EXHIBIT 2
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WARRANT
to Purchase Common Stock of
CANNONDALE CORPORATION
a Delaware corporation
Warrant No. 1
Issue Date: July 26, 2002
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NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAW. THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT
COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY THE
PROVISIONS OF, THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS
THEREUNDER AND THIS WARRANT.
Warrant No. 1
WARRANT
TO PURCHASE 1,516,479 SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT) OF
CANNONDALE CORPORATION
THIS IS TO CERTIFY THAT PEGASUS PARTNERS II, L.P., a Delaware
limited partnership, or its registered assigns ("Pegasus"), is entitled, at any
time prior to the Expiration Date (defined herein), to purchase from CANNONDALE
CORPORATION, a Delaware corporation, or a successor corporation (the "Company"),
1,516,479 shares of the Common Stock of the Company (subject to adjustment as
provided herein), at an exercise price (the "Exercise Price") equal to $2.05,
such Exercise Price subject to adjustment pursuant to SECTIONS 3 and 4 herein.
This Warrant is being issued in connection with the Note Purchase Agreement
dated as of July 26, 2002 between the Company and Pegasus (the "Note Purchase
Agreement"). Any capitalized terms not otherwise defined herein shall have the
meaning given to such term in the Note Purchase Agreement.
SECTION 1. Certain Definitions
As used in this Warrant, the following terms have the
respective meanings set forth below:
"18 MONTH CLAWBACK" shall have the meaning given to such term
in SECTION 3(A) herein.
"24 MONTH CLAWBACK" shall have the meaning given to such term
in SECTION 3(B) herein.
"AFTER-TAX BASIS" when referring to a payment that is required
hereunder (the "TARGET AMOUNT"), shall mean a total payment (the "TOTAL AMOUNT")
that, after deduction of all
federal, state and local taxes that are required to be paid by the recipient in
respect of the receipt or accrual of such total amount, is equal to the target
amount.
"AGGREGATE EXERCISE PRICE" shall mean the aggregate Exercise
Price of the Warrant Shares purchased on any Exercise Date.
"CLAWBACK" shall have the meaning given to such term in
SECTION 3(B) herein.
"COMMON STOCK" shall mean the Common Stock of the Company, par
value $.01 per share, as constituted on the Issue Date, and any capital stock
into which such Common Stock may thereafter be changed, and shall also include
shares of common stock of any successor or acquiring corporation (as defined in
SECTION 4(E) herein) received by or distributed to the holders of Common Stock
of the Company in the circumstances contemplated by SECTION 4(E) herein.
"COMPANY" shall have the meaning given to such term in the
Preamble.
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness,
shares of stock or other securities that are convertible into or exchangeable
for, with or without payment of additional consideration in cash or property,
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
"CURRENT MARKET PRICE" shall mean, as of any specified date,
the average of the Daily Market Price of one share of Common Stock for the
shorter of (x) the 10 consecutive Business Days immediately preceding such date
or (y) the period commencing on the Business Day next following the first public
announcement by the Company of any event giving rise to an adjustment of the
Exercise Price pursuant to SECTION 4 herein and ending on such specified date.
"DAILY MARKET PRICE" shall mean, with respect to one share of
Common Stock and for any Business Day: (i) if the Common Stock is then listed on
a national securities exchange or is authorized for quotation on Nasdaq and is
designated as a National Market System security, the last sale price of one
share of Common Stock, regular way, on such day on the principal stock exchange
or market system on which such Common Stock is then listed or authorized for
quotation, or, if no such sale takes place on such day, the average of the
closing bid and asked prices for one share of Common Stock on such day as
reported on such stock exchange or market system or (ii) if the Common Stock is
not then listed or authorized for quotation on any national securities exchange
or designated as a National Market System security on Nasdaq but is traded
over-the-counter, the average of the closing bid and asked prices for one share
of Common Stock as reported on Nasdaq or the Electronic Bulletin Board or in the
National Daily Quotation Sheets, as applicable.
"DESIGNATED OFFICE" shall have the meaning set forth in
SECTION 12 herein.
"EXERCISE DATE" shall have the meaning set forth in SECTION
2(A) herein.
"EXERCISE NOTICE" shall have the meaning set forth in SECTION
2(A) herein.
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"EXERCISE PRICE" shall have the meaning given to such term in
the Preamble.
"EXPIRATION DATE" shall mean the tenth anniversary of the
Issue Date.
"FULLY DILUTED" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all shares of Common Stock Outstanding on such date and all shares of Common
Stock issuable in respect of (x) any Convertible Securities outstanding on such
date and (y) any other Stock Purchase Rights outstanding on such date, in each
case regardless of whether or not the conversion, exchange, subscription or
purchase rights, associated with such Convertible Securities or Stock Purchase
Rights are presently exercisable.
"HOLDER(S)" shall mean Pegasus Partners II, L.P., a Delaware
limited partnership, and any transferee(s) of the Warrants whose name has been
recorded by the Company on the books maintained for such purpose.
"ISSUE DATE" shall mean the date on which the Warrant was
issued, as set forth on the cover page of this Warrant.
"NASDAQ" shall mean the Nasdaq Stock Market, or any successor
thereto.
"NOTE PURCHASE AGREEMENT" shall have the meaning given to such
term in the Preamble.
"OTHER PROPERTY" shall have the meaning set forth in SECTION
4(E) herein.
