WARRANT AGREEMENT
THIS WARRANT AGREEMENT dated as of January 1, 2000 (as amended,
supplemented or modified from time to time, the "Warrant Agreement") by and
between ACCEL INTERNATIONAL CORPORATION, a Delaware corporation (the "Issuer"),
and Accel Finance Company LLC, a Connecticut limited liability company
("Lender").
W I T N E S S E T H:
WHEREAS, Issuer and Lender executed a Loan Agreement dated as of the date
hereof (as the same may be amended, supplemented or otherwise modified from time
to time, the "Loan Agreement") pursuant to which Lender agreed to make a certain
revolving loan (the "Loan") to the Issuer upon the terms, and subject to the
conditions, set forth in the Loan Agreement; and
WHEREAS, in order to induce Lender to enter into the Loan Agreement, the
Issuer has agreed to execute and deliver to Lender the Warrants hereinafter
described;
NOW, THEREFORE, in consideration of the premises the parties hereto agree
as follows:
Section 1. Definitions.
a) As used in this Warrant Agreement, unless otherwise defined herein,
terms defined in the Loan Agreement (as in effect on the date hereof, whether or
not the Loan Agreement is thereafter terminated or expires according to its
terms) shall have such defined meanings when used herein and the following terms
shall have the following meanings, unless the context otherwise requires:
"Capital Stock" shall mean, as to any Person, any and all shares,
interests, warrants, participants or other equivalents (11owever designated) of
corporate stock of such Person.
"Commission" shall mean the Securities and Exchange Commission or any
entity succeeding to any or all of its functions under the Securities Act and
the Exchange Act.
"Common Stock" shall mean the Common Stock, par value $0.10 per share, of
the Issuer, and shall include any stock into which such Common Stock shall have
been changed or any stock resulting from any reclassification of such Common
Stock and all other stock of any class or classes (however designated) of the
Issuer the registered holders of which 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.
"Equity of the Issuer" shall mean the total shareholders' equity of the
Issuer, determined in accordance with generally accepted accounting principles.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute.
"Exercise Price" shall mean the exercise price of a Warrant, which shall be
$2.00 per Warrant.
"Expiration Date" shall mean the sooner of December 1, 2003 and the date
upon which the Loan Agreement terminates.
"Issuance Date" shall mean the date on which the Warrants are issued and
delivered to Lender.
"Person" shall mean and include any individual, sole proprietorship,
partnership, joint venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, entity, party or government
(whether national, federal, state, county, city, municipal, or otherwise,
including, without limitation, any instrumentalities, division, agency, body or
department thereof).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.
"Subsidiary" shall mean, as to any Person, a corporation of which shares of
stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Warrant Agreement
shall refer to a Subsidiary or Subsidiaries of the Issuer.
"Warrant Certificate" shall mean a certificate(s) evidencing one or more
Warrants, substantially in the form of Exhibit A-I attached hereto, with such
changes therein as may be required to reflect any adjustments made pursuant to
Section 12.
"Warrant Expiration Date" shall mean, with respect to any Warrant issued
hereunder, 5:00 p.m., New York time, on the fifth anniversary of the date such
Warrant became exercisable.
"Warrant Holders" shall mean Lender thereof and such other Persons to whom
Lender thereof transfers Warrants in compliance with the terms of this Warrant
Agreement.
"Warrant Register" shall mean the register maintained by the Issuer for
registration of the Warrants and transfers thereof.
"Warrant Shares" shall mean the shares of Common Stock issued or issuable
upon exercise of the Warrants, as the number of such shares may be adjusted from
time to time pursuant to Section 12 and the provisions of the Issuer's
Certificate of Incorporation.
"Warrants" shall mean the stock purchase warrants issued pursuant to this
Warrant Agreement entitling the Lender to purchase from the Issuer 280,000
shares of Common Stock for each $1,000,000 of advance (or a pro rata portion or
multiple thereof) under the Loan Agreement at the Exercise Price at any time
after the issuance of such Warrant and before 5:00 p.m., New York time, on the
Warrant Expiration Date.
