of each Investor, including each
of the transferees of such Investor. Each Investor may assign or transfer any
portion of such rights to any Affiliate or any Bank and all of such rights to
any other Person provided that such other Person is not substantially engaged in
the business of manufacturing, selling or distributing small portable kitchen
appliances or small portable home comfort or personal care appliances.
SECTION 11.11. COUNTERPARTS. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
In making proof of this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by each of the parties hereto.
ARTICLE XII
REGULATORY RESTRICTIONS
Any other provisions hereof to the contrary notwithstanding, no Person which is
a bank holding company or a subsidiary of a bank holding company (a "Bank
Affiliate") as defined in the Bank Holding Company Act of 1956, as amended, or
other applicable banking laws of the United States of America and the rules and
regulations promulgated thereunder shall be entitled to exercise the right under
the Warrants to purchase any share or shares of Common Stock if, under any law
or under any regulation, rule or other requirement of any governmental authority
at any time applicable to such Bank Affiliate, (a) as a result of such purchase,
such Bank Affiliate would own, control or have power to vote a greater quantity
of securities of any kind than the Bank Affiliate shall be permitted to own,
control or have power to vote, or (b) such purchase would not be permitted. For
purposes of this Article XII, a written statement of the Bank Affiliate
exercising the Warrant, delivered upon surrender of the Warrant pursuant to the
terms thereof, to the effect that the Bank Affiliate is legally entitled to
exercise its rights under the Warrant to purchase securities and that such
purchase will not violate the prohibitions set forth in the preceding sentence,
shall be conclusive and binding upon the Company and shall obligate the Company
to deliver certificates representing the shares of Common Stock so purchased in
accordance with the other provisions hereof and shall relieve the Company of any
liability under this Article XII.
30
-30-
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this Agreement and return such
counterpart to the undersigned, whereupon this Agreement, as so accepted by you,
shall become a binding agreement under seal between you and the undersigned.
Very truly yours,
THE ▇▇▇▇▇▇ GROUP, INC.
By:
------------------------------
Name:
Title:
Attest
------------------------
Dated as of: May __, 2001
The foregoing Warrant Purchase Agreement with The ▇▇▇▇▇▇ Group, Inc. is
hereby accepted by the undersigned on and as of the date thereof.
INVESTORS:
FLEET NATIONAL BANK (F/K/A BANKBOSTON, N.A.)
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
SYNDICATED LOAN FUNDING TRUST
By: ▇▇▇▇▇▇ COMMERCIAL PAPER INC., not in its individual
capacity, but solely as Asset Manager
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
31
-2-
▇▇▇▇▇▇ FINANCIAL, INC.
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
LASALLE BANK NATIONAL ASSOCIATION
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
COMERICA BANK
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
KEY CORPORATE CAPITAL INC.
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
CITIZENS BANK OF MASSACHUSETTS,
a Massachusetts Bank
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
32
-3-
STAR BANK, NATIONAL ASSOCIATION
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
ANTARES CAPITAL CORPORATION
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
NATIONAL CITY BANK
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
THE PROVIDENT BANK
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
FRANKLIN FLOATING RATE TRUST
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
33
-4-
THE TRAVELERS INSURANCE COMPANY
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
TRAVELERS CORPORATE LOAN FUND INC.
By: Travelers Asset Management International Company LLC
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ SENIOR FLOATING RATE FUND, INC.
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
MAGNETITE ASSET INVESTORS LLC
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ PRIME RATE PORTFOLIO
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
34
-5-
PILGRIM PRIME RATE TRUST
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
PILGRIM AMERICA HIGH INCOME INVESTMENTS LTD.
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
SEQUILS-PILGRIM I, LTD.
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
CAPTIVA IV FINANCE LTD.
as advised by Pacific Investment Management Company LLC
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
PILGRIM CLO 1999 - 1 LTD.
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
▇▇
-▇-
▇▇▇▇▇ ▇▇▇▇▇ CLO 1999 - 1 LTD.
