WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT (the "Agreements"), dated as of January 30,
1995, between CDI Group, Inc. (the "Company") and the Holder (as defined below)
listed on the signature pages hereof.
W I T N E S S E T H:
WHEREAS, the Company, Community Distributors, Inc. (as surviving
corporation of the merger of Newrxco, Inc. with and into Community Distributors,
Inc., the "Borrowers"), the financial institutions from time to time party
thereto (the "Banks") and Banque Paribas, as agent for such Banks (the "Agent"),
are parties to a Credit Agreement of even date herewith (as the same shall be
amended, modified and supplemented and in effect from time to time, the "Credit
Agreements");
WHEREAS, in order to induce Banque Paribas, individually and as Agent, to
enter into the Credit Agreement, the Company has authorized the issuance of the
Warrants (as defined below) which are exercisable, pursuant to the terms and
conditions thereof, for Class A Common Stock (as defined below) of the Company;
and
WHEREAS, the Holder desires to subscribe for, and the Company desires to
issue to the Holder, upon the terms and conditions set forth herein, the
Warrants substantially in the form of Exhibit A hereto (the "Warrants");
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
1.01 Definitions. The following terms, as used herein, shall have the
following respective meanings:
"Class A Common Stock" shall mean the Company's authorized Class A Voting
Common Stock, $.00001 par value per share.
"Class B Common Stock" shall mean the Company's authorized Class B
Non-Voting Common Stock, $.00001 par value per share.
"Common Stock" shall mean and include the Company's Class A Common Stock
and Class B Common Stock as constituted on the date hereof.
"Exercise Period" shall mean the period of time from January 30, 1995 until
5:30 P.M., local time in New York City, on the tenth anniversary thereof.
"Holder" shall mean the holder of any Warrant or Warrant Share.
"Investors" shall mean BancBoston Ventures Inc. and Harvest Partners, Inc.
"Investor Securities Purchase Agreement" shall mean the Investor Securities
Purchase Agreement, dated as of January 30, 1995 among the Company, the
Investors and the other parties signatory thereto, as such agreement shall be
amended, modified and supplemented from time to time in accordance with the
provisions thereof.
"Paribas" shall mean Banque Paribas, acting through its Cayman Islands
Branch.
"Person" shall mean an individual, a corporation, a company, a voluntary
association, a partnership, a trust, an unincorporated organization or a
government or any agency, instrumentality or political subdivision thereof.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of January 30, 1995 among the Company, the Investors and the
other parties signatory thereto, as such agreement shall be amended, modified
and supplemented from time to time in accordance with the provisions thereof.
"Required Holders" shall mean the holders of more than 50% of all Warrant
Shares (assuming the full exercise of all Warrants).
"Stockholder" shall mean each of the Company's stockholders.
"Stockholders' Agreement" shall mean the Stockholders' Agreement, dated as
of January 30, 1995, among the Company, the Investors and the other parties
signatory thereto, as such agreement shall be amended, modified and supplemented
from time to time in accordance with the provisions thereof.
"Warrant" shall mean a Warrant substantially in the form of Exhibit A
hereto, and any Warrant or Warrants issued upon transfer of, or in substitution
therefor.
"Warrantholder" shall mean the holder of any Warrant.
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"Warrant Share" shall mean any share of Common Stock issued or issuable
upon exercise of any Warrant. For purposes of this Agreement, a Warrant Share
shall be "outstanding" from and after the date hereof until the redemption or
cancellation of such Warrant Share (or, if the related Warrant has not been
exercised, the expiration, repurchase or cancellation of such Warrant) by the
Company.
Section 2. Terms and Conditions of Issuance of Warrant.
2.01 Issuance of the Warrant. In consideration of the premises and other
good and valuable consideration, the Company hereby agrees to (i) issue on the
date hereof to the Holder listed on the signature pages hereto a Warrant to
purchase 16,667 shares of Common Stock (as such number may be adjusted as
provided in the Warrant) and (ii) deliver to the Holder a legal opinion dated
the date hereof and addressed to the Holder, in form and substance satisfactory
to the Holder, in connection with the issuance of the Warrant from counsel
satisfactory to the Holder.
2.02 Warrant Shares. The Warrant to be issued on the date hereof under this
Agreement shall entitle the Holder to exercise such Warrant for 16,667 shares of
Common Stock (as such number may be adjusted as provided in the Warrant)
representing as of the date hereof the right to receive shares of Common Stock
equal to 4% of the total Common Stock (determined on a fully diluted basis after
giving effect only to the issuance of all Warrant Shares).
Section 3. Representations and Warranties of the Company. The Company
represents and warrants to the Holder as follows:
3.01 Incorporation of Representations and Warranties. The representations
and warranties of the Company contained in the Credit Agreement and in the
Investor Securities Purchase Agreement are each incorporated herein by reference
and made a part hereof as if set forth herein and such representations and
warranties are true and correct in all material respects on the date hereof.
3.02 Authorization. The Company has all necessary power and authority to
execute, deliver and perform its obligations under this Agreement, the
Stockholders' Agreement, the Investor Securities Purchase Agreement and the
Registration Rights Agreement and the Warrant and to issue and deliver the
Warrant and Warrant Shares; the execution, delivery and performance by the
Company of this Agreement, the Stockholders' Agreement, the Investor Securities
Purchase Agreement and the Registration Rights Agreement and the Warrant have
been duly authorized by all necessary action; each of this Agreement, the
Stockholders' Agreement, the Investor Securities Purchase Agreement and the
Registration Rights Agreement and the Warrant has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company
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enforceable in accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to creditors' rights generally or by
general equitable principles.
3.03 Valid Issuances. The Warrant, when issued and delivered pursuant
hereto, and the Warrant Shares when issued and delivered pursuant to the
Warrants, will be validly issued, fully paid and non-assessable and are not
subject to any preemptive rights, rights of first refusal or rights of first
offer except as set forth in the Stockholders' Agreement. Sufficient shares of
authorized but unissued Class A Common Stock have been reserved by all necessary
corporate action in connection with the exercise of the Warrant and the issuance
of the Warrant Shares upon exercise thereof. Except for the registration rights
as set forth in the Registration Rights Agreement, the Company is not under any
obligation to cause the registration of any of its presently outstanding
securities or any of its securities which hereafter may be issued.
3.04 No Breach. Except for securities law filings required pursuant to the
Registration Rights Agreement, none of the execution, delivery or performance of
this Agreement, the Stockholders' Agreement, the Investor Securities Purchase
Agreement, the Registration Rights Agreement and the Warrants, the consummation
of the transactions herein or therein contemplated, including the issuance and
delivery of the Warrant and, upon the exercise of the Warrant, the Warrant
Shares, or compliance with the terms and provisions hereof or thereof will
conflict with or result in a breach of, or require any consent under, the
Certificate of Incorporation or By-Laws of the Company, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it is bound or to
which any of its properties or assets is subject, or constitute a default under
any such agreement or instrument or result in the creation or imposition of any
lien upon any of the revenues or assets of the Company or any of its
subsidiaries pursuant to the terms of any such agreement or instrument.