"OUTSTANDING" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any Subsidiary thereof, and shall include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"REGISTRABLE SECURITIES" shall have the meaning given to such
term in the Registration Rights Agreement.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement, dated as of July 26, 2002, by and between the Company and
Pegasus.
"REQUIRED HOLDERS" shall mean the Holders of Warrants
exercisable for more than 50% in number of the aggregate number of Warrant
Shares for which the outstanding Warrants are exercisable.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
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"SPRINGING WARRANT" shall mean the warrant issued by the
Company to Pegasus on the date hereof, pursuant to which Pegasus is entitled to
purchase 1,428,073 shares of Common Stock at the Exercise Price, as such
Exercise Price may be adjusted pursuant thereto.
"STOCK PURCHASE RIGHTS" shall mean any options, warrants or
other securities or rights to subscribe to or exercisable for the purchase of
shares of Common Stock or Convertible Securities, whether or not immediately
exercisable.
"STOCKHOLDER APPROVAL" shall mean the affirmative vote of a
majority of the total votes cast on the proposal to issue the Warrant Shares
underlying the Warrants as and if required by Nasdaq.
"SUBSEQUENT ISSUANCE" shall mean any sale or issuance by the
Company of Common Stock, Convertible Securities or Stock Purchase Rights after
the Issue Date other than:
(i) Any issuance of Warrant Shares upon exercise of the
Warrants and any issuance of Common Stock pursuant to Convertible Securities or
Stock Purchase Rights outstanding as of the Issue Date.
(ii) The issuance of shares of Common Stock, Convertible
Securities or Stock Purchase Rights pursuant to the Company's 2000 Stock Option
Plan, 1998 Stock Option Plan, 1996 Stock Option Plan, 1995 Stock Option Plan,
1994 Management Stock Option Plan, 1994 Stock Option Plan, 1994 Employee Stock
Purchase Plan, 401(k) Plan and any other stock option, ownership or purchase
plan approved by the Company's Board of Directors and stockholders in an amount
not to exceed 300,000 shares (as currently constituted and subject to subsequent
adjustments for stock splits, stock dividends, reverse stock splits and the
like) during any twelve month period; provided, however, that such limitation
shall not apply to (A) the issuance of any shares of Common Stock issued upon
exercise of Stock Purchase Rights which have previously been applied to such
limitation or (B) the issuance of any Stock Purchase Rights (or of any shares of
Common Stock issued upon exercise thereof) issued upon or subsequent to the
expiration, cancellation, forfeiture or exchange of previously issued Stock
Purchase Rights.
(iii) Any other issuance of Common Stock, Convertible
Securities or Stock Purchase Rights with respect to which the Required Holders
shall have waived application of the provisions of SECTION 4 below.
"SUBSIDIARY" shall mean any corporation, partnership, limited
liability company, joint venture or other entity in which the Company (a) owns,
or at any relevant time owned, directly or indirectly, more than 50% of the
outstanding voting securities or equity interests or (b) is a general partner.
"TRANSFER" shall mean any disposition of any Warrant or
Warrant Shares or of any interest in either thereof, which would constitute a
"sale" thereof within the meaning of the Securities Act.
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"WARRANTS" shall mean this Warrant and the Springing Warrant,
and any warrants issued in respect hereof and thereof.
"WARRANT SHARES" shall mean the shares of Common Stock issued,
issuable or both (as the context may require), upon the exercise of the
Warrants.
SECTION 2. EXERCISE OF WARRANT.
(a) Subject to Section 3 and the other applicable terms and conditions
hereof, from and after the Issue Date and until 5:00 P.M., New York City time,
on the Expiration Date, the Holder may exercise this Warrant, on any Business
Day, for all or any part of the number of shares of Common Stock purchasable
hereunder. In order to exercise this Warrant, in whole or in part, the Holder
shall (i) deliver to the Company at the Designated Office a written notice of
the Holder's election to exercise this Warrant (an "Exercise Notice") together
with this Warrant and (ii) pay to the Company the Aggregate Exercise Price (the
date on which both such delivery and payment shall have first taken place being
hereinafter sometimes referred to as the "Exercise Date"). Such Exercise Notice
shall be in the form of the subscription form attached hereto as ANNEX A, duly
executed by the Holder or its duly authorized agent or attorney.
(b) Upon receipt of such Exercise Notice, this Warrant and payment of
the Aggregate Exercise Price, the Company shall as soon as practicable execute
(or cause to be executed) and deliver (or cause to be delivered) to the Holder a
certificate representing the aggregate number of shares of Common Stock issuable
upon such exercise. The stock certificate or certificates so delivered shall be
registered in the name of the Holder. This Warrant shall be deemed to have been
exercised and such certificate shall be deemed to have been issued, and the
Holder shall be deemed to have become a holder of record of such Warrant Shares
for all purposes as of the Exercise Date.
(c) Payment of the Aggregate Exercise Price shall be made at the option
of the Holder by one or more of the following methods: (i) by delivery of a
certified or official bank check in the amount of such Aggregate Exercise Price
payable to the order of the Company, (ii) by instructing the Company to withhold
a number of Warrant Shares then issuable upon exercise of this Warrant with an
aggregate Current Market Price equal to such Aggregate Exercise Price, (iii) by
surrendering to the Company shares of Common Stock previously acquired by the
Holder with an aggregate Current Market Price equal to such Aggregate Exercise
Price, (iv) by deeming a portion of the outstanding principal of the Notes and
accrued and unpaid interest thereon equal to the Aggregate Exercise Price to be
prepaid by the Company or (v) any combination of such methods.