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
FIRST MASSACHUSETTS BANK
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
TRANSAMERICA BUSINESS CREDIT CORPORATION
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
CHASE MANHATTAN BANK not in its individual capacity, but solely as Trustee of
Antares Funding Trust under the Trust Agreement dated as of November 30, 1999
(the "Trust Agreement") between Antares Funding, L.P. (the "Depositor") and
Chase Manhattan Bank as trustee (the "Trustee")
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
▇▇▇ ▇▇▇▇▇▇ SENIOR INCOME TRUST
By:
----------------------------------------
Name:
36
-7-
Title:
Address:
--------------------------
--------------------------
▇▇▇ ▇▇▇▇▇▇ PRIME RATE INCOME TRUST
By:
----------------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
37
SCHEDULE 3.1
Number of shares of Common
Stock for which the Warrants
may be exercised (such numbers
are subject to adjustment as
Bank provided in the Warrants)
---- -------------------------
Fleet National Bank 175,865
Antares Capital Corporation 32,328
Captiva IV Finance Ltd. 19,397
Chase Manhattan Bank 28,449
Citizens Bank of Massachusetts 108,622
Comerica Bank 56,897
First Massachusetts Bank 18,104
Franklin Floating Rate Trust 10,345
Great Point CLO 1999-1 LTD 24,569
▇▇▇▇▇▇ Financial, Inc. 90,519
Key Corporate Capital, Inc. 62,070
LaSalle Bank National Association 72,415
▇▇▇▇▇▇ Commercial Paper, Inc. 68,536
Magnetite Asset Investors LLC 24,569
▇▇▇▇▇▇▇ ▇▇▇▇▇ Prime Rate Portfolio 47,846
▇▇▇▇▇▇▇ ▇▇▇▇▇ Senior Floating Rate Fund, Inc. 20,690
National City Bank 36,207
Pilgrim America High Income Investment Ltd. 15,517
Pilgrim CLO 1999-1 LTD 24,569
SEQUILS-Pilgrim I, Ltd. 27,156
Pilgrim Prime Rate Trust 19,397
Provident Bank 19,397
Star Bank 56,897
Transamerica Business Credit Corporation 104,743
Travelers Corporate Loan Fund Inc. 10,345
Travelers Insurance Company 45,259
▇▇▇ ▇▇▇▇▇▇ Prime Rate Income Trust 24,569
▇▇▇ ▇▇▇▇▇▇ Senior Income Trust 47,846
38
EXHIBIT A
EXECUTION COPY
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR ANY
APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER ARE SUBJECT TO PUT AND CALL
RIGHTS AND CERTAIN OTHER RESTRICTIONS CONTAINED IN A WARRANT PURCHASE AGREEMENT
DATED AS OF MAY 7, 2001 AMONG THE COMPANY AND CERTAIN HOLDERS OF WARRANTS OF THE
COMPANY. UPON WRITTEN REQUEST TO THE COMPANY'S SECRETARY, A COPY OF THE WARRANT
PURCHASE AGREEMENT WILL BE PROVIDED WITHOUT CHARGE TO APPROPRIATELY INTERESTED
PERSONS.
THE ▇▇▇▇▇▇ GROUP, INC.
COMMON STOCK PURCHASE WARRANT
No. W-___
The ▇▇▇▇▇▇ Group, Inc., a Massachusetts corporation, (together with
any corporation which shall succeed to or assume the obligations of The ▇▇▇▇▇▇
Group, Inc. hereunder, the "Company"), hereby certifies that, for value
received, ______________________________ ("Bank"), or its assigns, is entitled,
subject to the terms set forth below, to purchase from the Company at any time
or from time to time after the date hereof, until the expiration hereof pursuant
to Section 2.4 hereof, up to shares of Common Stock, at an initial purchase
price per share of $5.04 (such price per share as adjusted from time to time as
provided herein is referred to herein as the "Exercise Price"). The number and
character of such shares of Common Stock and the Exercise Price are subject to
adjustment as provided herein.