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(b) For all purposes of this Warrant Agreement except as otherwise
expressly provided or unless the context otherwise requires:
(i) "Herein," "hereof" and "hereunder" and other words of similar
import refer to this Warrant Agreement as a whole and not to any particular
Section or other subdivision;
(ii) Any uses of the masculine, feminine or neuter gender shall also
be deemed to include any other gender as appropriate;
(iii) The exhibits and schedules to this Warrant Agreement shall be
deemed an integral part of this Warrant Agreement;
(iv) Except as specifically set forth in such representation, each of
the representations and warranties of the Issuer in Section 3 hereof is separate
and is not limited, qualified or modified by the existence, wording or
satisfaction of any other representation of the Issuer in Section 3 or
otherwise;
(v) All references herein (in covenants or otherwise) to any
action(s) which are to be taken (or which are prohibited from being taken) by
any Person, the Issuer or any Subsidiary shall apply to such Person, the Issuer
or such Subsidiary, as the case may be, whether such action is taken directly or
indirectly; and
(vi) All references herein to actions by the Issuer or any Subsidiary
(including, without limitation, actions denoted by terms such as "create,"
"sell," "transfer" or "dispose of") mean such action whether voluntary or
involuntary, by operation of law or otherwise.
Section 2. Issuance of Warrants. The Issuer hereby agrees to issue and
deliver to Lender the Warrants and Warrant Certificates evidencing the Warrants
contemporaneously with each advance under the Loan Agreement. No payment shall
be required from Lender in consideration of its receipt of the Warrants.
Repayment of advances under the Loan Agreement will not eliminate the Lender's
rights with respect to the issuance of the Warrants. Additional advances and
re-advances during the term of the Revolving Loan Facility will entitle the
Lender to additional Warrants.
Section 3. Representations and Warranties. The Issuer hereby represents and
warrants to Lender, for the benefit of Lender and any other Warrant Holder, as
follows:
(a) The Issuer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, has the corporate power
and authority to conduct its business as presently conducted and as intended to
be conducted, has the corporate power and authority to execute and deliver this
Warrant Agreement and the Warrant Certificates, to issue the Warrants and to
perform its obligations under this Warrant Agreement and the Warrant
Certificates, has the corporate power and authority and legal right to own and
lease its properties and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which it owns or leases real property or in
which the conduct of its business requires such qualification, except where
failure to be so qualified could not be reasonably expected to have a material
adverse effect on the business,
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properties, financial condition or results of operations of the Issuer and its
Subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Issuer of this Warrant
Agreement and the Warrant Certificates, the issuance of the Warrants and the
issuance of the Warrant Shares upon the exercise of the Warrants have been duly
authorized by all necessary corporate action and do not and will not violate, or
result in a breach of, or constitute a default under, or require any consent
under, or result in the creation of any lien, charge or encumbrance upon the
assets of the Issuer pursuant to, any law, statute, ordinance, rule, regulation,
order or decree of any court, governmental body or regulatory authority or
administrative agency having jurisdiction over the Issuer or its Subsidiaries or
the Issuer's Articles of Incorporation or any contract, mortgage, loan
agreement, note, lease or other instrument binding upon the Issuer or its
Subsidiaries or by which their properties are bound.
(c) This Warrant Agreement has been duly executed and delivered by the
Issuer and constitutes a legal, valid, binding and enforceable obligation of the
Issuer. When the Warrants and Warrant Certificates have been issued as
contemplated hereby, (i) the Warrants and the Warrant Certificates will
constitute legal, valid, binding and enforceable obligations of the Issuer and
(ii) the Warrant Shares, when issued upon exercise of the Warrants in accordance
with the terms hereof, will be duly authorized, validly issued, fully paid and
nonassessable shares of the Common Stock ,as applicable, with 110 personal
liability attaching to the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 15,000,000 shares
of Common Stock, par value $0.10 per share, of which 8,554,966 shares are issued
and outstanding. Except as set forth on Schedule I hereto, there are no
outstanding options, warrants, subscriptions, rights, convertible or
exchangeable securities or other agreements or plans under which the Issuer may
be or become obligated to issue, sell or transfer shares of its capital stock or
other securities. To the Issuer's best knowledge, there are no voting
agreements, voting trusts, proxies or other agreements or understandings with
respect to the voting of any capital stock of the Issuer or any Subsidiary.
Section 4. Registration, Transfer and Exchange of Certificates.
(a) The Issuer shall maintain, at its office, the Warrant Register for
registration of the Warrants and Warrant Certificates and transfers thereof. On
the Issuance Date, The Issuer shall register the Warrants and Warrant
Certificates in the Warrant Register in the name of Lender. The Issuer may deem
and treat the registered holders of the Warrant Certificates as the absolute
owners thereof and the Warrants represented thereby (notwithstanding any
notation of ownership or other writing on the Warrant Certificates made by any
person) for the purpose of any exercise thereof or any distribution to the
holders thereof, and for all other purposes, and the Issuer shall not be
affected by any notice to the contrary.