(d) If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
the shares of Common Stock being issued, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the remaining Warrant Shares.
Such new Warrant shall in all other respects be identical to this Warrant.
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(e) If the Company has not obtained the Stockholder Approval and such
Stockholder Approval is required by Nasdaq, then the Company may not, upon
exercise of the Warrants issue in excess of 1,516,479 shares of Common Stock
(which equals 19.999% of the number of shares of Common Stock Outstanding on the
Issue Date (such number of shares, subject to adjustment for stock splits,
reverse stock splits, stock dividends and similar events affecting the Common
Stock, the "Maximum Issue")). If, pursuant to the preceding Sentence the Company
may not issue any number of Warrant Shares for which the Holders then desire to
exercise the Warrants, then the Required Holders, in their sole discretion, may
require the Company to either (A) use all commercially reasonable efforts to
obtain the Stockholder Approval in a timely manner and, if the Company fails to
obtain such Stockholder Approval, issue to the Holders Warrant Shares and Notes
as set forth in clause (B), or (B) issue to the Holders desiring to so exercise
Warrants a number of Warrant Shares that, together with Warrant Shares for which
the Warrants had previously been exercised, is equal to the Maximum Issue and
issue additional Notes, or, if such issuance is to occur after July 25, 2007,
notes with a term of four years and 364 days otherwise having substantially the
same terms and conditions as the Notes, to such Holders in an amount equal to
(x) a number of shares of Common Stock equal to the difference between the
aggregate number of Warrant Shares for which the Warrants are being exercised on
such Exercise Date, less the Maximum Issue, multiplied by (y) the greater of (A)
the difference between the Current Market Price of the Common Stock and the
Exercise Price and (B) $.10. Notwithstanding the preceding, any Notes issued
pursuant to this SECTION 2(E) shall contain the covenants set forth in SECTION 5
hereof in lieu of the covenants contained in Sections 8 and 9 of the Note
Purchase Agreement.
(f) All Warrant Shares shall be validly issued, fully paid and
nonassessable, issued without violation of any preemptive rights and free and
clear of all Liens (other than any Liens created by actions of the Holder).
(g) The Company shall pay all expenses in connection with, and all
issuance, transfer, stamp and other similar taxes and other governmental charges
that may be imposed with respect to, the issue or delivery of the Warrant
Shares, (other than taxes in respect of any transfer occurring contemporaneously
therewith) unless such tax or charge is imposed by law upon the Holder, in which
case such taxes or charges shall be paid by the Holder and the Company shall
reimburse the Holder therefor on an After-Tax Basis.
(h) The Company shall not be required to issue a fractional share of
Common Stock upon exercise of this Warrant. As to any fraction of a share that
the Holder would otherwise be entitled to purchase upon such exercise (after
aggregating all shares acquired upon such exercise), the Company shall pay to
such Holder an amount in cash equal to such fraction multiplied by the Current
Market Price.
(i) All Warrants delivered for exercise shall be canceled by the
Company.
SECTION 3. CLAWBACK.
(a) In the event that the Obligations are fully repaid in cash by the
Company on or before 5:00 P.M., New York City time, on January 26, 2004, the
Warrants shall thereafter cease to be
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exercisable with respect to a number of
Warrant Shares equal to two-thirds of the aggregate Warrant Shares represented
by the Warrants on the Issue Date (subject to subsequent adjustments for stock
splits, stock dividends, reverse stock splits and the like) (the "18 Month
Clawback").
(b) In the event that the Obligations are not repaid by the Company on
or before 5:00 P.M., New York City time, on January 26, 2004, but that such
Obligations are fully repaid in cash by the Company on or before 5:00 P.M., New
York City time, on July 26, 2004, the Warrants shall thereafter cease to be
exercisable with respect to a number of Warrant Shares equal to one-half of the
aggregate Warrant Shares represented by the Warrants on the Issue Date (subject
to subsequent adjustments for stock splits, stock dividends, reverse stock
splits and the like) (the "24 Month Clawback" and, together with the 18 Month
Clawback, the "Clawback").
(c) The Clawback shall be applied first to reduce the number of Warrant
Shares available for purchase under the Springing Warrant.
(d) At any time that any portion of the Warrants is subject to the
Clawback, such portion shall not be exercisable.
(e) For purposes of this SECTION 3, payment of the Aggregate Exercise
Price pursuant to SECTION 2(C)(IV) hereof shall be deemed to be the same as
repayment "in cash."
SECTION 4. ANTIDILUTION PROVISIONS. The number of shares of Common
Stock for which this Warrant is exercisable and the Exercise Price shall be
subject to adjustment from time to time as set forth in this SECTION 4.
(a) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
(i) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in,
or other distribution of, additional shares of Common Stock,
(ii) subdivide, split or reclassify its outstanding shares of
Common Stock into a larger number of shares of such Common
Stock, or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of such Common Stock,
then the Exercise Price shall be adjusted to equal the product of the Exercise
Price in effect immediately prior to such event multiplied by a fraction the
numerator of which is equal to the number of shares of Common Stock outstanding
immediately prior to the adjustment and the denominator of which is equal to the
number of shares of Common Stock outstanding immediately after such adjustment.