This Warrant is one of a series of warrants issued pursuant to the
Warrant Purchase Agreement (as amended and in effect from time to time, the
"Warrant Purchase Agreement"), dated as of May 7, 2001, among the Company, the
Bank and certain other holders of warrants of the Company, a copy of which is on
file at the
39
-2-
principal office of the Company. The holder of this Warrant shall be entitled to
all of the benefits and shall be subject to all of the obligations of the
Warrant Purchase Agreement. In the event of any conflict between the terms of
this Warrant and the terms of the Warrant Purchase Agreement, the terms of this
Warrant shall be controlling.
1. DEFINITIONS. Terms defined in the Warrant Purchase Agreement and not
otherwise defined herein are used herein with the meanings so defined. Certain
terms are used in this Warrant as specifically defined in Section 13 hereof.
2. EXERCISE OF WARRANT.
2.1. Exercise. This Warrant may be exercised at any time or from time
to time prior to its expiration pursuant to Section 2.4 hereof by the holder
hereof, by surrender of this Warrant, with the form of subscription attached
hereto duly executed by such holder, to the Company at its principal office,
accompanied by payment, by certified or official bank check payable to the order
of the Company or by wire transfer to its account, in the amount obtained by
multiplying the number of shares of Common Stock for which this Warrant is then
being exercised by the Exercise Price then in effect. In the event the Warrant
is not exercised in full, the Company, at its expense, will forthwith issue and
deliver to or upon the order of the holder hereof a new Warrant or Warrants of
like tenor, in the name of the holder hereof or as such holder (upon payment by
such holder of any applicable transfer taxes) may request, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
equal (without giving effect to any adjustment therein) to the number of such
shares called for on the face of this Warrant minus the number of such shares
(without giving effect to any adjustment therein) for which this Warrant shall
have been exercised. Upon any exercise of this Warrant, in whole or in part, the
holder hereof may pay the aggregate Exercise Price with respect to the shares of
Common Stock for which this Warrant is then being exercised in immediately
available funds or, in lieu of such payment, the holder may convert this
Warrant, in whole or in part, into a number of Warrant Shares determined as
follows:
X = Y(A-B)/A
where:
X = the number of Warrant Shares to be issued to the
Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the Fair Market Value (as determined below) of one
Warrant Share.
40
-3-
B = the Exercise Price.
For purposes of this Section 2.1, the fair market value ("Fair Market Value") of
a Warrant Share shall mean (a) if the Common Stock of the Company is traded on a
nationally recognized securities exchange or over the counter market, the
closing price of a share of Common Stock reported for the business day
immediately preceding the date of holder's exercise of the Warrant, and (b) if
the Common Stock is not traded on a nationally recognized securities exchange or
over the counter market, the Fair Market Value as determined in good faith by
the Company's Board of Directors.
2.2. Conflict With Other Laws. Any other provisions hereof to the
contrary notwithstanding, no Bank Affiliate shall be entitled to exercise the
right under this Warrant to purchase any share or shares of Common Stock if,
under any law or under any regulation, rule or other requirement of any
governmental authority at any time applicable to such Bank Affiliate, (a) as a
result of such purchase, such Bank Affiliate would own, control or have power to
vote a greater quantity of securities of any kind than the Bank Affiliate shall
be permitted to own, control or have power to vote, or (b) such purchase would
not be permitted. For purposes of this Section 2.2, a written statement of the
Bank Affiliate exercising this Warrant, delivered upon surrender of the Warrant
pursuant to the Warrant Purchase Agreement, to the effect that the Bank
Affiliate is legally entitled to exercise its right under this Warrant to
purchase securities and that such purchase will not violate the prohibitions set
forth in the preceding sentence, shall be conclusive and binding upon the
Company and shall obligate the Company to deliver certificates representing the
shares of Common Stock so purchased in accordance with the other provisions
hereof and shall relieve the Company of any liability under this Section 2.2.
2.3. Warrant Agent. In the event that a bank or trust company shall
have been appointed as trustee for the holder of the Warrant pursuant to Section
7.2 hereof, such bank or trust company shall have all the powers and duties of a
warrant agent appointed pursuant to Section 14 hereof and shall accept, in its
own name for the account of the Company or such successor entity as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 2.