(b) Subject to Section 14, the Issuer shall register the transfer of any
outstanding Warrants in the Warrant Register upon surrender of the Warrant
Certificates evidencing such Warrants to the Issuer, accompanied (if so required
by it) by a written instrument or instruments of transfer in form satisfactory
to it, duly executed by the registered holder or holders thereof or by the duly
appointed legal representative thereof. Upon any such registration of transfer,
new Warrant Certificates evidencing such
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transferred Warrants shall be issued to the transferee and the surrendered
Warrant Certificates shall be canceled. If less than all the Warrants evidenced
by Warrant Certificates surrendered for transfer are to be transferred, new
Warrant Certificates shall be issued to the holder surrendering such Warrant
Certificates evidencing such remaining number of Warrants.
(c) Warrant Certificates may be exchanged at the option of the holders
thereof, when surrendered to the Issuer at the Warrant Office, for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled.
(d) Except as provided in subsection 14(b) each Warrant Certificate issued
upon transfer or exchange shall bear the legend set forth in subsection 14(b) if
the Warrant Certificate presented for transfer or exchange bore such legend.
Section 5. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Issuer of such loss, theft or destruction of such Warrant
Certificate and, if requested, indemnity satisfactory to it. The Issuer
acknowledges that a written indemnity by Lender or, if an affiliate of Lender is
the holder of such lost, stolen or destroyed Warrant Certificate, by such
affiliate, shall be satisfactory to the Issuer for such purpose.
Section 6. Duration and Exercise of Warrants.
(a) A Warrant evidenced by a Warrant Certificate shall be exercisable in
whole or in part by the registered holder thereof on any Business Day after the
Issuance Date and on or before 5:00 p.m., New York time, on the Warrant
Expiration Date with respect to such Warrant, provided that, at any given time,
the registered holder(s) of the Warrants shall be required to exercise the
Warrants in an aggregate amount of at least 10,000 Warrants (or if less than an
aggregate of 10,000 Warrants are outstanding, the remainder of the Warrants then
outstanding).
(b) Subject to the provisions of this Warrant Agreement, the Warrants
evidenced by a Warrant Certificate may be exercised by the registered holder
thereof by the surrender of the Warrant Certificate evidencing the Warrants to
be exercised, with the form of election to purchase on the reverse thereof or
attached thereto duly completed and signed, to the Issuer, and upon payment of
the aggregate Exercise Price for the number of Warrant Shares in respect of
which such Warrants are being exercised in lawful money of the United States of
America. In lieu of exercising Warrants pursuant to the immediately preceding
sentence, the Warrant Holder shall have the right to require the Issuer to
convert the Warrants, in whole or in part and at any time or times (the
"Conversion Right"), into Warrant Shares, by surrendering to the Issuer the
Warrant Certificate evidencing the Warrants to be converted, accompanied by the
form of conversion notice on the reverse thereof or attached thereto which has
been duly completed and signed. Upon exercise of the Conversion Right, the
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Issuer shall deliver to the Warrant Holder (without payment by the Warrant
Holder of any Exercise Price) that number of Warrant Shares which is equal to
the quotient obtained by dividing (x) the value of the number of Warrants being
converted at the time the Conversion Right is exercised (determined by
subtracting the aggregate Exercise Price for all such Warrants immediately prior
to the exercise of the Conversion Right from the aggregate current market price
(determined on the basis of the quoted market price per share) of that number of
Warrant Shares purchasable upon exercise of such Warrants immediately prior to
the exercise of the Conversion Right (taking into account all applicable
adjustments pursuant to Section 12) by (y) the current market price per share of
one share of Common Stock immediately prior to the exercise of the Conversion
Right. Any references in this Warrant Agreement to the "exercise" of any
Warrants, and the use of the term "exercise" herein, shall be deemed to include
(without limitation) any exercise of the Conversion Right.
(c) Upon exercise of any Warrants hereunder, the Issuer shall issue and
cause to be delivered to or upon the written order of the registered holders of
such Warrants and in such name or names as such registered holders may
designate, a certificate for the Warrant Share or Warrant Shares issued upon
such exercise of such Warrants. Any Persons so designated to be named therein
shall be deemed to have become holders of record of such Warrant Share or
Warrant Shares as of the date of exercise of such Warrants.
(d) If less than all of the Warrants evidenced by a Warrant Certificate are
exercised at any time, a new Warrant Certificate or Certificates shall be issued
for the remaining number of Warrants evidenced by such Warrant Certificate. Each
new Warrant Certificate so issued shall bear the legend set forth in subsection
14(b) if the Warrant Certificate presented in connection with partial exercise
thereof bore such legend unless the transfer restrictions referred to in such
legend are no longer applicable pursuant to subsection 14(d). All Warrant
Certificates surrendered upon exercise of Warrants shall be canceled.
