SUPREMA SPECIALTIES, INC.
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WARRANT AGREEMENT
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DATED AS OF MARCH 9, 1998
105,000 WARRANTS TO PURCHASE COMMON STOCK
TABLE OF CONTENTS
(Not Part of Agreement)
Page
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1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES.......................................... 1
1.1 Form of Warrant Certificates......................................................... 1
1.2 Execution of Warrant Certificates; Registration Books................................ 1
1.3 Transfer, Split Up, Combination and Exchange of Warrant Certificates;
Lost or Stolen Warrant Certificates.................................................. 2
1.4 Subsequent Issuance of Warrant Certificates.......................................... 3
1.5 Effect of Issuance in Registered Form................................................ 3
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE............................................... 3
2.1 Exercise of Warrants................................................................. 3
2.2 Issuance of Common Stock............................................................. 5
2.3 Unexercised Warrants................................................................. 5
2.4 Cancellation and Destruction of Warrant Certificates................................. 5
2.5 Notice of Expiration; Extension of Expiration Date................................... 6
2.6 Fractional Shares.................................................................... 6
3. AGREEMENTS OF THE COMPANY..................................................................... 6
3.1 Reservation of Common Stock.......................................................... 6
3.2 Common Stock To Be Duly Authorized and Issued, Fully Paid and
Nonassessable........................................................................ 6
3.3 Transfer Taxes....................................................................... 6
3.4 Common Stock Record Date............................................................. 7
3.5 Rights in Respect of Common Stock.................................................... 7
3.6 CUSIP Number......................................................................... 7
3.7 Right of Action...................................................................... 8
3.8 Survival............................................................................. 8
4. ANTIDILUTION ADJUSTMENTS...................................................................... 8
4.1 Mechanical Adjustments............................................................... 8
4.2 Stock Dividends, Subdivisions and Combinations....................................... 8
4.3 Dividends and Distributions.......................................................... 8
4.4 Repurchases of Common Stock or Rights................................................ 9
4.5 Issuances of Additional Common Stock or Rights....................................... 10
4.6 Expiration of Rights................................................................. 11
4.7 Consolidation; Merger; Sale; Reclassification........................................ 11
4.8 De Minimis Changes in Purchase Price................................................. 12
4.9 Adjustment of Number of Shares Issuable Pursuant to Warrants......................... 12
4.10 Miscellaneous........................................................................ 13
4.11 Other Securities..................................................................... 13
4.12 Additional Agreements of the Company................................................. 13
5. REPORTING COVENANTS........................................................................... 14
5.1 Financial and Business Information................................................... 14
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TABLE OF CONTENTS (continued)
(Not Part of Agreement)
Page
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5.2 Extension of Time to File SEC Reports................................................ 15
5.3 Information Concerning Antidilution Adjustments...................................... 16
6. REGISTRATION RIGHTS........................................................................... 17
6.1 Incidental Registration.............................................................. 17
6.2 Companies Registration............................................................... 18
6.3 Registration Procedures.............................................................. 18
6.4 Reasonable Investigation............................................................. 21
6.5 Registration Expenses................................................................ 22
6.6 Indemnification; Contribution........................................................ 22
6.7 Holdback Agreements; Registration Rights to Others................................... 25
6.8 Other Registration of Common Stock................................................... 25
6.9 Availability of Information.......................................................... 25
7. RIGHT OF FIRST REFUSAL........................................................................ 26
7.1 Transfer of Warrants................................................................. 26
7.2 Notice of Proposed Transfer.......................................................... 26
7.3 First Refusal Right.................................................................. 26
7.4 Transfers to Third Parties on Refusal or Failure to Consummate....................... 26
7.5 Limited Right of First Refusal Regarding Sale of Certain Common Stock................ 27
8. INTERPRETATION OF THIS AGREEMENT.............................................................. 28
8.1 Certain Defined Terms................................................................ 28
8.2 Descriptive Headings................................................................. 41
8.3 Governing Law........................................................................ 41
9. MISCELLANEOUS................................................................................. 41
9.1 Expenses............................................................................. 41
9.2 Amendment and Waiver................................................................. 42
9.3 Directly or Indirectly............................................................... 42
9.4 Survival of Representations and Warranties; Entire Agreement......................... 42
9.5 Successors and Assigns............................................................... 43
9.6 Notices.............................................................................. 43
9.7 Satisfaction Requirement............................................................. 43
9.8 Severability......................................................................... 44
9.9 Counterparts......................................................................... 44
9.10 Waiver of Jury Trial; Consent to Jurisdiction; Etc................................... 44
Annex 1 -- Addresses of Purchasers
Annex 2 -- Address of Company
Attachment A -- Form of Warrant Certificate
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WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of March 9, 1998, among SUPREMA SPECIALTIES,
INC., a New York corporation (together with its successors and assigns, the
"Company") and ALBION ALLIANCE MEZZANINE FUND, L.P., and THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES (each, together with its successors and
assigns, a "Purchaser" and collectively, the "Purchasers").
AGREEMENT
In consideration of the premises and the mutual agreements set forth
herein, the parties to this Agreement hereby agree as follows:
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES.
1.1 Form of Warrant Certificates.
The warrant certificates (individually, a "Warrant Certificate" and,
collectively, the "Warrant Certificates") evidencing the Warrants, and the forms
of assignment and of election to purchase shares to be attached to such
certificates, shall be substantially in the form set forth in Attachment A
hereto and may have such letters, numbers or other marks of identification or
designation as may be required to comply with any law or with any rule or
regulation of any governmental authority, stock exchange or self-regulatory
organization. Each Warrant Certificate shall be dated the date of issuance
thereof by the Company, either upon initial issuance or upon transfer or
exchange, and on its face shall initially entitle the holder thereof to purchase
a number of shares of Common Stock equal to the number of Warrants specified on
the face of such Warrant Certificate at a price per share equal to the Purchase
Price, but the number of such shares and the Purchase Price shall be subject to
adjustment as provided herein.
1.2 Execution of Warrant Certificates; Registration Books.
(a) Execution of Warrant Certificates. The Warrant Certificates shall
be executed on behalf of the Company by an officer of the Company
authorized by the Board of Directors. In case the officer of the Company
who shall have signed any Warrant Certificate shall cease to be such an
officer of the Company before issuance and delivery by the Company of such
Warrant Certificate, such Warrant Certificate nevertheless may be issued
and delivered with the same force and effect as though the individual who
signed such Warrant Certificate had not ceased to be such an officer of the
Company, and any Warrant Certificate may be signed on behalf of the Company
by any individual 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, although at the date of the execution of this Agreement any
such individual was not such an officer.
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(b) Registration Books. The Company will keep or cause to be kept at
its office maintained at the address of the Company set forth in Section
hereof or at such other office of the Company in the United States of
America of which the Company shall have given notice to each holder of
Warrant Certificates, books for registration and transfer of the Warrant
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Warrant Certificates, the
registration number and the number of Warrants evidenced on its face by
each of the Warrant Certificates and the date of each of the Warrant
Certificates.
1.3 Transfer, Split Up, Combination and Exchange of Warrant Certificates;
Lost or Stolen Warrant Certificates.
(a) Transfer, Split Up, etc. Any Warrant Certificate, with or without
other Warrant Certificates, subject to the terms hereof, may be
transferred, split up, combined or exchanged for another Warrant
Certificate or Warrant Certificates, entitling the registered holder or
Transferee thereof to purchase a like number of shares of Common Stock as
the Warrant Certificate or Warrant Certificates surrendered then entitled
such registered holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Warrant Certificate shall make
such request in writing delivered to the Company, and shall surrender the
Warrant Certificate or Warrant Certificates to be transferred, split up,
combined or exchanged at the office of the Company referred to in Section
hereof, whereupon, subject to the terms hereof, the Company shall deliver
promptly to the Person entitled thereto a Warrant Certificate or Warrant
Certificates, as the case may be, as so requested. Notwithstanding the
foregoing, no holder of Warrants may sell or transfer any Warrants to any
Person other than a Permitted Investor, and no holder of Warrants may sell
or transfer any Warrants to any other Person unless such holder has first
complied with the provisions of Section 7 hereof.
(b) Loss, Theft, etc. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate (which evidence shall
be, in the case of any Purchaser or another institutional investor, notice
from such institutional investor of such ownership (or of ownership by such
institutional investor's nominee) and such loss, theft, destruction or
mutilation), and:
(i) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Company; provided, however, that if the
holder of such Warrant Certificate is an institutional investor or a
Purchaser, or a nominee of an institutional investor or a Purchaser,
the Purchaser's or institutional investor's own unsecured agreement of
indemnity shall be deemed to be satisfactory; or
(ii) in the case of mutilation, upon surrender and cancellation
thereof;
the Company at its own expense will execute and deliver, in lieu thereof, a
new Warrant Certificate, dated the date of such lost, stolen, destroyed or
mutilated Warrant Certificate and of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant Certificate.
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1.4 Subsequent Issuance of Warrant Certificates. Subsequent to the original
issuance, no Warrant Certificates shall be issued except:
(a) Warrant Certificates issued upon any transfer, combination, split
up or exchange of Warrants pursuant to Section 1.3(a) hereof;
(b) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 1.3(b)
hereof; and
(c) Warrant Certificates issued pursuant to Section 2.3 hereof upon
the partial exercise of any Warrant Certificate to evidence te unexercised
portion of such Warrant Certificate.
1.5 Effect of Issuance in Registered Form. Every holder of a Warrant
Certificate by accepting the same consents and agrees with the Company and with
every other holder of a Warrant Certificate that:
(a) the Warrant Certificates are transferable only on the registry
books of the Company if surrendered at the office of the Company referred
to in Section 1.2(b) hereof, duly endorsed or accompanied by an instrument
of transfer (in the form attached hereto) and payment of any applicable
transfer tax or stamp tax; and
(b) the Company may deem and treat the Person in whose name each
Warrant Certificate is registered as the absolute owner thereof and of the
Warrants evidenced thereby (notwithstanding any notations of ownership or
writing on the Warrant Certificates made by anyone other than the Company)
for all purposes whatsoever, and the Company shall not be affected by any
notice to the contrary.
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE.
2.1 Exercise of Warrants.
(a) Manner of Exercise. At any time and from time to time on or after
the Effective Date and prior to the Expiration Date, the holder of any
Warrant Certificate may exercise the Warrants evidenced thereby, in whole
or in part (but not, in the case of any exercise in part, to the extent
that such exercise would result in the issuance of a fractional share of
Common Stock), by surrender of such Warrant Certificate, with an election
to purchase (a form of which is attached to each Warrant Certificate)
attached thereto duly executed, to the Company at its office referred to in
Section 1.2(b) hereof, together with payment of the Purchase Price for each
share of Common Stock with respect to which the Warrants are then being
exercised. Such Purchase Price shall be payable either:
(i) in cash pursuant to Section 2.1(b) hereof;
(ii) by a tender of Notes pursuant to Section 2.1(c) hereof;
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(iii) by a tender of cash pursuant Section 2.1(b) hereof and
Notes pursuant to Section hereof; or
(iv) by delivery of Warrant Certificates pursuant to Section
2.1(c) hereof.
(b) Payment in Cash. Upon exercise of any Warrants, the holder of a
Warrant Certificate may pay the Purchase Price (and shall pay the excess of
the Purchase Price for the Warrants being exercised over the amounts so
deemed to be paid by tender of Notes pursuant to Section 2.1(d) in cash or
by certified or official bank check payable to the order of the Company or
by wire transfer of immediately available funds to the account of the
Company.
(c) Payment in Notes. To the extent that any holder of any Warrant
Certificate surrenders with such Warrant Certificate any Note then held by
such holder, such holder shall be deemed to have paid that portion of the
Purchase Price equal to one hundred percent (100%) of the principal of such
Note which the holder thereof directs the Company to accept as payment of
the Purchase Price, which Note shall be cancelled and not reissued. To the
extent that the principal amount of such tendered Note is greater than the
amount of the Purchase Price paid by surrender thereof, the Company shall
deliver a new Note to the tendering holder thereof, in accordance with the
provisions of the Note Agreement, in the principal amount equal to the
amount not so applied to payment of the Purchase Price. At the time of the
issuance of the shares of Common Stock pursuant to the exercise of the
Warrants of any holder, the Company shall pay all accrued and unpaid
interest on the principal amount of any Note of such holder cancelled
pursuant to this Section 2.1(c) up to but excluding the date of such
issuance. For purposes of Rule 144 under the Securities Act, 17 C.F.R.
ss.230.144, the Company and the Purchasers agree that a tender of the
principal of any Notes in payment of the exercise price in respect of the
Warrants shall not be deemed a prepayment of the Notes, but rather a
conversion of such Notes, pursuant to the terms of the Notes, the Note
Agreement, this Agreement and the Warrants, into Common Stock.
