EXHIBIT 4.1
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WARRANT AGREEMENT
BETWEEN
STREAMLOGIC CORPORATION
AND
▇▇▇▇▇ FARGO BANK, N.A.
AS WARRANT AGENT
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DATED AS OF NOVEMBER _, 1996
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TABLE OF CONTENTS
PAGE
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Section 1. Definitions............................................... 1
Section 2. Issuance; Form of Warrant; Execution; Registration........ 3
2.1 Issuance.................................................. 3
2.2 Form of Warrant; Execution of Warrants.................... 3
2.3 Registration.............................................. 3
2.4 Countersignature of Warrants.............................. 4
Section 3. Transfer and Exchange of Warrants......................... 4
Section 4. Term of Warrants; Exercise of Warrants; Adjustments of
Exercise Price; Compliance with Government Regulations;
Redemption................................................ 4
4.1 Term of Warrants.......................................... 4
4.2 Exercise of Warrants...................................... 5
4.3 Reset of Exercise Price and Early Termination of Exercise
Period.................................................... 5
4.4 Compliance with Government Regulations: Registration Under
the Securities Act........................................ 6
Section 5. Payment of Taxes and Fees................................. 7
Section 6. Mutilated or Lost Warrant Certificates.................... 7
Section 7. Reservation of Warrant Shares............................. 7
Section 8. Adjustment of Exercise Price; Number of Warrant Shares and
Shares of Capital Stock Warrants Are Exercisable Into..... 7
8.1 Pricing and Share Adjustments............................. 7
8.2 Notice of Adjustment...................................... 12
8.3 Preservation of Purchase Rights upon Merger or
Consolidation............................................. 12
Section 9. Fractional Interests...................................... 12
Section 10. No Rights as Stockholders; Notices to Holders............. 13
Section 11. By the Company............................................ 13
11.1 Legal Status; Qualification............................... 13
11.2 No Conflicts.............................................. 14
11.3 Binding and Enforceable................................... 14
Section 12. Payments in U.S. Currency................................. 14
Section 13. Merger or Consolidation or Change of Name of Warrant
Agent..................................................... 14
Section 14. Appointment of Warrant Agent.............................. 14
14.1 Obligations of the Warrant Agent.......................... 15
Section 15. Change of Warrant Agent................................... 16
Section 16. Notices................................................... 17
Section 17. Cancellation of Warrants.................................. 17
Section 18. Supplements and Amendments................................ 17
Section 19. Successors................................................ 17
Section 20. Applicable Law............................................ 17
Section 21. Benefits of this Agreement................................ 18
Section 22. Records................................................... 18
Section 23. Counterparts.............................................. 18
Section 24. Captions.................................................. 18
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WARRANT AGREEMENT, dated as of November _, 1996, between STREAMLOGIC
CORPORATION, a Delaware corporation (the "Company"), and ▇▇▇▇▇ FARGO BANK,
N.A., a national banking association, as Warrant Agent (together with any
successors and assigns, the "Warrant Agent").
WITNESSETH:
WHEREAS, StreamLogic Corporation is the issuer of 6% Convertible
Subordinated Debentures Due 2012 in the original face amount of $75,000,000
(collectively, the "Debentures");
WHEREAS, the Company has made a tender offer (the "Tender Offer") to all
holders of the Debentures pursuant to which the Company offered to exchange
all of the Debentures for cash, increasing rate unsecured promissory notes,
common stock of the Company and warrants to purchase common stock of the
Company (the "Warrants"), as more fully described below;
WHEREAS, the Company desires to issue the Warrants, each of which entitles
the holder thereof to purchase one share of the Company's common stock (each
of said shares of common stock deliverable upon exercise of the Warrants, a
"Warrant Share"); and
WHEREAS, the Company wishes the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act in connection with the
issuance, division, transfer, exchange and exercise of Warrants;
NOW, THEREFORE, in consideration of the foregoing, to implement the terms of
the Tender Offer, and for the purpose of defining the terms and provisions of
the Warrants and the respective rights and obligations thereunder of the
Company and the registered owners of the Warrants and any security into which
they may be exchanged (the "Holders"), the Company and the Warrant Agent
hereby agree as follows:
SECTION 1. DEFINITIONS.
The following terms, as used herein, have the following meanings (all terms
used herein in the singular to have the correlative meanings when used in the
plural and vice versa):
1.1 "Agreement" means this Warrant Agreement, as the same may be amended,
modified or supplemented from time to time.
1.2 "Business Day" means a day other than (a) a Saturday or Sunday, (b) any
day on which banking institutions located in the City of Los Angeles,
California, are required or authorized by law or by local proclamation to
close or (c) any day on which shares are not traded on the NASDAQ National
Market System.
1.3 "Common Stock" shall have the meaning ascribed to such term in Section
8.1(i).
1.4 "Common Stock Price" on any date of determination shall mean the last
reported sale price regular way of the shares of Common Stock on the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading, or if such shares are not listed or admitted to trading
on any national securities exchange, on the Nasdaq National Market System (or,
if no reported sale takes place on such day, the average of the closing bid
and asked prices on such day on such exchange or the Nasdaq National Market
System). If the shares of Common Stock are not listed or admitted to trading
on any national securities exchange or authorized for quotation on the Nasdaq
National Market System, "Common Stock Price" shall mean the average of the
closing bid and asked quotations as reported by The Nasdaq Small Cap Market
for such day, or if the shares of Common Stock are not authorized for
quotation on The Nasdaq Stock Market, the average of the closing bid and asked
quotations as furnished by two member firms of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose, or if no such quotations are available, as determined in good faith
by the disinterested non-employee members of the Board of Directors of the
Company. In determining the Common Stock Price, the Warrant Agent shall be
entitled to rely on such prices
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as may be published in The Wall Street Journal, The New York Times or any
other financial publication of like stature or as may be provided to the
Warrant Agent for such purpose by an authorized employee or agent of the
Company.
1.5 "Convertible Securities" has the meaning ascribed to such term in
Section 8.1(d) hereof.
1.6 "Early Expiration Date" has the meaning ascribed to such term in Section
4.3(b).
1.7 "Early Expiration Election" has the meaning ascribed to such term in
Section 4.3(b).
1.8 "Early Expiration Trigger Date" has the meaning ascribed to such term in
Section 4.3(b).
1.9 "Exchange Date" means [insert the date on which the Company exchanges
Debentures tendered to the Company pursuant to the Tender Offer for cash,
Common Stock, promissory notes and Warrants].
1.10 "Exercise Period" has the meaning ascribed to such term in Section 4.1
hereof.
1.11 "Exercise Price" means $3.60 as adjusted from time to time pursuant to
Section 4.3 and Section 8 hereof.
1.12 "Five-Day Average Price" as of any date of determination shall mean the
average of the Common Stock Prices on each of the immediately preceding five
consecutive Trading Days, after exclusion of the highest and lowest such
prices; provided, however, that if such highest or lowest prices occur on more
than one such Trading Day, such price shall be excluded only once in
calculating such average, so that such average always is based on the Common
Stock Prices on three Trading Days.
1.13 "Holder" has the meaning ascribed to such term in the preamble hereto.
1.14 "NASD" has the meaning ascribed to such term in Section 4.2 hereof.