Section 7. Fractional Shares. The Issuer shall not be required to issue
fractional shares of Common Stock upon exercise of the Warrants but shall pay
for any such fraction of a share an amount in cash equal to the Exercise Price
multiplied by such fraction.
Section 8. Payment of Taxes. The Issuer will pay all taxes attributable to
the initial issuance of Warrant Shares upon the exercise of the Warrants,
provided that the Issuer shall not be required to pay (i) any income tax
incurred by the holder of the Warrant Certificate or the Warrant Shares upon
exercise of the Warrants or the issuance of the Warrant Shares, or (ii) any tax
which may be payable in respect of any transfer involved in the issue of any
Warrant Certificate or any certificate for Warrant Shares in a name other than
that of the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Issuer shall not be required to issue or deliver
such certificate unless or until the person or persons requesting the issuance
thereof shall have paid to the Issuer the amount of such tax or shall have
established to the satisfaction of the Issuer that such tax has been paid.
Section 9. Stockholder Rights.
(a) Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders
thereof the right to vote or to consent or to receive notice as a stockholder in
respect of the meetings of stockholders or the election of directors of the
Issuer or any other matter, or any rights whatsoever as a stockholder of the
Issuer.
(b) Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as imposing any obligation on the registered
holders thereof to purchase any securities or as imposing any liabilities on
such holders as stockholders of the Issuer, whether such obligation or
liabilities are asserted by the Issuer or by creditors of the Issuer.
Section 10. Reservation and Issuance of Warrant Shares; Certain Corporate
Actions.
(a) The Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon the exercise of the Warrants
the number of shares of Common Stock deliverable upon exercise of all
outstanding Warrants.
(b) The Issuer covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant Agreement and the Issuer's Articles of
Incorporation, be fully paid and nonassessable and free from all taxes (except
as otherwise contemplated in Section 8 hereof) with respect to the issuance
thereof and from all liens, charges and security interests (other than any
created by or on behalf of any Warrant Holder).
(c) So long as any Warrants are outstanding, the Issuer shall make no
amendment of its Certificate of Incorporation which would affect the
authorization, dividend voting, liquidation, conversion, exchange or notice
rights or additional remedies provisions of the Capital Stock without the
written consent of all of the Warrant Holders.
(d) The Issuer will not, by amendment of its Certificate of Incorporation
or through any consolidation, merger, reorganization, transfer of assets,
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 this Warrant
Agreement or the Warrant Certificates. Without limiting the generality of the
foregoing, the Issuer (i) will not permit the par value or the determined or
stated value of any shares of the Issuer's Common Stock receivable upon the
exercise of the Warrants to exceed the amount payable therefor upon such
exercise, (ii) will take all such action as may be necessary or appropriate in
order that the Issuer may validly and legally issue fully paid and nonassessable
shares of the Issuer's Common Stock (as the case may be), upon the exercise of
the Warrants from time to time outstanding, including, without limitation,
amending its Certificate of Incorporation to reduce or eliminate the par value
of the Common Stock, (iii) will not take any action which results in an
adjustment in the number of Warrant Shares obtainable upon the exercise of any
Warrants if the total number of shares of the Issuer's Common Stock (or other
securities) issuable after such action upon the exercise of all of the
then-outstanding Warrants would exceed the total number of shares of the
Issuer's Common Stock (or other securities) then authorized by the Issuer's
Certificate of Incorporation and available for purpose of issuance upon such
exercise, and (iv) will not amend its Certificate of Incorporation to change any
terms of its Common Stock.
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Section 11. Obtaining of Governmental Approvals and Stock Exchange
Listings. The Issuer will, at its own expense, from time to time take all action
which may be necessary to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities which are or
become requisite in connection with the issuance, sale, transfer and delivery of
the Warrant Certificates and the exercise of the Warrants and the issuance,
sale, transfer and delivery of the Warrant Shares and all action which may be
necessary so that such Warrant Shares, immediately upon their issuance upon the
exercise of the Warrants will be listed on such securities exchange, if any, on
which the Common Stock is then listed.
Section 12. Adjustment of Number of Warrant Shares Purchasable.
(a) The number of shares of Common Stock purchasable upon the exercise of
each Warrant is subject to adjustment from time to time upon the occurrence of
any of the events enumerated in this Section 12 at any time or from time to time
after the date hereof and prior to the Expiration Date.