2.4. Expiration. This Warrant shall expire upon the earliest to occur
of (i) exercise in full, (ii) May 7, 2006, (iii) in the event that all of the
obligations of the Company and its Subsidiaries under the Credit Agreement have
been repaid in cash (whether pursuant to a payment in full or pursuant to a
discounted payment which has been offered and accepted by all obligees under
such obligations), and the commitments to extend credit thereunder cancelled, on
the date of such repayment and cancellation or (iv) upon a sale of the Company
for cash or cash equivalents provided
41
-4-
the Bank has not otherwise elected to put its Securities pursuant to Section 9.1
of the Warrant Purchase Agreement.
3. PUT AND CALL OPTIONS; REGISTRATION RIGHTS. The holder of this Warrant
has the right to require the Company to purchase this Warrant and/or Warrant
Shares and the Company has the option to purchase this Warrant and/or Warrant
Shares, at the times and in the manner specified in Article IX of the Warrant
Purchase Agreement. The holder of this Warrant has the right to cause the
Company to register Warrant Shares, and any shares issued upon exercise hereof,
under the Securities Act and any blue sky or securities laws of any
jurisdictions within the United States at the time and in the manner specified
in Article VIII of the Warrant Purchase Agreement.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
4.1. Delivery. As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within ten (10) days thereafter,
the Company, at its expense (including the payment by it of any applicable issue
taxes), will cause to be issued in the name of and delivered to the holder
hereof, or as such holder (upon payment by such holder of any applicable
transfer taxes) may direct, a certificate or certificates for the number of
fully paid and non-assessable shares of Common Stock (or Other Securities) to
which such holder shall be entitled on such exercise, together with any other
stock or other securities and property (including cash, where applicable) to
which such holder is entitled upon such exercise.
4.2. Fractional Shares. In the event that the exercise of this
Warrant, in full or in part, results in the issuance of any fractional share of
Common Stock, then in such event the holder of this Warrant shall be entitled to
cash equal to the fair market value of such fractional share as determined in
good faith by the Company's Board of Directors.
5. MAINTENANCE OF WARRANT REGISTER; ASSIGNMENT AND TRANSFER AND
REPLACEMENT.
5.1 Registered Holders. The Company will maintain a register
containing the name and address of the holder of this Warrant. The "registered
holder" of this Warrant shall be the Person in whose name such Warrant is
registered in said warrant register. Any registered holder of this Warrant may
change such holder's address as shown on the warrant register by written notice
to the Company requesting such change. Any notice or written communication
required or permitted to be given to the registered holder of this Warrant shall
be mailed by first class registered or certified mail, postage prepaid, or sent
by overnight courier (or sent in the form of a telex or telecopy) or delivered
to such registered holder at its address as shown on the warrant register.
42
-5-
5.2 Assignment and Transfer of the Warrant. This Warrant has not been
registered under the Securities Act, and neither this Warrant nor the rights
evidenced hereby shall be assigned, pledged, transferred or otherwise disposed
of unless either (a) this Warrant first shall have been registered under the
Securities Act, or (b) such sale or transfer is an exempted transaction under
the Securities Act. The registered holder of this Warrant may assign or transfer
any portion of this Warrant to an Affiliate or any Bank and the entire Warrant
to any other Person provided that such other Person is not substantially engaged
in the business of manufacturing, selling or distributing small portable kitchen
appliances or small portable home comfort or personal care appliances. Upon
surrender of this Warrant to the Company (or any warrant agent appointed
pursuant to Section 14 hereof) for transfer as an entirety by the registered
holder (as permitted by this Section) at the offices of the Company, with the
form of assignment attached hereto completed and duly executed by the registered
holder, the Company shall, at the Company's expense, issue a new Warrant of the
same denomination to the assignee.
5.3 Replacement. In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Company shall issue a new Warrant of like tenor and
denomination and deliver the same (a) in exchange and substitution for and upon
surrender and cancellation of the mutilated Warrant, or (b) in lieu of the
Warrant lost, stolen or destroyed, upon receipt of (i) a reasonably detailed
affidavit with respect to the circumstances of any loss, theft or destruction,
and (ii) an indemnity satisfactory to the Company.