3.05 Approvals. Except for securities law filings required pursuant to the
Registration Rights Agreement, no authorizations, approvals or consents of, and
no filings or registrations with, any governmental or regulatory authority or
agency, which have not already been made or obtained, are necessary for the
execution, delivery or performance by the Company of this Agreement, the
Stockholders' Agreement, the Investor Securities Purchase Agreement, the
Registration Rights Agreement or the Warrants, the consummation of the
transactions contemplated herein and therein or the validity or enforceability
hereof or thereof.
3.06 Capitalization. The authorized capital of the Company on the date
hereof consists of (i) 7,500 shares of Preferred Stock, $1.00 par value per
share, (ii) 600,000 shares of Class A Common Stock and (iii) 600,000 shares of
Class B Common
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Stock. Schedule I hereto lists each of the Stockholders on the date hereof, the
number and class of shares of Common Stock owned by each such Stockholder and
the percentage of the total issued and outstanding shares of Common Stock owned
by each such Stockholder. Except as set forth in Schedule I hereto, there are no
other authorized, issued or outstanding shares of capital stock of the Company
and there are not any outstanding or authorized options, warrants, rights,
subscriptions, claims of any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or otherwise, relating
to capital stock of the Company pursuant to which the Company is or may become
obligated to issue shares of capital stock or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of the
capital stock of the Company.
3.07 Offer of Warrants. Neither the Company nor any Person acting on its
behalf has directly or indirectly offered the Warrant or any part thereof or any
similar securities for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof with, any Person
other than the Holder. Neither the Company nor any Person acting on its behalf
has taken or will take any action which would subject the issuance and sale of
the Warrant to the provisions of Section 5 of the Securities Act, or to the
provisions of any state securities law requiring registration of securities,
notification of the issuance or sale thereof or confirmation of the availability
of any exemption from such registration except pursuant to the Stockholders'
Agreement.
Section 4. Miscellaneous.
4.01 Expenses. The Company agrees to pay or cause to be paid all fees and
disbursements of the Holder (including reasonable fees and expenses of one
counsel selected by the Required Holders) in connection with the purchase and
sale of the Warrant as contemplated by this Agreement or any amendments thereto
and the fees and disbursements of the Holder (including reasonable fees and
expenses of one counsel selected by the Required Holders) in connection with the
negotiation, execution, delivery and enforcement of this Agreement, the
Stockholders' Agreement, the Investor Securities Purchase Agreement, the
Registration Rights Agreement or the Warrant or any waiver or consent hereunder
or thereunder or any amendment hereof or thereof. In addition, the Company
agrees to pay any and all stamp, transfer and other similar taxes payable or
determined to be payable in connection with the execution and delivery of this
Agreement, the Stockholders' Agreement, any Warrant or the issuance or transfer
of the Warrant.
4.02 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telegraph, telecopy,
cable or other writing and telexed, telecopied, telegraphed, cabled, mailed or
delivered to the intended recipient at the
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"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party, at such other address as shall be designated by such party
in a notice to the Company given in accordance with this Section 4.02. All such
communications shall be deemed to have been duly given when transmitted by telex
or telecopier, delivered to the telegraph or cable office or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
4.03 Exclusion. This Agreement and the Warrants shall be binding upon, and
inure solely to the benefit of the Company and the Holder, and no other Person
shall acquire or have any right under or by virtue of this Agreement or the
Warrants (other than any such Person to whom the Holder has transferred an
interest in the Warrants pursuant to the terms thereof and hereof). Any Person
who acquires any Warrant or Warrant Shares shall be subject to the terms and
provisions of the Stockholders' Agreement as if it were an original signatory
thereto.
4.04 Specific Performance. The Company acknowledges and agrees that in the
event of any breach of this Agreement or the Warrants by the Company, the Holder
would be irreparably harmed and could not be made whole by monetary damages. The
Company accordingly agrees (i) to waive the defense in any action for specific
performance that a remedy at law would be adequate, and (ii) that the Holder, in
addition to any other remedy to which they may be entitled at law or in equity,
shall be entitled to compel specific performance of this Agreement or the
Warrants in any action instituted in the United States District Court for the
Southern District of New York, or, in the event such Court would not have
jurisdiction for such action, in any court of the United States or any state
thereof having subject matter jurisdiction for such action.
4.05 Warrantholder Not a Shareholder. Prior to the exercise of any of its
Warrants, the Warrantholder shall not, except as specifically provided herein
and in the Stockholders' Agreement, be entitled to any of the rights of, or be
deemed to be, a stockholder in the Company.
4.06 No Waivers. No failure or delay by any party in exercising any rights,
power or privilege hereunder or under the Warrants shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided herein shall be cumulative and not exclusive of
any rights or remedies provided by law.
4.07 Amendments and Waivers. Any provision of this Agreement or the
Warrants may be amended or waived if, but only if, such amendment or waiver is
in writing and signed by the Company and the Required Holders.
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4.08 GOVERNING LAW. THIS AGREEMENT AND THE WARRANTS SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4.09 Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be an original, with the same effect as if the
signatories hereto and hereto were upon the same instrument.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
CDI GROUP, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: President
Address for Notices:
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▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
HOLDER
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BANQUE PARIBAS, acting by and through its
Cayman Island Branch
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Title: VP
By /s/ [ILLEGIBLE]
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Title:
Address for Notices
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE I
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Capitalization
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Capital Percentage of
Stockholders Stock Owned Total Capital Stock
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EXHIBIT A
TO
WARRANT PURCHASE
AGREEMENT
----------------
THIS WARRANT, AND THE WARRANT SHARES ISSUABLE UPON
EXERCISE HEREOF, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE TRANS-
FERRED ONLY IN ACCORDANCE WITH SECTION 5 OF THIS WARRANT.
THIS WARRANT, AND THE WARRANT SHARES ISSUABLE UPON EXER-
CISE HEREOF, ARE ALSO SUBJECT TO THE STOCKHOLDER
AGREEMENT, DATED AS OF JANUARY 30, 1995, AMONG CDI GROUP,
INC., BANCBOSTON VENTURES INC., HARVEST TECHNOLOGY
PARTNERS, L. P. AND THE OTHER PARTIES SIGNATORY THERETO. A
COPY OF SUCH STOCKHOLDER AGREEMENT WILL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST.
COMMON STOCK PURCHASE WARRANT
Representing Rights To Purchase 16,667 Warrant Shares of Class A Common
Stock of CDI Group Inc.