(b) If the Issuer shall (i) declare a dividend on the Common in shares of
its capital stock (whether shares of Common Stock, or of capital stock of any
other class), (ii) split or subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares, each
Warrant outstanding at the time of the record date for such dividend or of the
effective date of such split, subdivision or combination shall thereafter
entitle the holder of such Warrant to receive the aggregate number and kind of
shares which, if such Warrant had been exercised immediately prior to such time,
such holder would have owned or have become entitled to receive by virtue of
such dividend, subdivision or combination. Such adjustment shall be made
successively whenever any event listed above shall occur and, if a dividend
which is declared is not paid, each Warrant outstanding shall again entitle the
holder thereof to receive the number of shares of Common Stock as would have
been the case had such dividend not been declared. If at any time, as a result
of an adjustment made pursuant to this subsection 12(b), the holder of any
Warrant thereafter exercised shall become entitled to receive any shares of
capital stock of the Issuer other than shares of Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in this Section 12, and the provisions of this Warrant Agreement with
respect to the Warrant Shares shall apply on like terms to such other shares.
(c) In the event of any capital reorganization of the Issuer, or of any
reclassification of the Common Stock (other than a subdivision or combination of
outstanding shares of Common Stock), or in case of the consolidation of the
Issuer with or the merger of the Issuer with or into any other corporation or of
the sale of the properties and assets of the Issuer as, or substantially as, an
entirety to any other corporation, each Warrant shall after such capital
reorganization, reclassification of Common Stock, consolidation, merger or sale
he exercisable upon the terms and conditions specified in this Warrant
Agreement, for the number of shares of stock or other securities or assets to
which a holder of the number of Warrant Shares purchasable (at the time of such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale) upon exercise of such Warrant would have been entitled upon such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale; and in any such case, if
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necessary, the provisions set forth in this Section 12 with respect to the
rights thereafter of the holders of the Warrants shall be appropriately adjusted
so as to be applicable, as nearly as may reasonably be, to any shares of stock
or other securities or assets thereafter deliverable on the exercise of the
Warrants.
(d) If any event occurs, as to which, in the good faith opinion of the
Board of Directors of the Issuer, the other provisions of this Section 12 are
not strictly applicable or (if strictly applicable) would not fairly protect the
purchase rights of the Warrants in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
decreasing the number of shares of Common Stock purchasable upon the exercise of
each Warrant from that which would otherwise be determined pursuant to this
Section 12.
(e) No adjustment in the number of Warrant Shares purchasable shall be
required unless such adjustment would require an increase or decrease in the
aggregate number of Warrant Shares purchasable of at least 1%, provided that any
adjustments which by reason of this subsection 12(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 12 shall be made to the nearest cent or to
the nearest hundredth of a share, as the case may be.
(f) Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrant, Warrant Certificates theretofore
or thereafter issued may continue to express the same number and kind of shares
as are stated on the Warrant Certificates initially issuable pursuant to this
Warrant Agreement.
(g) If any question shall at any time arise with respect to the number of
Warrant Shares purchasable following any adjustment pursuant to this Section 12,
such question shall be determined by agreement between the holders of a majority
of the Warrants and the Issuer or, in the absence of such an agreement, by an
independent investment banking firm or an independent appraiser engaged by the
Issuer (in either case the cost of which engagement will be borne by the Issuer)
and reasonably acceptable to the Issuer and the holders of a majority of
Warrants and such determination shall be binding upon the issuer and the holders
of the Warrants.
Section 13. Notices to Warrant Holders; Notices of Issuances and Dividends.
(a) Upon any adjustment of the number of Warrant Shares purchasable upon
exercise of a Warrant pursuant to Section 12, the Issuer shall promptly but in
any event within 20 days thereafter, cause to be given to each of the registered
holders of the Warrants at its address appearing on the Warrant Register by
registered mail, postage prepaid, return receipt requested a certificate signed
by its chairman, president or chief financial officer setting forth the number
of Warrant Shares purchasable upon exercise of a Warrant as so adjusted and
describing in reasonable detail the facts accounting for such adjustment and the
method of calculation used. Where appropriate, such certificate may be given in
advance and included as a part
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of the notice required to be mailed under the other provisions of this Section
13.