1.15 "No-Exercise Period" shall mean any period of up to 90 consecutive days
designated by the Company as a period during which Warrants may not be
exercised. The Company shall designate the commencement of no more than one
No-Exercise Period in any twelve-month period. A No-Exercise Period shall
commence on such date as is designated by the Company in a written notice
(which may be by facsimile transmission) of the commencement of such No-
Exercise Period delivered to the Warrant Agent no later than the close of
business of the Warrant Agent on the Business Day immediately preceding the
first day of such No-Exercise Period. Such No-Exercise Period shall terminate
on such date as is designated by the Company in a written notice (which may be
by facsimile transmission) of the termination of such No-Exercise Period
delivered to the Warrant Agent no later than the end of Business on the
Business Day immediately preceding such date of termination; provided,
however, that such No-Exercise Period shall terminate automatically and
without any action on the part of the Company at the close of business on the
90th day thereof, should the Company not designate an earlier termination
date. The Company shall take all reasonable measures and efforts to limit the
length of each No-Exercise Period, consistent with the reason for the No-
Exercise Period and shall terminate each No-Exercise Period as quickly as
reasonably possible, consistent with the reason for the No-Exercise Period.
1.16 "Person" means a natural person, a corporation, a partnership, a trust,
a joint venture, authority or any other entity or organization.
1.17 "Price Per Share" has the meaning ascribed to such term in Section
8.1(e)(ii) hereof.
1.18 "Reset Date" has the meaning ascribed to such term in Section 4.3(a).
1.19 "Reset Election" has the meaning ascribed to such term in Section
4.3(a).
1.20 "Reset Price" has the meaning ascribed to such term in Section 4.3(a).
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1.21 "Rights" has the meaning ascribed to such term in Section 8.1(b)
hereof.
1.22 "Securities Act" has the meaning ascribed to such term in Section 4.4.
1.23 "SEC" means the United States Securities and Exchange Commission, or
any successor agency or authority thereto.
1.24 "Subsidiary" has the meaning ascribed to such term in Section 8.1(c)
hereof.
1.25 "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for trading, or if such shares are not so listed or
admitted to trading on any national securities exchange, a day on which The
Nasdaq Stock Market is open for trading.
1.26 "Transfer Agent" has the meaning ascribed to such term in Section 7
hereof.
1.27 "Twenty-Day Average Price" as of any date of determination shall mean
the average of the Common Stock Prices on each of the immediately preceding
twenty consecutive Trading Days, after the exclusion of the highest and lowest
such prices; provided, however, that if such highest or lowest prices occur on
more than one such Trading Day, such price shall be excluded only once in
calculating such average, so that such average always is based on the Common
Stock Prices on 18 Trading Days.
1.28 "Warrant" has the meaning ascribed to such term in the preamble hereto.
1.29 "Warrant Certificate" has the meaning ascribed to such term in Section
2.2 hereof.
1.30 "Warrant Register" has the meaning ascribed to such term in Section 2.3
hereof.
1.31 "Warrant Share" has the meaning ascribed to such term in the preamble
hereto.
SECTION 2. ISSUANCE; FORM OF WARRANT; EXECUTION; REGISTRATION.
2.1 Issuance. On the Exchange Date the Company shall issue to each holder of
Debentures that tenders any Debentures to the Company pursuant to the Tender
Offer Warrants to purchase 40 shares of Common Stock per $1,000 face amount of
the Debentures, subject to adjustment pursuant to Section 8 hereof. The
Company shall cause the Warrant Agent to issue to each such holder of
Debentures one or more Warrant Certificates (defined below) representing the
Warrants issued by the Company.
2.2 Form of Warrant; Execution of Warrants. The certificates evidencing the
Warrants (the "Warrant Certificates") shall be in registered form only and
shall be in the form set forth as Exhibit A hereto. The Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board,
President or one of its Vice Presidents. The signature of any such officer on
the Warrant Certificates may be manual or by facsimile. Any Warrant
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate. Each Warrant
Certificate shall be dated the date it is countersigned by the Warrant Agent
pursuant to Section 2.4 hereof.
2.3 Registration. The Warrant Certificates shall be numbered and shall be
registered on the books of the Company maintained at the principal office of
the Warrant Agent initially in Los Angeles (or such other place in the
continental United States as the Warrant Agent shall from time to time notify
the Company and the Holders in writing) (the "Warrant Register"). The Company
and the Warrant Agent shall be entitled to treat the registered owner of any
Warrant as the owner in fact thereof for all purposes and shall not be bound
to recognize any equitable or other claim to or interest in such Warrant on
the part of any other person; provided that the Company and the Warrant Agent
shall follow the directions and instructions of a financial advisor of any
holder
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of Warrants which has been designated as such by such holder of Warrants in a
writing delivered to the Warrant Agent in a form reasonably satisfactory to
the Warrant Agent.
2.4 Countersignature of Warrants. The Warrant Certificates shall be
countersigned by the Warrant Agent and shall not be valid for any purpose
unless so countersigned. Warrant Certificates may be countersigned, however,
by the Warrant Agent and may be delivered by the Warrant Agent notwithstanding
that the persons whose manual or facsimile signatures appear thereon as proper
officers of the Company shall have ceased to be such officers at the time of
such countersignature, issuance or delivery. The Warrant Agent shall, upon
written instructions of the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company, countersign, issue
and deliver Warrant Certificates entitling the Holders thereof to purchase not
more than an aggregate of 3,000,000 Warrant Shares (subject to adjustment
pursuant to Section 8 hereof) and shall countersign, issue and deliver Warrant
Certificates as otherwise provided in this Agreement.
SECTION 3. TRANSFER AND EXCHANGE OF WARRANTS.
Subject to the terms hereof, the Warrant Agent shall countersign, register
in the Warrant Register and deliver Warrants hereunder in accordance with the
written instructions of the Company. The Warrant Agent shall thereafter from
time to time register the transfer of any outstanding Warrants upon the
records to be maintained by it for that purpose, upon surrender of the Warrant
Certificate or Certificates evidencing such Warrants duly endorsed or
accompanied (if so required by it) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Warrant Agent, duly executed
by the registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Subject to the terms
of this Agreement, each Warrant Certificate may be exchanged for another
Warrant Certificate or Certificates entitling the Holder thereof to purchase a
like aggregate number of Warrant Shares as the Warrant Certificate or
Certificates surrendered then entitles such Holder to purchase. Any Holder
desiring to exchange a Warrant Certificate or Certificates shall make such
request in writing delivered to the Warrant Agent, and shall surrender the
Warrant Certificate or Certificates to be so exchanged, duly endorsed or
accompanied (if so required by the Warrant Agent) by a written instrument or
instruments of transfer in form reasonably satisfactory to the Warrant Agent.
Upon registration of transfer, the Company shall issue and the Warrant Agent
shall countersign and deliver by certified mail a new Warrant Certificate or
Certificates to the persons entitled thereto.
No service charge to any Holder shall be made for any exchange or
registration of transfer of a Warrant certificate or of Warrant Certificates,
but the Company may require payment of a sum sufficient to cover any stamp tax
or other tax or other governmental charge that is imposed in connection with
any such exchange or registration of transfer pursuant to Section 5 hereof.
By accepting the initial delivery, transfer or exchange of Warrants, each
Holder shall be deemed to agree to the terms of this Agreement as it may be in
effect from time to time, including any amendments or supplements duly adopted
in accordance with Section 18 hereof.
SECTION 4. TERM OF WARRANTS; EXERCISE OF WARRANTS; ADJUSTMENTS OF EXERCISE
PRICE; COMPLIANCE WITH GOVERNMENT REGULATIONS; REDEMPTION.
4.1 Term of Warrants. Subject to the terms of this Agreement, each Holder
shall have the right, which may be exercised at any time from 9:00 a.m., Los
Angeles time, on the day following the Exchange Date to 5:00 p.m., Los Angeles
time, on the day preceding the fifth anniversary of the Exchange Date (the
"Exercise Period"), to receive from the Company the number of Warrant Shares
which the Holder may at the time be entitled to receive upon exercise of such
Warrants and payment of the Exercise Price then in effect for such Warrant
Shares. If the Company has designated one or more No-Exercise Periods, the
Exercise Period shall be extended by a number of days equal to the aggregate
number of days during which such No-Exercise Period or Periods was or were in
effect. The foregoing notwithstanding, the Exercise Period may terminated at
an earlier date, as provided in Section 4.3(b) hereof. The Warrant Shares
issued to a Holder upon exercise of its Warrants shall be duly authorized,
validly issued, fully paid, nonassessable and shall not have been issued in
violation of or subject to
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any preemptive rights. Each Warrant not exercised prior to the expiration of
the Exercise Period shall become void, and all rights thereunder and all
rights in respect thereof under this Agreement shall cease as of the
expiration of the Exercise Period for such Warrant. No adjustments as to
dividends will be made upon exercise of the Warrants for dividends paid prior
to exercise of the Warrants.
