EXHIBIT 10.3
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WARRANT AGREEMENT
DATED AS OF MARCH 14, 2003
among
PW EAGLE, INC.
and
THE INITIAL WARRANT HOLDERS
LISTED ON SCHEDULE I HERETO
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS..........................................................1
1.1 Definitions.........................................................1
1.2 Accounting Terms and Determinations.................................9
ARTICLE II PURCHASE AND SALE OF WARRANTS.......................................9
2.1 Authorization and Issuance of Shares and Warrants...................9
2.2 Issuance of the Warrants............................................9
2.3 Representations by Initial Holders.................................10
2.4 Representations and Warranties of the Company......................10
ARTICLE III FORM; REGISTER; EXCHANGE FOR WARRANTS; TRANSFER...................13
3.1 Form of Warrant; Register..........................................13
3.2 Exchange of Warrants for Warrants..................................13
3.3 Transfer of Warrant................................................14
ARTICLE IV EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES...................16
4.1 Exercise of Warrants...............................................16
4.2 Exchange for Warrant Shares........................................16
4.3 Issuance of Common Stock...........................................16
ARTICLE V ADJUSTMENT OF EXERCISE PRICE AND SHARES.............................18
5.1 General............................................................18
5.2 Stock Dividends, Subdivisions and Combinations.....................18
5.3 Issuance of Common Stock...........................................19
5.4 Issuance of Other Equity Securities................................22
5.5 Capital Reorganization, Capital Reclassifications, Merger, Etc.....22
5.6 Other Actions Affecting Common Stock...............................23
5.7 Miscellaneous......................................................23
ARTICLE VI CERTAIN OTHER RIGHTS...............................................25
6.1 Payments in Respect of Dividends and Distributions.................25
6.2 Right of First Offer...............................................25
6.3 Tag-Along Rights...................................................26
6.4 [Intentionally Deleted]............................................27
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ARTICLE VII COVENANTS OF THE COMPANY..........................................27
7.1 Notices of Certain Actions.........................................27
7.2 Financial Statements and Reports...................................28
7.3 Information Rights.................................................29
7.4 Transactions with Affiliates.......................................29
7.5 Merger or Consolidation of the Company.............................30
7.6 Reservation of Shares, Etc.........................................30
7.7 Redemptions, Etc...................................................30
7.8 Restrictions on Performance........................................31
7.9 Modification of Other Equity Documents.............................31
ARTICLE VIII MISCELLANEOUS....................................................31
8.1 Notices............................................................31
8.2 Expenses, Etc......................................................32
8.3 No Voting Rights; Limitations of Liability.........................32
8.4 [Intentionally Deleted]............................................32
8.5 Amendments and Waivers.............................................33
8.6 Specific Performance...............................................33
8.7 Binding Effect.....................................................33
8.8 Counterparts.......................................................33
8.9 Governing Law......................................................33
8.10 Benefits of this Agreement.........................................34
8.11 Headings...........................................................34
End of TOC - Do not delete this paragraph!
SCHEDULE I - Initial Warrant Holders
SCHEDULE 2.4(g) - Capitalization of the Company
EXHIBIT A - [Intentionally Deleted]
EXHIBIT B - Form of Warrant
ii
WARRANT AGREEMENT dated as of
March 14, 2003, among PW EAGLE, INC., a
Minnesota corporation (the "Company"),
and the initial warrant holders listed
on Schedule I hereto (the "Initial
Holders").
PREAMBLE
The Company is entering into Amendment No. 7 dated as of the date
hereof (the "Amendment") to the Securities Purchase Agreement dated as of
September 20, 1999 with the Initial Holders (or their predecessors in interest)
(as amended, restated, supplemented or otherwise modified from time to time, the
"Securities Purchase Agreement"). Pursuant to the Securities Purchase Agreement,
the Company issued to the Initial Holders (or their predecessors in interest)
$32.5 million aggregate principal amount of its Senior Subordinated Notes due
2007 (the "Notes"). In order to induce the Initial Holders to enter into the
Amendment, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company is willing to issue
the Warrants (as defined below) to the Initial Holders. This Agreement sets
forth terms and conditions applicable to the Warrants.
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any specified Person, any
other Person that directly or indirectly through one or more intermediaries
Controls, is Controlled by or is under common Control with such Person.
"Allocable Number" has the meaning given to such term in Section
4.2.
"Applicable Law" means all provisions of laws, statutes,
ordinances, rules, regulations, permits, certificates or orders of any
Governmental Authority applicable to the Person in question or any of its assets
or property, and all judgments, injunctions, orders and decrees of all courts
and arbitrators in proceedings or actions in which the Person in question is a
party or by which any of its assets or properties are bound.
"Assignment Form" means the assignment form attached as Annex C
to a Warrant.
"Board" means the board of directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or a
day on which banks are authorized or required to be closed in New York, New
York; provided, however, that any determination of a Business Day relating to a
securities exchange or other securities market means a Business Day on which
such exchange is open for trading.