(b) In the event:
(i) that the Issuer shall authorize the issuance to all holders of Common
Stock of rights or warrants to subscribe for or purchase capital stock of the
Issuer or of any other subscription rights or warrants; or
(ii) that the Issuer shall authorize the distribution to all holders of
Common Stock of evidences of its indebtedness or assets (including, without
limitation cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in Common Stock ;or
(iii) of any consolidation or merger to which the Issuer is a party and
for which approval of any stockholders of the Issuer is required, or of the
conveyance or transfer of the properties and assets of the Issuer substantially
as an entirety, or of any capital reorganization or reclassification or change
of the Common Stock (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a subdivision or
combination); or
(iv) of the voluntary or involuntary dissolution, liquidation or winding
up of the Issuer; or
(v) that the Issuer proposes to take any other action which would require
an adjustment in the number of Warrant Shares or other securities or assets to
which each Warrant Holder is entitled pursuant to Section 12; then the Issuer
shall cause to be given to each of the registered holders of the Warrants at its
address appearing on the Warrant Register at least 20 calendar days prior to the
applicable record date, if any, hereinafter specified, or, if no such record
date is specified, 20 calendar days prior to the taking of any action referred
to in clauses (i) through (v) above, by registered mail, postage prepaid, return
receipt requested, a written notice stating (i) the date as of which the holders
of record of Common Stock to be entitled to receive any such rights, warrants or
distribution are to be determined, or (ii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective, or (iii) the date on which such other action
is to be effected, and the date as of which it is expected that holders of
record of Common Stock shall be entitled to exchange their shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up or other action. The failure to give the notice required by this Section 13
or any defect therein shall not affect the legality or validity of any
distribution, right, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up or other action referred to above, or the
vote upon any such action.
Section 14. Restrictions on Transfer.
(a) The Lender (i) represents that it is an "accredited investor" within
the meaning of the Securities Act and the rules and regulations thereunder, (ii)
represents that it has received adequate information about the Issuer to
determine the advisability of a purchase of the Issuer's securities, (iii)
represents that it is acquiring the Warrants for its own
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account for investment and not with a view to any distribution or public
offering within the meaning of the Securities Act, except in any case pursuant
to the registration of such Warrants or Warrant Shares under the Securities Act
or pursuant to a valid exemption from such registration requirement, (iv)
acknowledges that the Warrants and the Warrant Shares issuable upon exercise
thereof have not been registered under the Securities Act, and (v) agrees that
it will not sell or otherwise transfer any of its Warrants or Warrant Shares
except upon the terms and conditions specified herein and that it will cause any
transferee thereof to agree to take and hold the same subject to the terms and
conditions specified herein, provided that the Warrant Holders may sell, pledge
or otherwise transfer the Warrants or the Warrant Shares purchased upon exercise
of the Warrants in one or more private transactions not requiring registration
under the Securities Act, as provided in Section 14(c) below.
(b) Except as provided in subsection 14(d) hereof each Warrant Certificate
and each certificate for the Warrant Shares issued to Lender or to a subsequent
transferee thereof pursuant to subsection 14(c) shall include a legend in
substantially the following form (with such changes therein as may be
appropriate to reflect whether such legend refers to Warrants or Warrant
Shares), provided that such legend shall not be required if such transfer is
being made in connection with a sale which is exempt from registration pursuant
to Rule 144 under the Securities Act or if the opinion of counsel referred to in
subsection 14(c) is to the further effect that neither such legend nor the
restrictions on transfer in this Section 14 are required in order to ensure
compliance with the Securities Act
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS AND
SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN
AND ARE SUBJECT TO OTHER PROVISIONS OF THE WARRANT AGREEMENT, DATED AS OF
JANUARY 1, 2000, BETWEEN THE ISSUER AND ACCEL FINANCE COMPANY LLC A COMPLETE AND
CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.
(c)Prior to or promptly after any assignment, transfer or sale of any
Warrant or any Warrant Shares (other than a transfer among Lender and/or its
affiliates), the holder thereof shall give written notice to the Issuer of such
holder's intention to effect such assignment, transfer or sale, which notice
shall set forth the date of such proposed assignment, transfer or sale and the
identity of the proposed transferee. Each holder wishing to effect such a
transfer of any Warrant or Warrant Shares shall also furnish to the Issuer an
agreement by the transferee thereof that it is taking and holding the same
subject to the terms and conditions specified herein.
(d)The restrictions set forth in this Section 14 shall terminate and cease
to be effective with respect to any Warrants or Warrant Shares which are
registered under the Securities Act or upon receipt by the Issuer of an opinion
of counsel, in form reasonably satisfactory to the Issuer, to the effect that
compliance with such restrictions is not necessary in order to comply with the
Securities Act with respect to the transfer of the Warrants and the Warrant
Shares; provided, however, that after two (2) years from the date of issuance of
any Warrants (or such shorter period as may be provided by Rule 144(k)
promulgated under the Securities Act), such restrictions will
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automatically terminate (without the necessity of any opinion of counsel) as to
such Warrants and as to any Warrant Shares issued in respect of such Warrants
set forth in subsection 6(b) above. Whenever such restrictions shall so
terminate the holder of such Warrants and/or Warrant Shares shall be entitled to
receive from the Issuer, without expense (other than transfer taxes, if any),
Warrant Certificates or certificates for such Warrant Shares not bearing the
legend set forth in subsection 14(b) at which time the issuer will rescind any
transfer restrictions relating thereto.
