EXHIBIT 4.35
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WARRANT AGREEMENT
BY AND AMONG
PACIFIC AEROSPACE & ELECTRONICS, INC.
AND
FIRST ALBANY CORPORATION
April 9, 2001
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................................................... 1
Section 1.1. Definitions.............................................................................. 1
ARTICLE II ISSUANCE, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES...................................... 3
Section 2.1. Warrants to be Issued.................................................................... 3
Section 2.2. Form of Warrant Certificates............................................................. 3
Section 2.3. Execution of Warrant Certificates........................................................ 3
Section 2.4. Transfer and Exchange of Warrant Certificates............................................ 3
Section 2.5. Lost, Stolen, Mutilated or Destroyed Warrant Certificates................................ 4
ARTICLE III EXERCISE PRICE AND EXERCISE OF WARRANTS...................................................... 4
Section 3.1. Exercise Price........................................................................... 4
Section 3.2. Registration of Warrant Shares........................................................... 5
Section 3.3. Exercise of Warrants..................................................................... 5
Section 3.4. Issuance of Warrant Shares............................................................... 6
Section 3.5. Certificates for Unexercised Warrants.................................................... 6
Section 3.6. Reservation of Warrant Shares............................................................ 6
Section 3.7. No Impairment............................................................................ 6
ARTICLE IV ADJUSTMENTS, NOTICE PROVISIONS AND ISSUANCE OF ADDITIONAL SECURITIES.......................... 7
Section 4.1. Adjustment of Exercise Price............................................................. 7
Section 4.2. No Adjustments to Exercise Price......................................................... 8
Section 4.3. Adjustment of Number of Shares........................................................... 8
Section 4.4. Reorganizations.......................................................................... 9
Section 4.5. Verification of Computations............................................................. 9
Section 4.6. Exercise Price Less Than Par Value....................................................... 9
Section 4.7. Notice of Certain Actions................................................................ 10
Section 4.8. Certificate of Adjustments............................................................... 10
Section 4.9. Warrant Certificate Amendments........................................................... 10
Section 4.10. Fractional Shares........................................................................ 11
ARTICLE V SPLIT UP, COMBINATION, EXCHANGE, TRANSFER AND CANCELLATION OF WARRANT CERTIFICATES............. 11
Section 5.1. Split Up, Combination, Exchange and Transfer of Warrant Certificates..................... 11
Section 5.2. Cancellation of Warrant Certificates..................................................... 11
ARTICLE VI HOLDER REPRESENTATION AND WARRANTIES........................................................... 11
Section 6.1. Purchase for Investment.................................................................. 11
ARTICLE VII MISCELLANEOUS................................................................................ 12
Section 7.1. Changes to Agreement..................................................................... 12
Section 7.2. Assignment............................................................................... 12
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Section 7.3. Successor to Company..................................................................... 12
Section 7.4. Notices.................................................................................. 12
Section 7.5. Governing Law............................................................................ 13
Section 7.6. Standing................................................................................. 13
Section 7.7. Headings................................................................................. 13
Section 7.8. Counterparts............................................................................. 13
Section 7.9. Availability of the Agreement............................................................ 13
Section 7.10. Entire Agreement......................................................................... 13
Section 7.11. Rights of Warrant Holders................................................................ 13
EXHIBIT A Form of Warrant Certificate..................................................................... 1
Form of Election To Purchase.............................................................................. 3
Assignment................................................................................................ 4
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WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement"), dated as of April 9, 2001, is
entered into by and among Pacific Aerospace & Electronics, Inc., a Washington
corporation (the "Company"), and First Albany Corporation (the "Holder" and
collectively with its permitted transferees, the "Holders"). This Agreement is
made in connection with the engagement letter dated January 23, 2001 between the
Company and the Holder, as amended by that certain letter agreement dated
February 5, 2001 between the Company and the Holder (collectively, the
"Engagement Letter").
WITNESSETH THAT:
WHEREAS, the Company and its domestic subsidiaries entered into a Loan
Agreement on March 1, 2001 with DDJ Capital Management, LLC, as agent, and the
Lenders listed therein, whereby the Company received a loan in the aggregate
principal amount of $13,841,488 (the "Transaction");
WHEREAS, in consideration for its services as placement agent in connection
with the Transaction, the Company has agreed to pay to the Holder a cash fee as
set forth in the Engagement Letter and to grant to Holder warrants to purchase
Common Stock of the Company as set forth herein;
WHEREAS, the Company proposes to issue and deliver Warrant Certificates
evidencing Warrants (each, as defined herein) to acquire up to an aggregate of
694,074 shares of the Company's Common Stock, subject to adjustment from time to
time as set forth herein (the Common Stock issuable upon exercise of the
Warrants being referred to herein as the "Warrant Shares"); and
WHEREAS, the Company desires to enter into this Agreement to set forth the
terms and conditions of the Warrants and the rights of the holders thereof.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following terms
shall have the following respective meanings (all terms defined herein in the
singular are to have the correlative meanings when used in the plural and vice
versa):
"Closing Price" means, for any date, the last sale price reported in the
Wall Street Journal or other trade publication regular way or, in case no such
reported sale takes place on such date, the average of the last reported bid and
asked prices regular way, in either case on the principal national securities
exchange on which the Common Stock is listed if that is the principal market for
the Common Stock or, if not listed on any national securities exchange or if
such national
securities exchange is not the principal market for the Common Stock, the
average of the closing high bid and low asked prices as reported by The Nasdaq
Stock Market, Inc. or its successor, if any, or if the Common Stock is not so
reported, as furnished by the National Quotation Bureau, Inc., or if such firm
is not then engaged in the business of reporting such prices, as furnished by
any similar firm then engaged in such business and selected by the Company or,
if there is no such firm, as furnished by any NASD member selected by the
Company.