(d) Net Exercise. In the event that any holder of Warrant Certificates
delivers such Warrant Certificates to the Company and notifies the Company
in writing that such holder intends to exercise all, or any portion of, the
Warrants represented by such Warrant Certificates to satisfy its obligation
to pay the Purchase Price in respect thereof by virtue of the provisions of
this Section 2.1(d), such holder shall become entitled to receive, instead
of the number of shares of Common Stock such holder would have received had
the Purchase Price been paid pursuant to Section 2.1(b) or Section 2.1(c)
hereof, a number of shares of Common Stock in respect of the exercise of
such Warrants equal to the product of:
(i) the number of shares of Common Stock issuable upon such
exercise of such Warrant Certificate (or, if only a portion of such
Warrant Certificate is being exercised, issuable upon the exercise of
such portion); multiplied by
(ii) the quotient of:
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(A) the difference of:
(I) the Market Price per share of Common Stock at the
time of such exercise; minus
(II) the Purchase Price per share of Common Stock at
the time of such exercise;
divided by
(B) the Market Price per share of Common Stock at the time
of such exercise.
The Company shall not be required to issue fractional shares by virtue
of this Section , but shall pay the exercising holder cash in lieu of
such fractional share in accordance with Section 2.6 hereof. For
purposes of Rule 144 under the Securities Act, 17 C.F.R. ss.230.144,
the Company and the Purchasers agree that the exercise of any Warrants
in accordance with this Section shall be deemed to be a conversion of
such Warrants, pursuant to the terms of this Agreement and the
Warrants, into Common Stock.
2.2 Issuance of Common Stock. Upon timely receipt of a Warrant Certificate,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for each of the shares to be purchased in the manner provided
in Section 2.1(a) hereof and an amount equal to any applicable transfer tax (if
not payable by the Company as provided in Section 3.3 hereof), the Company shall
thereupon promptly cause certificates representing the number of whole shares of
Common Stock then being purchased to be delivered to or upon the order of the
registered holder of such Warrant Certificate, registered in such name or,
subject to the terms hereof, in such names as may be designated by such holder,
and, promptly after such receipt deliver the cash, if any, to be paid in lieu of
fractional shares pursuant to Section 2.6 hereof to or upon the order of the
registered holder of such Warrant Certificate. For the avoidance of doubt, prior
to the Share Purchase Right Termination Date, each share of Common Stock issued
upon the exercise of any Warrant or Warrants shall in each case include the
attached Share Purchase Rights.
2.3 Unexercised Warrants. In case the registered holder of any Warrant
Certificate shall exercise less than all the Warrants evidenced thereby, a new
Warrant Certificate evidencing Warrants equal in number to the number of
Warrants remaining unexercised shall be issued by the Company to the registered
holder of such Warrant Certificate or, subject to the provisions hereof, to its
duly authorized assigns.
2.4 Cancellation and Destruction of Warrant Certificates. All Warrant
Certificates surrendered to the Company for the purpose of exercise, exchange,
substitution or transfer shall be cancelled by it, and no Warrant Certificates
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall cancel and retire any other
Warrant Certificates purchased or acquired by the Company otherwise than upon
the exercise thereof.
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2.5 Notice of Expiration; Extension of Expiration Date.
(a) Notice of Expiration; Effect. All Warrants that have not been
exercised or purchased in accordance with the provisions of this Agreement
shall expire and all rights of holders of such Warrants shall terminate and
cease on the Expiration Date. The Company agrees to notify each holder of
Warrants, not less than forty-five (45) days but not more than one hundred
twenty (120) days, prior to the Expiration Date in writing, of the
Expiration Date and that, on the Expiration Date, all Warrants remaining
unexercised shall expire and all rights of holders of such Warrants shall
terminate and cease.
(b) Extension of Expiration Date. If notice of the Expiration Date is
not given within the time period specified in Section 2.5(a), then the
Expiration Date shall be extended to, and shall instead occur, on that date
which is ninety (90) days after such notice is actually given.
2.6 Fractional Shares. The Company shall not be required to issue
fractional shares of Common Stock upon the exercise of any Warrant. Upon the
exercise of any Warrant, there shall be paid to the holder thereof, in lieu of
any fractional share of Common Stock resulting therefrom, an amount of cash
equal to the product of:
(a) the fractional amount of such share; times
(b) the Market Price, as determined on the trading day immediately
prior to the date of exercise of such Warrant.
3. AGREEMENTS OF THE COMPANY.
3.1 Reservation of Common Stock. The Company covenants and agrees that it
will at all times cause to be reserved and kept available out of its authorized
and unissued shares of Common Stock such number of shares of Common Stock as
will be sufficient to permit the exercise in full of all Warrants issued
hereunder and all other Rights exercisable or convertible into Common Stock. In
addition, at all times prior to the Share Purchase Right Termination Date, the
Company shall reserve a sufficient number of Share Purchase Rights as will be
sufficient to permit all shares of Common Stock issuable upon exercise in full
of all Warrants issued hereunder and all other Rights exercisable or convertible
into Common Stock to be issued together with the attached Share Purchase Rights.
3.2 Common Stock To Be Duly Authorized and Issued, Fully Paid and
Nonassessable. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon the exercise of any Warrants, at the time of delivery of the certificates
representing such shares, shall be duly and validly authorized and issued and
fully paid and nonassessable, free of any preemptive rights in favor of any
Person in respect of such issuance and free of any Lien created by, or arising
out of actions of, the Company, any Subsidiary or any Affiliate.
3.3 Transfer Taxes. The Company covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the initial issuance or delivery of:
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(a) each Warrant Certificate;
(b) each Warrant Certificate issued in exchange for any other Warrant
Certificate pursuant to Section 1.3(a) or Section 2.3 hereof (in each case,
other than in connection with a transfer of the Warrants represented
thereby to a Transferee); and
(c) each share of Common Stock issued upon the exercise of any
Warrant.
The Company shall not, however, be required to:
(i) pay any transfer tax that may be payable in respect of the
transfer or delivery of certificates representing Warrants or shares of
Common Stock in a name other than that of the registered holder of the
certificate surrendered for exercise, conversion, transfer or exchange (any
such tax being payable by the holder of such certificate at the time of
surrender); or
(ii) issue or deliver any such certificates referred to in the
foregoing clause (i) until any such tax referred to in the foregoing clause
(i) shall have been paid.
3.4 Common Stock Record Date. Each Person in whose name any certificate for
shares of Common Stock is issued upon the exercise of Warrants shall for all
purposes be deemed to have become the holder of record of the Common Stock
represented thereby on, and such certificate shall be dated, the date upon which
the Warrant Certificate evidencing such Warrants was duly surrendered with an
election to purchase attached thereto duly executed and payment of the aggregate
Purchase Price (and any applicable transfer taxes, if payable by such Person)
was made.
3.5 Rights in Respect of Common Stock. Except as otherwise set forth
herein, prior to the exercise of the Warrants evidenced thereby and payment
therefor, the holder of a Warrant Certificate shall not be entitled to any
rights of a stockholder in the Company with respect to shares for which the
Warrants shall be exercisable, including, without limitation, the right to vote
in respect of any matter upon which the holders of Common Stock may vote or the
right to receive dividends or other distributions and, except as expressly set
forth herein, shall not be entitled to receive any notice of any proceedings of
the Company. Prior to the exercise of the Warrants evidenced thereby, the
holders of the Warrant Certificates shall not have any obligation or any
liability as stockholders of the Company, whether such obligation or liabilities
are asserted by the Company or by creditors of the Company.
3.6 CUSIP Number. The Company covenants and agrees to maintain:
(a) a private placement number in respect of the Warrants; and
(b) a CUSIP number in respect of the Common Stock;
in each case, from the CUSIP Service Bureau of Standard & Poor's, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc.
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3.7 Right of Action. All rights of action in respect of the Warrants are
vested in the respective registered holders of the Warrant Certificates, and any
registered holder of any Warrant Certificate, without the consent of the holder
of any other Warrant Certificate, may, on its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, its right to
exercise the Warrants evidenced by such Warrant Certificate in the manner
provided in such Warrant Certificate and in this Agreement.
3.8 Survival. The agreements of the Company contained in this Section 3
shall survive the exercise of and the expiration of the Warrants.
4. ANTIDILUTION ADJUSTMENTS.
4.1 Mechanical Adjustments. The number of shares of Common Stock
purchasable upon the exercise of each Warrant, and the Purchase Price, shall be
subject to adjustment as set forth in this Section 4.
4.2 Stock Dividends, Subdivisions and Combinations. In the event that the
Company shall, on or after the date hereof:
(a) pay a dividend in shares of Additional Common Stock or make a
distribution in shares of Additional Common Stock;
(b) reclassify by subdivision its outstanding shares of Common Stock
into a greater number of shares; or
(c) reclassify by combination its outstanding shares of Common Stock
into a smaller number of shares;
then, and in each such case, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision or
combination shall be adjusted to that price determined by multiplying the
Purchase Price in effect immediately prior to such event by the quotient of:
(i) the total number of outstanding shares of Common Stock
immediately prior to such event; divided by
(ii) the total number of outstanding shares of Common Stock
immediately after such event.
An adjustment made pursuant to this Section 4.2 shall become effective on the
effective date of such event.
4.3 Dividends and Distributions. In the event that the Company shall make
or pay any dividend of, or distribute to holders of shares of Common Stock
(including, without limitation, any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation)
shares of capital stock (other than Common Stock) or rights, warrants or options
exercisable into such capital stock (other than Rights), other Securities,
8
evidences of its indebtedness or any of its Property (other than cash dividends
payable out of current net income or retained earnings), then, in each case, the
Purchase Price in effect after the record date in respect of which such stock,
rights, warrants, options, other Securities, indebtedness or Property were
dividended or distributed shall be adjusted by multiplying the Purchase Price in
effect immediately prior to such record date by the quotient of:
(a) the difference of:
(i) the Reference Price on such record date; minus
(ii) the quotient of:
(A) the then fair value (as determined by the Valuation
Agent, whose determination, if so made, shall be conclusive) of
the shares of stock, rights, warrants, options, other Securities,
evidences of indebtedness or Property so dividended or
distributed; divided by
(B) the number of shares of Common Stock outstanding on the
record date;
divided by
(b) the Reference Price on such record date.
Such adjustment shall be made whenever any such dividend or distribution is
made, and shall become effective on the date of such dividend or distribution.
4.4 Repurchases of Common Stock or Rights. In the event that the Company
shall repurchase, redeem, retire or otherwise acquire shares of Common Stock or
Rights for a Consideration Per Share greater than the Reference Price in effect
on the date of such repurchase, redemption, retirement or acquisition, then the
Purchase Price in effect immediately after such event shall be adjusted by
multiplying the Purchase Price in effect immediately prior to such event by the
quotient of:
(a) the difference of:
(i) the product of:
(A) the number of shares of Common Stock (calculated on a
Fully-Diluted Basis) immediately prior to such event; multiplied
by
(B) the Reference Price in effect immediately prior to such
event;
minus
(ii) the Aggregate Consideration Paid;
9
divided by
(b) the product of:
(i) the Reference Price in effect immediately prior to such
event; multiplied by
(ii) the number of shares of Common Stock (calculated on a Fully-
Diluted Basis) immediately after such event.
In the event that any of the Aggregate Consideration Paid consists of
Property other than cash, the value of such Property for purposes of computing
the Aggregate Consideration Paid shall be determined by the Valuation Agent as
of a date not more than thirty (30) days prior to the date of determination
thereof and shall be set forth in a written certificate of the Valuation Agent
which shall be delivered to the holders of the Warrants in the manner
contemplated by Section .
The provisions of this Section shall not apply to any redemption of all
Share Purchase Rights by the Company in accordance with the provisions of the
Rights Agreement.
4.5 Issuances of Additional Common Stock or Rights. In the event that the
Company shall issue or sell shares of Additional Common Stock or Rights
(excluding Excluded Securities) for no consideration or at a Consideration Per
Share lower than the Reference Price in effect on the date of such issuance or
sale, then the Purchase Price in effect immediately after such event shall be
adjusted by multiplying the Purchase Price in effect immediately prior to such
event by the quotient of:
(a) the sum of:
(i) the number of shares of Common Stock outstanding immediately
prior to such event; plus
(ii) the quotient of:
(A) the Aggregate Consideration Receivable; divided by
(B) the Reference Price;
in each case immediately prior to such event;
divided by
(b) the sum of:
(i) the number of shares of Common Stock outstanding immediately
prior to such event; plus
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(ii) the number of shares of Additional Common Stock so issued or
sold (or initially issuable pursuant to such Rights).
In the event that any of the Aggregate Consideration Receivable consists of
Property other than cash, the value of such Property for purposes of computing
the Aggregate Consideration Receivable shall be determined by the Valuation
Agent as of a date not more than thirty (30) days prior to the date of
determination thereof and shall be set forth in a written certificate of the
Valuation Agent which shall be delivered to the holders of the Warrants in the
manner contemplated by Section .