(e) With a view to making available to Lender and its affiliates and
subsequent holders of the Warrant Shares the benefits of certain rules and
regulations of the Securities and Exchange Commission (including, without
limitation, Rules 144 and 144A under the Securities Act) which may permit the
sale of Warrants and Warrant Shares to the public or certain other institutions
without registration, the Issuer agrees to take any and all such actions as may
be required of it to make available to Lender and its affiliates and such
subsequent holders such benefits, including without limitation, to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act or any successor
provision thereto from and after the date the Issuer first becomes subject to
the provisions of Section 13 or 15(d) of the Exchange Act;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Issuer under the Securities Act and the Exchange
Act from and after the date the Issuer first becomes subject to the provisions
of Section 13 or 15(d) of the Exchange Act; and
(iii) so long as Lender or an affiliate thereof owns any Warrants or
Warrant Shares, furnish to Lender forthwith upon request a written statement by
the Issuer as to its compliance with the reporting requirements of Rule 144 or
any successor provision thereto, and of the Securities Act and the Exchange Act,
(to the extent not previously furnished to Lender under subsection 13(d)) a copy
of the most recent annual or quarterly report of the Issuer filed with the
Commission, in each case from and after the date the Issuer first becomes
subject to the provisions of Section 13 or 15(d) of the Exchange Act, and such
other reports and documents of the Issuer and other information in the
possession of or reasonably obtainable by the Issuer as Lender and its
Affiliates and subsequent holders of the Warrants may reasonably request in
availing itself of any rule or regulation of the Commission allowing Lender and
its affiliates and subsequent holders of the Warrants to sell any such
securities without registration.
Section 15. Amendments and Waivers. Any provision of this Warrant Agreement
may be amended, supplemented, waived, discharged or terminated by a written
instrument signed by the Issuer and the Lender.
Section 16. Notices.
(a) Any notice or demand to be given or made by the Warrant Holders or the
holders of Warrant Shares to or on the Issuer pursuant to this Warrant Agreement
shall be sufficiently given or made if sent by registered mail, return receipt
requested, postage prepaid, addressed to the Issuer.
(b) Any notice to be given by the Issuer to the Warrant Holders or the
holders of Warrant Shares shall be sufficiently given or made if sent by
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registered mail, return receipt requested, postage prepaid, addressed to such
holder as such holder's name and address shall appear on the Warrant Register or
the Common Stock registry of the Issuer, as the case may be.
Section 17. Binding Effect. This Warrant Agreement shall be binding upon
and inure to the sole and exclusive benefit of the Issuer, its successors and
assigns, Lender, Affiliates of Lender and the registered holders from time to
time of the Warrants and the Warrant Shares.
Section 18. Counterparts. This Warrant Agreement may be executed in one or
more separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 19. Connecticut Law. THIS WARRANT AGREEMENT AND EACH WARRANT
CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CONNECTICUT.
Section 20. Benefits of This Warrant Agreement. Nothing in this Warrant
Agreement shall be construed to give to any Person other than the Issuer and the
registered holders of the Warrants and the Warrant Shares any legal or equitable
right, remedy or claim under this Warrant Agreement.
Section 21. Voting and Consents to be on a Fully Converted Basis. Wherever
this Warrant Agreement calls for the written consent or vote of any combinations
of the holders of the Warrants, any of the Warrant Shares, voting as a single
group, the Warrants shall be counted as if they had been exercised for Common
Stock.
[Remainder of page intentionally left blank]
-13-
IN WITNESS WHEREOF the parties hereto have caused this Warrant Agreement to
be duly executed and delivered by their proper and duly authorized officers, as
of the date and year first above written.
ACCEL INTERNATIONAL CORPORATION
By: ___________________________
Name: _____________________
Title: _____________________
Attest: _______________________
Name: _____________________
Title: _____________________
ACCEL FINANCE COMPANY LLC
By: ___________________________
Name: _____________________
Title: _____________________
Attest: _______________________
Name: _____________________
Title: _____________________
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SCHEDULE I
See Section 3(d)
-15-
EXHIBIT A-I
To Warrant Agreement
FORM OF SERIES A WARRANT CERTIFICATE
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT
TO OTHER PROVISIONS OF THE WARRANT AGREEMENT, DATED AS OF DATED JANUARY 1, 2000
DECEMBER 1, 1999, BETWEEN THE ISSUER AND ACCEL FINANCE COMPANY LLC, A COMPLETE
AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF
THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN EXCHANGE
RIGHTS MORE FULLY SET FORTH IN THE WARRANT AGREEMENT.