WARRANT NO. 1
This certifies that, for value received, Banque Paribas, acting through its
Cayman Islands Branch ("Paribas") and its successors or assigns (the "Holders)
is entitled, subject to the terms and conditions hereinafter set forth at any
time and from time to time until January 30, 2005 or, in the event that on such
date the Holder shall not have received 30 days prior written notice of the
expiration of the Exercise Period of the Warrants pursuant to Section 8(g), such
later date on which the Holder shall have had such notice of the expiration of
the Exercise Period for at least 30 consecutive days (the "Expiration Date") to
purchase up to a total of 16,667 shares (as such number of shares may be
adjusted pursuant to Section 7, the "Warrant Shares") of Class A Common Stock,
at a price per share equal to the Exercise Price in lawful funds of the United
States of America. This Warrant is issued to the Holder (together with such
other warrants as may be issued in exchange, transfer or replacement of this
Warrant, the "Warrants") and entitles the Holder to purchase the Warrant Shares.
This Warrant is subject to the following further terms and conditions:
1. DEFINITIONS
"Affiliate" shall have the meaning given such term in the Credit Agreement.
"Bank" shall mean any financial institution constituting a "Bank" pursuant
to the terms of the Credit Agreement.
"Borrower" shall mean Community Distributors, Inc., as surviving
corporation of the merger of NewRxCo, Inc. with and into Community Distributors,
Inc., a Delaware corporation.
"Class A Common Stock" shall mean the Company's authorized Class A Voting
Common Stock, $.00001 par value per share.
"Class B Common Stock" shall mean the Company's authorized Class B
Non-Voting Common Stock, $.00001 par value per share.
"Commission" shall mean the Securities and Exchange Commission and any
other similar or successor agency of the federal government of the United States
of America then administering the Securities Act or the Exchange Act.
"Common Stock" shall mean and include each of the Company's authorized
Class A Common Stock and Class B Common Stock as constituted at the Date of
Issuance.
"Company" shall mean CDI Group, Inc., a Delaware corporation, together with
any corporation which shall succeed to or assume the obligations hereunder of
the Company.
"Credit Agreement" shall mean the Credit Agreement, dated as of January 30,
1995, among the Company, the Borrower, the Banks and Banque Paribas, as Agent,
as such agreement may be amended, modified or supplemented from time to time.
"Credit Agreement Debt" shall have the meaning given to such term in
Section 8.1(i).
"Date of Issuance" shall have the meaning given to such term in Section 11.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any similar or successor federal statute, and the rules and regulations
thereunder of the Commission or any other federal agency then administering the
Exchange Act, all as the same shall be in effect at the time.
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"Exercise Agreement" shall have the meaning given to such term in Section
4.3.
"Exercise Event" shall have the meaning given to such term in Section 4.1.
"Exercise Period" shall have the meaning given to such term in Section 4.1.
"Exercise Price" shall mean $.001 per Warrant Share as adjusted as provided
for herein.
"Exercise Time" shall have the meaning given to such term in Section
4.2(a).
"Expiration Date" shall have the meaning given to such term in the preamble
hereto.
"Holder" shall have the meaning given to such term in the preamble hereto.
"Investor Securities Purchase Agreement" shall mean the Investor Securities
Purchase Agreement, dated as of January 30, 1995, among the Company, the
Investors and the other parties signatory thereto, as such Agreement shall be
amended, modified, and supplemented from time to time in accordance with the
provisions thereof.
"Investors" shall mean BancBoston Ventures Inc. and Harvest Technology
Partners, L.P.
"Majority of the Warrant Interests" shall mean the Holders of a majority of
all Warrant Shares (assuming the exercise of all Warrants).
"Offering Price" shall have the meaning given to such term in Section 7.
l(b).
"OID" shall have the meaning given to such term in Section 8.1(f).
"Paribas" shall have the meaning given to such term in the preamble hereto.
"Person" shall mean a corporation, an association, a partnership, an
organization, a business, an individual or a government or political subdivision
thereof or any governmental agency.
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"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of January 30, 1995, among the Company, the Investors and
the other parties signatory thereto, as such agreement shall be amended,
modified and supplemented from time to time in accordance with the provisions
thereof.
"Regulation Y" shall mean Regulation Y of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Rights" shall have the meaning given to such term in Section 7.1(b).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations thereunder of the
Commission or any other federal agency then administering the Securities Act,
all as the same shall be in effect at the time.
"Shareholders Agreement" shall mean the Stockholder Agreement, dated as of
January 30, 1995 among the Company, the Investors and the other parties
signatory thereto, as the same may be modified, supplemented or amended from
time to time pursuant to the terms thereof.
"Transfer" shall include any sale, transfer, assignment or other
disposition of this Warrant or Warrant Shares, or of any interest in either
thereof, which would constitute a sale thereof within the meaning of the
Securities Act.
"Warrant" shall have the meaning given such term in the preamble hereto.
"Warrant Shares" shall have the meaning given to such term in the preamble
hereto.
All terms used in this Warrant which are not defined in this Section 1 have
the meanings respectively set forth therefor elsewhere in this Warrant.
2. OWNERSHIP OF THIS WARRANT
The Company may deem and treat the Person in whose name this Warrant is
registered as the Holder and owner hereof for all purposes, notwithstanding any
notations of ownership or writing made hereon by anyone other than the Company,
and shall not be affected by any notice to the contrary, until presentation of
this Warrant for registration or transfer as provided in Section 3. The Company
shall maintain at its chief executive office, a register for the Warrants, in
which the Company shall record the name and address of the
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Person in whose name each Warrant has been issued, as well as the name and
address of each transferee and each prior owner of such Warrant. Within five
days after the Holder shall by written notice to the Company request the same,
the Company will deliver to such Holder a certificate signed by one of its
officers, listing the names and addresses of every other Holder, as such
information appears in said register and in the stock transfer books of the
Company at the close of business on the day before such certificate is signed.
3. EXCHANGE, TRANSFER AND REPLACEMENT
This Warrant is exchangeable, upon the surrender hereof by the registered
Holder to the Company at its office provided for in Section 2, for new Warrants
of same tenor, representing in the aggregate the right to purchase the number of
Warrant Shares purchasable hereunder, each of such new Warrants to represent the
right to purchase such number of Warrant Shares as shall be designated by said
registered Holder at the time of such surrender. Subject to Section 5 hereof,
this Warrant and all rights hereunder are transferable, in whole or in part,
only upon the register of this Warrant provided for in Section 2, by the
registered Holder hereof in person or by duly authorized attorney, and a new
Warrant shall be made and delivered by the Company, of the same tenor as this
Warrant but registered in the name of the transferee, upon surrender of this
Warrant together with a duly completed assignment, in the form attached hereto
as Exhibit A, at the office of the Company where the register provided for in
Section 2 is maintained. Upon receipt by the Company at its office provided for
in Section 2 of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender of this Warrant, if mutilated, the Company will make and deliver a new
Warrant of same tenor in replacement of this Warrant; provided, if a Person
having net assets in excess of $10,000,000 (as disclosed in its last audited
financial statement) shall be the registered Holder, an agreement of indemnity
by it shall be sufficient for all purposes of this Section 3. This Warrant shall
be promptly cancelled by the Company upon the surrender thereof in connection
with any exchange, transfer or replacement. The Company shall pay all taxes
(other than securities transfer taxes which shall be paid by Holder) and all
other expenses and charges payable in connection with the preparation, execution
and delivery of Warrants pursuant to this Section 3.