4.2 Exercise of Warrants. During the Exercise Period, each Holder may,
subject to this Agreement, exercise from time to time some or all of the
Warrants evidenced by its Warrant Certificate(s) by (i) surrendering to the
Company at the principal office of the Warrant Agent such Warrant
Certificate(s) with the form of election to purchase on the reverse thereof
duly filled in and signed, which signature shall be guaranteed by a bank or
trust company having an office or correspondent in the United States or a
broker or dealer which is a member of a registered securities exchange or the
National Association of Securities Dealers, Inc. (the "NASD"), and (ii) paying
to the Warrant Agent for the account of the Company the Exercise Price, for
the number of Warrant Shares in respect of which such Warrants are exercised.
Warrants shall be deemed exercised on the date such Warrant Certificate(s) are
surrendered to the Warrant Agent, tender of payment of the Exercise Price is
made, and any applicable No-Exercise Period has terminated. Payment of the
aggregate Exercise Price shall be made in cash by wire transfer of immediately
available funds to the Warrant Agent for the account of the Company or by
certified or official bank check or checks payable to the order of the Company
or by any combination thereof.
Upon the exercise of any Warrants in accordance with this Agreement, the
Company shall issue and cause to be delivered by the Warrant Agent with all
reasonable dispatch, to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate or certificates for
the number of full Warrant Shares issuable upon the exercise of such Warrants
and shall take such other actions at its sole expense as are necessary to
complete the exercise of the Warrants (including, without limitation, payment
of any cash with respect to fractional interests required under Section 9
hereof). The Warrant Agent shall have no responsibility or liability for such
issuance or the determination of the number of Warrant Shares issuable upon
such exercise. The certificate or certificates representing such Warrant
Shares shall be deemed to have been issued and any person so designated to be
named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date the Warrants are exercised hereunder.
In the event that less than all of the Warrants evidenced by a Warrant
Certificate are exercised, the Holder thereof shall be entitled to receive a
new Warrant Certificate or Certificates as specified by such Holder evidencing
the remaining Warrant or Warrants, and the Warrant Agent is hereby irrevocably
authorized by the Company to countersign, issue and deliver the required new
Warrant Certificate or Certificates evidencing such remaining Warrant or
Warrants pursuant to the provisions of this Section 4.2 and of Section 3
hereof. The Company, whenever required by the Warrant Agent, will supply the
Warrant Agent with Warrant Certificates duly executed on behalf of the Company
for such purpose.
Upon delivery of the Warrant Shares issuable upon exercise in accordance
herewith and of any required new Warrant Certificates, the Warrant Agent shall
cancel the Warrant Certificates surrendered upon exercise. Such canceled
Warrant Certificates shall then be disposed of by the Warrant Agent in a
manner permitted by applicable laws and satisfactory to the Company in
accordance with its written instructions to the Warrant Agent. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all amounts received by the Warrant Agent
upon exercise of such Warrants.
Each Holder shall be entitled to enforce all rights relating to Warrants
owned by such Holder under the terms of this Agreement.
4.3 Reset of Exercise Price and Early Termination of Exercise Period.
(a) On any date (a "Reset Date") prior to the first anniversary of the
Exchange Date that the Five-Day Average Price is less than $1.56 (after
giving effect to any adjustments pursuant to Section 8 hereof), each Holder
of Warrants shall have the right to elect (a "Reset Election") to adjust
the Exercise Price of such Holder's Warrants to an amount equal to 150% of
such Five-Day Average Price (the "Reset Price");
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provided, however, that the Exercise Price of any Warrant may be adjusted
only once pursuant to this Section 4.3(a). To elect a Reset Election with
respect to a Warrant, a Holder shall surrender to the Company at the
principal office of the Warrant Agent the Warrant Certificate representing
such Warrant, together with the form of Reset Election on the reverse
thereof duly filled in and signed, which signature shall be guaranteed by a
bank or trust company having an office or correspondent in the United
States or a broker or dealer which is a member of the NASD. No Reset
Election shall be effective with respect to any Reset Date unless such
Warrant Certificate and form of Reset Election are received by the Warrant
Agent no later than the fifth Business Day following such Reset Date. Upon
timely receipt of a Reset Election in proper form, the Warrant Agent shall
determine the Reset Price and shall imprint the following legend in a
prominent location and typeface on the front of the Warrant Certificate:
"The Exercise Price of the Warrant represented by this Warrant
Certificate has been the subject of a Reset Election pursuant to
Section 4.3(a) of the Warrant Agreement referred to herein. As a result
of such Reset Election, the Reset Price as defined in such Section
4.3(a) is $[insert price]. No further Reset Election is permitted under
the Warrant Agreement."
The Warrant Agent shall then deliver such Warrant Certificate as so
legended to the Holder thereof. The Warrant Agent shall promptly notify the
Company of each Reset Election and the date, Reset Price and other
particulars thereof and shall maintain records of each Reset Election in
the register of Warrants referred to in Section 2.3 hereof. In the event of
any transfer, exchange or other issue or reissue of Warrants that have been
the subject of a Reset Election, the Warrant Agent shall cause any and all
Warrant Certificates so issued or reissued to bear the legend referred to
above.
(b) If on any date (an "Early Expiration Trigger Date") the Five-Day
Average Price is more than $4.50 (after giving effect to any adjustments
thereto pursuant to Section 8 hereof), the Company shall have the right to
elect (an "Early Expiration Election") to designate a date (the "Early
Expiration Date") after which no Warrant shall be exercisable, the
provisions of Section 4.1 hereof to the contrary notwithstanding. Each
Warrant not exercised prior to 5:00 p.m. Los Angeles time on any such Early
Expiration Date shall become void, and all rights thereunder and all rights
in respect thereof under this Agreement shall cease as of such time. The
Company shall make an Early Expiration Election by designating an Early
Expiration Date in a written notice (which may be by facsimile
transmission) to the Warrant Agent specifying the Early Expiration Trigger
Date and the Five-Day Average Price no later than the fifth Business Day
following such Early Expiration Trigger Date. Upon receipt of such notice,
the Warrant Agent shall within two Business Days of such receipt give
notice pursuant to Section 16 hereof to each Holder of the Early Expiration
Election of the Company and specifying the Early Expiration Date. The
Company shall not specify an Early Expiration Date that is less than 12
Business Days after the delivery to the Warrant Agent of the Company's
notice of its Early Expiration Election.
4.4 Compliance with Government Regulations: Registration Under the
Securities Act. To the extent required by the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (collectively,
the "Securities Act"), the Company will register under the Securities Act the
issuance and sale of Warrant Shares by the Company in connection with the due
exercise of Warrants by the Holder thereof (subject to the prohibition on any
such exercise during any No-Exercise Period). In addition, if the transfer of
the Warrant Shares obtained upon such exercises by Holders would not otherwise
be exempt from the registration and prospectus delivery requirements of the
Securities Act, the Company will register under the Securities Act the offer
and sale of such Warrant Shares in connection with such transfers by such
Holders (subject to prohibition of any such transfers during any No-Exercise
Period); provided, however, that participation by any Holder in any such
registration shall be conditioned upon such Holder's provision to the Company
of all information, undertakings, consents, agreements or other documents and
the taking of any and all actions as may be necessary to enable such
registration and such participation therein by such Holder as a selling
security holder to comply with all applicable requirements of the Securities
Act. The Company's registration obligations hereunder shall terminate on the
seventh anniversary of the Exchange Date.