4.6 Expiration of Rights. Upon the expiration of any Rights in respect of
the issuance of which adjustment was made pursuant to Section 4.5, without the
exercise thereof, the Purchase Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall, upon such expiration, be
readjusted and shall thereafter be such Purchase Price and such number of shares
of Common Stock as would have been had such Purchase Price and such number of
shares of Common Stock 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; 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, whether or not exercised;
provided that no such readjustment shall have the effect of increasing the
Purchase Price by an amount in excess of the amount of the reduction
initially made in respect of the issuance, sale, or grant of such Rights.
4.7 Consolidation; Merger; Sale; Reclassification. In the event that there
shall be:
(a) any consolidation of the Company with, or merger of the Company
with or into, another corporation (other than a merger in which the Company
is the surviving corporation and that does not result in either:
(i) any reclassification or change of shares of Common Stock
outstanding immediately prior to such merger; or
(ii) cash or Securities or Property of any Person acquiring then
Company being issued to all stockholders of the Company (other than
the acquiring Person) in exchange for the Common Stock formerly held
by them (whether pursuant to a reverse triangular merger or
otherwise);
(b) any sale or conveyance to another corporation of the Property of
the Company substantially as an entirety;
(c) any reclassification of the Common Stock that results in the
issuance of other Securities of the Company; or
11
(d) any separation of the Share Purchase Rights (including, without
limitation, on the Distribution Date, as defined therein) from the Common
Stock;
then, in each such case, lawful provision shall be made as a part of the terms
of such transaction so that the holders of Warrants shall thereafter have the
right to purchase the number and kind of shares of stock, other Securities,
Share Purchase Rights, cash, Property and Rights receivable upon such
consolidation, merger, sale, conveyance, reclassification by a holder of such
number of shares of Common Stock as the holder of a Warrant would have had the
right to acquire upon the exercise of such Warrant immediately prior to such
consolidation, merger, sale, conveyance, reclassification or detachment, at the
Purchase Price then in effect, and, without further action on the part of any
Person, each Warrant will thereafter represent the right to receive, upon
payment of the Purchase Price, such shares of stock, other Securities, Share
Purchase Rights, cash, Property and Rights as are so receivable. The Company
agrees that, as a condition of proceeding with any such merger, consolidation or
sale, it shall cause the Person surviving such merger or consolidation, the
Person acquiring the Company or the Person to whom such sale or conveyance is
made, as the case may be, at the time of such consolidation, merger or sale, to
expressly assume the due and punctual observance and performance of each and
every provision of this Agreement and all obligations and liabilities of the
Company hereunder (subject to the foregoing sentence), in each case, pursuant to
such agreements and instruments as are reasonably acceptable to the Required
Warrantholders.
4.8 De Minimis Changes in Purchase Price. No adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Purchase Price; provided that any
adjustments that, at the time of the calculation thereof, are less than one
percent (1%) of the Purchase Price at such time and by reason of this Section
are not required to be made at such time shall be carried forward and added to
any subsequent adjustment or adjustments for purposes of determining whether
such subsequent adjustment or adjustments, as so supplemented, exceed the one
percent (1%) amount set forth in this Section 4.8 and, if any such subsequent
adjustment, as so supplemented or otherwise, should exceed such one percent (1%)
amount, all adjustments deferred prior thereto and not previously made shall
then be made. In any case, all such adjustments being carried forward pursuant
to this Section 4.8 shall be given effect upon the exercise of any Warrants by
any holder thereof for purposes of determining the Purchase Price thereof. All
calculations shall be made to the nearest cent ($0.01).
4.9 Adjustment of Number of Shares Issuable Pursuant to Warrants. Upon each
adjustment of the Purchase Price as a result of any calculations made pursuant
to Section 4.2, Section 4.3, Section 4.4, Section 4.5 or Section 4.12, each
Warrant outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of shares of Common Stock (calculated to the nearest share) obtained by
multiplying the number of shares of Common Stock covered by such Warrant
immediately prior to such adjustment by the quotient of:
(a) the Purchase Price in effect immediately prior to such adjustment,
divided by
(b) the Purchase Price in effect immediately after such adjustment.
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All Warrants originally issued by the Company hereunder shall, subsequent to any
adjustment made to the Purchase Price hereunder, evidence the right to purchase,
at the adjusted Purchase Price, the number of shares of Common Stock determined
to be purchasable from time to time hereunder upon exercise of such Warrants,
all subject to further adjustment as provided herein. Each such adjustment shall
be valid and binding upon the Company and the holders of Warrants irrespective
of whether the Warrant Certificates theretofore and thereafter issued express
the Purchase Price per share of Common Stock and the number of shares of Common
Stock that were expressed upon the initial Warrant Certificates issued
hereunder.
4.10 Miscellaneous.
(a) Adjustments shall be made pursuant to this Section 4 successively
whenever any of the events referred to in Section 4.2 through Section 4.7,
inclusive, shall occur.
(b) If any Warrant shall be exercised subsequent to the record date
for any of the events referred to in Section 4.2 through Section 4.7,
inclusive, but prior to the effective date thereof, appropriate adjustments
shall be made immediately after such effective date so that the holder of
such Warrant on such record date shall have received, in the aggregate, the
kind and number of shares of Common Stock or other Securities or Property
that it would have owned or been entitled to receive on such effective date
had such Warrant been exercised prior to such record date.
(c) Shares of Common Stock owned by or held for the account of the
Company or any Subsidiary shall not, for purposes of the adjustments set
forth in this Section 4, be deemed outstanding.
4.11 Other Securities. In the event that at any time, as a result of an
adjustment made pursuant to this Section 4, each holder of Warrants shall become
entitled to purchase any Securities of the Company other than shares of Common
Stock, the number or amount of such other Securities so purchasable and the
Purchase Price of such Securities shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in Section 4.2 through Section 4.7, inclusive, hereof, and
all other relevant provisions of this Section 4 that are applicable to shares of
Common Stock shall be applicable to such other Securities.
4.12 Additional Agreements of the Company. The Company covenants and agrees
that:
(a) The Company shall not, by amendment to its Charter as in effect on
the date hereof, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, liquidation, issuance or sale of
Securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, or which would have the effect of circumventing
or avoiding the provisions of this Section 4, but shall at all times in
good faith assist in the carrying out of all the provisions of this Section
and in the taking of all such actions as may be necessary or appropriate in
order to protect the rights of the holders of the Warrant Certificates
against dilution or other impairment.
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(b) Before taking any action that would result in an adjustment to the
then current Purchase Price to a price that would be below the then current
par value of Common Stock issuable upon exercise of any Warrant, the
Company will take or cause to be taken any and all necessary corporate or
other action that may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon
payment of such Purchase Price as so adjusted.
(c) If the Company shall amend the provisions of any Rights (other
than the Warrants), including, without limitation, the Series A Preferred
Stock or the Outstanding Warrants, or make any adjustment thereto (pursuant
to any antidilution provision or otherwise) so as to reduce the
Consideration Per Share applicable thereto, increase the number of shares
issuable upon exercise thereof or otherwise change the economic terms (such
as the purchase price, exercise price, conversion price or conversion ratio
thereof), then the Company shall make appropriate adjustment, as nearly as
practical to those that would be required by the provisions of Section 4.2
through Section 4.5, inclusive, most nearly analogous to the effect of such
amendment, to the Purchase Price, and, pursuant to and Section 4.9, to the
number of shares of Common Stock issuable upon exercise of the Warrants, as
shall be fair and equitable, such adjustment to be determined by the
Valuation Agent.
(d) In the event that any of the events described in any of Section
4.2 through Section 4.5, inclusive, give rise to an adjustment to the
purchase, exercise or conversion price or conversion ratio, or number of
shares of Common Stock issuable upon conversion or exercise, of any Rights
(other than the Warrants), including, without limitation, the Series A
Preferred Stock and the Outstanding Warrants, then the adjustments provided
for in Section 4.2 through Section 4.5, inclusive, in respect of such event
shall give effect both to the event giving rise to such adjustment under
this Agreement and to all such adjustments made in respect of such other
Rights; provided, however, that no such adjustment shall duplicate any
adjustment required to be made in respect thereof by virtue of the
provisions of Section 4.12(c).
5. REPORTING COVENANTS
5.1 Financial and Business Information.
The Company shall deliver to each holder of Warrants:
(a) Quarterly Financial Statements -- as soon as practicable after the
end of each quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such fiscal year), and
in any event within forty-five (45) days thereafter:
(i) a consolidated balance sheet as at the end of such quarter;
and
(ii) consolidated statements of income and cash flows for such
quarter and (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter;
14
for the Company and the Subsidiaries, setting forth in each case, in
comparative form, the financial statements for the corresponding
periods in the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly financial
statements generally; provided, that timely delivery of copies of the
Company's Quarterly Report on Form 10-Q filed with the SEC shall be
deemed to satisfy the requirements of this Section 5.1(a);
(b) Annual Financial Statements -- as soon as practicable after the
end of each fiscal year of the Company, and in any event within ninety (90)
days thereafter:
(i) a consolidated balance sheet as at the end of such year; and
(ii) consolidated statements of income, stockholders' equity and
cash flows for such year;
for the Company and the Subsidiaries, setting forth in comparative form,
the financial statement for the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP, and accompanied by an audit
report thereon of independent certified public accountants of recognized
national standing, which report shall state without qualification
(including, without limitation, qualifications related to the scope of the
audit, the compliance of the audit with generally accepted auditing
standards, or the ability of the Company or a material subsidiary thereof
to continue as a going concern), that such financial statements have been
prepared and are in conformity with GAAP; provided, that the timely
delivery of the Company's Annual Report on Form 10-K for such fiscal year
filed with the SEC shall be deemed to satisfy the requirements of this
Section 5.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available:
(i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to stockholders generally; and
(ii) each regular or periodic report (including, without
limitation, each Form 10-K, Form 10-Q and Form 8-K), and each
amendment thereto filed by the Company or any Subsidiary with the SEC
(and any successor agency);
(d) Rule 144A -- promptly upon the request of any holder of Warrants,
information required to comply with 17 C.F.R. ss.230.144A, as amended from
time to time, in connection with any transfer or proposed transfer of any
Warrants; and
(e) Requested Information -- with reasonable promptness, such other
data and information as from time to time may be requested by any holder of
Warrants.
5.2 Extension of Time to File SEC Reports. If the rules and regulations of
the SEC under the Exchange Act and the rules and regulations of the NASDAQ
National Market are amended to permit extend the deadline for delivery to the
SEC and the NASDAQ National Market of Quarterly Reports on Form 10-Q (or any
successor form) beyond the forty-five (45) days following the end of each fiscal
quarter of the Company (other than its last fiscal quarter) as currently
required, then the forty-five (45) day period within which quarterly financial
15
statements are required to be delivered in accordance with the provisions of
Section 5.1(a) shall be similarly extended. If the rules and regulations of the
SEC under the Exchange Act and the rules and regulations of the NASDAQ National
Market are amended to permit extend the deadline for delivery to the SEC and the
NASDAQ National Market of Annual Reports on Form 10-K (or any successor form)
beyond the ninety (90) days following the end of the Company's fiscal year as
currently required, then the ninety (90) day period within which annual
financial statements are required to be delivered in accordance with the
provisions of Section 5.1(b) shall be similarly extended.
5.3 Information Concerning Antidilution Adjustments.
(a) Notice of Adjustment. Whenever the number of shares of Common
Stock issuable upon the exercise of Warrants is adjusted or the Purchase
Price in respect thereof is adjusted, as herein provided, the Company shall
promptly give to each holder of Warrants notice of such adjustment or
adjustments and shall promptly deliver to each holder of Warrants a
certificate of the chief financial officer of the Company setting forth:
(i) the number of shares of Common Stock issuable upon the
exercise of each Warrant and the Purchase Price of such shares after
such adjustment;
(ii) a brief statement of the facts requiring such adjustment;
and
(iii) the computation by which such adjustment was made.
(b) Annual Certificate. So long as any Warrant is outstanding, within
ninety (90) days of the end of each fiscal year of the Company, the Company
shall deliver to each holder of Warrants a certificate of the chief
financial officer of the Company setting forth:
(i) the number of shares of Common Stock issuable upon the
exercise of each Warrant and the Purchase Price of such shares as of
the end of such fiscal year;
(ii) a brief statement of the facts requiring each adjustment, if
any, required to be made in such fiscal year; and
(iii) the computation by which each such adjustment was made.
(c) Confirmation by Accountants. At the request of a holder of
Warrants, a certificate of the chief financial officer pursuant to Section
5.3(a) or Section 5.3(b) shall be confirmed by a certificate from the
independent certified public accountants of the Company.