4. EXERCISE RIGHTS
4.1. Exercise Period. The Holder may in its sole discretion exercise (an
"Exercise Event"), in whole or in part, the purchase rights represented by this
Warrant at any time and from time to time on or after the date hereof and until
the Expiration Date (the "Exercise Period").
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4.2. Exercise Procedure. (a) An Exercise Event shall have been deemed to
have occurred as of the time during the Exercise Period when the Company has
received all of the following items (the "Exercise Time"):
(i) a completed Exercise Agreement, as described in Section 4.3 below,
executed by the registered Holder;
(ii) this Warrant; and
(iii) payment in an amount equal to the Exercise Price for the Warrant
Shares for which this Warrant is being exercised in cash, or by a certified
or official bank check, or by any combination thereof.
(b) Certificates for Warrant Shares purchased upon exercise of this Warrant
will be delivered by the Company to the registered Holder within three business
days after the date of the Exercise Time. Unless this Warrant has expired or all
of the purchase rights represented hereby have been exercised, the Company will
prepare a new Warrant, substantially identical hereto, representing the rights
formerly represented by this Warrant which have not expired or been exercised
and will, within such three-day period, deliver such new Warrant to the
registered Holder.
(c) The Warrant Shares issuable upon exercise of this Warrant, shall, when
issued, and after payment therefor pursuant to Section 4.2(a)(iii), be duly
authorized, validly issued, fully paid, and nonassessable and will be free from
all liens and encumbrances with respect thereto.
(d) The Warrant Shares issuable upon the exercise of this Warrant will be
deemed to have been issued at the Exercise Time, and the Person or Persons in
whose name or names such Warrant Shares are registered will be deemed for all
purposes to have become the record holder of such Warrant Shares at the Exercise
Time.
(e) The issuance of certificates for Warrant Shares upon exercise of this
Warrant will be made without charge to the Holder for any issuance tax in
respect thereof or other cost incurred by the Company in connection with such
exercise and the related issuance of Warrant Shares; provided, however, in the
event that Warrant Shares are to be issued to a person other than the person in
whose name the Warrant being exercised is registered, then the person requesting
such exercise shall pay any transfer or other taxes required by reason of the
issuance of Warrant Shares to a person other than the registered holder of the
Warrant surrendered thereby unless it is established to the satisfaction of the
Company that such tax has been paid or is not applicable.
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(f) The Company will not close its books against the transfer of this
Warrant or of any of the Warrant Shares in any manner which interferes with the
timely exercise of this Warrant. The Company will from time to time take all
such action as may be necessary to assure that the par value per share of the
unissued Warrant Shares acquirable upon exercise of this Warrant is at all times
equal to or less than the Exercise Price then in effect.
4.3. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement will be substantially in the form set forth in Exhibit B hereto (the
"Exercise Agreements"), except that if the Warrant Shares are not to be issued
in the name of the registered Holder, the Exercise Agreement will also state the
name or names of the Person or Persons to whom the certificates for the Warrant
Shares are to be issued, and the registered Holder shall comply with Sections
5.1 and 5.2 hereof in connection therewith. Such Exercise Agreement will be
dated the actual date of execution thereof.
5. TRANSFER
5.1. Restrictions on Transfer Generally. Notwithstanding any provisions
contained in this Warrant to the contrary, this Warrant shall not be Transferred
other than to an Affiliate of the Holder, to any Bank (or an Affiliate of any
Bank) or to any member of the consolidated group of Compagnie Financiere de
Paribas or any officer or employee of any member of the consolidated group of
Compagnie Financiere de Paribas and the related Warrant Shares shall not either
be issuable to any Person other than the registered Holder, an Affiliate of such
Holder, any Bank (or an Affiliate of any Bank), any member of the consolidated
group of Compagnie Financiere de Paribas, or any officer or employee of any
member of the consolidated group of Compagnie Financiere de Paribas, or
Transferable by the registered owner thereof other than to an Affiliate of the
Holder, to any Bank (or an Affiliate of any Bank) or to any member of the
consolidated group of Compagnie Financiere de Paribas or any officer or employee
of any member of the consolidated group of Compagnie Financiere de Paribas,
except upon satisfaction of the conditions specified in this Section 5.1. Such
condition is intended to insure compliance with the provisions of the Securities
Act in respect of the exercise of this Warrant or Transfer of this Warrant or
any Warrant Shares. The registered Holder of this Warrant, and each registered
owner of Warrant Shares, agrees that it will not, in each case, prior to
delivery to the Company of the opinion of the counsel referred to in, and to the
effect described in, Section 5.2, to the extent such opinion has been requested
by the Company, or until registration under the Securities Act of this Warrant
and all related Warrant Shares has become effective: (i) Transfer this Warrant
other than to an Affiliate of the Holder, to any Bank (or an Affiliate of any
Bank) or to any member of the consolidated group of Compagnie Financiere de
Paribas or any officer or employee of any member of the consolidated group of
Compagnie Financiere de Paribas; (ii) request the issuance to any
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Person, other than the registered Holder, an Affiliate of such Holder, any Bank
(or an Affiliate of any Bank) any member of the consolidated group of Compagnie
Financiere de Paribas, or any of officer or employee of any member of the
consolidated group of Compagnie Financiere de Paribas, of Warrant Shares
issuable upon exercise of this Warrant; or (iii) Transfer other than to an
Affiliate of the Holder, to any Bank (or an Affiliate of any Bank) or to any
member of the consolidated group of Compagnie Financiere de Paribas or any
officer or employee of any member of the consolidated group of Compagnie
Financiere de Paribas any Warrant Shares.