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SECTION 5. PAYMENT OF TAXES AND FEES.
The Company will pay all documentary stamp and other like taxes, if any,
attributable to the initial issuance and delivery of the Warrants and the
initial issuance and delivery of the Warrant Shares upon the exercise of
Warrants, provided that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer of the Warrants or
involved in the issuance or delivery of any Warrant Shares in a name other
than that of the Holder of the Warrants being exercised, and the Warrant Agent
shall not register any such transfer or issue or deliver any Warrant
Certificate(s) or Warrant Shares unless or until the persons requesting the
registration or issuance shall have paid to the Warrant Agent for the account
of the Company the amount of such tax, if any, or shall have established to
the reasonable satisfaction of the Company that such tax, if any, has been
paid.
SECTION 6. MUTILATED OR LOST WARRANT CERTIFICATES.
In the event that any Warrant Certificate shall be mutilated, lost, stolen
or destroyed, the Company shall issue, and at the direction of the Company by
written order the Warrant Agent shall countersign and deliver in exchange and
substitution for, and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and an indemnity or bond, if requested
by the Company or the Warrant Agent, also reasonably satisfactory to them. An
applicant for such a substitute Warrant Certificate shall also comply with
such other reasonable procedures and pay such reasonable fees and expenses as
the Company or the Warrant Agent may reasonably require.
SECTION 7. RESERVATION OF WARRANT SHARES.
There have been reserved, and the Company shall at all times keep reserved,
out of its authorized Common Stock, free of all preemptive rights, a number of
shares of Common Stock sufficient to provide for the exercise of the rights of
purchase represented by the outstanding Warrant Certificates. The Company will
keep a copy of this Agreement on file with the Warrant Agent. The Warrant
Agent is hereby irrevocably authorized to requisition from time to time from
the Company certificates for Warrant Shares required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement.
The Company will supply its Warrant Agent with duly executed stock
certificates for such purposes and will itself provide or otherwise make
available any cash which may be payable as provided in Section 9 hereof. The
Company will furnish to its agent for transfer of shares of its Common Stock
(the "Transfer Agent"), a copy of all notices of adjustments and certificates
related thereto, transmitted to each Holder pursuant to Section 8.2 hereof.
The Company will give the Warrant Agent prompt notice of any change in any
Transfer Agent or any change of address of any Transfer Agent.
Before taking any action which would cause an adjustment pursuant to Section
8 reducing the Exercise Price, the Company will take any and all corporate
action which may be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE; NUMBER OF WARRANT SHARES AND SHARES
OF CAPITAL STOCK WARRANTS ARE EXERCISABLE INTO.
The number of securities purchasable upon the exercise of each Warrant, and
the Exercise Price, shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter described.
8.1 Pricing and Share Adjustments. During the Exercise Period and until a
Holder's Warrants are exercised, the number of Warrant Shares purchasable by
such Holder upon the exercise of each Warrant and the Exercise Price shall be
subject to adjustment as follows:
(a) Adjustment for Change in Capital Stock. Subject to paragraphs (f) and
(h) below, in case the Company shall (i) pay a dividend or other
distribution on its outstanding shares of Common Stock in shares
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of Common Stock, (ii) make a distribution on its outstanding shares of
Common Stock in shares of its capital stock other than Common Stock, (iii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iv) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, or (v) issue, by
reclassification of its shares of Common Stock, other securities of the
Company, then the number of Warrant Shares purchasable upon exercise of
each Warrant immediately prior thereto shall be adjusted so that the Holder
of each Warrant shall be entitled to receive the number of Warrant Shares
of the Company which such Holder would have owned or have been entitled to
receive upon the happening of any of the events described above had such
Warrant been exercised in full immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made pursuant
to this paragraph (a) shall become effective immediately after the record
date for such event (provided, however, that no additional Warrant Shares
shall be issued or the Exercise Price modified as a result of such
adjustment unless and until the consummation of such event) or, if none,
immediately after the effective date of such event. Such adjustment shall
be made successively whenever such an event occurs.
(b) Adjustment for Rights Issue. Subject to paragraphs (f) and (h) below,
in case the Company shall issue rights, options, warrants or convertible
securities (collectively, "Rights") to all holders of its outstanding
Common Stock entitling them to subscribe for or purchase shares of Common
Stock at a Price Per Share (as defined in paragraph (e) below) which is
lower at the record date mentioned below than the then Current Market Price
(as defined in paragraph (e) below) per share of Common Stock, the number
of Warrant Shares thereafter purchasable upon the exercise of each Warrant
shall be determined by multiplying the number of Warrant Shares theretofore
purchasable upon exercise of each Warrant by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on the date
of issuance of such Rights plus the additional Number of Shares (as defined
in paragraph (e) below) of Common Stock offered for subscription or
purchase in connection with such Rights and the denominator of which shall
be the number of shares of Common Stock outstanding on the date of issuance
of such Rights plus the number of shares which the aggregate Proceeds (as
defined in paragraph (e) below) received or receivable by the Company upon
exercise of such Rights would purchase at the Current Market Price per
share of Common Stock at such record date. Such adjustment shall be made
whenever Rights are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to receive
Rights (provided, however, that no additional Warrant Shares shall be
issued or the Exercise Price modified as a result of such adjustment unless
and until such Rights are issued).
(c) Adjustment for Redemptions, Dividends, Other Distributions.
(i) Subject to paragraphs (f) and (h) below, in case the Company
shall redeem shares of its Common Stock at a Price Per Share above the
then Current Market Price Per Share of Common Stock on the date of such
redemption then the number of Warrant Shares thereafter purchasable
upon the exercise of each Warrant shall be determined by multiplying
the number of Warrant Shares theretofore purchasable upon the exercise
of each Warrant by a fraction, the numerator of which shall be the
Current Market Price Per Share of Common Stock on the date of
redemption multiplied by the aggregate number of shares of Common Stock
outstanding immediately following the redemption and the denominator of
which shall be the Initial Market Capitalization less the Redemption
Amount. The "Initial Market Capitalization" shall equal the product of
the number of shares of Common Stock outstanding immediately prior to
such redemption and the Current Market Price Per Share of the Common
Stock on the date of such redemption. The "Redemption Amount" shall
equal the number of shares redeemed multiplied by the Price Per Share
at which such redemption occurs. Such adjustment shall be made whenever
any such redemption is made, and shall become effective on the date of
such redemption.
(ii) Subject to paragraphs (f) and (h) below, in case the Company
shall distribute to the holders of its Common Stock a dividend or
distribution (whether in cash, cash equivalents, evidence of
indebtedness or assets of the Company or any corporation or other legal
entity a majority of the voting equity or equity interest of which is
owned, directly or indirectly, by the Company (a "Subsidiary")
8
or shares of capital stock of a Subsidiary) other than a dividend or
distribution subject to paragraphs (a) or (b) above, then in each case
the number of Warrant Shares thereafter purchasable upon the exercise
of each Warrant shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon the exercise of each
Warrant by a fraction, the numerator of which shall be the Current
Market Price Per Share of Common Stock on the date of such dividend or
distribution and the denominator of which shall be such Current Market
Price Per Share of Common Stock less the amount of dividend or
distribution per share as of the date of such dividend or distribution
(which amount in the case of a distribution of assets for which there
is not a readily ascertainable fair market value shall be the fair
value of such assets as determined by an independent professional
evaluator selected by the disinterested non-employee members of the
Board of Directors of the Company as the portion of the assets
applicable to one share of Common Stock). Such adjustments shall be
made whenever any such distribution is made and shall become effective
on the record date for the determination of stockholders entitled to
receive such distribution, if any, or the effective date of such
redemption if there is no such record date (provided, however, that no
additional Warrant Shares shall be issued or the Exercise Price
modified as a result of such adjustment unless and until the date of
such redemption).