(b) ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If at any time the
Company shall issue or sell any shares of Common Stock in a Subsequent Issuance
for a consideration per share
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that is less than either the Exercise Price or the Current Market Price in
effect as of the date of such issuance or sale, then, forthwith upon such
issuance or sale, the Exercise Price shall be reduced to the price calculated by
dividing (A) an amount equal to the sum of (x) the number of shares of Common
Stock Fully Diluted and Outstanding immediately prior to such Subsequent
Issuance multiplied by the Exercise Price as of the date of such Subsequent
Issuance, plus (y) the aggregate consideration (determined in accordance with
the provisions of SECTION 4(F) hereof), if any, received by the Company in
connection with such Subsequent Issuance, by (B) the total number of shares of
Common Stock Fully Diluted and Outstanding immediately after such Subsequent
Issuance.
The provisions of this SECTION 4(B) shall not apply to (i) any issuance of
Common Stock for which an adjustment is provided for under SECTION 4(A) or (ii)
any issuance or sale of Common Stock pursuant to the exercise of any Stock
Purchase Rights or Convertible Securities to the extent that an adjustment shall
have been previously made hereunder in connection with the issuance of such
Stock Purchase Rights or Convertible Securities pursuant to the provisions of
SECTION 4(C) hereof.
(c) ISSUANCES OF STOCK PURCHASE RIGHTS AND CONVERTIBLE SECURITIES.
(i) In the event that the Company shall at any time issue, sell
or grant any Stock Purchase Rights to any Person in a
Subsequent Issuance, then, for the purpose of SECTION 4(B)
above, the Company shall ------------ be deemed to have
issued at that time a number of shares of Common Stock equal
to the maximum number of shares of Common Stock that are or
may become issuable upon exercise of such Stock Purchase
Rights (or upon exercise of any Convertible Securities
issuable upon exercise of such Stock Purchase Rights) (other
than pursuant to any provision contained therein designed to
protect against dilution) for a consideration per share
equal to (i) the aggregate consideration per share
(determined in accordance with the provisions of SECTION
4(F) herein) received by the Company in connection with the
issuance, sale or grant of such Stock Purchase Rights plus
(ii) the minimum amount of such consideration per share
receivable by the Company in connection with the exercise of
such Stock Purchase Rights (and the exercise of any
Convertible Securities issuable upon exercise of such Stock
Purchase Rights).
(ii) In the event that the Company shall at any time issue or
sell any Convertible Securities to any Person in a
Subsequent Issuance, then, for the purposes of SECTION 4 (B)
above, the Company shall be deemed to have issued at that
time a number of shares of Common Stock equal to the maximum
number of shares of Common Stock that are or may become
issuable upon the exercise of the conversion or exchange
rights associated with such Convertible Securities (other
than pursuant to any provision contained therein designed to
protect against dilution) for a consideration per share
equal to (i) the aggregate consideration per share
(determined in accordance with the provisions of SECTION
4(F) hereof) received by the Company in connection with the
issuance or sale of such Convertible Securities plus (ii)
the minimum amount of such consideration per
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share receivable by the Company in connection with the
exercise of such conversion or exchange rights.
(iii) If, at any time after any adjustment of the Exercise Price
shall have been made hereunder as the result of any
issuance, sale or grant of any Stock Purchase Rights or
Convertible Securities, the maximum number of shares
issuable upon exercise of such Stock Purchase Rights or of
the rights of conversion or exchange associated with such
Convertible Securities shall increase, or the minimum amount
of consideration per share receivable in connection with
such exercise shall decrease, whether by operation of any
antidilution rights pertaining to such Stock Purchase Rights
or Convertible Securities, by agreement of the parties or
otherwise, the Exercise Price then in effect shall first be
readjusted to eliminate the effects of the original
issuance, sale or grant of such Stock Purchase Rights or
Convertible Securities on such Exercise Price and then
readjusted as if such Stock Purchase Rights or Convertible
Securities had been issued on the effective date of such
increase in number of shares or decrease in consideration,
but only if the effect of such two-step readjustment is to
reduce the Exercise Price below the Exercise Price in effect
immediately prior to such increase or decrease.
(iv) If, at any time after any adjustment of the Exercise Price
shall have been made hereunder as the result of any
issuance, sale or grant of any Stock Purchase Rights or
Convertible Securities, any of such Stock Purchase Rights or
the rights of conversion or exchange associated with such
Convertible Securities shall expire by their terms or any of
such Stock Purchase Rights or Convertible Securities shall
be repurchased by the Company or a Subsidiary thereof for a
consideration per underlying share of Common Stock not
exceeding the amount of such consideration received by the
Company in connection with the issuance, sale or grant of
such Stock Purchase Rights or Convertible Securities, the
Exercise Price then in effect shall forthwith be increased
to the Exercise Price that would have been in effect if such
expiring Stock Purchase Rights or rights of conversion or
exchange or such repurchased Stock Purchase Rights or
Convertible Securities had never been issued. Similarly, if
at any time after any such adjustment of the Exercise Price
shall have been made pursuant to SECTION 4(B)(I) any
additional consideration is received or becomes receivable
by the Company in connection with the issuance or exercise
of such Stock Purchase Rights or Convertible Securities or
(ii) there is a reduction in the conversion ratio applicable
to such Convertible Securities so that fewer shares of
Common Stock will be issuable upon the conversion or
exchange thereof or there is a decrease in the number of
shares of Common Stock issuable upon exercise of such Stock
Purchase Rights, the Exercise Price then in effect shall be
forthwith readjusted to the Exercise Price that would have
been in effect had such changes taken place at the time that
such Stock Purchase Rights or Convertible Securities were
initially issued, granted or sold. In no event shall any
readjustment under this SECTION 4(C)(4) affect the validity
of any Warrant Shares issued upon any exercise of this
Warrant prior to such readjustment, nor shall any such
readjustment have the effect of increasing
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the Exercise Price above the Exercise Price that would have
been in effect if the related Stock Purchase Rights or
Convertible Securities had never been issued.