5.2. Opinions of Counsel. So long as this Warrant, or any certificate for
Warrant Shares issued upon exercise of this Warrant, bears the legend required
by Section 5.4 hereof, the registered Holder of this Warrant and each registered
owner of any Warrant Shares agrees, by the acceptance thereof, that prior to any
Transfer other than to an Affiliate of the Holder, to any Bank (or an Affiliate
of any Bank) or to any member of the consolidated group of Compagnie Financiere
de Paribas or any officer or employee of any member of the consolidated group of
Compagnie Financiere de Paribas or attempted Transfer other than to an Affiliate
of the Holder, to any Bank (or an Affiliate of any Bank) or to any member of the
consolidated group of Compagnie Financiere de Paribas or any officer or employee
of any member of the consolidated group of Compagnie Financiere de Paribas
thereof it shall give written notice to the Company of such Person's intention
to effect such Transfer. Each such notice shall describe the manner and
circumstances of the proposed Transfer, and if in the Company's reasonable
opinion an exemption from registration under the Securities Act is not available
in connection with such Transfer, at the request of the Company, shall be
accompanied by an opinion of counsel, reasonably acceptable to the Company and
any transfer agent therefore, to the effect that such proposed Transfer may be
effected without registration under the Securities Act. If the proposed Transfer
may be effected without registration under the Securities Act, the Person giving
notice shall thereupon be entitled to consummate such Transfer in accordance
with the terms of the notice delivered by such Person to the Company upon
delivery to the Company of the written agreement of the proposed transferee to
become bound by the provisions of Sections 5.1 and 5.2 hereof and by the terms
of the Shareholders Agreement. Each Warrant or certificate evidencing Warrant
Shares, as the case may be, issued to a transferee in such Transfer shall bear
the legend set forth in Section 5.4 if required by such clause, unless such
legend is not required or appropriate in order to insure compliance with the
Securities Act.
5.3. Registration Rights and Other Rights. Each registered Holder of this
Warrant and each registered owner of Warrant Shares shall be entitled to the
benefits of and shall be subject to the obligations under the Shareholders
Agreement, the Registration Rights Agreement and the Investor Securities
Purchase Agreement (including, without limitation, information and access
rights, board observation rights, covenants and
-8-
representations and warranties, demand registration rights, piggy-back
registration rights and tag-along rights).
5.4. Legends. (a) Each Warrant issued in exchange, transfer, or replacement
of this Warrant shall (unless otherwise permitted by Section 5.2 hereof or
unless at such time as the Warrant shall have been transferred under an
effective registration statement under the Securities Act or pursuant to Rule
144 or 144A or any successor rules) be stamped or otherwise imprinted with a
legend substantially in the form of the legend appearing at the top of the first
page of this Warrant.
(b) Each certificate for Warrant Shares shall (unless otherwise permitted
by Section 5.2 or unless such Warrant Shares shall have been transferred under
an effective registration statement under the Securities Act or pursuant to Rule
144 or 144A or any successor rules) be stamped or otherwise imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND THE TRANSFER OF SAID SECURITIES IS SUBJECT
TO THE RESTRICTIONS SET FORTH IN SECTION 5 OF WARRANT NO. 1, DATED AS
OF JANUARY 30, 1995, OF CDI GROUP, INC. AND DELIVERED TO THE
REGISTERED HOLDER THEREOF, A COPY OF WHICH IS AVAILABLE FOR INSPECTION
AT THE HEAD OFFICE OF CDI GROUP, INC., AND NO TRANSFER OF SAID
SECURITIES SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL THE TERMS AND
CONDITIONS OF SAID SECTION 5 SHALL HAVE BEEN COMPLIED WITH. THIS
WARRANT, AND THE WARRANT SHARES ISSUABLE UPON EXERCISE HEREOF, ARE
ALSO SUBJECT TO THE STOCKHOLDER AGREEMENT DATED AS OF JANUARY 30,
1995, AMONG CDI GROUP, INC., BANCBOSTON VENTURES INC., HARVEST
TECHNOLOGY PARTNERS, L.P. AND THE OTHER PARTIES SIGNATORY THERETO. A
COPY OF SUCH STOCKHOLDER AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY
THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
(c) The provisions of Sections 5.1, 5.2 and this Section 5.4 shall be
binding upon all Holders and all subsequent holders of certificates for Warrant
Shares bearing the legend set forth in subsection (b) above.
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5.5. Exchange of Certificates. As soon as possible after the effective date
of any registration statement under the Securities Act pursuant to the terms and
conditions contained in the Registration Rights Agreement, the Company will
deliver to the Holder of any Warrant or any Warrant Shares so registered, upon
demand of such holder and its delivery to the Company of a certificate or
certificates representing such Warrant or Warrant Shares bearing the legend set
forth in Section 5.4, a new certificate or certificates representing such
Warrant Shares but not bearing such legend.
5.6. Regulatory Sale or Disposition. Anything herein or in the Shareholders
Agreement to the contrary notwithstanding, in the event that any Holder or any
of the Holders' Affiliates shall deliver to the Company an opinion of counsel to
such Holder or such Affiliate, as the case may be, to the effect that if such
Holder or such Affiliate, as the case may be, shall continue to hold some or all
of the Warrants or its Warrant Shares or any other securities of the Company
held by it, there is a material risk that such ownership will result in the
violation of any statute, regulation or rule of any governmental authority
(including, without limitation, Regulation Y), such Holder or such Affiliate, as
the case may be, may sell or otherwise dispose of its Warrants or Warrant
Shares, as the case may be, in as prompt and orderly a manner as is reasonably
necessary. The Company shall cooperate with such Holder or such Affiliate, as
the case may be, in disposing of its Warrants or Warrant Shares, and (without
limiting the foregoing) at the request of such Holder or such Affiliate, as the
case may be, the Company shall provide (and authorize such Holder or such
Affiliate, as the case may be, to provide) financial and other information
concerning the Company to any prospective purchaser of the Warrants or Warrant
Shares owned by such Holder or such Affiliate, as the case may be, subject to
appropriate confidentiality arrangements satisfactory to the Company. The
provisions of this Section 5.6 shall inure solely to the benefit of the Holders
and their Affiliates which are subject to the provisions of the Bank Holding
Company Act of 1956, as amended (including Regulation Y promulgated thereunder).
Any sale or transfer of any Warrants or Warrant Interest pursuant to this
Section 5.6 shall be subject to the other provisions of this Section 5.
6. COMPANY'S ACKNOWLEDGMENT OF OBLIGATIONS
The Company will, at the time of any exercise of this Warrant, upon the
request of the Holder, acknowledge in writing its continuing obligation to
afford to any Holder of Warrant Shares all rights (including, without
limitation, all rights contained in the Shareholders Agreement, the Registration
Rights Agreement and the Investor Securities Purchase Agreement) to which such
holder shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant; provided, however, that if the Holder shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to the Holder any such rights.
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7. ADJUSTMENTS TO NUMBER OF WARRANT SHARES
7.1. Adjustment of Number of Warrant Shares. The number of Warrant Shares
purchasable pursuant hereto shall be subject to adjustment from time to time on
and after the Date of Issuance as hereinafter provided in this Section 7.1.
(a) In case the Company shall at any time after the Date of Issuance (i)
declare or pay a dividend in shares of Common Stock or make a distribution in
shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) issue any shares of its capital stock or other
assets in a reclassification or reorganization of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing entity), the securities purchasable pursuant
hereto shall be adjusted to the number of Warrant Shares and amount of any other
securities, cash or other property of the Company which such Holder would have
owned or have been entitled to receive after the happening of any of the events
described above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An adjustment
made pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event. Any Warrant Shares purchasable as a result of such adjustment shall not
be issued prior to the effective date of such event.