"Common Stock" means the Common Stock of the Company, par value $.001 per
share.
"Date of Exercise" means, with respect to any Warrant, the date on which a
Warrant to be exercised has been received by the Company (in accordance with
Section 7.4 hereof).
"Expiration Date" means April 9, 2006.
"Officers' Certificate" means a certificate signed by any two of the
Chairman of the Board, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Secretary or an Assistant Secretary of the Company.
"Person" means any natural person, corporation, partnership, trust, joint
venture, limited liability company, or any other entity or organization.
"Restricted Securities" means the Warrants issued on the date hereof and
any Warrant Shares which have been issued or are issuable upon the exercise of
such Warrants until such time as any such Restricted Securities (i) have been
sold pursuant to an effective registration statement under the Securities Act,
(ii) are distributed to the public pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act or (iii) have been otherwise
transferred without registration under the Act pursuant to an exemption from the
registration requirements of the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder.
"Trading Days" means, with respect to the Common Stock (i) if the Common
Stock is quoted on the National Market System of the Nasdaq Stock Market, Inc.
or any similar system of automated dissemination of quotations of securities
prices, days on which trades may be made on such system or (ii) if the Common
Stock is listed or admitted for trading on any national securities exchange,
days on which such national securities exchange is open for business.
"Warrant Certificates" means the certificates representing the Warrants.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of any Warrant.
"Warrants" means the Warrants exercisable for shares of Common Stock issued
pursuant to this Agreement.
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ARTICLE II
ISSUANCE, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES
Section 2.1. Warrants to be Issued. The Company will issue Warrants to
purchase up to an aggregate of 692,074 fully paid and nonassessable shares of
the Company's Common Stock, subject to the terms hereof, at the Exercise Price
(as defined in Section 3.1), subject to adjustment pursuant to the provisions of
Article IV hereof.
Section 2.2. Form of Warrant Certificates. The Warrant Certificates shall
be issued substantially in the form of Exhibit A attached hereto. In addition,
the Warrant Certificates may have such letters, numbers or other marks of
identification or designation and such legends, summaries, or endorsements
stamped, printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as, in any particular case, may be required to comply with any law or with
any rule or regulation of any regulatory authority or agency, or to conform to
customary usage. Each Warrant shall evidence the right, subject to the
provisions of this Agreement and of the Warrant Certificate, to purchase such
number of shares of Common Stock of the Company as set forth in the Warrant
Certificate at the Exercise Price (as defined in Section 3.1), subject to
adjustment pursuant to the provisions of Article IV hereof.
Section 2.3. Execution of Warrant Certificates. The Warrant Certificates
shall be executed on behalf of the Company by its Chairman or President or any
Vice President and attested to by its Secretary or Assistant Secretary, either
manually or by facsimile signature printed thereon. In case any authorized
officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be such officer of the Company either before or after delivery
thereof by the Company to the holder thereof, the signature of such person on
such Warrant Certificates shall be valid nevertheless, and such Warrant
Certificates shall have the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.
Section 2.4. Transfer and Exchange of Warrant Certificates.
(a) Warrant Certificates evidencing Restricted Securities and only
such Warrant Certificates will bear a legend in substantially the following
form:
NEITHER THE ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE ISSUANCE OF ANY SECURITIES ISSUABLE UPON EXERCISE HEREOF HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES
MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER THE SECURITIES
ACT AND THE RULES AND REGULATIONS THEREUNDER OR (ii) AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
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(b) Neither the Warrant Certificates nor the Warrants represented
thereby may be transferred to any person other than an officer, director or
employee of the initial Holder.
(c) Prior to or concurrently with the transfer or exchange of any
Warrant Shares (other than pursuant to an effective registration statement under
the Securities Act), the transferor of such Warrant Shares shall, upon request
of the Company, deliver to the Company an opinion of counsel, in substance
reasonably satisfactory to the Company, to the effect that such Warrant Shares
to be issued upon such transfer or exchange will be issued in compliance with
applicable Securities laws and/or may be so issued without the foregoing legend.
Notwithstanding the foregoing, it shall be understood that no opinion of counsel
shall be required for transfers to officers, directors or employees of the
initial Holder.