(d) Notices of Certain Events. Whenever the Company shall publicly
announce the authorization of any Notice Event, the Company shall, not less
than fifteen (15) days prior to the record date with respect to such event
(or, if no record date for the same shall be fixed, not less than fifteen
(15) days prior to the occurrence of such Notice Event), give to each
holder of Warrants, written notice of such event setting forth any
16
change in the number of shares of Common Stock the Company estimates will
be issuable upon the exercise of each Warrant, the estimated Purchase Price
after any adjustment required to be made hereunder and a brief statement of
the facts requiring such adjustment and the computation by which the
Company expects such adjustment will be made. Notwithstanding the
foregoing, no failure of the Company to give any such notice shall affect
the validity of the action taken unless such failure was in bad faith.
6. REGISTRATION RIGHTS.
6.1 Incidental Registration.
(a) Filing of Registration Statement. If the Company at any time
proposes to register any of its Common Stock (an "Incidental Registration")
under the Securities Act (other than pursuant to a registration statement
on Form S-4 or Form S-8 or any successor forms thereto, in connection with
an offer made solely to existing Security holders or employees of the
Company), for sale in a public offering, it will each such time give prompt
written notice to all holders of Registrable Securities of its intention to
do so, which notice shall be given to all such holders at least thirty (30)
days prior to the date that a registration statement relating to such
registration is proposed to become effective with the SEC. Upon the written
request of any holder of Registrable Securities to include its shares under
such registration statement (which request shall be made within fifteen
(15) days after the receipt of any such notice and shall specify the
Registrable Securities intended to be disposed of by such holder), the
Company will use its best efforts to effect the registration of all
Registrable Securities that the Company has been so requested to register
by such holder; provided, however, that if, at any time after giving
written notice of its intention to register any Securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register
such Securities, the Company may, at its election, give written notice of
such determination to each such holder and, thereupon, shall be relieved of
its obligation to register any Registrable Securities of such Persons in
connection with such registration.
(b) Selection of Underwriters. Notice of the Company's intention to
register such Securities shall designate the proposed underwriters of such
offering and shall contain the Company's agreement to use its best efforts,
if requested to do so, to arrange for such underwriters to include in such
underwriting the Registrable Securities that the Company has been so
requested to register pursuant to this Section 6.1, it being understood
that the holders of Registrable Securities shall have no right to select
different underwriters for the disposition of their Registrable Securities.
(c) Priority on Incidental Registrations. If the managing underwriter
shall advise the Company in writing (with a copy to each holder of
Registrable Securities requesting sale) that, in such underwriter's
opinion, the number of shares of Securities requested to be included in
such Incidental Registration exceeds the number that can be sold in such
offering within a price range acceptable to the Company (such writing to
state the basis of such opinion and the approximate number of shares of
Securities that may be included in such offering without such effect), the
Company will include in such
17
Incidental Registration, to the extent of the number of shares of
Securities that the Company is so advised can be sold in such offering:
(i) in the case of any registration initiated by the Company for
the purpose of selling Securities for its own account:
(A) first, shares that the Company proposes to issue and
sell for its own account; and
(B) second, Registrable Securities requested to be sold by
the holders thereof pursuant to this Section 6.1 and all
Securities proposed to be registered by the Other Stockholders,
pro rata among such holders on the basis of the number of shares
requested to be so registered by such holders; and
(ii) in the case of a registration initiated by any Other
Stockholder pursuant to demand or required registration rights in
favor of such Other Stockholder:
(A) first, Securities requested to be sold by the Other
Stockholders requesting such Registration;
(B) second, Registrable Securities requested to be sold by
the holders thereof pursuant to this Section 6.1 and all
Securities proposed to be registered by the Other Stockholders
(other than those referred to in Section 6.1(c)(ii)(A)), pro rata
among such holders on the basis of the number of shares requested
to be so registered by such holders; and
(C) third, shares that the Company proposes to issue and
sell for its own account.
6.2 Companies Registration. If the Securities Act (whether by statutory
amendment, amendment of the rules and regulations thereunder or both) is amended
after the date hereof to provide for a Companies Registration Scheme, and the
Company is or becomes eligible to participate in the Companies Registration
Scheme, then the Company, promptly following the request of the Required
Holders, shall use its reasonable best efforts to register promptly under the
Companies Registration Scheme so as to facilitate the resale under the
registration statement contemplated by such Companies Registration Scheme of the
Registrable Securities in accordance with the method or methods of distribution
contemplated by the Holders.
6.3 Registration Procedures. The Company will use its best efforts to
effect each Registration, and to cooperate with the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable, and the Company will as expeditiously as possible:
(a) subject, in the case of an Incidental Registration, to the proviso
to Section , prepare and file with the SEC the registration statement and
use its best efforts to cause the Registration to become effective;
provided, however, that before filing
18
any registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the holders of the Registrable
Securities covered by such registration statement, their counsel, and the
underwriters, if any, and their counsel, copies of all such documents
proposed to be filed (i) in the case of the originally filed registration
statement, at least five (5) Business Days prior thereto, which documents
will be subject to the reasonable review, within such five (5) Business Day
period, of such holders, their counsel and the underwriters; and (ii) in
the case of any amendment or supplement, a reasonable period of time prior
thereto so as to permit the holders and their counsel to reasonably review
such amendment or supplement; and the Company will not name any holder of
Registrable Securities in any registration statement or amendment thereto
or any prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Requisite Holders shall reasonably
object within such period;
(b) subject to the proviso to Section 6.1(a), prepare and file with
the SEC such amendments and post-effective amendments to any registration
statement and any prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement; and cause
the prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act;
(c) furnish to each holder of Registrable Securities included in such
Registration and the underwriter or underwriters, if any, without charge,
at least one signed copy of the registration statement and any
post-effective amendment thereto, upon request, and such reasonable number
of conformed copies thereof and such number of copies of the prospectus
(including each preliminary prospectus and each prospectus filed under Rule
424 under the Securities Act), any amendments or supplements thereto and
any documents incorporated by reference therein, as such holder or
underwriter may reasonably request in order to facilitate the disposition
of the Registrable Securities being sold by such holder (it being
understood that the Company consents to the use of the prospectus and any
amendment or supplement thereto by each holder of Registrable Securities
covered by such registration statement and the underwriter or underwriters,
if any, in connection with the offering and sale of the Registrable
Securities covered by the prospectus or any amendment or supplement
thereto);
(d) notify each holder of the Registrable Securities of any stop order
or other order suspending the effectiveness of any registration statement,
issued or threatened by the SEC in connection therewith, and, subject to
the proviso to Section 6.1(a), take all reasonable actions required to
prevent the entry of such stop order or to remove it or obtain withdrawal
of it at the earliest possible moment if entered;
(e) if requested by the managing underwriter or underwriters, if any,
or any holder of Registrable Securities in connection with any sale
pursuant to a registration statement, promptly incorporate in a prospectus
supplement or post-effective amendment such information relating to such
underwriting as the managing underwriter or underwriters, if any, or such
holder reasonably requests to be included therein; and make
19
all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after being notified of the matters
incorporated in such prospectus supplement or post-effective amendment;
(f) on or prior to the date on which a Registration is declared
effective, use its best efforts to register or qualify, and cooperate with
the holders of Registrable Securities included in such Registration, the
underwriter or underwriters, if any, and their counsel, in connection with
any necessary registration or qualification of the Registrable Securities
covered by such Registration for offer and sale under the securities or
"blue sky" laws of each state and other jurisdiction of the United States
as any managing underwriter, if any, reasonably requests in writing; use
its best efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period
such registration statement is required to be kept effective; and do any
and all other acts or things necessary or advisable to enable the
disposition in all such jurisdictions reasonably requested of the
Registrable Securities covered by such Registration; provided, however,
that the Company will not be required to qualify generally to do business
in any jurisdiction where it is not then so qualified or to take any action
which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(g) in connection with any sale pursuant to a Registration, cooperate
with the holders of Registrable Securities and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Securities
to be sold under such Registration, and enable such Securities to be in
such denominations and registered in such names as the managing underwriter
or underwriters, if any, or such holders may request;
(h) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or
authorities within the United States and having jurisdiction over the
Company or any Subsidiary as may reasonably be necessary to enable the
seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Securities;
(i) notify each seller of Registrable Securities covered by such
Registration, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such Registration, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and promptly prepare, file with the SEC
and furnish to such seller or holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers or prospective purchasers
of such Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they are made;
(j) otherwise comply with all applicable rules and regulations of the
SEC, and make generally available to its security holders (as contemplated
by Section 11(a) under the Securities Act) an earnings statement satisfying
the provisions of Rule 158 under the
20
Securities Act no later than ninety (90) days after the end of the twelve
(12) month period beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the registration
statement, which statement shall cover said twelve (12) month period;
(k) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by each Registration from and after
a date not later than the effective date of such Registration; and
(l) obtain and maintain the registration of the Common Stock under
either section 12(b) or section 12(g) of the Exchange Act; and use its best
efforts to cause all Registrable Securities covered by each Registration to
be listed subject to notice of issuance, prior to the date of first sale of
such Registrable Securities pursuant to such Registration, on:
(i) either the New York Stock Exchange, Inc., or the NASDAQ
National Market; and
(ii) each other securities exchange, if any, on which the Common
Stock is then listed.
The Company may require each holder of Registrable Securities that will be
included in such Registration to furnish the Company with such information in
respect of such holder of its Registrable Securities that will be included in
such Registration as the Company may reasonably request in writing and as is
required by applicable laws or regulations.
6.4 Reasonable Investigation. The Company shall:
(a) give the holders of Registrable Securities, their underwriters, if
any, and their respective counsel and accountants the opportunity to
participate in the preparation of the registration statement, each
prospectus included therein or filed with the SEC and each amendment
thereof or supplement thereto;
(b) give each such holder and underwriter reasonable opportunities to
discuss the business of the Company with its officers, counsel and the
independent public accountants who have certified its financial statements;
(c) make available for inspection by any holder of Registrable
Securities included in any Registration, any underwriter participating in
any disposition pursuant to any Registration, and any attorney, accountant
or other agent retained by any such seller or underwriter, all financial
and other records, pertinent corporate documents and properties of the
Company; and
(d) cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Person in connection with
such Registration;
21
in each such case, as shall be reasonably necessary, in the opinion of such
holder or such underwriter, to enable it to conduct a "reasonable investigation"
within the meaning of the section 11(b)(3) of the Securities Act and to satisfy
the requirement of reasonable care imposed by section 12(a)(2) of the Securities
Act.
6.5 Registration Expenses. The Company will pay all Registration Expenses
in connection with each registration of Registrable Securities, including,
without limitation, any such registration not effected by the Company.
6.6 Indemnification; Contribution.
(a) Indemnification by the Company. The Company shall indemnify, to
the fullest extent permitted by law, each holder of Registrable Securities,
its officers, directors, partners, trustees and agents, if any, and each
Person, if any, who controls such holder within the meaning of section 15
of the Securities Act, against all losses, claims, damages, liabilities (or
proceedings in respect thereof) and expenses (under the Securities Act or
common law or otherwise), joint or several, resulting from any violation by
the Company of the provisions of the Securities Act or any untrue statement
or alleged untrue statement of a material fact contained in any
registration statement or prospectus (and as amended or supplemented if
amended or supplemented) or any preliminary prospectus or caused by any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case
of any prospectus, in light of the circumstances under which they were
made) not misleading, except to the extent that such losses, claims,
damages, liabilities (or proceedings in respect thereof) or expenses are
caused by any untrue statement or alleged untrue statement contained in or
by any omission or alleged omission from information concerning any holder
furnished in writing to the Company by such holder expressly for use
therein. If the offering pursuant to any registration statement provided
for under this Section 6 is made through underwriters, no action or failure
to act on the part of such underwriters (whether or not such underwriter is
an Affiliate of any holder of Registrable Securities) shall affect the
obligations of the Company to indemnify any holder of Registrable
Securities or any other Person pursuant to the preceding sentence. If the
offering pursuant to any registration statement provided for under this
Section is made through underwriters, the Company agrees, and subject to
the proviso to Section 6.1(a), to the extent (but only to the extent)
required by such underwriters, to enter into an underwriting or other
agreement providing for indemnity of such underwriters, their officers,
directors and agents, if any, and each Person, if any, who controls such
underwriters within the meaning of section 15 of the Securities Act to the
same extent as hereinbefore provided with respect to the indemnification of
the holders of Registrable Securities; provided that the Company shall not
be required to indemnify any such underwriter, or any officer or director
of such underwriter or any Person who controls such underwriter within the
meaning of section 15 of the Securities Act, to the extent that the loss,
claim, damage, liability (or proceedings in respect thereof) or expense for
which indemnification is claimed results from such underwriter's failure to
send or give a copy of an amended or supplemented final prospectus to the
Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the
sale of Registrable Securities to such Person if such statement or omission
was corrected in such amended or supplemented final prospectus prior to
22
such written confirmation and the underwriter was provided with such
amended or supplemented final prospectus.