(b) In case the Company shall issue shares of its Common Stock or issue
rights, options (including options issued to employees under the Company's 1995
Stock Option Plan on or after the date hereof) or warrants to subscribe for or
purchase, or other securities exchangeable for or convertible into, shares of
its Common Stock (any such rights, options, warrants or other securities being
herein called "Rights") (excluding (i) shares issued in a transaction covered by
Section 7.1(a), (ii) shares issued upon conversion, exercise, or exchange of
Rights issued after the date hereof (provided that appropriate adjustments were
made hereunder upon the issuance of such Rights) and (iii) the Warrants and any
Warrant Shares issued on exercise thereof at an issuance, subscription,
offering, exercise or conversion price (the "Offering Price") per share which is
lower than the current market price per share of Common Stock (as defined in
paragraph (d) below) on the date of issuance or grant, whether or not such
Rights are immediately exercisable or convertible, the number of Warrant Shares
issuable hereunder after such issuance or grant shall be determined by
multiplying the number of Warrant Shares issuable hereunder immediately prior to
any adjustment in connection with such issuance or grant by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
(exclusive of any treasury shares) immediately prior to the date of issuance or
grant of such shares of Common Stock or Rights (assuming that all Common Stock
into which all outstanding rights, options, warrants and convertible securities
excluding such Rights are
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exercisable or convertible is outstanding) plus the number of additional shares
of Common Stock issued and the number of shares of Common Stock that would be
issued upon exercise of such Rights, and of which the denominator shall be the
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to the date of issuance or grant of such Common Stock or
Rights (assuming that all Common Stock into which all outstanding rights,
options, warrants and convertible securities excluding such Rights are
exercisable or convertible is outstanding) plus the number of shares which the
aggregate Offering Price of the total number of shares of Common Stock so
offered would purchase at the current market price per share of Common Stock on
the date of issuance; provided that to the extent any such Rights, so issued
expire or are cancelled or redeemed without having been exercised or converted,
the number of Warrant Shares issuable hereunder shall again be adjusted to
reflect such expiration, cancellation or redemption of such Rights. Such
adjustment shall be made whenever such shares of Common Stock or Rights are
issued or granted. For purposes of this paragraph (b), the "Offering Price" per
share of Common Stock shall in the case of Rights be determined by dividing (x)
the total amount received or receivable by the Company in consideration of the
issuance of such Rights plus the total consideration payable to the Company upon
exercise thereof, by (y) the total number of shares of Common Stock covered by
such Rights.
(c) In case the Company shall distribute to any holder of its shares of
Common Stock or Rights, evidences of its indebtedness or assets (including
securities and cash dividends other than regular quarterly cash dividends paid
in the ordinary course of business out of the Company's consolidated earnings),
but excluding dividends or distributions referred to in paragraph (a) above or
Rights, referred to in paragraph (b) above (collectively, "Distributions"), then
in each case the number of Warrant Shares issuable hereunder after any such
Distribution shall be determined by multiplying the number of Warrant Shares
issuable hereunder prior to such Distribution by a fraction, the numerator of
which shall be the current market price per share of Common Stock (as defined in
paragraph (d) below) on the record date for such distribution, and of which the
denominator shall be such current market price per share of Common Stock, less
the then fair market value (as reasonably determined in good faith by the Board
of Directors of the Company) of the portion of the assets or evidences of
indebtedness so distributed applicable to one share of Common Stock. Such
adjustments shall be made successively whenever any such Distribution is made
and shall become effective on the date of distribution retroactive to the record
date for the determination of stockholders entitled to receive such
Distribution. In the event that the Holders of a Majority of Warrant Interests
disagree with the Company's determination of the fair market value of any assets
or evidences of indebtedness pursuant to this subsection 7.1(c), then such fair
market value shall be determined by an independent appraisal firm (which may be
an investment banking firm of national recognition) selected by such Holders and
the Company (the "Appraisal Firm"). If the Appraisal Firm determines such fair
market value to be greater than 105% of the Company's determination, then the
Company shall bear the costs of the Appraisal Firm. If the Appraisal Firm
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determines the current market value to be less than 105% of the Company's
determination, the Holders of the Warrant Interests shall reimburse the Company
for the cost of the Appraisal Firm.
(d) For the purpose of any computation under paragraphs (b) and (c) of this
Section, the current market price per share of Common Stock at any date shall be
the average of the daily closing prices for the 10 consecutive trading day prior
to the earlier to occur of (i) the date as of which the market price is to be
computed or (ii) the last full trading day before the commencement of
"ex-dividend" trading in the Common Stock relating to the event giving rise to
the adjustment required by paragraph (b) or (c). The closing price for each day
shall be the last such reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the closing bid and asked
prices regular way for such day, in each case on the principal national
securities exchange or in the NASDAQ-National Market System on which the shares
of Common Stock are listed or to which such shares are admitted to trading, or,
if not listed or admitted to trading, the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market as reported by NASDAQ
or any comparable system, or if the Common Stock is not listed on NASDAQ or a
comparable system, the average of the closing bid and asked prices as furnished
by two members of the National Association of Securities Dealers, Inc. selected
from time to time by the a Majority of the Warrant Interests for that purpose.
In the event the Company's Common Stock is not then publicly traded or if for
any other reason the current market price per share cannot be determined
pursuant to the foregoing provisions of this paragraph (d), the appropriate
current market price per share shall be the fair market value thereof (without
regard to any transfer restrictions imposed by law or contract thereon or lack
of liquidity thereof) as determined by the Board of Directors of the Company. In
the event that the Holders of Majority of Warrant Interests disagree with the
Company's determination of the current market price per share of Common Stock
made pursuant to the immediately preceding sentence, then such current market
price or fair market value, as the case may be, shall be determined by an
independent appraisal firm (which may be an investment banking firm of national
recognition) selected by such Holders and the Company (the "Appraisal Firm"). If
the Appraisal Firm determines such fair market value to be greater than 105% of
the Company's determination, then the Company shall bear the costs of the
Appraisal Firm. If the Appraisal Firm determines the current market value to be
less than 105% of the Company's determination, the Holders of the Warrant
Interests shall reimburse the Company for the cost of the Appraisal Firm.
(e) Whenever the numbers of Warrant Shares are adjusted as herein provided,
the Exercise Price payable upon exercise of this Warrant shall be adjusted by
multiplying such Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
immediately prior to such adjustment, and of which the denominator shall be the
number of Warrant Shares immediately thereafter.
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(f) No adjustment in the number of Warrant Shares shall be required
hereunder unless such adjustment would result in an increase or decrease of at
least one percent (1%) of the Exercise Price; provided, however, that any
adjustments which by reason of this paragraph (f) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-hundredth of a cent or to the
nearest one-thousandth of a share, as the case may be.