5.4 Negotiation. This Warrant, when endorsed in blank, shall be
deemed negotiable, and the holder hereof, when this Warrant shall have been so
endorsed, may be treated by the Company and all other Persons dealing with this
Warrant as the absolute owner hereof for any purpose and as the Person entitled
to exercise the rights represented by this Warrant, or to the transfer hereof on
the books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered holder hereof
as the owner hereof for all purposes.
6. ADJUSTMENT FOR DIVIDENDS, DISTRIBUTIONS AND RECLASSIFICATIONS. In
case at any time or from time to time, the holders of Common Stock shall have
received, or (on or after the record date fixed for the determination of
shareholders eligible to receive) shall have become entitled to receive, without
payment therefor:
(a) other or additional stock, other securities, cash or
property by way of dividend; or
43
-6-
(b) other or additional (or less) stock or other
securities or property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares or similar
corporate restructuring;
other than additional shares of Common Stock issued as a stock dividend or in a
stock-split (adjustments in respect of which are provided for in Section 8
hereof), then and in each such case the holder of this Warrant, on the exercise
hereof as provided in Section 2 hereof, shall be entitled to receive the amount
of stock and other securities and property (including cash in the case referred
to in subsection (b) of this Section 6) which such holder would have received
prior to or would have held on the date of such exercise if on the date hereof
it had been the holder of record of the number of shares of Common Stock called
for on the face of this Warrant and had thereafter, during the period from the
date hereof to and including the date of such exercise, retained such shares and
all such other or additional stock and other securities and property (including
cash in the case referred to in subsection (b) of this Section 6) receivable by
such holder as aforesaid during such period, giving effect to all further
adjustments called for during such period by Sections 7 and 8 hereof.
7. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
7.1. Certain Adjustments. In case at any time or from time to time,
the Company shall (i) effect a capital reorganization, reclassification or
recapitalization, (ii) consolidate with or merge into any other Person, or (iii)
transfer all or substantially all of its properties or assets to any other
Person under any plan or arrangement contemplating the dissolution of the
Company, then in each such case, the holder of this Warrant, on the exercise
hereof as provided in Section 2 hereof at any time after the consummation of
such reorganization, recapitalization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
holder had so exercised this Warrant immediately prior thereto, all subject to
further adjustment thereafter as provided in Sections 6 and 8 hereof.
7.2. Appointment of Trustee for Warrant Holders Upon Dissolution. In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall, at its expense, deliver or cause to be delivered the stock
and other securities and property (including cash, where applicable) receivable
by the holders of the Warrant after the effective date of such dissolution
pursuant to this Section 7 to a bank or trust company, as trustee for the holder
or holders of the Warrant.
44
-7-
7.3. Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 7, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the Person acquiring all or substantially all of the
properties or assets of the Company, whether or not such Person shall have
expressly assumed the terms of this Warrant as provided in Section 9 hereof.
8. ADJUSTMENTS FOR STOCK EVENTS.
8.1. General. If at any time there shall occur any stock split, stock
dividend, reverse stock split or other subdivision of the Company's Common Stock
("Stock Event"), then the number of shares of Common Stock to be received by the
holder of this Warrant shall be appropriately adjusted such that the proportion
of the number of shares issuable hereunder to the total number of shares of the
Company (on a fully diluted basis) prior to such Stock Event is equal to the
proportion of the number of shares issuable hereunder after such Stock Event to
the total number of shares of the Company (on a fully-diluted basis) after such
Stock Event. No adjustment to the Exercise Price shall be made in connection
with any adjustment of the number of shares of Common Stock receivable upon
exercise of this Warrant, except that the Exercise Price shall be
proportionately decreased or increased upon the occurrence of any stock split or
other subdivision of the Common Stock; provided that in no event will the
Exercise Price be less than the par value of the Common Stock.