(b) Indemnification by the Holders. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder, severally and not jointly, shall
indemnify, to the fullest extent permitted by law, the Company, each
underwriter (if the underwriter so requires) and their respective officers,
directors and agents, if any, and each Person, if any, who controls the
Company or such underwriter within the meaning of section 15 of the
Securities Act, against any losses, claims, damages, liabilities (or
proceedings in respect thereof) and expenses resulting from any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact required to be stated in the
registration statement or prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or necessary to make the statements
therein (in the case of any prospectus, in light of the circumstances under
which they were made) not misleading, but only to the extent that such
untrue statement is contained in or such omission is from information so
concerning a holder furnished in writing by such holder expressly for use
therein; provided, however, that such holder's obligations hereunder shall
be limited to an amount equal to the net proceeds to such holder of the
Registrable Securities sold pursuant to such registration statement.
(c) Control of Defense. Any Person entitled to indemnification under
the provisions of this Section shall give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and
unless the named party to any such action includes both the Company and the
indemnified party and counsel for such indemnified party has advised the
indemnified party that in its reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of
such claim, permit such indemnifying party to assume the defense of such
claim, with counsel reasonably satisfactory to the indemnified party; and
if such defense is so assumed, such indemnifying party shall not enter into
any settlement without the consent of the indemnified party if such
settlement attributes liability to the indemnified party and such
indemnifying party shall not be subject to any liability for any settlement
made without its consent (which shall not be unreasonably withheld); and
any underwriting agreement entered into with respect to any registration
statement provided for under this Section 6 shall so provide. In the event
an indemnifying party shall not be entitled, or elects not, to assume the
defense of a claim, such indemnifying party shall not be obligated to pay
the fees and expenses of more than one counsel or firm of counsel for all
parties indemnified by such indemnifying party in respect of such claim,
unless in the reasonable judgment expressed in writing by counsel to such
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties in respect to such claim.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses:
23
(i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the
indemnified party on the other; or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant
equitable considerations.
Notwithstanding the foregoing, no holder of Registrable Securities shall be
required to contribute any amount in excess of the amount such holder would
have been required to pay to an indemnified party if the indemnity under
Section 6.6(b) hereof was available. No Person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. The obligation of any Person to
contribute pursuant to this Section 6.6 shall be several and not joint.
(e) Advancement of Expenses. An indemnifying party shall make payments
of all amounts required to be made pursuant to the foregoing provisions of
this Section 6.6 to or for the account of the indemnified party from time
to time promptly upon receipt of bills or invoices relating thereto or when
otherwise due or payable. Without limiting the generality of the foregoing,
each indemnifying party, as an interim measure during the pendency of any
claim, action, investigation, inquiry or proceeding arising out of or based
upon any matter or subject for which indemnity (or contribution in lieu
thereof) would be available to any indemnified party under any provision of
this Section 6.6, shall promptly reimburse each indemnified party, as often
as invoiced therefor (but in no event more often than monthly), for all
reasonable legal or other expenses incurred in connection with the
investigation or defense of any such claim, action, investigation, inquiry
or proceeding, notwithstanding the absence of any judicial determination as
to the propriety or enforceability of the indemnifying party's obligation
to reimburse the indemnified party for such expenses and notwithstanding
the possibility that the obligations to pay such expenses might later have
been held to be improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement is held to be improper, the
indemnified party agrees to promptly return the amount so advanced to the
indemnifying party, together with interest, compounded monthly, at the
prime rate (or other commercial lending rate for borrowers of the highest
credit standing) listed from time to time in The Wall Street Journal which
represents the average base rate on corporate loans posted by the nation's
thirty (30) largest banks. Any such interim reimbursement payments which
are not made to the indemnified party within thirty (30) days of a request
therefor shall bear interest at such prime rate from the date of such
request to the extent such reimbursement payments are ultimately determined
to be proper obligations of the indemnifying party. Subject to the proviso
to Section 6.1(a), to the extent required by any underwriter in connection
with the execution of any underwriting agreement pursuant to which the
holders of Registrable Securities shall be selling any shares of Common
Stock, the Company shall agree to advancement of the expenses of such
underwriter to at least the same extent as provided in this Section 6.6(e).
24
(f) Survival. The indemnity and contribution agreements contained in
this Section shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of Registrable
Securities, its officers, directors, agents or any Person, if any, who
controls such holder as aforesaid, and shall survive the transfer of such
Securities by such holder.
6.7 Holdback Agreements; Registration Rights to Others.
(a) In connection with each underwritten sale of Registrable
Securities, the Company agrees, and each holder of Registrable Securities
by acquisition of such Registrable Securities agrees, to enter into
customary holdback agreements concerning sale or distribution of
Registrable Securities and other equity Securities of the Company, except,
in the case of any holder of Registrable Securities, to the extent that
such holder is prohibited by applicable law or exercise of fiduciary duties
from agreeing to withhold Registrable Securities from sale or is acting in
its capacity as a fiduciary or investment adviser. Without limiting the
scope of the term "fiduciary," a holder shall be deemed to be acting as a
fiduciary or an investment adviser if its actions or the Registrable
Securities proposed to be sold are subject to the Employee Retirement
Income Security Act of 1974, as amended, or the Investment Company Act of
1940, as amended, or if such Registrable Securities are held in a separate
account under applicable insurance law or regulation.
(b) If the Company shall at any time after the date hereof provide to
any holder of any Securities of the Company rights with respect to the
registration of such Securities under the Securities Act:
(i) such rights shall not be in conflict with or adversely affect
any of the rights provided in this Section 6 to the holders of
Registrable Securities; and
(ii) if such rights are provided on terms or conditions more
favorable to such holder than the terms and conditions provided in
this Section 6, the Company will provide (by way of amendment to this
Section 6 or otherwise) such more favorable terms or conditions to the
holders of Registrable Securities.
6.8 Other Registration of Common Stock. If any shares of Common Stock
required to be reserved for purposes of exercise of Warrants or conversion of
any class of Common Stock into any other class of Common Stock require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered or approved, as
the case may be.
6.9 Availability of Information. At any time that any class of the Common
Stock is registered under section 12(b) or section 12(g) of the Exchange Act,
the Company will comply with the reporting requirements of sections 13 and 15(d)
of the Exchange Act (whether or not it shall be required to do so pursuant to
such Sections) and will comply with all other public information reporting
requirements of the SEC from time to time in effect. In addition, the Company
shall file such reports and information, and shall make available to the public
and to the holders of Registrable Securities such information, as shall be
necessary to permit such
25
holders to offer and sell Registrable Securities pursuant to the provisions of
Rule 144 promulgated under the Securities Act. The Company will also cooperate
with each such holder in supplying such information as may be necessary for such
holder to complete and file any information reporting forms presently or
hereafter required by the SEC as a condition to the availability of an exemption
from the registration provisions of the Securities Act in connection with the
sale of any Registrable Securities. The Company will furnish to each such
holder, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, and copies of all regular and
periodic reports and all registration statements and prospectuses filed by the
Company with any securities exchange or with the SEC.
7. RIGHT OF FIRST REFUSAL.
7.1 Transfer of Warrants. No holder of Warrants shall sell or transfer any
Warrants held by such holder except pursuant to the provisions of this Section 7
or pursuant to an Exempt Transfer.
7.2 Notice of Proposed Transfer. Not less than fifteen (15) days prior to
making any sale or transfer of any Warrants (other than an Exempt Transfer and
other than a transfer to the Company), the transferring holder or holders of
Warrants shall deliver a written notice (a "Transfer Notice") to the Company,
which Transfer Notice shall:
(a) state the proposed number of Warrants to be transferred (the
"Offered Warrants");
(b) state the amount and kind of consideration offered in
exchange for the Offered Warrants;
(c) state the name or identity of the proposed Transferee;
(d) describe in reasonable detail the proposed terms and
conditions of the sale or transfer; and
(e) state the intended date of closing of such transfer.
7.3 First Refusal Right. The Company may elect to purchase all (but not
less than all) the Offered Warrants specified in the Transfer Notice at the
price and on the terms specified therein by delivering written notice of such
election to each holder of Offered Warrants within ten (10) days after the
delivery of the Transfer Notice to the Company. If the Company shall have
elected to purchase all the Offered Warrants, the holder having delivered the
Transfer Notice shall sell to the Company, and the Company shall purchase from
such holder, all such Offered Warrants on the First Refusal Sale Date.
7.4 Transfers to Third Parties on Refusal or Failure to Consummate. If:
26
(a) the Company has not elected to purchase all, but not less than
all, the Offered Warrants pursuant to Section 7.3 on or prior to the date
which is ten (10) days after the date of delivery of the Transfer Notice;
or
(b) the Company shall have elected to purchase all of the Offered
Warrants pursuant to Section 7.3 hereof, but the purchase of all such
Offered Warrants is not consummated on the First Refusal Sale Date;
then, in either case, for a period of one hundred eighty (180) days after the
First Refusal Sale Date relating thereto, the holder or holders of Offered
Warrants may sell or transfer any Offered Warrants to one or more Permitted
Investors without any requirement of compliance with this Section 7.
7.5 Limited Right of First Refusal Regarding Sale of Certain Common Stock.
(a) Grant of First Refusal Option. Each Person who is a holder of
Warrants, by its purchase and acceptance thereof, agrees that should such
Person exercise any Warrants held by such Person, such Person (but not any
future holder of the shares of Common Stock issued to such Person upon
exercise of the Warrants), prior to selling or transferring such shares of
Common Stock (other than in an Exempt Transfer), shall give written notice
(which notice, notwithstanding the provisions of Section 9.6, may be given
solely by facsimile transmission and which shall state the number of shares
proposed to be sold or transferred), and shall use its reasonable efforts
to confirm such transmission by telephone, of such intended sale or
transfer of such shares of Common Stock. The Company shall have the option,
for a period of three (3) hours following the giving of such facsimile
notice, to elect to purchase all (but not less than all) such shares of
Common Stock specified in such facsimile notice at a price per share equal
to the Closing Price in effect at the time of dispatch of such facsimile
notice.
(b) Exercise of First Refusal Option. The Company may exercise its
option by giving the selling Person written notice (which notice,
notwithstanding the provisions of Section 9.6, may be given solely by
facsimile transmission) of its intention to purchase all such shares of
Common Stock at such Closing Price not later than three (3) hours following
the giving of such facsimile notice by such Person, and shall use its
reasonable efforts to confirm such transmission by telephone. If the
Company shall have elected to purchase all such shares of Common Stock, the
Company shall deliver (which, notwithstanding the provisions of Section
9.6, shall be given by facsimile transmission, with the original dispatched
prepaid by overnight courier) to such Person within two (2) hours after the
dispatch of its notice of exercise its option to purchase all such shares,
a written confirmation of such sale, in customary form reasonably
acceptable to the selling Person, setting forth the number of shares to be
purchased, the identity of the selling Person, such Closing Price and the
aggregate price for all such shares being sold, confirming the sale and
transfer of all such shares of Common Stock by such selling Person to the
Company. Subject to Section 7.5(c), settlement of such sale shall occur on
the third (3rd) Business Day following the date the Company exercises such
option. On such date, the Company shall deliver to the selling holder, by
wire transfer of immediately available funds, the purchase price for the
shares of Common Stock being purchased, and the selling holder shall
deliver, by physical delivery of certificates
27
representing such shares of Common Stock, accompanied by stock powers
executed in blank, or, in the event such shares of Common Stock are held in
book entry form, through the facilities of a customary book-entry transfer
facility or system.
(c) Other Sales of Common Stock. In the event that the Company does
not exercise its election to purchase all, but not less than all, shares of
Common Stock proposed to be sold by the selling Person by delivery of
facsimile notice thereof to the selling Person not later than three (3)
hours following the giving of notice of the selling Person's intention to
sell such shares of Common Stock, then such selling Person, for a period of
thirty (30) days commencing upon the failure by the Company to properly
exercise such option, shall be free to sell any shares of Common Stock held
or owned by such Person to any other Person on any terms without any
further requirement of compliance with this Section 7.5. In the event that
the Company shall exercise any option to purchase shares of Common Stock
pursuant to this Section 7.5 but shall fail to make payment therefor on the
settlement date therefor:
(i) the Company's rights pursuant to this Section 7.5 shall
terminated immediately and without any further action;
(ii) the selling holder of the shares of Common Stock which were
the subject of the sale which the Company failed to settle shall
dispose of all such shares in a commercially reasonable manner, and
the Company shall indemnify upon demand and hold harmless the holder
for any difference between the price which the Company would have been
required to pay had such settlement occurred and the price actually
realized upon such actual sale, together with any other expenses,
losses or damages (including consequential or incidental damages)
occasioned by such failure to settle such sale and such subsequent
actual sale; and
(iii) all other holders of Common Stock received by such holder
upon the exercise of any Warrant formerly held by such holder shall be
free to sell any such shares at any time to any Person on any terms
without any further restraint on account of this Section .