(g) For the purpose of this subsection 7.1, the term "shares of Common
Stock" shall mean (i) the classes of stock designated as the Common Stock of the
Company at the date of this Agreement, (ii) any other class of stock resulting
from successive changes or reclassifications of such shares consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value or (iii) any other class of capital stock of the Company which is not
by its terms restricted in amount or timing to the entitlement to dividends or
in the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company. In the event that at any time, as a
result of an adjustment made pursuant to this subsection 7.1, the Holders shall
become entitled to receive any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so receivable upon
exercise of this Warrant and the Exercise Price of such shares 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 7.
7.2. Reorganization, Merger, etc. If any capital reorganization,
reclassification or similar transaction involving the capital stock of the
Company (other than as specified in Section 7.1(a)), any consolidation, merger
or business combination of the Company with another corporation, or the sale or
conveyance of all or any substantial part of the assets of the Company to
another corporation, shall be effected in such a way that holders of the Common
Stock shall be entitled to receive stock, securities or assets (including,
without limitation, cash) with respect to or in exchange for shares of the
Common Stock, then, prior to and as a condition of such reorganization,
reclassification, similar transaction, consolidation, merger, business
combination, sale or conveyance, lawful and adequate provision shall be made
whereby the Holder shall thereafter have the right to purchase upon exercise of
this Warrant and upon payment of the Exercise Price in effect immediately prior
to such action, the kind and amount of shares of stock, securities or assets
which he would have owned or been entitled to receive after the happening of
such reorganization, reclassification, similar transaction, consolidation,
merger, business combination, sale or conveyance had this Warrant been exercised
immediately prior to such transaction. The Company shall not effect any such
consolidation, merger, business combination, sale or conveyance unless prior to
or simultaneously with the consummation thereof the survivor or successor
corporation (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing such assets shall assume by written
instrument executed and sent to each registered Holder, the obligation to
deliver to
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such Holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such Holder may be entitled to receive. Nothing
contained in this Section, shall limit the Holder's obligation to participate in
an Approved Sale (as defined in the Shareholders Agreement) in accordance with
the provisions of the Shareholders Agreement.
7.3. Voluntary Adjustment by the Company. The Company may at its option, at
any time during the term of this Warrant, reduce the then current Exercise Price
to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company, including such reductions in the Exercise Price as the
Company considers to be advisable in order that any event treated for Federal
income tax purposes as a dividend of stock or stock rights shall not be taxable
to the recipients; provided, however, that no such adjustment in Exercise Price
shall affect the number of Warrant Shares.
7.4. Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price is required to be adjusted, as herein provided, the Company
promptly shall deliver to each Holder, notice of such adjustment or adjustments
and a certificate of a firm of independent public accountants selected by the
Board of Directors of the Company (who may be the regular accountants employed
by the Company) setting forth the number of Warrant Shares and the Exercise
Price after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made.
7.5. Other Events. If any event occurs as to which the foregoing provisions
of this Section 7 are not strictly applicable or, if strictly applicable, would
not, fairly and adequately protect the purchase rights represented by the
Warrants in accordance with the essential intent and principles of such
provisions, then the Company shall make such adjustments in the application of
such provisions, in accordance with such essential intent and principles, as
shall be necessary to protect such purchase rights as aforesaid.
7.6. Statement on Warrant Certificates. Irrespective of any adjustments in
the Exercise Price or the number or kind of Warrant Shares, this Warrant may
continue to express the same price and number and kind of shares as are stated
on the front page hereof.
7.7. Exceptions to Adjustment. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment of the
number of Warrant Shares issuable hereunder in the case of the issuance of the
Warrants or the issuance of shares of the Common Stock upon exercise of the
Warrants.
7.8. Treasury Warrant Shares. The number of shares of the Common Stock
outstanding at any time shall not include shares owned or held by or for the
account
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of the Company or any of its subsidiaries, and the disposition of any such
shares shall be considered an issue or sale of the Common Stock for the purposes
of this Section 7.
7.9. Company to Prevent Dilution. In case at any time or from time to time
conditions arise by reason of action taken by the Company or any of its
subsidiaries which are not adequately covered by the provisions of this Section
7, or which might adversely affect the exercise rights of the registered
Holders, the Board of Directors of the Company shall appoint a firm of
independent certified public accountants of recognized national standing, which
may be the firm regularly retained by the Company, which shall give their
opinion upon the adjustment, if any, necessary with respect to the number of
Warrant Shares into which this Warrant is exercisable, on a basis consistent
with the standards established in the other provisions of this Section 7, so as
to preserve, without dilution, the exercise rights of the registered Holders.
Upon receipt of such opinion, the Board of Directors of the Company shall
forthwith make the adjustments described therein.
8. SPECIAL COVENANTS OF THE COMPANY
The Company covenants and agrees that until the Expiration Date:
(a) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, directly or indirectly avoid or seek to avoid the
of ▇▇▇▇▇▇▇▇ or performance of any of the terms of this Warrant, or the
Shareholders Agreement, 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 Holders
against impairment. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of stock
receivable upon the exercise of the Warrants above the Exercise Price
payable therefor upon such exercise, and (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 upon the
exercise of all Warrants from time to time outstanding (including as a
result of a reduction in the purchase price pursuant to the terms hereof).
(b) If any Warrant Shares required to be reserved for the purposes of
exercise of this Warrant require registration with or approval of any
governmental authority under any federal law (other than the Securities
Act) or under any state law before such Warrant Shares may be issued upon
exercise of this Warrant, the Company will, at its expense, as
expeditiously as possible use its best efforts to cause such Warrant Shares
to be duly registered or approved, as the case may be.
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(c) If at any time Common Stock is listed on any national securities
exchange (as defined in the Exchange Act), the Company will, at its
expense, obtain and maintain the approval for listing on each such exchange
upon official notice of issuance of all Warrant Shares receivable upon the
exercise of the Warrants at the time outstanding and maintain the listing
of such Warrant Shares after their issuance; and the Company will so list
on such national securities exchange, will register under the Exchange Act
(and any similar state statute then in effect), and will maintain such
listing of, any other securities that at any time are issuable upon
exercise of the Warrants, if and at the time that any securities of the
same class shall be listed on such national securities exchange by the
Company.
(d) The Company covenants and agrees to give each Holder, as reflected
in books and records of the Company, prior written notice of the expiration
of the Exercise Period of the Warrants. Such notice shall be delivered not
less than thirty (30) days but not more than sixty (60) days prior to such
expiration; provided, that if the Company fails to give such notice, the
expiration of such Exercise Period shall not occur, until thirty (30) days
after such notice is delivered.