(d) No Restricted Security shall be transferred, unless such transfer
is in compliance with all applicable securities laws (including, without
limitation, the Securities Act and any applicable state securities laws).
(e) Subject to paragraph (a) and (b) above, the Company shall
register the transfer of all or any whole number of Warrants covered by any
outstanding Warrant Certificate upon surrender to the Company of Warrant
Certificates accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Company, duly executed by the Warrant holder or his
attorney duly authorized in writing. Upon any such registration of transfer, a
new Warrant Certificate shall be issued to the transferee and the Company shall
promptly cancel the surrendered Warrant Certificate. Warrant Certificates may be
exchanged at the option of the holder thereof, upon surrender, properly endorsed
by the holder, to the Company, with written instructions, for other Warrant
Certificates representing in the aggregate a like number of Warrants.
Section 2.5. Lost, Stolen, Mutilated or Destroyed Warrant Certificates.
If any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
Company shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Warrant Certificate, or in lieu of or in
substitution for a lost, stolen or destroyed Warrant Certificate, a substitute
Warrant Certificate, but only upon receipt of evidence of such loss, theft or
destruction of such Warrant Certificate, and of the ownership thereof. Any such
new Warrant Certificate shall constitute an original contractual obligation of
the Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant Certificate shall be at any time enforceable by anyone.
ARTICLE III
EXERCISE PRICE AND EXERCISE OF WARRANTS
Section 3.1. Exercise Price. Each Warrant Certificate shall, when signed
by the Chairman or President or any Vice President and attested to by the
Secretary or Assistant Secretary of the Company, entitle the holder thereof
subject to the provisions thereof and of this Agreement, to purchase from the
Company at any time after the date hereof and before 5:00 p.m., New York time,
on the Expiration Date, such number of shares of Common Stock of the Company as
set forth in the Warrant Certificate for each of the Warrants specified therein,
at a purchase price of $.4062 per share (the "Exercise Price") or such adjusted
number of shares at
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such adjusted exercise price as may be established from time to time pursuant to
the provisions of Article IV hereof, payable in full in accordance with Section
3.3 hereof, at the time of exercise of the Warrant. Except as the context
otherwise requires, the term "Exercise Price" as used in this Agreement shall
mean the purchase price of one Warrant Share pursuant to the Warrant
Certificates reflecting all appropriate adjustments made in accordance with the
provisions of Article IV hereof.
Section 3.2. Registration of Warrant Shares. The Company shall secure the
effective registration of the Warrant Shares under the Securities Act and
applicable state laws and maintain such registration or qualification in effect,
all on the same terms set forth in the Registrations Rights Agreement between
the Company and DDJ Capital Management, LLC, and the other parties thereto dated
as of March 1, 2001 (other than Section 2 thereof, which requires that a
registration statement be filed within 30 days after the date of that
agreement). Promptly after a registration statement under the Securities Act
covering the Warrant Shares has become effective, the Company shall cause notice
thereof together with copies of the prospectus covering the Warrant Shares to be
mailed to each holder of a Warrant Certificate.
Section 3.3. Exercise of Warrants.
(a) Warrants may be exercised by surrendering the Warrant Certificate
evidencing such Warrants to the Company with the Election to Purchase form
attached to the Warrant Certificate duly completed and executed by the holder
thereof or his attorney duly authorized in writing (the "Exercise Notice"),
accompanied by payment in full, as set forth below, of the Exercise Price for
each share of Common Stock as to which Warrants are exercised. Such Exercise
Price shall be paid in full by (i) cash or a certified check or a wire transfer
in same day funds in an amount equal to the then applicable Exercise Price
multiplied by the number of Warrant Shares then being purchased, (ii) delivery
to the Company of that number of shares of Common Stock, duly endorsed, having
an aggregate Fair Market Value (as defined in Section 4.1(d)) equal to the then
applicable Exercise Price multiplied by the number of Warrant Shares then being
purchased or (iii) by any combination of (i) and (ii). In the alternative, the
holder of a Warrant Certificate may exercise its right to purchase some or all
of the Warrant Shares subject to such Warrant Certificate, on a net basis, such
that, without the exchange of any funds, such holder receives that number of
Warrant Shares subscribed to pursuant to such Warrant Certificate less that
number of shares of Common Stock having an aggregate Fair Market Value at the
Date of Exercise equal to the aggregate Exercise Price that would otherwise have
been paid by such holder for the number of Warrant Shares subscribed to pursuant
to such Warrant Certificate. A Warrant holder may exercise all or any number of
whole Warrants represented by a Warrant Certificate.
(b) A Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of the due surrender for exercise of
the Warrant Certificate and payment to the Company of the Exercise Price. Each
Person in whose name any such certificate for shares of Common Stock is issued
shall for all purposes be deemed to have become the holder of record of such
shares at the close of business on the date on which the Warrant Certificate was
duly surrendered to the Company and payment of the Exercise Price was made to
the Company, irrespective of the date of delivery of such share certificate,
except that, if the date
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of such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open (whether before or after the Expiration Date in
such case).