8. INTERPRETATION OF THIS AGREEMENT.
8.1 Certain Defined Terms. For the purpose of this Agreement, the following
terms shall have the meanings set forth below or set forth in the Section hereof
following such term:
Additional Common Stock -- means Common Stock, including treasury shares,
issued after the date hereof, except Common Stock issued upon the exercise of
any one or more Warrants.
28
Affiliate -- means, at any time, a Person (other than a Subsidiary or a
Purchaser):
(a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Company;
(b) that beneficially owns or holds five percent (5%) or more of any
class of the Voting Stock of the Company; or
(c) five percent (5%) or more of the Voting Stock (or in the case of a
Person that is not a corporation, five percent (5%) or more of the equity
interest) of which is beneficially owned or held by the Company or any
Subsidiary;
at such time.
As used in this definition,
control -- means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
Aggregate Consideration Paid -- means, in the case of a repurchase,
redemption, retirement or acquisition of shares of Common Stock, the aggregate
amount paid by the Company in connection therewith and, in the case of a
repurchase, redemption, retirement or acquisition of Rights, the sum of:
(a) the aggregate amount paid by the Company for such Rights; plus
(b) the aggregate consideration or premiums stated in such Rights to
be payable for the shares of Common Stock covered thereby.
For purposes of clause (a) above, in the event of the repurchase,
redemption, retirement or acquisition of any Rights together with other
Securities or obligations of the Company or any other Person in which the
purchase price for the Rights and such other Securities or obligations is
expressed as a single purchase price (including, without limitation, upon the
issuance or sale of Preferred Stock or debt Securities which are convertible
into Common Stock), the aggregate amount paid by the Company for such Rights
shall include only the portion of such single purchase price attributable to
such Rights, and not the portion attributable to such other Securities or
obligations. The portion of such purchase price attributable to such Rights in
such case shall be equal to the product of:
(i) such single purchase price; multiplied by
(ii) the quotient of:
(A) the fair market value (as determined by the Valuation Agent)
of such Right, independent of the value of such other Securities or
obligations (computed using the Black-Scholes option pricing model or
such other pricing model as the Valuation Agent determines is
appropriate, and applying such
29
reasonable assumptions concerning price variances with respect to the
Common Stock and such other variables as the Valuation Agent considers
appropriate); divided by
(B) the fair market value (as determined by the Valuation Agent)
of such Right together with such other Securities or obligations
(computed using such methodology and making such assumptions as the
Valuation Agent determines is appropriate).
Aggregate Consideration Receivable -- means, in the case of an issuance or
sale of shares of Additional Common Stock, the aggregate amount paid to the
Company in connection therewith and, in the case of an issuance or sale of
Rights, or any amendment thereto, the sum of:
(a) the aggregate amount paid to the Company for such Rights; plus
(b) the aggregate consideration or premiums stated in such Rights to
be payable for the shares of Additional Common Stock covered thereby;
in each case without deduction for any fees, expenses or underwriters discounts.
For purposes of clause (a) above, in the event of the issuance or sale of
any Rights together with other Securities or obligations of the Company or any
other Person in which the purchase price for the Rights and such other
Securities or obligations is expressed as a single purchase price (including,
without limitation, upon the issuance or sale of Preferred Stock or debt
Securities which are convertible into Common Stock), the aggregate amount paid
to the Company for such Rights should include only the portion of such single
purchase price attributable to such Rights, and not the portion attributable to
such other Securities or obligations. The portion of such purchase price
attributable to such Rights in such case shall be equal to the product of:
(i) such single purchase price; multiplied by
(ii) the quotient of:
(A) the fair market value (as determined by the Valuation Agent)
of such Right, independent of the value of the value of such other
Securities or obligations (computed using the Black-Scholes option
pricing model or such other pricing model as the Valuation Agent
determines is appropriate, and applying such reasonable assumptions
concerning price variances with respect to the Common Stock and such
other variables as the Valuation Agent considers appropriate); divided
by
(B) the fair market value (as determined by the Valuation Agent)
of such Right together with such other Securities or obligations
(computed using such methodology and making such assumptions as the
Valuation Agent determines is appropriate).
30
Agreement, this -- and references thereto shall mean this Warrant Agreement
as it may from time to time be amended or supplemented.
Board of Directors -- means the board of directors of the Company or any
committee thereof that, in the instance, shall have the lawful power to exercise
the power and authority of such board of directors.
Business Day -- means a day other than a Saturday, a Sunday or a day on
which banks in the State of New York are required or permitted by law (other
than a general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.
Charter -- means te Certificate of Incorporation of the Company, as amended
and in effect as of the date hereof.
Closing Price -- means, on any date with respect to any share of Common
Stock:
(a) the last sale price, regular way, on such date or, if no such sale
takes place on such date, the average of the closing bid and asked prices
on such date, in each case as officially reported on the principal national
securities exchange on which any Common Stock is then listed or admitted to
trading; and
(b) if no Common Stock is then listed or admitted to trading on any
national securities exchange, but is listed on the NASDAQ National Market
or the NASDAQ SmallCap Market, as the case may be, the last trading price
of any Common Stock on such date as reported by NASDAQ, or if there shall
have been no trading on such date, the average of the reported closing bid
and asked prices on such date as shown by NASDAQ.
Common Stock -- means the Common Stock, par value $.01 per share, of the
Company; provided, however, that prior to the Share Purchase Right Termination
Date, the term "Common Stock," and references to any shares thereof, shall in
each case include the attached Share Purchase Rights.
Companies Registration Scheme -- means an amendment to the Securities Act
(whether by statutory amendment, amendment of the rules and regulations
thereunder or both), such as, without limitation, as proposed in the Report of
the Advisory Committee on the Capital Formation and Regulatory Processes of the
Securities and Exchange Commission, dated July 24, 1996, pursuant to which:
(a) issuers of Securities are permitted to register all issuances of
securities on an integrated company registration statement; and
(b) under the provisions of such amendment, such registration could
cover the reoffering or resale by the holders thereof of shares of Common
Stock issued upon the exercise of the Warrants, if any, outstanding at such
time.
Company -- shall have the meaning specified in the introductory paragraph
hereof.
31
Consideration Per Share -- means, with respect to shares of Common Stock or
Rights, the quotient of:
(a) the Aggregate Consideration Paid (in the case of a repurchase,
redemption, retirement or other acquisition for value of Common Stock or
Rights) or the Aggregate Consideration Receivable (in the case of an
issuance or sale of Common Stock or Rights by the Company), as the case may
be, in respect of such shares of Common Stock or such Rights; divided by
(b) the total number of such shares of Common Stock or, in the case of
Rights, the total number of shares of Common Stock into which by such
Rights are exercisable or convertible.
Effective Date -- means March 1, 1999.
Exchange Act -- means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Excluded Securities -- means and includes:
(a) shares of Common Stock or Rights issued in any of the transactions
described in Section 4.2 through Section 4.7, inclusive, hereof, and in
respect of which an adjustment has been made pursuant to such Section;
(b) shares of Common Stock issuable upon exercise of the Warrants or
any other Rights (including, without limitation, any Outstanding Warrants)
outstanding on the date hereof;
(c) shares of Common Stock or other Securities issued or sold by the
Company upon exercise of any Share Purchase Rights in accordance with the
provisions of the Rights Agreement, and any Common Stock, if any, issued
upon the exercise or conversion of such other Securities in accordance with
the provisions of the Rights Agreement;
(d) shares of Common Stock issued to the public in a bona fide public
offering registered under the Securities Act to Persons other than:
(i) Affiliates;
(ii) employees of the Company; or
(iii) existing holders of Common Stock or Rights;
provided, however, that a bona fide public offering sold through an
underwriter and held open to the public generally shall not fail to meet
the requirements of this clause (c) merely by virtue of the fact that one
or more Affiliates, employees or existing holders of Common Stock or Rights
may have been purchasers from the underwriters therein so
32
long as no pre-existing arrangement or agreement to so purchase shares in
connection with such offering was in existence or in effect;
(e) shares of the Common Stock sold in a bona fide private placement
transaction for a price not less than ninety (90%) of the Market Price
calculated as the date of the closing of such sale, so long as the price of
such shares was negotiated at arm's length and so long as the purchasers of
such shares are not either:
(i) Affiliates;
(ii) employees of the Company; or
(iii) existing holders of Common Stock or Rights; and
(f) Rights consisting of employee stock options granted with an
exercise price not less than the Market Price thereof as of the date of the
grant, and shares of Common Stock issued upon exercise of such Rights,
issued to employees, consultants or independent contractors of the Company
pursuant to any stock option plan approved by the Board of Directors at any
time, so long as, and to the extent that:
(i) the aggregate number of shares of Common Stock issuable upon
exercise of such stock options (whether or not then currently
exercisable) at such time, together with all shares of Common Stock
previously issued upon exercise of such stock options, does not exceed
nine hundred thousand (900,000) shares, such number of shares to be
appropriately adjusted in respect of the occurrence of any of the
events described in Section 4 hereof; and
(ii) no other holder of any Rights or any other Securities of the
Company shall have the right to any preemptive, subscription or
similar right in respect of such issuance.
Exempt Transfer -- means, with respect to any transfer of Warrants or
Common Stock issued upon exercise of any Warrants by any holder thereof, any
transfer:
(a) to any affiliate of such holder;
(b) to any other holder of Warrants;
(c) to any affiliate of any other holder;
(d) in connection with the liquidation, dissolution, termination or
other event with respect to any holder of Warrants which requires such
holder to distribute the Warrants to the stockholders, shareholders,
members or partners of such holder, each such stockholder, shareholder,
member or partner;
(e) to a nominee of or custodian for such holder; or
(f) in connection with a bona fide pledge of such Warrants or Common
Stock.
33
Expiration Date -- means March 1, 2008, subject to extension as provided in
Section 2.5.
Fair Value -- means, with respect to any share of Common Stock at any time,
the quotient of:
(a) the difference of:
(i) the sum of:
(A) the fair salable value of the Company as a going
concern, giving effect to all Property thereof and subject to all
liabilities thereof, that would be realized in an arm's length
sale between an informed and willing buyer and an informed and
willing seller, under no compulsion to buy or sell, respectively,
as of a date that is within fifteen (15) days of the date as of
which the determination is to be made, determined by agreement
among the holders of the Warrants and the Company and, if, in the
Company's view after reasonable negotiation no such agreement can
be reached, by the Valuation Agent, such determination in either
case to be made without regard to the absence of a liquid or
ready market for such Common Stock; plus
(B) the aggregate exercise or conversion price of all
Warrants and all other Valuable Rights (including, without
limitation, Valuable Rights in respect of any shares of Preferred
Stock convertible at such time into shares of Common Stock) in
existence and remaining unexercised on such date;
minus
(ii) if there shall then exist any outstanding shares of
Preferred Stock (other than Preferred Stock convertible at such time
into shares of Common Stock, which shares represent Valuable Rights at
such time), the aggregate liquidation preference of (or, if less, the
aggregate price, if any, at which the Company could elect to redeem)
such shares of Preferred Stock (together with all accrued and unpaid
dividends thereon);
divided by
(b) the sum of:
(i) the total number of shares of Common Stock then outstanding;
plus
(ii) the aggregate number of shares of Common Stock issuable in
respect of all Valuable Rights (including, without limitation,
Valuable Rights in respect of any shares of Preferred Stock
convertible at such time into shares of Common Stock) at such time.
34
First Refusal Sale Date -- means, with respect to any Transfer Notice, the
date which is fifteen (15) days after the date such Transfer Notice is delivered
to the Company, or such later date as is agreed to by the Company and the holder
of the Offered Warrants.
Fully Diluted Basis -- means, with respect to any calculation of the number
of shares of Common Stock at any time, the sum of:
(a) the number of shares of Common Stock outstanding at such time;
plus
(b) the aggregate number of shares of Common Stock issuable upon the
exercise, conversion or exchange, as the case may be, of all Rights
outstanding at such time, regardless of whether such Rights are then
exercisable, convertible or exchangeable and regardless of whether the
consideration given up by the holder of such Right in connection with the
exercise, conversion or exchange thereof would exceed the value of the
Common Stock received upon such exercise, conversion or exchange.
GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.
Incidental Registration -- Section 6(a).
Initial Purchase Price -- means Four and One Hundred Twenty-Five
One-Thousandths Dollars ($4.125) per share.
Initiating Holders -- means, at any time, the holders (other than the
Company or any Affiliate thereof) of at least fifty-one percent (51%) (by number
of shares) of the Registrable Securities at such time (excluding any Registrable
Securities held directly or indirectly by the Company or any Affiliate thereof).
Lien -- means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property (for purposes of this
definition, the "Owner"), whether such interest is based on the common law,
statute or contract, and includes but is not limited to:
(a) the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes, and the filing of any financing statement
under the Uniform Commercial Code of any jurisdiction, or an agreement to
give any of the foregoing;
(b) reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting real Property;
35
(c) stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements affecting the Owner's rights in
stock owned by the Owner; and
(d) any interest in any Property held by the Owner evidenced by a
conditional sale agreement, capitalized lease or other arrangement pursuant
to which title to such Property has been retained by or vested in some
other Person for security purposes.