8.2. Other Securities. In case any Other Securities shall have been
issued, or shall then be subject to issue upon the conversion or exchange of any
stock (or Other Securities) of the Company (or any other issuer of Other
Securities or any other entity referred to in Section 7 hereof) or to
subscription, purchase or other acquisition pursuant to any rights or options
granted by the Company (or such other issuer or entity), the holder hereof shall
be entitled to receive upon exercise hereof such amount of Other Securities (in
lieu of or in addition to Common Stock) as is determined in accordance with the
terms hereof, treating all references to Common Stock herein as references to
Other Securities to the extent applicable, and the computations, adjustments and
readjustments provided for in this Section 8 with respect to the number of
shares of Common Stock issuable upon exercise of this Warrant shall be made as
nearly as possible in the manner so provided and applied to determine the amount
of Other Securities from time to time receivable on the exercise of the Warrant,
so as to provide the holder of the Warrant with the benefits intended by this
Section 8 and the other provisions of this Warrant.
45
-8-
8.3 Other Common Stock Issuances. In case the Company shall issue
additional shares of Common Stock, (or shall be deemed to have issued Common
Stock, as provided in (a) below) at a Net Consideration Per Share (as defined
below) which is less than the Exercise Price in effect at the time of such
issuance, the Exercise Price shall be adjusted so that the same shall equal the
price determined by multiplying the Exercise Price in effect immediately prior
thereto by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding or deemed outstanding on the date immediately prior to
such issuance plus the number of additional shares of Common Stock which could
be purchased in connection with such issuance at the Exercise Price then in
effect and of which the denominator shall be the number of shares of Common
Stock outstanding or deemed outstanding immediately prior to such issuance plus
the number of such additional shares of Common Stock issued or deemed issued in
connection with such issuance.
(a) For the purposes of this section 8.3 the issuance of any
warrants, options, subscriptions or purchase rights with respect to
shares of Common Stock and the issuance of any securities convertible
into or exchangeable for shares of Common Stock (or the issuance of
any warrants, options or any rights with respect to such convertible
or exchangeable securities) shall be deemed to be an issuance of such
Common Stock at such time. Any unconditional obligation, agreement or
undertaking to issue warrants, options, subscriptions or purchase
rights or convertible or exchangeable securities at any time in the
future shall be deemed to be an issuance at the time such obligation,
agreement or undertaking is made or arises. No adjustment of the
Exercise Price shall be made under this section 8.3 upon the issuance
of any shares of Common Stock or convertible or exchangeable
securities which are issued pursuant to the exercise of any warrants,
options, subscriptions or purchase rights or pursuant to the exercise
of any conversion or exchange rights in any convertible or
exchangeable securities if any adjustment shall previously have been
made upon the issuance of any such warrants, options or subscriptions
or purchase rights or upon the issuance of any convertible securities
(or upon the issuance of any warrants, options or any rights
therefor) as above provided unless any downward price adjustments or
rate adjustments are made with respect to such warrants, options,
subscriptions or other purchase rights or convertible or exchangeable
securities subsequent to the date the Exercise Price was initially
adjusted. Any adjustment of the Exercise Price pursuant to this
section 8.3 which relates to warrants, options, subscriptions or
purchase rights with respect to shares of Common Stock shall be
recomputed if, as, and when such warrants, options, subscriptions or
purchase rights expire or are canceled without being exercised, so
that the Exercise Price effective immediately upon such cancellation
or expiration shall be equal to the Exercise Price in effect
immediately prior to the time of the issuance of the expired or
canceled
46
-9-
warrants, options, subscriptions or purchase rights, adjusted as if
the expired or canceled warrants, options, subscriptions or purchase
rights had not been issued.
(b) For purposes of this Section 8.3 the "Net Consideration Per
Share" received by the Company shall mean the amount equal to the
total amount of consideration, if any, received by the Company for
the issuance of such Common Stock, or for the issuance of such
warrants, options, subscriptions or other purchase rights or
convertible or exchangeable securities, plus the minimum amount of
consideration, if any, payable to the Company upon full exercise,
exchange or conversion thereof, divided by the aggregate number of
shares of Common Stock that would be issued if all such warrants,
options, subscriptions or other purchase rights or convertible or
exchangeable securities were exercised, exchanged or converted. The
"Net Consideration Per Share" which may be received by the Company
shall be determined in each instance as of the date of issuance of
warrants, options, subscriptions or other purchase rights or
convertible or exchangeable securities ; provided, however, that the
"Net Consideration Per Share" shall be adjusted to reflect any
downward price adjustments or rate adjustments which occur with
respect to such warrants, options, subscriptions or other purchase
rights or convertible or exchangeable securities. If a part or all of
the consideration received by the Company in connection with the
issuance of shares of Common Stock or any of the securities described
in this paragraph consists of property other than cash, the Board of
Directors of the Company shall in its good faith discretion value
such property at fair market value, whereupon such value shall be
recorded on the books of the Company as consideration for the
property so received.