Section 3.4. Issuance of Warrant Shares. As soon as practicable and no
later than five (5) business days after the Date of Exercise of any Warrants,
the Company shall issue, or cause its transfer agent to issue, a certificate or
certificates for the number of full Warrant Shares to which the holder is
entitled, registered in accordance with the instructions set forth in the
Election to Purchase, together with cash, as provided in Section 4.10 hereof, in
respect of any fractional share. All Warrant Shares issued upon the exercise of
any Warrants shall be validly authorized and issued, fully paid and non-
assessable, free of preemptive rights and free from all taxes, liens, security
interests and charges created by the Company in respect of the issuance thereof.
Each person in whose name any such certificate for Warrant Shares is issued
shall for all purposes be deemed to have become the holder of record of the
Common Stock represented thereby on the Date of Exercise of the Warrants
resulting in the issuance of such shares, irrespective of the date of issuance
or delivery of such certificate for Warrant Shares.
Section 3.5. Certificates for Unexercised Warrants. In the event that
fewer than all of the Warrants represented by a Warrant Certificate are
exercised, the Company shall execute and mail, by first-class mail, within ten
(10) days of the Date of Exercise, to the holder of such Warrant Certificate, or
such other Person as shall be designated in the Election to Purchase, a new
Warrant Certificate representing the number of Warrants not exercised.
Section 3.6. Reservation of Warrant Shares. The Company shall at all
times reserve and keep available for issuance upon the exercise of Warrants a
number of its authorized but unissued shares or treasury shares, or both, of
Common Stock that will be sufficient to permit the exercise in full of all
outstanding Warrants.
Section 3.7. No Impairment. The Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, stock split, stock dividend or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of the Warrants, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of the Warrant holder against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any Warrant Shares receivable upon the
exercise of the Warrants above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate to assure that the par value of the Common Stock is
at all times equal to or less than the Exercise Price (including without
limitation approving and submitting to the stockholders of the Company for
approval an amendment to the Company's Bylaws to reduce such par value), (c)
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 Warrant
Shares upon the exercise of any Warrant, and (d) use its best efforts to obtain
all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under the Warrants.
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ARTICLE IV
ADJUSTMENTS, NOTICE PROVISIONS AND ISSUANCE
OF ADDITIONAL SECURITIES
Section 4.1. Adjustment of Exercise Price. Subject to the provisions of
this Article IV, the Exercise Price in effect from time to time shall be subject
to adjustment, as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on the outstanding shares of Common Stock in shares of Common Stock
or any class thereof, (ii) subdivide or reclassify the outstanding shares of
Common Stock or any class thereof into a greater number of shares, or (iii)
combine or reclassify the outstanding shares of its Common Stock into a smaller
number of shares, the Exercise Price in effect immediately after the record date
for such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price in effect immediately prior
thereto by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding immediately before such dividend, distribution,
subdivision, combination or reclassification, and of which the denominator shall
be the number of shares of Common Stock outstanding immediately after such
dividend, distribution, subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event specified above shall
occur.
(b) In case the Company shall fix a record date for the issuance of
rights, options, warrants or convertible or exchangeable securities to all
holders of its Common Stock entitling them (for a period expiring within forty-
five (45) days after such record date) to subscribe for or purchase shares of
its Common Stock at a price per share less than the Fair Market Value on such
record date the Exercise Price shall be adjusted immediately thereafter so that
it shall equal the price determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so offered would purchase at the Fair Market Value per
share, and of which the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares of
Common Stock offered for subscription or purchase. Such adjustment shall be made
successively whenever such a record date is fixed. To the extent that any such
rights, options, warrants or convertible or exchangeable securities are not so
issued or expire unexercised, the Exercise Price then in effect shall be
readjusted to the Exercise Price which would then be in effect if such unissued
or unexercised rights, options, warrants or convertible or exchangeable
securities had not been issuable.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of shares of Common Stock of (i) shares of any class
other than Common Stock or (ii) evidences of its indebtedness or (iii) assets
(excluding cash dividends or distributions (other than extraordinary cash
dividends or distributions), and dividends or distributions referred to in
Section 4.1(a) hereof) or (iv) rights, options, warrants or convertible or
exchangeable securities (excluding those rights, options, warrants or
convertible or exchangeable securities referred to in Section 4.1(b) hereof),
then in each such case the Exercise
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Price in effect immediately thereafter shall be determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, of which the
numerator shall be the total number of shares of Common Stock outstanding on
such record date multiplied by the Fair Market Value per share on such record
date, less the aggregate fair market value as determined in good faith by the
Board of Directors of the Company of said shares or evidences of indebtedness or
assets or rights, options, warrants or convertible or exchangeable securities so
distributed, and of which the denominator shall be the total number of shares of
Common Stock outstanding on such record date multiplied by such Fair Market
Value per share. Such adjustment shall be made successively whenever such a
record date is fixed. In the event that such distribution is not so made, the
Exercise Price then in effect shall be readjusted to the Exercise Price which
would then be in effect if such record date had not been fixed.