The term "Lien" does not include negative pledge clauses in loan agreements and
equal and ratable security clauses in loan agreements.
Market Price -- means, per share of Common Stock, as of any date of
determination, the daily Closing Price on the trading day before such date of
determination; provided that if the Common Stock is then neither listed nor
admitted to trading on any national securities exchange, the NASDAQ National
Market or the NASDAQ SmallCap Market, then "Market Price" means the Fair Value
of one share of Common Stock, as determined by the Valuation Agent as of the
date of determination.
NASD -- means the National Association of Securities Dealers, Inc.
NASDAQ -- means the NASDAQ Stock Market, Inc., a subsidiary of the NASD.
NASDAQ National Market -- has the meaning ascribed thereto in Rule 4200(r)
of NASDAQ.
NASDAQ SmallCap Market -- has the meaning ascribed thereto in Rule 4200(t)
of NASDAQ.
Note Agreement -- means the Note Agreement, dated as of the date hereof,
between the Company and the Purchasers, pursuant to which the Notes were issued.
Notes -- means the 16.5% Senior Subordinated Notes due March 1, 2006 issued
pursuant to the Securities Purchase Agreement and the Note Agreement.
Notice Event -- means any event that would require an adjustment in the
Purchase Price pursuant to Section 4 hereof.
Offered Warrants -- Section 7.2 hereof.
Other Stockholders -- means and includes, at any time, all holders of
Securities of the Company at such time (other than the holders of Registrable
Securities).
Outstanding Warrants -- means and includes all warrants to purchase Common
Stock of the Company outstanding on the date hereof and prior to the issuance of
the Warrants.
Permitted Investor -- means and includes any Person:
36
(a) which is a Purchaser;
(b) in connection with the liquidation, dissolution, termination or
other event with respect to any holder of Warrants which requires any such
holder of Warrants to distribute the Warrants to the stockholders,
shareholders, members or partners of such holder, each such stockholder,
shareholder, member or partner; or
(c) (i) which meets the criteria for an "accredited investor," as set
forth in either Rule 501(a)(1), Rule 501(a)(2), Rule 501(a)(3), Rule
501(a)(7) or Rule 501(a)(8), in each case, under the Securities Act; and
(ii) which is not engaged principally in the production or
distribution of dairy products.
Person -- means an individual, partnership, corporation, limited liability
company, joint venture, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
Preferred Stock -- means and includes all capital stock of the Company of
any class (including, without limitation, the Series A Preferred Stock) which is
preferred as to payment upon a liquidation or dissolution of the Company, or
both, over the Common Stock.
Property -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
Public Offering -- shall mean any sale of Common Stock in a transaction
either registered under, or requiring registration under, section 5 of the
Securities Act.
Purchase Price -- means, prior to any adjustment pursuant to Section 4 of
this Agreement, the Initial Purchase Price and thereafter, the Initial Purchase
Price as thereafter successively adjusted and readjusted from time to time.
Purchaser -- shall have the meaning specified in the introductory paragraph
hereof.
Reference Price -- means, per share of Common Stock, as of any date of
determination, the arithmetic mean of the daily Closing Prices for the twenty
(20) consecutive trading days before such date of determination; provided that
if the Common Stock is then neither listed nor admitted to trading on any
national securities exchange, the NASDAQ National Market or the NASDAQ SmallCap
Market, then "Reference Price" means the Fair Value of one share of Common
Stock, as determined by the Valuation Agent as of the date of determination.
Registrable Securities -- means, at any time:
(a) any shares of Common Stock that have been issued upon the exercise
of any Warrant;
(b) any shares of Common Stock into which such shares of Common Stock
shall have been converted at any time; and
37
(c) any shares of Common Stock that are issuable upon the exercise of
the Warrants or the conversion of Common Stock referred to in clause (a) or
clause (b) above.
For purposes of Section hereof and the definitions of "Initiating Holders" and
"Requisite Holders" herein, holders of Warrants at any time shall be deemed to
be holders of Registrable Securities described in clauses (b) and (c) of this
definition that are at such time issuable upon exercise in full of such
Warrants, whether or not such holders are then entitled so to exercise such
Warrants pursuant to the terms thereof.
As to any particular Registrable Securities once issued, such Securities
shall cease to be Registrable Securities:
(i) when a registration statement with respect to the sale of such
Securities shall have become effective under the Securities Act and such
Securities shall have been disposed of in accordance with such registration
statement;
(ii) when they shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act;
(iii) when they shall have been otherwise transferred and subsequent
disposition of them shall not require registration or qualification under
the Securities Act or any similar state law then in force; or
(iv) when they shall have ceased to be outstanding or (with respect to
Registrable Securities described in clause (c) of this definition) issuable
upon exercise of the Warrants.
Registration -- means each Incidental Registration.
Registration Expenses -- means all expenses incident to the Company's
performance of or compliance with compliance with Section 6.1 through Section
6.4, inclusive, including, without limitation:
(a) all registration and filing fees;
(b) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities);
(c) expenses of printing certificates for the Registrable Securities
in a form eligible for deposit with Depositary Trust Company;
(d) messenger and delivery expenses;
(e) internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting
duties);
38
(f) fees and disbursements of counsel for the Company and its
independent certified public accountants (including the expenses of any
management review, cold comfort letters or any special audits required by
or incident to such performance and compliance);
(g) securities acts liability insurance (if the Company elects to
obtain such insurance);
(h) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration;
(i) fees and expenses of other Persons retained by the Company; and
(j) in connection with any transaction in which the holders of the
Registrable Securities tender and continue to hold available for sale under
any Registration all (but not less than all) of the Registrable Securities
(and irrespective of whether any such tendered Registrable Securities fail
to be included in such Registration pursuant to the operation of Section
6.1(c)), the reasonable fees and expenses of one counsel for holders of
Registrable Securities, selected by the Requisite Holders;
but not including any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities or fees and expenses of more than one
counsel representing the holders of Registrable Securities or any other selling
expenses, discounts or commissions incurred in connection with the sale of
Registrable Securities.
Required Warrantholders -- means, at any time, the holders of at least
sixty-six and two-thirds percent (66 2/3%) of all Warrants outstanding
(excluding any Warrants directly or indirectly held by the Company, any
Subsidiary or any Affiliate) at such time.
Requisite Holders -- means, with respect to any registration or proposed
registration of Registrable Securities pursuant to Section 6 hereof, any holder
or holders (other than the Company or any Affiliate or Subsidiary) holding at
least sixty-six and two-thirds percent (66 2/3%) of the shares of Registrable
Securities (excluding any shares of Registrable Securities directly or
indirectly held by the Company or any Affiliate or Subsidiary) to be so
registered.
Right -- means and includes:
(a) any warrant (including, without limitation, any Warrant and any
Outstanding Warrant) or any option (including, without limitation, employee
stock options) to acquire Common Stock;
(b) any right issued to holders of the Common Stock, or any class
thereof, permitting the holders thereof to subscribe to shares of
Additional Common Stock (pursuant to a rights offering or otherwise);
(c) any right to acquire Common Stock pursuant to the provisions of
any Security (including, without limitation, the Series A Preferred Stock)
convertible or exchangeable into Common Stock; and
39
(d) any similar right permitting the holder thereof to subscribe for
or purchase shares of Common Stock.
Rights Agreement -- means the Rights Agreement, dated as of March 6, 1996,
between the Company and Continental Stock Transfer & Trust Company, as Rights
Agent.
SEC -- means, at any time, the Securities and Exchange Commission or any
other federal agency at such time administering the Securities Act.
Securities Act -- means the Securities Act of 1933, as amended.
Securities Purchase Agreement -- means, collectively, the separate
Securities Purchase Agreements, each dated as of the date hereof, between the
Company and each Purchaser, relating to the offering and sale of the Notes and
the Warrants.
Security -- shall have the meaning specified in section 2(1) of the
Securities Act.
Series A Preferred Stock -- means the Series A Redeemable Convertible
Preferred Stock of the Company.
Share Purchase Right Termination Date -- means the earlier to occur of:
(a) any separation of the Share Purchase Rights pursuant to the
provisions of the Rights Agreement (including, without limitation, on the
Distribution Date, as defined therein); and
(b) any redemption by the Company of all Share Purchase Rights under
circumstances under which no further Share Purchase Rights will be issued
under the Rights Agreement.
Share Purchase Rights -- means and includes each of the Common Stock
purchase rights issued pursuant to, and governed by the terms of, the Rights
Agreement.
Subsidiary -- means, at any time, each corporation, association, limited
liability company or other business entity which qualifies as a subsidiary of
the Company that is properly included in a consolidated financial statement of
the Company and its subsidiaries in accordance with GAAP at such time.
Transferee -- means any registered transferee of all or any part of any one
or more Warrant Certificates acquired by the Purchasers under this Agreement.
Transfer Notice -- Section 7.2 hereof.
Valuable Right -- means, at any time, a Right, the effective conversion,
exercise or purchase price of which on the date of determination is less than
the Market Price in respect of the shares of Common Stock issuable upon
conversion, exercise or purchase pursuant to such Right on such date.
40
Valuation Agent -- means the Board of Directors of the Company, or a duly
constituted and appropriately empowered committee thereof, acting in good faith,
the determination of which shall be delivered in writing to the holders of the
Warrants; provided, however, that if any holder of Warrants objects in good
faith and in writing to any such written determination of such Board of
Directors or committee within thirty (30) days after the receipt thereof, then
the "Valuation Agent" shall mean a firm of independent certified public
accountants, an investment banking firm or appraisal firm (which firm shall own
no Securities of, and shall not be an Affiliate, Subsidiary or a related Person
of, the Company) of recognized national standing retained by the Company and
reasonably acceptable to the Required Warrantholders.
Voting Stock -- means, with respect to any corporation, any shares of stock
of such corporation whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation (irrespective of whether
at the time any stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency), and, in the case of
the Company, shall include the Common Stock.
Warrant -- shall mean each Warrant to purchase shares of the Common Stock
issued pursuant to this Agreement.
Warrant Certificate -- Section 1.1.
8.2 Descriptive Headings. The descriptive headings of the several Sections
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
8.3 Governing Law. THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY
CONFLICTS OF LAW RULES WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY
OTHER JURISDICTION.
9. MISCELLANEOUS.
9.1 Expenses. The Company agrees to pay, and save the Purchasers and any
Transferees harmless against liability for the payment of, all out-of-pocket
expenses (including, without limitation, the reasonable fees and disbursements
of special counsel for the Purchasers and any Transferee) arising in connection
with the transactions herein contemplated, including, without limitation:
(a) the cost, if any, of complying with Section 3.6 hereof;
(b) any subsequent proposed modification of, or proposed consent
requested or initiated by or on behalf of the Company under, this
Agreement, the Warrant Certificates or the Warrants, whether or not such
proposed modification shall be effected or proposed consent granted
(including, without limitation, all document production and duplication
charges and the reasonable fees and expenses of one special counsel engaged
by the holders of Warrants in connection therewith); and
41
(c) the enforcement of (or determination of whether or how to enforce)
any rights under this Agreement, the Warrant Certificates or the Warrants
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the
transactions contemplated hereby or by reason of a Purchaser's or any
Transferee's having acquired any Warrant Certificate, including, without
limitation, the reasonable fees and expenses of one special counsel engaged
by the holders of the Warrants and incurred by the holders of the Warrants
and the costs and expenses incurred in any bankruptcy case involving the
Company or any Subsidiary.
The obligations of the Company under this Section 9.1 shall survive the transfer
of any Warrant Certificate or portion thereof or interest therein by any
Purchaser or any Transferee and the exercise or expiration of any Warrant.
9.2 Amendment and Waiver. This Agreement may be amended, and the observance
of any term of this Agreement may be waived, with and only with the written
consent of the Company and:
(a) in the case of Section 1 through Section 5, Section 8.2, Section
8.3 or Section 9 hereof (other than this Section 9.2), or of any term
defined in Section 801 to the extent used therein, the written consent of
the Required Warrantholders;
(b) the provisions of Section 6 hereof, and of any term defined in
Section 8.1 hereof as used in Section 6 hereof, may be amended, modified or
supplemented only by a writing duly executed by or on behalf of the
Initiating Holders and the Company; provided, however, that compliance by
the Company with the provisions of Section 6 hereof, with respect to any
particular registration, may be waived by the Requisite Holders; and
(c) in the case of this Section 9.2, or of any term defined in Section
8.1 to the extent used herein, the written consent of all holders of
Warrants then outstanding (excluding any Warrants directly or indirectly
held by the Company, any Subsidiary or any Affiliate) and all other
Registrable Securities then outstanding;
provided, however, that:
(i) no such amendment or waiver of any of the provisions of this
Agreement pertaining to the Purchase Price or the number or kind of shares
of Common Stock that may be purchased upon exercise of each Warrant; and
(ii) no change delaying the occurrence of the Effective Date or
accelerating the occurrence of the Expiration Date;
shall be effective as to the holder of any Warrant unless consented to in
writing by such holder.