(c) This Section 8.3 shall not apply and no adjustment in the
Exercise Price shall be made hereunder upon a stock dividend, stock
split or other event described in Sections 8.1 and 8.2 (in such
instances, adjustments to the Exercise Price shall be governed by
Sections 8.1 and 8.2).
(d) Anything in paragraph to the contrary notwithstanding, the
Company shall not be required to make any adjustment of the Exercise
Price as set forth in this Section 8.3 in the case of shares of
Common Stock issued or deemed issued: (a) pursuant to a dividend,
split, subdivision or other event described in sections 8.1 or 8.2
hereof (in such instances, adjustments to the Exercise Price shall be
governed by Sections 8.1 and 8.2); (b) pursuant to the Company's
employee incentive plans provided such issuances do not exceed an
aggregate amount of 6,232,765 shares (inclusive of the 4,232,765
options outstanding on May 7, 2001) of Common Stock (which number
shall be equitably adjusted for any stock split, stock dividend,
reclassification of shares or other similar event affecting the
Common Stock);
47
-10-
(d) No adjustment of the Exercise Price shall be made under this
section 8.3 if the amount of such adjustment shall be less than $.001
per share, but in such case any adjustment that would otherwise be
required then to be made shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment,
which, together with any adjustment so carried forward, shall amount
to not less than $.001 per share.
(f) Upon each adjustment of the Exercise Price pursuant to this
section 8.3, the number of shares of Common Stock purchasable upon
exercise of this Warrant shall be adjusted to the number of shares of
Common Stock, calculated to the nearest one hundredth of a share,
obtained by multiplying the number of shares of Common Stock
purchasable immediately prior to such adjustment upon the exercise of
this Warrant by the Exercise Price in effect prior to such adjustment
and dividing the product so obtained by the new Exercise Price.
9. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
Articles of Organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the 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 the
Warrant set forth herein. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of stock receivable on
the exercise of the Warrant above the amount payable therefor on such exercise,
(ii) will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of stock on the exercise of the Warrant from time to time outstanding, (iii)
will not transfer all or substantially all of its properties and assets to any
other entity (corporate or otherwise), or consolidate with or merge into any
other entity or permit any such entity to consolidate with or merge into the
Company (if the Company is not the surviving entity), unless such other entity
shall expressly assume in writing and will be bound by all the terms of this
Warrant and the Warrant Purchase Agreement.
10. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of any event
that may require any adjustment or readjustment in the shares of Common Stock
issuable on the exercise of this Warrant, the Company at its expense will
promptly prepare a certificate setting forth such adjustment or readjustment, or
stating the reasons why no adjustment or readjustment is being made, and
showing, in detail, the facts upon which any such adjustment or readjustment is
based, including a statement of (i) the number of shares of the Company's Common
Stock then outstanding on a fully diluted basis, and (ii) the number of shares
of Common Stock to
48
-11-
be received upon exercise of this Warrant, in effect immediately
prior to such adjustment or readjustment and as adjusted and
readjusted (if required by Section 8) on account thereof. The Company
will forthwith mail a copy of each such certificate to each holder of
a Warrant, and will, on the written request at any time of any holder
of a Warrant, furnish to such holder a like certificate setting forth
the calculations used to determine such adjustment or readjustment.
At its option, the Majority Investors holding Warrants may confirm
the adjustment noted on the certificate by causing such adjustment to
be computed by an independent certified public accountant at the
expense of the Company.