(d) Adjustment for Common Stock and Convertible Securities Issue. Subject
to paragraphs (f) and (h) below, in case (A) the Company shall issue shares
of its Common Stock, or securities convertible into, or exchangeable or
exercisable for Common Stock or Rights to subscribe for or purchase such
securities (collectively, "Convertible Securities") (excluding the issuance
of (i) Common Stock or Convertible Securities issued in any of the
transactions described in paragraphs (a), (b) or (c) above) or (ii) Warrant
Shares issued upon the exercise of the Warrants) at a Price Per Share of
Common Stock, in the case of the issuance of Common Stock, or at a Price
Per Share of Common Stock initially deliverable upon conversion or exercise
of exchange of such Convertible Securities, in each case, together with any
other consideration received or to be received by the Company in connection
with such issuance or upon the conversion, exchange or exercise of such
Convertible Securities, below the then Current Market Price per share of
Common Stock on the date the Company fixed the offering, conversion or
exercise or exchange price of such additional shares, or (B) there shall be
a reduction in the exercise price of any outstanding Convertible Securities
other than pursuant to customary antidilution provisions set forth in the
instruments governing such Convertible Securities as in effect at the date
of the issuance thereof, then the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon
exercise of each Warrant by a fraction:
(x) in the case of an issuance of Convertible Securities, the
numerator of which shall be the total number of shares of Common Stock
outstanding on the date of such issuance plus the additional number of
shares of Common Stock offered for subscription or purchase and the
denominator of which shall be the number of shares of Common Stock
outstanding on such date plus the number of shares of Common Stock
which the aggregate Proceeds of the total amount of Convertible
Securities so offered would purchase at the Current Market Price Per
Share of Common Stock at such date of issuance; and
(y) in the case of a reduction in the exercise price of any
Convertible Securities, the numerator of which shall be the sum of the
Initial Market Capitalization plus the Initial Proceeds and the
denominator of which shall be the sum of the Initial Market
Capitalization and the Reduced Proceeds. The "Initial Market
Capitalization" shall mean the product of the number of shares of
Common Stock outstanding immediately prior to such price reduction and
the Current Market Price Per Share of the Common Stock on the date of
such price reduction. The "Initial Proceeds" shall mean the Proceeds
received and receivable by the Company prior to such price reduction in
connection with such Convertible Securities. The "Reduced Proceeds"
shall mean the Proceeds received and receivable by the Company after
giving effect to such price reduction in connection with such
Convertible Securities.
In case the Company shall issue and sell Convertible Securities for a
consideration consisting, in whole or in part, of property other than cash
or its equivalent, then in determining the "Price Per Share" of Common
Stock and the "consideration received by the Company" for purposes of this
paragraph (d), an independent professional evaluator selected by the
disinterested non-employee members of the Board of
9
Directors of the Company shall reasonably and in good faith determine the
fair value of such property. The determination of whether any adjustment is
required under this paragraph (d), by reason of the sale and issuance of
any Convertible Securities and the amount of such adjustment, if any, shall
be made at such time and not at the subsequent time of issuance of shares
of Common Stock upon the exercise, conversion or exchange of Convertible
Securities.
(e) Current Market Price; Price Per Share.
(i) For the purpose of any computation under this Section 8.1, the
"Current Market Price" per share of Common Stock at any date shall be
the Twenty-Day Average Price.
(ii) For purposes of this Section 8.1, "Price Per Share" shall be
defined and determined according to the following formula:
P = R/N
where
P = Price Per Share;
R = the "Proceeds" received or receivable by the Company which (w)
in the case of shares of Common Stock is the total amount received
or receivable by the Company in consideration for the issuance and
sale of such shares; (x) in the case of Rights or of Convertible
Securities with respect to shares of Common Stock, is the total
amount received or receivable by the Company in consideration for
the issuance and sale of Rights or such Convertible Securities, plus
the minimum aggregate amount of additional consideration, other than
the surrender of such Convertible Securities, payable to the Company
upon exercise, conversion or exchange thereof; (y) in the case of
Rights to subscribe for or purchase such Convertible Securities, is
the total amount received or receivable by the Company in
consideration for the issuance and sale of such Rights plus the
minimum aggregate amount of additional consideration, other than the
surrender of such Convertible Securities, payable upon the exercise
of such Rights and on the conversion or exchange or exercise of such
Convertible Securities; and (z) in the case of a redemption of
shares of Common Stock is the total amount paid or payable by the
Company as consideration for the shares redeemed, provided that in
each case the proceeds received or receivable or paid or payable by
the Company shall be the net cash proceeds after deducting therefrom
any compensation paid or discount allowed in the sale, underwriting
or purchase thereof by underwriters or dealers or others performing
similar services; and
N = the "Number of Shares," which (x) in the case of Common Stock is
the number of shares issued; (y) in the case of Rights or of
Convertible Securities with respect to shares of Common Stock, is
the number of shares of Common Stock issuable upon exercise,
conversion or exchange thereof for the minimum aggregate amount of
additional consideration referred to above in the definition of
Proceeds; and (z) in the case of shares of Common Stock redeemed is
the number of shares redeemed by the Company.
(f) When De Minimis Adjustment May Be Deferred. No adjustment in the
number of Warrant Shares purchasable hereunder shall be required unless
such adjustment would require an increase or decrease of at least one
percent (1%) in the number of Warrant Shares purchasable upon the exercise
of each Warrant, provided that any adjustments which by reason of this
paragraph (f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations shall be
made to the nearest one-thousandth of a Warrant Share and the nearest cent.
(g) Adjustment in Exercise Price. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant is adjusted as herein
provided, the Exercise Price payable upon exercise of each Warrant
immediately prior to such adjustment shall be adjusted by multiplying such
Exercise Price by a fraction, the numerator of which shall be the number of
Warrant Shares purchasable upon the exercise of
10
each Warrant immediately prior to such adjustment and the denominator of
which shall be the number of Warrant Shares purchasable immediately
thereafter.
(h) When No Adjustment Required. No adjustment in the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Exercise Price
shall be made pursuant to this Section 8.1 in connection with the exercise
of any of the following (other than a reduction in the purchase or exercise
price that would be subject to an adjustment under subsection (d)(y) above;
provided, however, there shall be no adjustment pursuant to such subsection
(d)(y) in connection with any antidilution or other adjustment required by
the terms and conditions of instruments governing the following as in
effect on June 14, 1996:
(i) 80,081 Warrants issued as of June 13, 1996 at an exercise price
of $5.00 per share of Common Stock;
(ii) 1,500,000 Warrants outstanding as of June 13, 1996 at an
exercise price of $4.00 per share of Common Stock;
(iii) Up to 1,776,060 options to purchase Common Stock reserved for
issuance to employees of the Company;
(iv) Up to 1,657,300 employee stock options outstanding as of
September 18, 1996; and
(v) Up to 150,000 employee stock options outstanding after September
18, 1996 but on or before October 31, 1996.
Additionally, no adjustment need be made if the Company issues or
distributes to each Holder of Warrants the shares, rights, options,
warrants, evidences of indebtedness, assets or other securities referred to
in the paragraphs above which each Holder of Warrants would have been
entitled to receive had the Warrants been exercised for the number of
Warrant Shares for which Warrants are then exercisable prior to the
happening of such event or the record date with respect thereto.