(d) For the purpose of any computation under Section 4.1(b) or 4.1(c)
hereof, the "Fair Market Value" per share at any date (the "Computation Date")
shall be as follows: (i) if the Common Stock is listed on a national securities
exchange or quoted on a national quotation system, the Current Market Price,
which shall be deemed to be the average of the Closing Prices of the Common
Stock for the five (5) Trading Days immediately preceding the Computation Date;
provided, however, that if there shall have occurred prior to the Computation
Date any event described in Section 4.1(a), 4.1(b) or 4.1(c) which shall have
become effective with respect to market transactions at any time (the "Market-
Effect Date") on or after the beginning of such 5-day period, the Closing Price
for each Trading Day preceding the Market-Effect Date shall be adjusted, for
purposes of calculating such average, by multiplying such Closing Price by a
fraction the numerator of which is the Exercise Price as in effect immediately
prior to the Computation Date and the denominator of which is the Exercise Price
as in effect immediately prior to the Market-Effect Date, it being understood
that the purpose of this proviso is to ensure that the effect of such event on
the market price of the Common Stock shall, as nearly as possible, be eliminated
in order that the distortion in the calculation of the Fair Market Value may be
minimized and it being understood that if the Exercise Price may not be adjusted
due to the provisions of Section 4.6, for purposes of the calculation above, the
Exercise Price shall be deemed the Exercise Price as if it had been adjusted or
(ii) there is no public market for Common Stock, the fair market value per share
of Common Stock as determined in good faith by the Company's Board of Directors.
Section 4.2. No Adjustments to Exercise Price. No adjustment in the
Exercise Price in accordance with the provisions of Section 4.1(a), 4.1(b) or
4.1(c) hereof need be made unless such adjustment would amount to a change of at
least .5% in such Exercise Price of the Warrant Certificates; provided, however,
that the amount by which any adjustment is not made by reason of the provisions
of this Section 4.2 shall be carried forward and taken into account at the time
of any subsequent adjustment in the Exercise Price.
Section 4.3. Adjustment of Number of Shares. Upon each adjustment of the
Exercise Price pursuant to Section 4.1(a), 4.1(b) or 4.1(c) hereof, each Warrant
shall thereupon evidence the right to purchase that number of Warrant Shares
(calculated to the nearest hundredth of a share) obtained by multiplying the
number of Warrant Shares purchasable immediately prior to such adjustment upon
exercise of the Warrant by the Exercise Price in effect immediately prior to
such adjustment and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment. In the event that the Exercise Price
may not be adjusted due
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to the provisions of Section 4.6 hereof, the number of Warrant Shares
purchasable upon the exercise of each Warrant shall be adjusted hereunder as if
the Exercise Price had been so adjusted.
Section 4.4. Reorganizations. In case of any capital reorganization,
other than in the cases referred to in Section 4.1 hereof, or the consolidation
or merger of the Company with or into another corporation (other than a merger
or consolidation in which the Company is the continuing corporation and which
does not result in any reclassification of the outstanding shares of Common
Stock or the conversion of such outstanding shares of Common Stock into shares
of other stock or other securities or property), or the sale or conveyance of
the property of the Company as an entirety or substantially as an entirety
(collectively such actions being hereinafter referred to as "Reorganizations"),
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of Warrant Shares theretofore deliverable) the number of shares of
stock or other securities or property to which a holder of the number of Warrant
Shares which would otherwise have been deliverable upon the exercise of such
Warrant would have been entitled upon such Reorganization if such Warrant was
fully exercisable and had been exercised in full immediately prior to such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of Warrant holders so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of Warrants. Any such
adjustment shall be made by and set forth in a supplemental agreement prepared
by the Company or any successor thereto, between the Company, or any successor
thereto, and shall for all purposes hereof conclusively be deemed to be an
appropriate adjustment. The Company shall not effect any such Reorganization
unless upon or prior to the consummation thereof the successor corporation, (or
if the Company shall be the surviving corporation in any such Reorganization and
is not the issuer of the shares of stock or other securities or property to be
delivered to holders of shares of the Common Stock outstanding at the effective
time thereof, then such issuer), shall assume by written instrument the
obligation to deliver to the holder of any Warrant Certificate such shares of
stock, securities, cash or other property as such holder shall be entitled to
purchase in accordance with the foregoing provisions.
Section 4.5. Verification of Computations. The Company shall, if
requested by a Holder of a majority of the outstanding Warrants, select a firm
of independent public accountants, which selection may be changed from time to
time, to verify each computation and/or adjustment made in accordance with this
Article IV. The certificate, report or other written statement of any such firm
shall be conclusive evidence of the correctness of any computation made under
this Article IV. Promptly upon its receipt of such certificate, report or
statement from such firm of independent public accountants, the Company shall
deliver a copy thereof to each holder of Warrants
Section 4.6. Exercise Price Less Than Par Value. The Exercise Price shall
not be adjusted below the par value per share of the Common Stock for the
purpose of making any adjustment as may be required pursuant to this Article IV.