11. NOTICES OF RECORD DATE. In the event of:
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right; or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or any consolidation or merger of the Company with or into
any other Person; or
(c) any voluntary or involuntary dissolution, liquidation
or winding-up of the Company; or
(d) any proposed issue or grant by the Company of any
shares of stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities (other than the issue of
Common Stock on the exercise of this Warrant),
then, and in each such event, the Company will mail or cause to be mailed to the
holder of this Warrant a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, (ii)
the date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is
anticipated to take place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for securities or
other property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up and (iii) the amount and character of any stock or other
49
-12-
securities, or rights or options with respect thereto, proposed to be issued or
granted, the date of such proposed issue or grant and the Persons or class of
Persons to whom such proposed issue or grant is to be offered or made. Such
notice shall be mailed at least twenty (20) days prior to the date specified in
such notice on which any such action is to be taken.
12. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
on the exercise of this Warrant, a number of shares of Common Stock equal to the
total number of shares of Common Stock from time to time issuable upon exercise
of this Warrant and, from time to time, will take all steps necessary to amend
its Articles of Organization to provide sufficient reserves of shares of Common
Stock issuable upon exercise of this Warrant.
13. DEFINITIONS. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
13.1. The term Common Stock means (i) the Company's Common Stock,
$.001 par value per share, (ii) any other capital stock of any class or classes
(however designated) of the Company, the holders of which shall have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and (iii) any other
securities into which or for which any of the securities described in clauses
(i) or (ii) above have been converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
13.2. The term Other Securities refers to any stock (other than
Common Stock) and other securities of the Company or any other entity (corporate
or otherwise) (i) which the holder of this Warrant at any time shall be entitled
to receive, or shall have received, on the exercise of this Warrant, in lieu of
or in addition to Common Stock, or (ii) which at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common Stock or
Other Securities, in each case pursuant to Section 6 or 7 hereof.
14. WARRANT AGENT. The Company may, by written notice to the holder of
this Warrant, appoint an agent for the purpose of issuing Common Stock on the
exercise of this Warrant pursuant to Section 2 hereof, and exchanging or
replacing this Warrant pursuant to the Warrant Purchase Agreement, or any of the
foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such agent.
50
-13-
15. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
16. NOTICES. All notices and other communications from the Company to the
holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, or sent by overnight courier (or sent in the form of a
telex or telecopy) at such address as may have been furnished to the Company in
writing by such holder or, until any such holder furnishes to the Company an
address, then to, and at the address of, the last holder of this Warrant who has
so furnished an address to the Company.
17. MISCELLANEOUS. In case any provision of this Warrant shall be
invalid, illegal or unenforceable, or partially invalid, illegal or
unenforceable, the provision shall be enforced to the extent, if any, that it
may legally be enforced and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by a statement in writing signed by the party against which enforcement of
such change, waiver, discharge or termination is sought. This Warrant and the
rights evidenced hereby shall inure to the benefit of and be binding upon the
respective successors and assigns of the Company and the holder hereof. The
provisions of this Warrant are intended to be for the benefit of all holders of
this Warrant from time to time and shall be enforceable by any such holder of
this Warrant. This Warrant shall be governed by and construed in accordance with
the internal laws (and not the conflict of law rules) of the Commonwealth of
Massachusetts. The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
51
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officer.
Dated: May 7, 2001
THE ▇▇▇▇▇▇ GROUP, INC.
By:
------------------------
Name:
Title:
52
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: The ▇▇▇▇▇▇ Group, Inc.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder shares of Common
Stock of The ▇▇▇▇▇▇ Group, Inc. and herewith makes payment of $ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to __________________, whose address is_____________ .
Dated: ___________________ _________________________________
(Signature must conform in all
respects to name of the holder as
specified on the face of the
Warrant)
_________________________________
(Address)
53
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto ____________ the right represented by the within Warrant to
purchase shares_________ of Common Stock of The ▇▇▇▇▇▇ Group, Inc., to which the
within Warrant relates, and appoints attorney____________ to transfer such right
on the books of The ▇▇▇▇▇▇ Group, Inc., with full power of substitution in the
premises.
_______________________________
(Name of holder)
Dated: By:
________________ _________________________________
Title:
_________________________________
Signed in the presence of:
__________________________