(i) Common Stock. For all purposes of this Agreement, the term "Common
Stock" shall mean (i) the class of stock designated as the Common Stock of
the Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time, as
a result of an adjustment made pursuant to this Section 8.1, the Holders
shall become entitled to purchase any securities of the Company other than
shares of Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Warrant and the Exercise Price of such
shares shall be subject to adjustment from time to time in a manner and on
terms substantially identical to the provisions with respect to the Warrant
Shares contained in paragraphs (a) through (h) above, and the provisions of
this Agreement with respect to the Warrant Shares shall apply on like terms
to any such other securities.
(j) Expiration of Rights, etc. Upon the expiration of any Rights or
conversion or exchange or exercise rights, if any thereof shall not have
been exercised, the Exercise Price and the number of Warrant Shares
purchasable upon the exercise of each Warrant shall, upon such expiration,
be readjusted and shall thereafter be such as it would have been had it
been originally adjusted (or had the original adjustment not been required,
as the case may be) as if (A) the only shares of Common Stock so issued
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Rights or conversion or exchange or exercise rights and
(B) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all of such Rights or conversion or exchange or
exercise rights whether or not exercised, provided that no such
readjustment shall have the effect of increasing the Exercise Price or
decreasing the number of Warrant Shares purchasable upon the exercise of
each Warrant by an amount in excess of the amount of the adjustment
initially made in respect of the issuance, sale or grant of such Rights or
conversion or exchange or exercise rights.
11
8.2 Notice of Adjustment. Whenever the number of Warrant Shares purchasable
upon the exercise of each Warrant or the Exercise Price of Warrant Shares is
adjusted, as provided in this Section 8, the Company shall cause the Warrant
Agent promptly to mail to each Holder, at the sole expense of the Company by
first class mail, postage prepaid, notice of such adjustment or adjustments
and shall deliver to the Warrant Agent a certificate of a firm of independent
public accounts (who may be the regular accountants employed by the Company)
setting forth the number of Warrant Shares purchasable upon the exercise of
each Warrant and the Exercise Price of Warrant Shares after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth in reasonable detail the computations by which such adjustment
was made. The Warrant Agent shall be entitled to rely on such certificate and
shall be under no duty or responsibility with respect to any such certificate,
except to exhibit the same, from time to time, to any Holder requesting an
inspection thereof during reasonable business hours. The Warrant Agent shall
not at any time be under any duty or responsibility to any Holder to determine
whether any facts exist which may require any adjustment of the Exercise Price
or the number of Warrant Shares or other stock or property purchasable on
exercise of Warrants, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed in making such
adjustment. Concurrently with giving a Holder notice of an adjustment, the
Warrant Agent shall issue to such Holder a replacement Warrant Certificate
showing the terms of the Warrant, as adjusted, provided that the Warrant
Agent's failure to provide such new Warrant Certificates shall not adversely
affect the rights of the Holders to receive the benefits of any adjustments.
8.3 Preservation of Purchase Rights upon Merger or Consolidation. In case of
any consolidation of the Company with or merger of the Company into another
entity, the Company or such successor entity shall execute and deliver to the
Warrant Agent an agreement, which shall be binding on the Company and the
Holders, that each Holder shall have the right thereafter upon payment of the
Exercise Price in effect immediately prior to such action to purchase upon
exercise of each Warrant the kind and amount of shares and other securities
and property (including cash) which such Holder would have owned or have been
entitled to receive after the happening of such consolidation or merger had
such Warrant been exercised immediately prior to such action, subject to
obtaining any required governmental approvals or making any required
governmental filings. The Company shall at its sole expense request the
Warrant Agent to mail by first class mail, postage prepaid, to each Holder
notice of the execution of any such agreement. Such agreement shall provide
for adjustments, which shall be substantially identical to the adjustments
provided for in this Section 8. In addition, the Company shall not merge or
consolidate with or into, any other entity unless the successor entity (if not
the Company), shall expressly assume, by supplemental agreement reasonably
satisfactory in form and substance to the Warrant Agent in its sole judgment
and executed and delivered to the Warrant Agent, 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. The provisions of this
Section 8.3 shall similarly apply to successive consolidations or mergers. The
Company and the Warrant Agent shall each be under a good faith duty and
responsibility to determine the correctness of any provisions contained in any
such agreement relating to the kind or amount of shares of stock or other
securities or property receivable upon exercise of Warrants or with respect to
the method employed and provided therein for any adjustments and shall be
entitled to rely upon the provisions contained in any such agreement.
If this Section 8.3 applies, paragraphs (a), (b), (c) and (d) of Section 8.1
do not apply.
SECTION 9. FRACTIONAL INTERESTS.
Neither the Company nor the Warrant Agent shall be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be exercised at the same time by the same Holder, the number of
full Warrant Shares which shall be issuable upon such exercise shall be
computed on the basis of the aggregate number of Warrants so exercised. If any
fraction of a Warrant Share would, except for the provisions of this Section
9, be issuable on the exercise of any Warrant, the Company shall pay an amount
in cash equal to the Common Stock Price on the date the Warrant Certificate is
presented for exercise, multiplied by such fraction.
12
SECTION 10. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS.
Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the Holders of Warrant Certificates or their
transferees the right to vote or to receive dividends or to consent or to
receive notice as stockholders in respect of any meeting of stockholders for
the election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company.
In case:
(a) the Company shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of shares
of Common Stock of securities or assets; or
(c) of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or of
the conveyance or transfer of a substantial portion of the properties and
assets of the Company for which approval of any stockholders of the Company
is required, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange
offer for shares of Common Stock;
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(e) the Company shall sell all or substantially all of its assets, or any
asset necessary to conduct the Company's business.
then the Company shall cause to be filed with the Warrant Agent and shall
cause to be given to each Holder at its address appearing on the Warrant
Register, at least ten (10) days prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first class mail, postage prepaid, a written notice stating
(i) the date as of which the holders of record of shares of Common Stock
entitled to receive any such rights, options, warrants or distribution are to
be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up or fundamental change is expected to
become effective or consummated, as well as the date as of which it is
expected that holders of record of shares of Common Stock shall be entitled to
exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation, or winding up. The failure to give the notice
required by this Section 10 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation, winding up or action, or the vote upon any of the foregoing.
SECTION 11. BY THE COMPANY.
The Company represents and warrants to the Warrant Agent and each of the
Holders as follows as of the Exchange Date:
11.1 Legal Status; Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated. The Company is duly qualified or
licensed to do business and is in good standing as a foreign corporation in
all jurisdictions in which the failure to obtain such qualification or
licensing could reasonably be expected to have a material adverse effect on
the business or financial condition of the Company. The Company has all
requisite corporate power and authority to conduct its business, to own,
lease, sell or otherwise dispose of property, and to enter into and perform
this Agreement.
13
11.2 No Conflicts. This Agreement has been duly authorized by all necessary
corporate action on the part of the Company. Neither the execution and
delivery nor the performance of this Agreement (i) conflicts with the
certificate of incorporation or by-laws of the Company, (ii) violates any law,
regulation or ordinance, or any order or ruling of any court or governmental
entity, applicable to the Company or (iii) results in a breach or violation
of, or constitutes a default under, any term of any agreement or instrument to
which the Company is a party or by which it or any of its properties or assets
are bound other than any breach or violation which could not reasonably be
expected to have a material and adverse effect on (i) the business,
operations, properties, assets or financial condition of the Company, or (ii)
the ability of the Company to perform its obligations under any material
agreement in accordance with its terms.
11.3 Binding and Enforceable. This Agreement has been duly executed and
delivered by the Company and is a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject, (i) to bankruptcy, insolvency, reorganization, arrangement,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and (ii) to general principles of equity, whether such
enforcement is considered in a proceeding at law or in equity.
11.4 Valid Issue. All Warrant Shares are duly authorized and, upon issuance
in accordance with the provisions of this Agreement shall be validly issued,
fully paid and nonassessable and free from all taxes, liens, charges and
security interests (other than liens and security interests created by this
Agreement or by the Holder thereof).