9.3 Directly or Indirectly. Where any provision in this Agreement refers to
any action to be taken by any Person, or that such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person, including actions taken by or on behalf of any
partnership in which such Person is a general partner.
42
9.4 Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein and in the Securities Purchase
Agreement in connection herewith shall survive the execution and delivery of
this Agreement and the Warrant Certificates, the transfer by any Purchaser of
any Warrant Certificate or portion thereof or interest therein and the exercise
or expiration of any Warrant, and may be relied upon by any Purchaser or any
Transferee, regardless of any investigation made at any time by or on behalf of
any Purchaser or such Transferee. Subject to the preceding sentence, this
Agreement and the Warrant Certificates embody the entire agreement and
understanding among the Company and the Purchasers, and supersede all prior
agreements and understandings, relating to the subject matter hereof.
9.5 Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not. Notwithstanding the foregoing sentence, other than as required by Section
4.7 hereof, the Company may not assign any of its rights, duties or obligations
hereunder or under the Warrants without the prior written consent of all holders
of the Warrants then outstanding.
9.6 Notices. All communications hereunder or under the Warrants shall be in
writing and shall be delivered either by national overnight courier or by
facsimile transmission (confirmed by delivery by national overnight courier sent
on the day of the sending of such facsimile transmission), and shall be
addressed to the following addresses:
(a) if to a Purchaser, at its address set forth on Annex 1 to this
Agreement, or at such other address as it shall have specified to the
Company in writing;
(b) if to any other holder of any Warrant Certificate, addressed to
such other holder at such address as such other holder shall have specified
to the Company in writing or, if any such other holder shall not have so
specified an address to the Company, then addressed to such other holder in
care of the last holder of such Warrant Certificate that shall have so
specified an address to the Company; and
(c) if to the Company, at the address set forth on Annex 2 to this
Agreement, or at such other address as the Company shall have specified to
each holder of Warrants in writing.
Any communication addressed and delivered as herein provided shall be deemed to
be received when actually delivered to the address of the addressee (whether or
not delivery is accepted) or received by the telecopy machine of the recipient.
Any communication not so addressed and delivered shall be ineffective.
9.7 Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Purchasers or to any holder or holders of
Warrant Certificates, the determination of such satisfaction shall, unless
specifically required herein in any instance to be "reasonable" or words to
similar effect, be made by the Purchasers or such holder or holders, as the case
may be, in
43
the sole and exclusive judgment (exercised in good faith) of the Person or
Persons making such determination.
9.8 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
9.10 Waiver of Jury Trial; Consent to Jurisdiction; Etc.
(a) Waiver of Jury Trial. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE WARRANTS OR ANY OF THE DOCUMENTS, AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREBY.
(b) Consent to Jurisdiction. ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE WARRANTS OR ANY OF THE DOCUMENTS,
AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR PROCEEDING
TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER
THIS AGREEMENT, THE WARRANTS OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY MAY BE BROUGHT BY SUCH PARTY IN ANY FEDERAL DISTRICT COURT LOCATED
IN NEW YORK COUNTY, NEW YORK, OR ANY NEW YORK STATE COURT LOCATED IN NEW
YORK COUNTY, NEW YORK AS SUCH PARTY MAY IN ITS SOLE DISCRETION ELECT, AND
BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE IN PERSONAM
JURISDICTION OF EACH SUCH COURT, AND EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY
WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT
TO THE IN PERSONAM JURISDICTION OF ANY SUCH COURT. IN ADDITION, EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY BROUGHT IN
ANY SUCH COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(c) Service of Process. EACH PARTY HERETO IRREVOCABLY AGREES THAT
PROCESS PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL AT THE
ADDRESSES PROVIDED HEREIN FOR NOTICES SHALL CONSTITUTE, TO
44
THE EXTENT PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
WARRANTS OR ANY DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY, OR
ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN
RESPECT OF ANY BREACH HEREUNDER OR UNDER ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY
PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES
POSTAL SERVICE OR ANY COMMERCIAL DELIVERY SERVICE.
(d) Other Forums. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT
THE ABILITY OF THE PURCHASERS TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN
ANY MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE
COMPANY IN SUCH OTHER JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY BE
PERMITTED BY APPLICABLE LAW.
[Remainder of page intentionally left blank; next page is a signature page.]
45
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed and delivered by one of its duly authorized officers or
representatives.
SUPREMA SPECIALTIES, INC.
By:
------------------------------------------
Name:
Title:
ALBION ALLIANCE MEZZANINE FUND,
L.P.
By: Albion Alliance LLC, its General
Partner
By:
------------------------------------------
Name:
Title:
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By:
-----------------------------------------
Name:
Title:
ANNEX 1
ADDRESSES OF PURCHASERS
================================================================================
Purchaser Name ALBION ALLIANCE MEZZANINE FUND, L.P.
--------------------------------------------------------------------------------
Name in which Warrant ALBION ALLIANCE MEZZANINE FUND, L.P.
Certificate is Registered
--------------------------------------------------------------------------------
Warrant Certificate WR-1: 85,000 Warrants
Registration Number;
Number of Warrants
--------------------------------------------------------------------------------
Address for Notices Albion Alliance Mezzanine Fund, L.P.
c/o Albion Alliance LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
(▇▇▇) ▇▇▇-▇▇▇▇ - Phone
(▇▇▇) ▇▇▇-▇▇▇▇ - Fax
--------------------------------------------------------------------------------
Other Instructions Signature Page Format:
ALBION ALLIANCE MEZZANINE FUND, L.P.
By: Albion Alliance LLC, its
General Partner
By___________________________
Name:
Title:
--------------------------------------------------------------------------------
Tax Identification Number ▇▇-▇▇▇▇▇▇▇
================================================================================
Annex ▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇.)
================================================================================
Purchaser Name THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
--------------------------------------------------------------------------------
Name in which Warrant THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
Certificate is Registered UNITED STATES
--------------------------------------------------------------------------------
Warrant Certificate WR-2: 20,000 Warrants
Registration Number;
Number of Warrants
--------------------------------------------------------------------------------
Address for Notices The Equitable Life Assurance Society of
the United States
c/o Alliance Capital Management, L.P.
1345 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Alliance Corporate
Finance Group Inc.
(▇▇▇) ▇▇▇-▇▇▇▇ - Phone
(▇▇▇) ▇▇▇-▇▇▇▇ - Fax
--------------------------------------------------------------------------------
Other Instructions Signature Page Format:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
By___________________________
Name:
Title:
--------------------------------------------------------------------------------
Tax Identification Number ▇▇-▇▇▇▇▇▇▇
================================================================================
Annex 1-2
ANNEX 2
ADDRESS OF COMPANY
Address of Company for Notices:
Suprema Specialties
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Annex 2-1
ATTACHMENT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD EXCEPT IN
A TRANSACTION REGISTERED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT. THE WARRANT AGREEMENT REFERRED TO IN THIS
CERTIFICATE CONTAINS, AMONG OTHER THINGS, PROVISIONS WHICH LIMIT THE TRANSFER OF
THIS SECURITY. A COPY OF THE WARRANT AGREEMENT IS AVAILABLE FROM THE COMPANY
UPON REQUEST.
WARRANT CERTIFICATE
SUPREMA SPECIALTIES, INC.
No. WR-___ __________ Warrants
Date: ________ PPN: 86859F 2* 7
This Warrant Certificate certifies that ___________________, or registered
assigns, is the registered holder of ___________ (________) Warrants. Each
Warrant entitles the owner thereof to purchase at any time on or after the
Effective Date and on or prior to the Expiration Date, one (1) fully paid and
nonassessable share of Common Stock, par value $.01 per share (the "Common
Stock"), of SUPREMA SPECIALTIES, INC., a New York corporation (together with its
successors and assigns, the "Company"), at a Purchase Price (subject to
adjustment as provided therein) of Four and One Hundred Twenty-Five
One-Thousandths Dollars ($4.125) per share upon presentation and surrender of
this Warrant Certificate with a form of election to purchase duly executed and
delivery to the Company of the payment of the Purchase Price in the manner set
forth in the Warrant Agreement. The number of shares of Common Stock that may be
purchased upon exercise of each Warrant and the Purchase Price are the number
and the Purchase Price as of the date hereof, and are subject to adjustment as
referred to below.
The Warrants are issued pursuant to the Warrant Agreement (as it may from
time to time be amended or supplemented, the "Warrant Agreement"), dated as of
March 9, 1998 between the Company and the investor named therein, and are
subject to all of the terms, provisions and conditions thereof, which Warrant
Agreement is hereby incorporated herein by reference and made a part hereof and
to which Warrant Agreement reference is hereby made for a full description of
the rights, obligations, duties and immunities of the Company and the holders of
the Warrant Certificates. Capitalized terms used, but not defined, herein have
the respective meanings ascribed to them in the Warrant Agreement.
As provided in the Warrant Agreement, the Purchase Price and the number of
shares of Common Stock that may be purchased upon the exercise of the Warrants
evidenced by this Warrant Certificate are, upon the happening of certain events,
subject to modification and adjustment. Except as otherwise set forth in, and
subject to, the Warrant Agreement, the
Attachment A-1
Effective Date of this Warrant Certificate is March 1, 1999, and the Expiration
Date of this Warrant Certificate is March 1, 2008.
This Warrant Certificate shall be exercisable, at the election of the
holder, either as an entirety or in part from time to time (but not, in the case
of any exercise in part, as to a fractional Warrant). If this Warrant
Certificate shall be exercised in part, the holder shall be entitled to receive,
upon surrender hereof, another Warrant Certificate or Warrant Certificates for
the number of Warrants not exercised. This Warrant Certificate, with or without
other Warrant Certificates, upon surrender in the manner set forth in the
Warrant Agreement, may be exchanged for another Warrant Certificate or Warrant
Certificates of like tenor evidencing Warrants entitling the holder to purchase
a like aggregate number of shares of Common Stock as the Warrants evidenced by
the Warrant Certificate or Warrant Certificates surrendered shall have entitled
such holder to purchase.
Except as expressly set forth in the Warrant Agreement, no holder of this
Warrant Certificate shall be entitled to vote or receive dividends or be deemed
for any purpose the holder of shares of Common Stock or of any other Securities
of the Company that may at any time be issued upon the exercise hereof, nor
shall anything contained in the Warrant Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a holder of a share
of Common Stock in the Company or any right to vote upon any matter submitted to
holders of shares of Common Stock at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of Securities, change of par value, consolidation,
merger, conveyance, or otherwise), or to receive dividends or subscription
rights, or otherwise, until the Warrant or Warrants evidenced by this Warrant
Certificate shall have been exercised as provided in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE COMPANY AND THE HOLDER HEREOF SHALL BE GOVERNED BY,
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
WITNESS the signature of a proper officer of the Company as of the date
first above written.
SUPREMA SPECIALTIES, INC.
By:
---------------------------
Name:
Title:
Attachment A-2
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if
such holder desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED, _______________________________________ hereby sells,
assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee.)
the accompanying Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint:
________________________________________________________________________________
attorney, to transfer the accompanying Warrant Certificate on the books of the
Company with full power of substitution.
Dated: ____________________, ________.
[HOLDER]
By ________________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
Attachment A-3
[FORM OF ELECTION TO PURCHASE]
(To be executed by the registered holder if
such holder desires to exercise the Warrant Certificate)
To SUPREMA SPECIALTIES, INC.:
The undersigned hereby irrevocably elects to exercise
______________________________ Warrants represented by the accompanying Warrant
Certificate to purchase the shares of Common Stock issuable upon the exercise of
such Warrants and requests that certificates for such shares be issued in the
name of:
________________________________________________________________________________
(Please print name and address.)
________________________________________________________________________________
(Please insert social security or other identifying number.)
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address.)
________________________________________________________________________________
(Please insert social security or other identifying number.)
Attachment A-4
The undersigned is paying the Purchase Price for the shares of Common Stock to
be issued on exercise of the foregoing Warrants:
|_| in cash pursuant to Section (a)(i) of the Warrant Agreement;
|_| in Notes (as defined in the Warrant Agreement) pursuant to Section
(a)(ii) of the Warrant Agreement;
|_| in cash in the amount of $____________ and a principal amount of Notes
equal to $___________ pursuant to Section (a)(iii) of the Warrant
Agreement; or
|_| by net exercise of the Warrants being exercised pursuant to Section
(a)(iv) of the Warrant Agreement.
Dated: __________________, ______.
[HOLDER]
By __________________________________
NOTICE
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the face of the accompanying Warrant Certificate or any
prior assignment thereof in every particular, without alteration or enlargement
or any change whatsoever.
Attachment A-5