(d) ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. Upon any adjustment of
the Exercise Price as provided in SECTION 4(A), (B) or (C) hereof, the Holder
hereof shall thereafter be entitled to purchase upon the exercise of this
Warrant, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest 1/100th of a share) obtained
by multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares of Common Stock issuable on the exercise hereof
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(e) REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is any change whatsoever in, or distribution with respect to, the Outstanding
Common Stock of the Company), or sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, (i) shares of common stock of the
successor or acquiring corporation or of the Company (if it is the surviving
corporation) or (ii) any cash, shares of stock or other securities or property
of any nature whatsoever (including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of the successor or acquiring
corporation ("OTHER PROPERTY") are to be received by or distributed to the
holders of Common Stock of the Company who are holders immediately prior to such
transaction, then the Holder of this Warrant shall have the right thereafter to
receive, upon exercise of this Warrant, the number of shares of common stock of
the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. In such event, the Aggregate
Exercise Price otherwise payable for the shares of Common Stock issuable upon
exercise of this Warrant shall be allocated among the shares of common stock and
Other Property receivable as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets in proportion to the respective
fair market values of such shares of common stock and Other Property as
determined in good faith by the Board of Directors of the Company. In case of
any such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Warrant to be performed and observed by
the Company and all the obligations and liabilities hereunder, subject to such
modifications as may be reasonably deemed appropriate (as determined by
resolution of the Board of Directors of the Company) in order to provide for
adjustments of any shares of the common stock of such successor or acquiring
corporation for which this Warrant thus becomes exercisable, which modifications
shall be as equivalent as practicable to the adjustments provided for in this
SECTION 4. For purposes of this SECTION 4(E), "common stock of the successor or
acquiring corporation" shall include stock of such corporation of any class that
is not preferred
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as to dividends or assets over any other class of stock of such corporation and
that is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities that are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this SECTION 4(E) shall similarly apply to successive reorganizations,
reclassification, mergers, consolidations or disposition of assets.
(f) DETERMINATION OF CONSIDERATION. For purposes of SECTIONS 4(B), (C)
and (D) herein, the consideration received and/or receivable by the Company in
connection with the issuance, sale, grant or exercise of additional shares of
Common Stock, Stock Purchase Rights or Convertible Securities, irrespective of
the accounting treatment of such consideration, shall be valued as follows:
(i) CASH PAYMENT. In the case of cash, the net amount received
by the Company, including any underwriting commissions or
concessions paid or allowed by the Company.
(ii) SECURITIES OR OTHER PROPERTY. In the case of securities or
other property, the fair market value thereof as of the date
immediately preceding such issuance, sale, grant or exercise
as determined in good faith by the Board of Directors of the
Company.
(iii) ALLOCATION RELATED TO COMMON STOCK. In the event shares of
Common Stock are issued or sold together with other
securities or other assets of the Company for a
consideration which covers both, the consideration received
(computed as provided in (i) and (ii) above) shall be
allocable to such shares of Common Stock as determined in
good faith by the Board of Directors of the Company.
(iv) ALLOCATION RELATED TO STOCK PURCHASE RIGHTS AND CONVERTIBLE
SECURITIES. In case any Stock Purchase Rights or Convertible
Securities shall be issued or sold together with other
securities or other assets of the Company, together
comprising one integral transaction in which no specific
consideration is allocated to the Stock Purchase Rights or
Convertible Securities, the consideration allocable to such
Stock Purchase Rights or Convertible Securities shall be
determined in good faith by the Board of Directors of the
Company.
(v) DIVIDENDS IN SECURITIES. In case the Company shall declare a
dividend or make any other distribution upon any stock of
the Company payable in either case in Common Stock or
Convertible Securities, such Common Stock or Convertible
Securities, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued
or sold without consideration.
(vi) MERGER, CONSOLIDATION OR SALE OF ASSETS. In case any shares
of Common Stock, Stock Purchase Rights or Convertible
Securities shall be issued in connection with any merger or
consolidation in which the Company is the surviving
11
corporation, the amount of consideration therefor shall be
deemed to be the fair value of such portion of the assets
and business of the non-surviving corporation attributable
to such Common Stock, Stock Purchase Rights or Convertible
Securities, as is determined in good faith by the Company's
Board of Directors.
(vii) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board
of Directors of the Company shall be required to make a
determination in good faith of the fair value of any item
under this Section 4, such determination may be challenged
in good faith by the Required Holders, and any dispute shall
be resolved by an investment banking or appraisal firm of
recognized national standing selected by the Company and
acceptable to the Required Holders and whose decision shall
be binding on the Company and all Holders of Warrants. The
fees and expenses of such firm shall be paid by the Company
unless such firm's determination of fair value is within 10%
of the determination challenged by the Required Holders, in
which case such fees and expenses will be paid by the
Holders PRO RATA based upon the number of Warrant Shares for
which the Warrants held by each Holder are exercisable.