SECTION 12. PAYMENTS IN U.S. CURRENCY.
All payments required to be made hereunder shall be made in lawful money of
the United States of America.
SECTION 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
Any corporation into which the Warrant Agent may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporation trust business of the Warrant Agent, shall be
the successor to the Warrant Agent hereunder without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a
successor Warrant Agent under the provisions of Section 14 hereof. In case at
the time such successor to the Warrant Agent shall succeed to the agency
created by this Agreement, any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent and deliver such
Warrant Certificates so countersigned; and in case at that time any of the
Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor Warrant Agent;
and in all such cases such Warrant Certificates shall be fully valid and
effective as provided therein and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignatures under its
prior name and deliver such Warrant Certificates so countersigned; and in case
at that time any of the Warrant Certificates shall not have been
countersigned, the Warrant Agent may countersign such Warrant Certificates
either in its prior name or in its changed name; and in all such cases such
Warrant Certificates shall be fully valid and effective as provided therein
and in this Agreement.
SECTION 14. APPOINTMENT OF WARRANT AGENT.
The Company hereby appoints the Warrant Agent to act as agent for the
Company hereunder and in accordance with the terms and conditions hereof, and
the Warrant Agent hereby accepts such appointment.
14
14.1 Obligations of the Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders, by their acceptance
of Warrant Certificates, shall be bound:
(a) Correctness of Statements. The statements contained herein and in the
Warrant Certificates shall be taken as statements of the Company, and the
Warrant Agent assumes no responsibility for the correctness of any of the
same except such as described the Warrant Agent or action taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution of
the Warrant Certificates or Warrants except as herein otherwise provided.
(b) Breach of Covenants. The Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants contained in
this Agreement or in the Warrant to be complied with by the Company.
(c) Performance of Duties. The Warrant Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents and shall not be
responsible for the misconduct or negligence of any attorney or agent
(which shall not include an employee of the Warrant Agent) appointed with
due care.
(d) Reliance on Counsel. The Warrant Agent may consult at any time with
legal counsel satisfactory to it (who may be counsel for the Company), and
the Warrant Agent shall incur no liability or responsibility to the Company
or to any Holder in respect to any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(e) Proof of Actions Taken. Whenever in the performance of its duties
under this Agreement the Warrant Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed conclusively to be proved and established by a certificate signed by
the Chairman of the Board, the President, a Vice President, the Treasurer
or the Secretary of the Company and delivered to the Warrant Agent; and
such certificate shall be full authorization to the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(f) Compensation. The Company agrees to pay the Warrant Agent such
reasonable compensation for all services rendered by the Warrant Agent in
the performance of its duties under this Agreement as shall be agreed upon
in advance by the Company and the Warrant Agent, to reimburse the Warrant
Agent for all reasonable expenses, taxes and governmental charges and other
charges of any kind and nature incurred by the Warrant Agent in the
performance of its duties under this Agreement (including but not limited
to legal fees and expenses), and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
counsel fees, for anything done or omitted by the Warrant Agent or any of
its agents in the performance of its duties under this Agreement, except as
a result of the Warrant Agent's gross negligence or willful misconduct as
determined in a final judgment of a court of competent jurisdiction and
authority. The Company's obligations under this Section 14.1(f) and any
claim arising hereunder shall survive the resignation or removal of the
Warrant Agent and the termination or discharge of the Company's obligations
under this Agreement.
(g) Legal Proceedings. The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or any one or more Holders
shall furnish the Warrant Agent with reasonable security and indemnity for
any costs and expenses which may be incurred or any liabilities which may
arise, but this provision shall not affect the power of the Warrant Agent
to take such action as the Warrant Agent may consider proper, whether with
or without any such security or indemnity. All rights of action of any
Holder under this Agreement or under any of the Warrants may be enforced by
the Warrant Agent without the possession of any of the Warrant Certificates
or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant
Agent shall be brought in its name as Warrant Agent, and any
15
recovery of judgment shall be for the ratable benefit of the Holders, as
their respective rights or interests may appear.
(h) Other Transactions in Securities of Company. The Warrant Agent and
any stockholders, director, officer or employee of the Warrant Agent may
buy, sell or deal in any of the Warrants or any other securities of the
Company or become pecuniarily interested in any transaction in which the
Company may be interested or contract with or lend money to the Company or
other wise act as fully and freely as though it were not Warrant Agent
under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company of for any other legal entity.
(i) Liability of Warrant Agent. The Warrant Agent shall act hereunder
solely as agent, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which
it may do or refrain from doing in connection with this Agreement except
for its own negligence or bad faith.
(j) Reliance on Documents. The Warrant Agent will not incur any liability
or responsibility to the Company or to any Holder for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument reasonably believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(k) Validity of Agreement. The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Warrant Agent) or in respect of the validity or execution of any Warrant
Certificate (except its countersignature thereof) or any Warrant; nor shall
the Warrant Agent by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any Warrant Shares
(or other securities) to be issued pursuant to this Agreement or any
Warrant, or as to whether any Warrant Shares (or other securities) will,
when issued, be validly issued, fully paid and nonassessable, or as to the
Exercise Price or the number or amount of Warrant Shares or other
securities or any Assets or other property issuable upon exercise of any
Warrant.
(l) Instructions from Company. The Warrant Agent is hereby authorized and
directed to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, the President, a Vice
President, the Treasurer or the Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its duties, and
shall not be liable for any action taken or suffered to be taken by it in
accordance with instructions of any such officer or officers.
(m) Reporting Requirements. The Warrant Agent shall send to each Warrant
holder a copy of each publicly available filing with the SEC made by the
Company (including but not limited to Forms 10-K, 10-Q and 8-K) promptly
but in any event within five (5) Business Days following such filing.
SECTION 15. CHANGE OF WARRANT AGENT.
The Warrant Agent may resign and be discharged from its duties under this
Agreement by giving to the Company thirty (30) days' notice in writing. The
Warrant Agent may be removed by like notice to the Warrant Agent and the
Holders from the Company, such notice to specify the date when removal shall
become effective. If the Warrant Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Warrant Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after such removal or notification in writing of
such registration or incapacity by the resigning or incapacitated Warrant
Agent or by any Holder (who shall with such notice submit his Warrant
Certificate or Certificates for inspection by the Company), then any Holder
may apply to any court of competent jurisdiction for the appointment of a
successor to the Warrant Agent. Any successor Warrant Agent, whether appointed
by the Company or such a court, shall be a bank or trust Company, in good
standing, incorporated under the laws of the United States of America or any
state thereof and having at the time of its appointment as Warrant Agent a
combined capital and surplus of at least $100,000,000. After appointment and
acceptance of such appointment in writing, the successor Warrant Agent shall
be vested with the same powers, rights, duties
16
and responsibilities as if it had been originally named as Warrant Agent with
out further act or deed; but the former Warrant Agent shall deliver and
transfer to the successor Warrant Agent any property at the time held by it
hereunder, and shall execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Failure to file any notice provided for
in this Section 15, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant Agent or the
appointment of the successor Warrant Agent, as the case may be. In the event
of such resignation or removal, the successor Warrant Agent shall mail, by
first class mail, postage prepaid, to each Holder, written notice of such
removal or resignation and the name and address of such successor Warrant
Agent.
SECTION 16. NOTICES.
Any notice pursuant to this Agreement by the Company or by any Holder to the
Warrant Agent, or by the Warrant Agent or by any Holder to the Company, shall
be in writing and shall be delivered in person or by facsimile transmission,
or mailed first class, postage pre-paid, (a) to the Company, at its offices at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer, Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇, or (b) to the Warrant
Agent, at its offices at , Attention:
, Telecopier No.: . Each party hereto may from time to
time change the address to which notices to its are to be delivered or mailed
hereunder by notice to the other party.