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Section 4.7. Notice of Certain Actions. In the event the Company shall:
(a) declare any dividend payable in stock to the holders of the
Common Stock or make any other distribution in property other than cash to the
holders of the Common Stock;
(b) offer to the holders of the Common Stock rights to subscribe for
or purchase any shares of any class of stock or any other rights or options; or
(c) effect any reclassification of the Common Stock (other than a
reclassification involving merely the subdivision or combination of outstanding
shares of Common Stock) or any capital reorganization or any consolidation or
merger (other than a merger in which no distribution of securities or other
property is made to holders of Common Stock), or any sale, transfer or other
disposition of its property, assets and business substantially as an entirety,
or the liquidation, dissolution or winding up of the Company;
then, in each such case, the Company shall mail notice of such proposed action
to each holder of Warrants at least ten (10) days prior to such action. Such
notice shall specify the date on which the books of the Company shall close, or
a record be taken, for determining holders of Common Stock entitled to receive
such stock dividend or other distribution or such rights or options, or the date
on which such reclassification, reorganization, consolidation, merger, sale,
transfer, other disposition, liquidation, dissolution, winding up or exchange
shall take place or commence, as the case may be, and the date as of which it is
expected that holders of record of Common Stock shall be entitled to receive
securities or other property deliverable upon such action, if any such date has
been fixed. Such notice shall be mailed in the case of any action covered by
paragraph (a) or (b) of this Section 4.7, at least ten (10) days prior to the
record date for determining holders of the Common Stock for purposes of
receiving such payment or offer, and in the case of any action covered by
paragraph (c) of this Section 4.7, at least ten (10) days prior to the earlier
of the date upon which such action is to take place or any record date to
determine holders of Common Stock entitled to receive such securities or other
property.
Section 4.8. Certificate of Adjustments. Whenever any adjustment is to be
made pursuant to this Article IV, the Company shall prepare an Officers'
Certificate setting forth such adjustment to be mailed to each transfer agent
for the Common Stock and to each holder of a Warrant Certificate at least five
(5) days prior thereto, such notice to include in reasonable detail (i) the
events precipitating the adjustment, (ii) the computation of any adjustments,
and (iii) the Exercise Price and the number of Warrant Shares or the securities
or other property purchasable upon exercise of each Warrant after giving effect
to such adjustment.
Section 4.9. Warrant Certificate Amendments. Irrespective of any
adjustments pursuant to this Article IV, Warrant Certificates theretofore or
thereafter issued need not be amended or replaced, but certificates thereafter
issued shall bear an appropriate legend or other notice of any adjustments;
provided the Company may, at its option, issue new Warrant Certificates
evidencing Warrants in such form as may be approved by its Board of Directors to
reflect any adjustment in the Exercise Price and number of Warrant Shares
purchasable under the Warrant Certificates and deliver the same to the holders
thereof in substitution for existing Warrant Certificates.
10
Section 4.10. Fractional Shares. The Company shall not be required upon
the exercise of any Warrant to issue fractional Warrant Shares which may result
from adjustments in accordance with this Article IV to the Exercise Price or
number of Warrant Shares purchasable under each Warrant or otherwise. If more
than one Warrant is exercised at one time by the same holder, the number of full
Warrant Shares which shall be deliverable shall be computed based on the number
of shares deliverable in exchange for the aggregate number of Warrants
exercised. With respect to any final fraction of a Warrant Share called for upon
the exercise of any Warrant or Warrants, the Company shall pay a cash adjustment
to the holders of the Warrants in respect of such final fraction in an amount
equal to the same fraction of the Closing Price of a Warrant Share, as
determined by the Company on the basis of the Closing Price per share of Common
Stock on the business day next preceding the date of such exercise. The holder
of each Warrant Certificate, by his acceptance of the Warrant Certificate, shall
expressly waive any right to receive any fractional Warrant Share upon exercise
of the Warrants. All calculations under this Section 4.10 shall be made to the
nearest hundredth of a share.
ARTICLE V
SPLIT UP, COMBINATION, EXCHANGE, TRANSFER AND
CANCELLATION OF WARRANT CERTIFICATES
Section 5.1. Split Up, Combination, Exchange and Transfer of Warrant
Certificates. Subject to Article II hereof, Warrant Certificates, subject to
the provisions of Section 5.2, may be split up, combined or exchanged for other
Warrant Certificates of the same type representing a like aggregate number of
Warrants or may be transferred in whole or in part. Any holder desiring to split
up, combine or exchange a Warrant Certificate or Warrant Certificates shall make
such request in writing delivered to the Company and shall surrender the Warrant
Certificate or Warrant Certificates so to be split up, combined or exchanged.
Upon any such surrender for split up, combination, exchange or transfer, the
Company shall execute and deliver to the person entitled thereto a Warrant
Certificate or Certificates, as the case may be, as so requested.