(g) OTHER DILUTIVE EVENTS. In case any event shall occur as to which
the other provisions of this SECTION 4 are not strictly applicable but as to
which the failure to make any adjustment would not fairly protect the purchase
rights represented by this Warrant in accordance with the essential intent and
principles hereof, then the Board of Directors of the Company shall determine in
good faith and in consultation with and subject to the reasonable agreement of
the Required Holders, and the Company shall make, an appropriate adjustment to
the number of Warrant Shares and/or the Exercise Price so as to so protect the
rights of the Holders hereunder.
(h) OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the adjustments provided for
pursuant to this SECTION 4:
(i) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this SECTION 4 shall be made whenever and as often as any
specified event requiring such an adjustment shall occur.
For the purpose of any such adjustment, any specified event
shall be deemed to have occurred at the close of business on
the date of its occurrence.
(ii) RECORD DATE. In case the Company shall take a record of the
holders of the Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable
in Common Stock, Convertible Securities or Stock Purchase
Rights or (ii) to subscribe for or purchase Common Stock,
Convertible Securities or Stock Purchase Rights, then all
references in this SECTION 4 to the date of the issuance or
sale of such shares of Common Stock, Convertible Securities
or Stock Purchase Rights shall be deemed to be references to
such record date.
(iii) FRACTIONAL INTERESTS. In computing adjustments under this
SECTION 4, fractional interests in Common Stock shall be
taken into account to the nearest 1/100th of a share.
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(iv) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or distribution to
which the provisions of Section 4(a) would apply, but shall,
thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment
shall be required by reason of the taking of such record and
any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(v) MAXIMUM EXERCISE PRICE. Except as provided in SECTION 4(A)
above, at no time shall the Exercise Price per share of
Common Stock be adjusted to exceed the amount set forth in
the first paragraph of the preamble of this Warrant.
(vi) CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any
transaction that, by reason of any adjustment under SECTION
4(A), (B) or (C) above, would cause the Exercise Price to be
less than the par value of the Common Stock, if any, unless
the Company first reduces the par value of the Common Stock
to be less than the Exercise Price that would result from
such transaction.
(vii) CERTAIN BUSINESS COMBINATIONS. The Company will not merge
or consolidate with or into, or sell, transfer or lease all
or substantially all of its property to, any other entity
unless the successor or purchasing entity, as the case may
be (if not the Company), shall expressly agree to provide to
the Holder the securities, cash or property required by
SECTION 4(E) hereof upon the exercise or exchange of this
Warrant and expressly assumes, by supplemental agreement,
the due and punctual performance and observance of each and
every covenant and condition of this Warrant to be performed
and observed by the Company; PROVIDED, HOWEVER, that the
initial obligation of such successor with respect to the
exercise or exchange of this Warrant shall be only as set
forth in SECTION 4(E).
(viii) NOTICE OF ADJUSTMENTS. Whenever the number of shares of
Common Stock for which this Warrant is exercisable or the
Exercise Price shall be adjusted pursuant to this SECTION 4,
the Company shall forthwith prepare a certificate to be
executed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was
calculated, specifying the number of shares of Common Stock
for which this Warrant is exercisable and (if such
adjustment was made pursuant to SECTION 4(E)) describing the
number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any
related change in the Exercise Price, after giving effect to
such adjustment or change. The Company shall keep at its
principal office or at the Designated Office, if different,
copies of all such certificates and cause the same to be
available for inspection at said office during normal
business hours by any Holder or any prospective transferee
of a Warrant designated by a Holder thereof.
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(ix) INDEPENDENT APPLICATION. Except as otherwise provided
herein, all subsections of this SECTION 4 are intended to
operate independently of one another (but without
duplication). If an event occurs that requires the
application of more than one subsection, all applicable
subsections shall be given independent effect without
duplication.
SECTION 5. NOTE PURCHASE AGREEMENT COVENANTS. For so long as this
Warrant or any Warrant Shares that remain Registrable Securities are
outstanding, the covenants contained in Sections 8.1, 8.3, 8.6 and 8.7 of the
Note Purchase Agreement shall apply for the benefit of the Holder as if such
Holder were a holder of Notes, whether or not the Note Purchase Agreement
remains in full force and effect, and such covenants are incorporated herein by
reference. Notwithstanding the preceding, the covenant contained in Section 8.3
of the Note Purchase Agreement shall not apply to the extent that it would
prohibit the termination of the existence of the Company in connection with the
Company's (i) merging into or consolidating with a third party or (ii) voluntary
and intentional liquidation or dissolution. On reasonable request by the Company
in connection with the delivery to the Holder of information required to be
delivered to the Holder under this Warrant or requested by the Holder, the
Holder will enter into an agreement with the Company embodying the provisions of
Section 19 of the Note Purchase Agreement.