(e) The Company covenants that, following an initial public offering
of the Common Stock it will file any reports required to be filed by it
under the Securities Act and the Exchange Act and, whether or not the
Company has effected an initial public offering, it will take such further
action as any Holder may reasonably request, all to the extent required
from time to time to enable such Holder to sell Warrant Shares without
registration under the Securities Act within the limitation of the
exemptions provided by (a) Rules 144 and 144A under the Securities Act, as
such Rules may be amended from time to time, or (b) any similar rules or
regulations or regulations hereafter adopted by the Commission; provided,
that any such sale shall also be made in accordance with the terms and
provisions of the Stockholders Agreement. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether
it has complied with such requirements.
(f) The Company agrees that the fair market value of the Warrants,
when taken together with the terms of the Indebtedness arising under the
Credit Agreement (the "Credit Agreement Debt"), will not result in any
original issue discount ("OID") for federal income tax purposes with
respect to the Credit Agreement Debt and the Company agrees not to claim
any OID with respect to the Credit Agreement Debt.
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9. NOTIFICATION BY THE COMPANY
In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock; or
(ii) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or any
other securities convertible into or exchangeable for shares of stock or
any rights or options to subscribe thereto; or
(iii) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving
the capital stock of the Company, or a sale or conveyance of all or a
substantial part of the assets of the Company, or a consolidation, merger
or business combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
then, in any one or more of such cases, the Company shall give written notice to
the Holder, at the earliest time legally practicable (and not less than 30 days
before any record date or other date set for definitive action) of the date on
which (A) the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights or options or (B) such
reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up shall take place or be voted on by
stockholders of the Company, as the case may be. Such notice shall also specify
the date as of which the holders of the Common Stock of record shall participate
in said dividend, distribution, subscription rights or options or shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up, as the case may
be. If the action in question or the record date is subject to the effectiveness
of a registration statement under the Securities Act or to a favorable vote of
stockholders, the notice required by this Section 9 shall so state.
10. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY
Prior to exercise, this Warrant will not entitle the Holder to any voting
rights or other rights as a stockholder of the Company. No provision hereof, in
the absence of affirmative action by the Holder to purchase Common Stock, and no
enumeration herein
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of the rights or privileges of the Holder shall give rise to any liability of
such Holder for the purchase price of Common Stock acquirable by exercise hereof
or as a stockholder of the Company.
11. DATE OF ISSUANCE
The date the Company initially issues this Warrant will be deemed to be the
Date of Issuances hereof and of each new Warrant issued in exchange, transfer or
replacement hereof, regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant shall be issued.
12. AMENDMENT AND WAIVER
(a) No failure or delay of the Holder in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of such right or power, or any abandonment or discontinuance of steps
to enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights and remedies of the
Holder are cumulative and not exclusive of any rights or remedies which it would
otherwise have. The provisions of this Warrant may be amended, modified or
waived with (and only with) the written consent of the Company and the Majority
of the Warrant Interests.
(b) Any such amendment, modification or waiver effected pursuant to this
Section 12 shall be binding upon the Holders of all Warrants and Warrant Shares,
upon each future holder thereof, upon the Company and its shareholders. In the
event of any such amendment, modification or waiver, the Company shall give
prompt written notice thereof to all Holders and, if appropriate, notation
thereof shall be made on all Warrants thereafter surrendered for registration of
transfer or exchange.
(c) No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
13. NO FRACTIONAL WARRANT SHARES
The Company shall not be required to issue stock certificates representing
fractions of Warrant Shares, but may at its option in respect of any final
fraction of a Warrant Share make a payment in cash based on the then current
market price of the Common Stock (as determined in accordance with Section
7.l(d)) after giving effect to the full exercise or conversion of the Warrants.
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14. RESERVATION OF WARRANT SHARES
The Company will authorize, reserve and keep available at all times, free
from preemptive rights, a sufficient number of Warrant Shares to satisfy the
requirements of this Warrant and any other outstanding Warrants.
15. NOTICES
All notices, requests, consents and other communications hereunder shall be
in writing (including, telegraphic, telex, facsimiled or cable communication)
and delivered, mailed telegraphed, telexed, telecopied or cabled:
(i) if to the Holder, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or at such other address as may have been
furnished to the Company in writing by the Holder; and
(ii) if to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, or at such other address as may have
been furnished to the Holder in writing by the Company.
All such notices and communications shall, when mailed, telegraphed,
telexed, facsimiled, or cabled or sent by overnight courier, be effective 3
Business Days after deposited in the mails, certified, return receipt requested,
when delivered to the telegraph company, cable company or one day following
delivery to an overnight courier, as the case may be, or sent by telex or
facsimilar device.
16. HEADINGS
The headings of the Sections and subsections of this Warrant are inserted
for convenience only and shall not be deemed to constitute a part of this
Warrant.
17. GOVERNING LAW; CONSENT TO JURISDICTION
THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF DELAWARE. If any action or proceeding shall be brought by
any Holder in order to enforce any right or obligation in respect of this
Warrant, the Company hereby consents and will submit to the jurisdiction of any
state or federal court of competent jurisdiction sitting within the area
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comprising the Southern District of New York on the date of this Warrant, and
agrees that venue will be proper in any such court.
18. BINDING EFFECT
The terms and provisions of this Warrant shall inure to the benefit of the
original Holder and its successors and assigns and shall be binding upon the
Company and its successors and assigns, including, without limitation, any
Person succeeding to the Company by merger, consolidation or acquisition of all
or substantially all of the Company's assets.
IN WITNESS WHEREOF, the seal of the Company and the signatures of its duly
authorized officers have been affixed hereto as of the date first written above.
CDI GROUP, INC.
By
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Title:
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EXHIBIT A
---------
ASSIGNMENT
To Be Executed by the Registered Holder
Desiring to Transfer the Within Warrant of
CDI GROUP, INC.
FOR VALUE RECEIVED, the undersigned registered holder hereby sells, assigns and
transfers unto ___________________________ the right to purchase ______ shares
of the Class A Common Stock covered by the within Warrant, and does hereby
irrevocably constitute and appoint _________________ Attorney to transfer the
said Warrant on the books of the Company (as defined in said Warrant), with full
power of substitution.
Name of
Registered Holder_________________________
Signature ________________________________
Title:
Address:
Dated:______________________
In the presence of
____________________________
NOTICE:
The signature to the foregoing Assignment must correspond to the name
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
EXHIBIT B
---------
EXERCISE AGREEMENT
To Be Executed by the Registered Holder
Desiring to Exercise the Within Warrant of
CDI GROUP, INC.
The undersigned registered holder hereby exercises the right to purchase
________ shares of the Class A Common Stock covered by the within Warrant,
according to the conditions thereof, and herewith make payment in full of the
Exercise Price of such shares, $ _________________.
Name of
Registered Holder_________________________
Signature ________________________________
Title:
Address:
Dated:_________________, ____