Section 5.2. Cancellation of Warrant Certificates. Any Warrant
Certificate surrendered upon the exercise of Warrants or for split up,
combination, exchange or transfer, or purchased or otherwise acquired by the
Company, shall be canceled and shall not be reissued by the Company; and, except
as provided in Section 3.5 hereof in case of the exercise of less than all of
the Warrants evidenced by a Warrant Certificate or in Section 5.1 in case of a
split up, combination, exchange or transfer, no Warrant Certificate shall be
issued hereunder in lieu of such cancelled Warrant Certificate.
ARTICLE VI
HOLDER REPRESENTATION AND WARRANTIES
Section 6.1. Purchase for Investment. The Holder is (a) acquiring the
Warrants and the Warrant Shares for Holder's own account and not with a view to
the distribution thereof in violation of the securities laws of the United
States or any state thereof, provided that the disposition of Holder's property
shall at all times be within Holder's control, and (b) is an "accredited
investor" as defined in Rule 501 (a) of Regulation D under the Securities Act
and
11
able to evaluate the merits and risks of the investment. Holder understands that
the Warrants and the Warrant Shares have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or in an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Changes to Agreement. The Company, when authorized by its
Board of Directors, may amend or supplement this Agreement with the written
consent of the Holder or Holders of a majority of the outstanding Warrants.
Section 7.2. Assignment. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of their respective successors and assigns.
Section 7.3. Successor to Company. The Company will not merge or
consolidate with or into any other corporation or sell or otherwise transfer its
property, assets and business substantially as an entirety to a successor
corporation, unless the corporation resulting from such merger, consolidation,
sale or transfer (if not the Company) shall expressly assume, by supplemental
agreement satisfactory in form and substance to the Holders and delivered to the
Holders, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.
Section 7.4. Notices. All notices and other communications provided for
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by facsimile or overnight courier,
addressed as follows:
If to the Company, to:
Pacific Aerospace & Electronics, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Pacific Aerospace & Electronics, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder, if addressed to such Holder at the address set forth on the
signature page hereto.
Failure to file any certificate or notice or to mail any notice, or any defect
in any certificate or notice pursuant to this Agreement shall not affect in any
way the rights of any holder of a Warrant Certificate or the legality or
validity of any adjustment made pursuant to Section 4.1 hereof, or any
transaction giving rise to any such adjustment, or the legality or validity of
any action taken or to be taken by the Company.
Section 7.5. Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be governed by the laws of the State of New York without
regard to principles of conflicts of laws thereof.
Section 7.6. Standing. Nothing in this Agreement expressed and nothing
that may be implied from any of the provisions hereof is intended, or shall be
construed, to confer upon, or give to, any person or corporation other than the
Company and the Holder of the Warrant Certificates any right, remedy or claim
under or by reason of this Agreement or of any covenant, condition, stipulation,
promise or agreement contained herein; and all covenants, conditions,
stipulations, promises and agreements contained in this Agreement shall be for
the sole and exclusive benefit of the Company and their successors, and the
Holder of the Warrant Certificates.
Section 7.7. Headings. The descriptive headings of the articles and
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 7.8. Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same instrument.
Section 7.9. Availability of the Agreement. The Company shall keep copies
of this Agreement available for inspection by holders of Warrants during normal
business hours. Copies of this Agreement may be obtained upon written request
addressed to the Company at the address set forth in Section 7.4 hereof.
Section 7.10. Entire Agreement. This Agreement, including the Exhibits
referred to herein and the other writings specifically identified herein or
contemplated hereby, is complete, reflects the entire agreement of the parties
with respect to its subject matter, and supersedes all previous written or oral
negotiations, commitments and writings.
Section 7.11. Rights of Warrant Holders. No Warrant Certificate shall
entitle the holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the
13
right to vote, to receive dividends and other distributions, to receive any
notice of, or to attend, meetings of stockholders or any other proceedings of
the Company.
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
parties as of the day and year first above written.