SECTION 6. SPECIAL DISTRIBUTION. If at any time the Company makes a
distribution to the holders of Common Stock of any cash, capital stock or other
property (other than pursuant to the Company's Rights Agreement dated as of
December 22, 1997, as amended), then the Company shall distribute to the Holder
the amount and type of cash, capital stock or other property that would have
been distributed to the Holder had the portion of this Warrant that had not yet
been exercised on the record date for such distribution been so exercised and
the applicable Warrant Shares had been issued and outstanding on such record
date. Notwithstanding the foregoing, if the Company makes such a distribution to
the holders of Common Stock during any time that any portion of the Warrant
Shares are subject to the Clawback, the Company shall deposit such property
otherwise distributable to the Holder pursuant to this Section 6 with respect to
the number of Warrant Shares then subject to the Clawback in escrow with an
independent third party acceptable to the Required Holders and pursuant to an
agreement in form and substance acceptable to the Required Holders.
SECTION 7. NO IMPAIRMENT; NOTICE OF EXPIRATION DATE.
(a) The Company shall not by any action, including, without limitation,
amending its charter documents or through any reorganization, reclassification,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other similar voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company shall take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant,
14
free and clear of all Liens, and shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction over it as may be necessary to enable the Company to perform its
obligations under this Warrant.
(b) The Company shall deliver to the Holder on or before six months
prior to the tenth anniversary of the Issue Date, but no earlier than nine
months prior to the tenth anniversary of the Issue Date, advance notice of such
tenth anniversary and of the anticipated Expiration Date. If the Company fails
to fulfill in a timely manner the notice obligation set forth in the prior
sentence, it shall provide such notice as soon as possible thereafter.
SECTION 8. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY. From and after the Issue Date,
the Company shall at all times reserve and keep available for issuance upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. If any shares of Common Stock required to be reserved for issuance upon
exercise of this Warrant require registration or qualification with any
governmental authority under any federal or state law (other than under the
Securities Act or any state securities law) before such shares may be so issued,
the Company will in good faith and as expeditiously as possible and at its
expense endeavor to cause such shares to be duly registered or qualified, as the
case may be. Before taking any action that would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction over such action.
SECTION 9. NOTICE OF CORPORATE ACTIONS; TAKING OF RECORD; TRANSFER
BOOKS
(a) In case:
(i) the Company shall take a record of the holders of Common
Stock for the purpose of entitling them to receive a
dividend payable in, or other distribution of, additional
shares of Common Stock; or
(ii) the Company shall grant to the holders of its Common Stock
rights or warrants to subscribe for or purchase any shares
of capital stock of any class; or
(iii) of any reclassification of the Common Stock (other than a
subdivision or combination of the outstanding shares of
Common Stock), or of any consolidation, merger or share
exchange to which the Company is a party and for which
approval of any stockholders of the Company is required, or
of the sale or transfer of all or substantially all of the
assets of the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
15
(v) the Company or any Subsidiary shall commence a tender offer
for all or a portion of the outstanding shares of Common
Stock (or shall amend any such tender offer to change the
maximum number of shares being sought or the amount or type
of consideration being offered therefor);
then the Company will cause to be mailed to the Holder at least 25 days prior to
the applicable record, effective or expiration date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or granting of rights or warrants, or, if a record
is not to be taken, the date as of which the holders of Common Stock of record
who will be entitled to such dividend, distribution, rights or warrants are to
be determined, (y) the date on which such reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up, or (z) the date on which such tender
offer commenced, the date on which such tender offer is scheduled to expire
unless extended, the consideration offered and the other material terms thereof
(or the material terms of the amendment thereto). Such notice shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the Exercise Price and the number and kind
or class of shares or other securities or property which shall be deliverable or
purchasable upon the occurrence of such action or deliverable upon exercise of
the Warrants. Neither the failure to give any such notice nor any defect therein
shall affect the legality or validity of any action described in clauses (i)
through (v) of this SECTION 9(A).
(b) The Company shall not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
warrant transfer books so as to result in preventing or delaying the exercise or
transfer of this Warrant.
SECTION 10. LOSS OR MUTILATION. Upon receipt by the Company from the
Holder of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of this Warrant and an indemnity
reasonably satisfactory to it (it being understood that the written
indemnification agreement or affidavit of loss of Pegasus shall be a sufficient
indemnity) and, in case of mutilation, upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant of like tenor
to the Holder; provided, however, in the case of mutilation, no indemnity shall
be required if this Warrant in identifiable form is surrendered to the Company
for cancellation.
SECTION 11. TRANSFER. Subject to compliance with the Securities Act
and the applicable rules and regulations promulgated thereunder and the receipt
by the Company of the applicable transfer tax, this Warrant and all rights
hereunder shall be transferable in whole or in part; PROVIDED, HOWEVER, that
prior to July 26, 2004 (the expiration of the 24 Month Clawback), this Warrant
or any portion hereof may not be transferred to a third party unless
simultaneously therewith all or a pro rata portion, as the case may be, of the
Springing Warrant is also transferred to such third party. Any such transfer
shall be made at the Designated Office, by the
16
Holder in person or by its duly authorized attorney, upon surrender of this
Warrant together with an assignment, in the form of ANNEX B hereto, properly
endorsed, and promptly thereafter a new Warrant shall be issued and delivered by
the Company, registered in the name of the assignee. Until registration of
transfer hereof on the books of the Company, the Company may treat the
registered Holder of this Warrant as the owner hereof for all purposes.