Any notice mailed pursuant to this Agreement by the Company or the Warrant
Agent to the Holders shall be in writing and shall be mailed first class,
postage prepaid, or otherwise delivered, to such Holders at their respective
addresses in the Warrant Register. The initial address of each Holder shall be
as provided by the Company to the Warrant Agent. Any Holder may change its
address by notice to the Company and the Warrant Agent given in accordance
with this Section 16.
SECTION 17. CANCELLATION OF WARRANTS.
In the event the Company shall purchase or otherwise acquire Warrants, the
same shall thereupon be delivered to the Warrant Agent and be cancelled by it
and retired. The Warrant Agent shall cancel any Warrant certificate
surrendered for exchange, substitution, transfer or exercise in whole or in
part.
SECTION 18. SUPPLEMENTS AND AMENDMENTS.
From time to time, the Company and the Warrant Agent, without the consent of
the holders of the Warrants, may amend or supplement this Agreement for
certain purposes, including curing defects or inconsistencies or making any
other change so long as such amendment or supplement does not adversely affect
the rights of any Holder. Any supplement or amendment to this Agreement that
does not adversely affect the rights of a Holder may be made with the approval
of the Holders of a majority of the then outstanding Warrants; provided,
however, that any such amendment or supplement that (i) increases the Exercise
Price; (ii) decreases the number of shares of Common Stock issuable upon
exercise of a Warrant; or (iii) shortens the period during which the Warrants
may be exercised shall require the consent of each Holder of a Warrant
affected thereby.
SECTION 19. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrant Agent shall bind and inure to the benefit of the
Company or the Warrant Agent and shall bind and inure to the benefit of their
respective successors hereunder.
SECTION 20. APPLICABLE LAW.
This Agreement and each Warrant issued hereunder shall be governed by and
construed in accordance with the laws of the State of California without
giving effect to the principles of conflict of laws thereof.
17
SECTION 21. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent and the Holders and
their successors and assigns any legal or equitable right, remedy or claim
under this Agreement. This Agreement shall be for the sole and exclusive
benefit of the Company, the Warrant Agent, the Holders and the respective
successors and assigns of the Company, Warrant Agent and Holders.
SECTION 22. RECORDS.
The Warrant Agent shall keep copies of this Agreement and any notices given
or received hereunder available for inspection by the Holders during normal
business hours at its office. The Company shall at its sole expense supply the
Warrant Agent from time to time with such numbers of copies of this Agreement
as the Warrant Agent may request.
SECTION 23. COUNTERPARTS.
This Agreement may be executed in any number of counterparts; each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
SECTION 24. CAPTIONS.
The captions of the Sections and subsections of this Agreement have been
inserted for convenience only and shall have no substantive effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, all as of the day and year first above written.
STREAMLOGIC CORPORATION
By: _________________________________
Name:
Title:
▇▇▇▇▇ FARGO BANK, N.A.,
as Warrant Agent
By: _________________________________
Name:
Title:
18
EXHIBIT A
FORM OF WARRANT CERTIFICATE
No. Warrants
WARRANT CERTIFICATE
STREAMLOGIC CORPORATION
This Warrant Certificate certifies that , or registered
assigns, is the registered holder of Warrants (the "Warrants")
expiring at 5:00 p.m., Los Angeles time, , 2001 (subject to
extension or earlier termination as provided in the Warrant Agreement) (the
"Expiration Date"), to purchase Common Stock, $1.00 par value per share (the
"Common Stock"), of STREAMLOGIC CORPORATION, a Delaware corporation (the
"Company"). The Warrants may be exercised at any time from 9:00 a.m., Los
Angeles time, on , 1996 to 5:00 p.m., Los Angeles time, on the
Expiration Date. Each Warrant entitles the holder upon exercise to receive
from the Company, if exercised before 5:00 p.m., Los Angeles time, on the
Expiration Date, one fully paid and nonassessable share of Common Stock (a
"Warrant Share") at the Exercise Price (as defined in the Warrant Agreement
referred to on the reverse side hereof), payable in lawful money of the United
States of America, upon surrender of this Warrant Certificate and payment of
the Exercise Price at the office or agency of the Warrant Agent, but only
subject to the conditions set forth herein and in the Warrant Agreement. The
Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events as
set forth in the Warrant Agreement.
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M., LOS ANGELES TIME ON THE
EXPIRATION DATE AS DEFINED HEREIN SHALL BECOME VOID.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agents as such term is used in the Warrant Agreement.
19
IN WITNESS WHEREOF, STREAMLOGIC CORPORATION has caused this Warrant
Certificate to be duly executed.
STREAMLOGIC CORPORATION
By: _________________________________
Title:
Dated: _________________________________
Countersigned:
▇▇▇▇▇ FARGO BANK, N.A.
as Warrant Agent
By: ____________________________________
Authorized Signatory
20
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date entitling the
holder on exercise to receive shares of Common Stock of the Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of
, 1996 (the "Warrant Agreement"), duly executed and delivered by
the Company to ▇▇▇▇▇ Fargo Bank, N.A., a national banking association, as
Warrant Agent (the "Warrant Agent"), which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the
Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request to
the Company. By accepting initial delivery, transfer or exchange of this
Warrant, the duly registered holder shall be deemed to have agreed to the
terms of the Warrant Agreement as it may be in effect from time to time,
including any amendments or supplements duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with
payment of the Exercise Price in the manner described below at the office of
the Warrant Agent. In the event that upon any exercise of Warrants evidenced
hereby the number of Warrants exercised shall be less than the total number of
Warrants evidenced hereby, there shall be issued to the holder hereof or its
assignee a new Warrant Certificate evidencing the number of Warrants not
exercised.
Payment of the Exercise Price may be made in cash by wire transfer to the
Warrant Agent for the account of the Company or by certified or official bank
check or checks to the order of the Company or by any combination thereof.
The Warrant Agreement provides that upon the occurrence of certain events
the number of shares of Common Stock issuable upon the exercise of each
Warrant, and the Exercise Price of each Warrant, may, subject to certain
conditions, be adjusted. No fractions of a share of Common Stock will be
issued upon the exercise of any Warrant, but the Company shall pay the cash
value thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of
like tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
21
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise this Warrant,
according to the terms and conditions hereof, to the extent of purchasing
shares of Common Stock and hereby makes payment of $ in
payment of the exercise price thereof. If the number of shares shall not be
all of the shares purchasable under this Warrant, a new Warrant Certificate
for the balance remaining shall be issued in the name of the undersigned or
its assignee as indicated on the Assignment Form.
Dated:
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: _________________________________________________________________________
(please typewrite or print in block letters)
Address: ______________________________________________________________________
Signature: ____________________________________________________________________
Note: The signature must conform in all respects to name of holder as
specified on the face of this Warrant Certificate
Signature Guaranteed:
22
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
Name: __________________________________________________________________________
(please typewrite or print in block letters)
Address: _______________________________________________________________________
its right to purchase shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint Attorney, to
transfer the same on the books of the Company, with full power of substitution
in the premises.
Dated:
Social Security or other identifying number of holder
Signature: _____________________________________________________________________
Note: The signature must conform in all respects to name of holder as
specified on the face of this Warrant Certificate
Signature Guaranteed:
23
RESET ELECTION FORM
The undersigned registered holder of this Warrant hereby irrevocably elects a
Reset Election pursuant to the terms and conditions of this Warrant and Section
4.3(a) of the Warrant Agreement.
The Reset Date applicable to this Reset Election is:
________________________________________________________________________________
(Please typewrite or print in block letters)
Dated:
Social Security or other identifying number of holder
Signature: _____________________________________________________________________
Note: The signature must conform in all respects to name of holder as
specified on the face of this Warrant Certificate
Signature Guaranteed:
24