PACIFIC AEROSPACE & ELECTRONICS, INC.,
a Washington corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
HOLDER:
FIRST ALBANY CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President
Notice Address:
First Albany Corporation
FAC/Equities
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇ III
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
14
EXHIBIT A
Form of
Warrant Certificate
NEITHER THE ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
ISSUANCE OF ANY SECURITIES ISSUABLE UPON EXERCISE HEREOF HAS BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR PURSUANT
TO THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO SUCH SECURITIES UNDER THE SECURITIES ACT AND THE RULES AND
REGULATIONS THEREUNDER OR (ii) AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
No. FAC- _______ April 9, 2001
Certificate for _________Shares
NOT EXERCISABLE AFTER 5:00 P.M.,
New York TIME, ON April 9, 2006
PACIFIC AEROSPACE & ELECTRONICS, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
THIS CERTIFIES that _____________________ or its assigns is the holder of
this Warrant which represents the right to purchase [____________] fully paid
and non-assessable shares of Common Stock, par value $.001 per share (the
"Common Stock"), of Pacific Aerospace & Electronics, Inc., a Washington
corporation (the "Company"), at an initial exercise price (the "Exercise Price")
equal to $.4062 per share, at the times provided in the Warrant Agreement (as
hereinafter defined), by surrendering this Warrant Certificate, with the
Election to Purchase attached hereto duly executed and by paying in full the
Exercise Price. Payment of the Exercise Price may be made at the option of the
holder hereof by (i) cash, certified check or a wire transfer in same day funds
in an amount equal to the then applicable Exercise Price multiplied by the
number of Warrant Shares then being purchased, (ii) delivery to the Company of
that number of shares of Common Stock, duly endorsed, having an aggregate Fair
Market Value equal to the then applicable Exercise Price multiplied by the
number of Warrant Shares then being purchased or (iii) by any combination of (i)
and (ii). In the alternative, the holder of a Warrant Certificate may exercise
its right to purchase some or all of the Warrant Shares subject to such Warrant
Certificate, on a net basis, such that, without the exchange of any funds, such
holder receives that number of Warrant Shares subscribed to pursuant to such
Warrant Certificate less that number of shares of Common Stock having an
aggregate Fair Market Value at the Date of Exercise equal to the aggregate
Exercise Price that would otherwise have been paid by such holder for the number
of Warrant Shares subscribed to pursuant to such Warrant Certificate.
No Warrant may be exercised after 5:00 P.M., New York time, on April 9,
2006, (the "Expiration Date"). All Warrants evidenced hereby shall thereafter
become void, subject to the terms of the Warrant Agreement.
Prior to the Expiration Date, subject to any applicable laws, rules or
regulations restricting transferability and to any restriction on
transferability that may appear on this Warrant Certificate and in accordance
with the terms of the Warrant Agreement, the holder shall be entitled to
transfer this Warrant Certificate, in whole or in part, upon surrender of this
Warrant Certificate to the Company with the Assignment on the reverse hereof.
Upon any such transfer, a new Warrant Certificate or Warrant Certificates
representing the same aggregate number of Warrants will be issued in accordance
with instructions in the form of assignment.
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, there shall be issued to the holder a new Warrant
Certificate in respect of the Warrants not exercised.
Prior to the Expiration Date, the holder shall be entitled to exchange this
Warrant Certificate, with or without other Warrant Certificates, for another
Warrant Certificate or Warrant Certificates for the same aggregate number of
Warrants, upon surrender of this Warrant Certificate to the Company as set forth
in the Warrant Agreement. Upon certain events provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock issuable
upon the exercise of each Warrant are required to be adjusted. No fractional
shares will be issued upon the exercise of Warrants. As to any final fraction of
a share which the holder of one or more Warrant Certificates, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay the cash value thereof
determined as provided in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of April 9, 2001 between the Company and the holder and is
subject to the terms and provisions contained in said Warrant Agreement, to all
of which terms and provisions the holder consents by acceptance hereof. All
capitalized terms not defined herein shall have the meaning set forth in the
Warrant Agreement.
This Warrant Certificate shall not entitle the holder to any of the rights
of a stockholder of the Company, including, without limitation, the right to
vote, to receive dividends and other distributions, or to attend or receive any
notice of meetings of stockholders or any other proceedings of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its facsimile Corporate Seal.
PACIFIC AEROSPACE & ELECTRONICS, INC.
By:
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Financial Officer
Attest:
By:
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
Form of Election To Purchase
The undersigned hereby irrevocably elects to exercise this Warrant with
respect to [________________] shares of Common Stock represented by this Warrant
Certificate and to purchase such shares of Common Stock issuable upon the
exercise of said Warrant, and requests that Certificates for such shares be
issued and delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO: ____________________________________________________________________
(NAME)
at _____________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares hereby purchased is less than all the shares
represented by this Warrant Certificate, the undersigned requests that a new
Warrant Certificate representing the number of full shares not exercised be
issued and delivered as set forth above.
In full payment of the exercise price with respect to the shares purchased
and transfer taxes, if any, the undersigned hereby tenders payment of $______ by
(i) $_______ in cash, certified check or wire transfer in same day funds, (ii)
surrender to the Company of certificate no(s) ____________ representing ______
shares of Common Stock, (iii) a combination of (i) an (ii) or (iv) purchasing
the shares on a net basis such that the number of shares of Common Stock
otherwise receivable by the holder pursuant to the Warrants exercised shall be
reduced by the number of shares of Common Stock having an aggregate Fair Market
Value equal to the exercise price with respect to the number of shares
purchased.
Date:_________________, _____ __________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
PLEASE INSERT SOCIAL SECURITY OR TAX I.D.
NUMBER OF HOLDER
__________________________________________
Assignment
FOR VALUE RECEIVED, the undersigned hereby irrevocably sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
represented by the within Warrant Certificate, with respect to the number of
shares set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint ___________________________,
Attorney, to make such transfer on the books of Pacific Aerospace & Electronics,
Inc. maintained for that purpose, with full power of substitution in the
premises.
Date:_________________, _____ ___________________________________
Signature