-------------, ----
Certificate No. _____
EXERCISABLE ONLY ON OR BEFORE
[5 Years from Date of Issuance]
Warrant Certificate
This Warrant Certificate certifies that Accel Finance Company LLC, or
registered assigns, is the registered holder of ________ Warrants (the
"Warrants") to purchase Common Stock of Accel International Corp., a Delaware
corporation (the "Issuer"). Each Warrant entitles the holder, but only subject
to the conditions set forth herein and in the Warrant Agreement referred to
below, to purchase from the Issuer before 5:00 P.M., New York time, on the fifth
anniversary of the issuance of these Warrants (the "Warrant Expiration Date"),
one (1) fully paid and nonassessable share of the Common Stock of the Issuer
(the "Warrant Shares") in the percentages and to the extent set forth in the
Warrant Agreement, at a price (the "Exercise Price") of $2.00 per Warrant
payable in lawful money of the United States of America, upon surrender of this
Warrant Certificate, execution of the annexed Form of Election to Purchase and
payment of the Exercise Price at the office of the Issuer at __________________,
or such other address as the Issuer may specify in writing to the registered
holder of the Warrants evidenced hereby (the "Warrant Office"). In lieu of
exercising Warrants pursuant to the immediately preceding sentence, the Warrant
holder shall have the right to require the Issuer to convert the Warrants, in
whole or in part and at any time or times, into Warrant Shares, by surrendering
to the Issuer the Warrant Certificate evidencing the Warrants to be converted,
accompanied by the annexed Form of Notice of Conversion which has been duly
completed and signed. The Exercise Price and number of Warrant Shares
purchasable upon exercise of the Warrants are subject to adjustment prior to the
Warrant Expiration Date as set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 P.M., New York time, on the
Expiration Date and (except as otherwise provided in the Warrant Agreement)
all rights of the registered holders of the Warrants shall cease after 5:00
P.M., New York time, on the Expiration Date.
The Issuer may deem and treat the registered holders of the Warrants
evidenced hereby as the absolute owners thereof (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof and of any distribution to the holders hereof and for all other
purposes, and the Issuer shall not be affected by any notice to the contrary.
Warrant Certificates, when surrendered at the office of the Issuer at the
above-mentioned address by the registered holder hereof in person or by a legal
representative duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Issuer at the above-mentioned address, a new
Warrant Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued in exchange for this Warrant
Certificate to the transferee(s) and, if less than all the Warrants evidenced
hereby are to be transferred, to the registered holder hereof, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
This Warrant Certificate is one of the Warrant Certificates referred to in
the Warrant Agreement, dated as of January 1, 2000, between the Issuer and Accel
Finance Company LLC. Said Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Issuer and the holders. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Warrant Agreement.
IN WITNESS WHEREOF the Issuer has caused this Warrant Certificate to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto.
ACCEL INTERNATIONAL CORPORATION
By: ___________________________
Name: ____________________
Title: ____________________
(CORPORATE SEAL)
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ANNEX to Form
of Warrant
Certificate
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____ Warrant Shares* and
herewith tenders payment for such Warrant Shares to the order of the Issuer in
the amount of $________ in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
_______________________ whose address is _________________ ____________________
_____________________ and that such certificate be delivered to
_______________________ whose address is
________________________________________. If said number of Warrant Shares is
less than all of the Warrant Shares purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
the Warrant Shares be registered in the name of _________________________ whose
address is ____________________________________________ and that such Warrant
Certificate be delivered to ____________________ whose address is
_________________________________.
Signature:
-------------------------------------------
(Signature must conform in all respects to name of holder as specified in the
Warrant Registry.)
Date: ________________
*Consisting of:
_____ shares of Common Stock
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ANNEX to Form
of Warrant
Certificate
FORM OF NOTICE OF CONVERSION
(To be executed upon conversion of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to convert Warrants represented hereby
into _______ Warrant Shares* in accordance with the terms hereof. The
undersigned requests that a certificate for such Warrant Shares be registered in
the name of _______________________ whose address is ___________
______________________ and that such certificate be delivered to
_____________________ whose address is ____________________________________. If
said number of Warrant Shares is less than all of the Warrant Shares obtainable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of the Warrant Shares be registered in the name of
_____________________________ whose address is
___________________________________ and that such Warrant Certificate be
delivered to ____________________________ whose address is
___________________________________.
Signature:
-------------------------------------------
(Signature must conform in all respects to name of holder as specified in the
Warrant Registry.)
Date: ________________
*Consisting of:
_____ shares of Common Stock
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