If, at the time of any transfer or exchange (other than a transfer or
exchange not involving a change in the beneficial ownership of this Warrant or
Warrant Shares) of this Warrant or Warrant Shares, this Warrant or Warrant
Shares shall not be registered under the Securities Act, the Company may
require, as a condition of allowing such transfer or exchange and at the expense
of the Company, that the Holder or transferee of this Warrant or Warrant Shares,
as the case may be, furnish to the Company an opinion of counsel reasonably
acceptable to the Company or a "no action" or similar letter from the Securities
and Exchange Commission to the effect that such transfer or exchange may be
effected without registration under the Securities Act. In lieu of such opinion
the Company may require a certification and/or other information reasonably
satisfactory to it. The certificates evidencing the Warrant Shares issued on the
exercise of this Warrant shall, if such Warrant Shares are being sold or
transferred without registration under the Securities Act, bear a legend to the
effect that the Warrant Shares evidenced by such certificates have not been so
registered.
SECTION 12. OFFICE OF THE COMPANY. As long as the Warrant remains
outstanding, the Company's office at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ shall be the designated office (the "Designated Office"), where the
Warrant may be presented for exercise or transfer as provided herein, provided
that the Company may from time to time change the Designated Office to another
office of the Company or its agent within the United States by notice given to
the Holder at least ten (10) Business Days prior to the effective date of such
change.
SECTION 13. NONWAIVER. No course of dealing or any delay or failure to
exercise any right hereunder on the part of the Holder shall operate as a waiver
of such right or otherwise prejudice the rights, powers or remedies thereof.
SECTION 14. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or communication hereunder to be made pursuant
to the provisions of this Warrant shall be sufficiently given or made if in
writing and either delivered in person with receipt acknowledged or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
Federal Express or another overnight courier service, addressed as follows:
(a) if to the Holder or holder of Warrant Shares issued upon the
exercise hereof, at its last known address appearing on the books of the
Company maintained for such purpose;
(b) if to the Company, at its Designated Office;
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other
17
communication hereunder shall be deemed to have been duly given or served on the
date on which personally delivered, with receipt acknowledged, or three (3)
Business Days after the same shall have been deposited in the United States
mail, or one (1) Business Day after the same shall have been delivered to
Federal Express or another overnight courier service.
SECTION 15. LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of such Holder to pay the Exercise Price for
any Warrant Shares other than pursuant to an exercise of this Warrant or any
liability as a stockholder of the Company, whether such liability is asserted by
the Company or by stockholders or creditors of the Company.
SECTION 16. REMEDIES. The Holder, in addition to being entitled to
exercise its rights granted by law, including recovery of damages, shall be
entitled to specific performance of its rights provided under this Warrant. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant and
hereby agrees, in an action for specific performance, to waive the defense that
a remedy at law would be adequate.
SECTION 17. SUCCESSORS AND ASSIGNS. Subject to the provisions of
SECTION11, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the permitted
successors and assigns of the Holder hereof. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and to the extent applicable, all holders of shares of Warrant Shares issued
upon the exercise hereof (including transferees), and shall be enforceable by
any such holder.
SECTION 18. REGISTRATION RIGHTS. The Warrant Shares shall be defined
as "Registrable Securities" under the Registration Rights Agreement and any
holder of Warrant Shares shall be deemed to be a party to such Registration
Rights Agreement as a holder of "Registrable Securities" thereunder subject to
compliance with SECTION 10 of the Registration Rights Agreement.
SECTION 19. ALLOCATION OF PURCHASE PRICE. The Company and the Holder
hereby acknowledge that for the purposes of Section 1273(c)(2) of the Code, this
Warrant is a part of an investment unit with the loans being made by the Holder
(or one or more Affiliates thereof) to the Company under the Note Purchase
Agreement, and that the allocated purchase price of the Warrant for such
purposes is $100. The Company and the Holder agree to use the foregoing
allocated purchase price as the purchase price of the Warrant for all income tax
purposes.
SECTION 20. AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of both the Company and the
Required Holders, which modification, amendment or waiver shall be binding on
all Holders of this Warrant.
SECTION 21. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be
18
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Warrant.
SECTION 22. NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle
the Holder to any of the rights of a stockholder of the Company.
SECTION 23. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
SECTION 24. GOVERNING LAW; JURISDICTION. IN ALL RESPECTS, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS WARRANT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE. THE COMPANY HEREBY CONSENTS AND AGREES THAT
THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY
AND THE HOLDER OF THIS WARRANT PERTAINING TO THIS WARRANT OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer.
CANNONDALE CORPORATION
(a Delaware corporation)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
20
ANNEX A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned Holder of this Warrant irrevocably exercises
this Warrant for the purchase of ______ shares Common Stock of Cannondale
Corporation and herewith makes payment therefor, all at the price and on the
terms and conditions specified in this Warrant and requests that certificates
for the shares of Common Stock hereby purchased (and any securities or other
property issuable upon such exercise) be issued in the name of and delivered to
______________ whose address is _________________________________ and, if such
shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and date
for the balance of the shares of Common Stock issuable hereunder be delivered to
the undersigned.
-----------------------------------
(Name of Registered Owner)
-----------------------------------
(Signature of Registered Owner)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
21
ANNEX B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
No. of Shares of
Name and Address of Assignee Common Stock
and does hereby irrevocably constitute and appoint _____________________
attorney-in-fact to register such transfer onto the books of Cannondale
Corporation maintained for the purpose, with full power of substitution in the
premises.
Dated: ________________
Name: ____________________________
Signature: ________________________
Witness: _________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
22