"Change of Control" means the occurrence of any of the following
events: (i) all or substantially all of the Company's assets, on a consolidated
basis, are sold as an entirety to any Person or related group of Persons or
there shall be consummated any consolidation or merger of the Company (A) in
which the Company is not the continuing or surviving company (other than a
consolidation or merger with a wholly-owned Subsidiary in which all shares of
Common Stock outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant to which
the Common Stock would be converted into cash, securities or other property, in
any case, other than a sale of assets or consolidation or merger of the Company
in which the holders of the Common Stock immediately prior to the sale of assets
or consolidation or merger have, directly or indirectly, at least a majority of
the Common Stock of the transferee or continuing or surviving company
immediately after such sale of assets or consolidation or merger, (ii) any
"person" (as such term is used in Sections 13(d) and 14 (d) of the Exchange Act)
other than the Spell Group, is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 of the Exchange Act provided that such person shall be
deemed to have "beneficial ownership" of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the total
voting power of the outstanding voting securities of the Company; or (iii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board (together with any new directors whose
election by such members of the Board or whose nomination for election by the
shareholders of the Company, as the case may be, was approved by a vote of at
least a majority of the directors of the Company then still in office) cease for
any reason to constitute a majority of the Board then in office.
"Class B Common Stock" means the Class B Common Stock, $.01 par
value, of the Company.
"Closing Date" means March 14, 2003.
"Commission" means the Securities and Exchange Commission (or a
successor thereto).
"Common Stock" means (i) the Common Stock, $.01 par value of the
Company, (ii) the Class B Common Stock and (iii) any other class of capital
stock of the Company hereafter authorized that is not limited to a fixed sum or
percentage of par or stated or liquidation value with respect to the rights of
the holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the Company.
"Company" has the meaning given to such term in the Preamble.
"Company Notice Date" has the meaning given to such term in
Section 6.4.
"Compliance Sideletter" has the meaning given to such term in the
Securities Purchase Agreement.
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"Control" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Convertible Securities" has the meaning given to such term in
Section 5.3(b)(i).
"Delivery Date" has the meaning given to such term in Section
4.3(a).
"Exercisability Date" means October 1, 2004; provided that if on
October 1, 2004 a Sale Process is occurring, the Exercisability Date shall be
postponed until the Termination Date of the Sale Process, if any.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Form" means the exchange form attached as Annex B to a
Warrant.
"Excluded Securities" means:
(i) shares of capital stock issued pursuant to a stock
dividend or a stock split or other subdivision of shares;
(ii) Common Stock issued upon exercise of any Warrant;
(iii) Common Stock obtained upon conversion of Class B
Common Stock;
(iv) securities issued by the Company in a Public
Offering;
(v) securities issued upon exercise of conversion or
exchange rights, options or subscription calls, warrants, commitments
or claims, provided that the foregoing are issued and outstanding on
the date hereof and are listed on Schedule 2.4(g) or are issued
hereafter in compliance with Section 5.3; and
(vi) Common Stock or Options to purchase Common Stock
issued to employees, officers or, directors of the Company or any
Subsidiary or the issuance of Common Stock upon the exercise of any
such Options; provided, however, that the aggregate amount of all such
Common Stock or Common Stock which may be acquired upon the exercise
of such Options shall not exceed an aggregate of 5% of the Common
Stock outstanding on the date of issuance of such Common Stock or
Options, as the case may be.
"Excluded Transaction" means, with respect to any member of the
Spell Group, any sale pursuant to a Public Offering or any sale or other
transfer to a majority-controlled Affiliate of such member of the Spell Group
(other than the Company or any Subsidiary) or to a member of the Family Group of
such member of the Spell Group.
"Exercise Form" means the exercise form attached as Annex A to a
Warrant.
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"Exercise Price" means $9.50 per Warrant Share, subject to
adjustment from time to time in the manner provided in Article V.
"Expiration Time" means the earlier of (i) 5:00 p.m., Eastern
time, on March 14, 2013 and (ii) the consummation of a Sale of the Company, if
such consummation occurs prior to the Exercisability Date.
"Family Group" means an individual's spouse and descendants
(whether natural or adopted) and any trust established solely for the benefit of
such individual or such individual's spouse and descendants (whether natural or
adopted) for estate planning purposes and any partnership in which all of the
partners consist of the such individual and/or such individual's spouse and/or
such individuals descendants (whether natural or adopted).
"Fiscal Year" means, with respect to the Company, the one-year
period ending on December 31 of any year.
"Fully Diluted Basis" means, with respect to the Common Stock at
any time of determination, the number of shares of Common Stock that would be
issued and outstanding at such time, assuming full conversion, exercise and
exchange of all issued and outstanding Convertible Securities and Options that
shall be (or may become) exchangeable for, or exercisable or convertible into,
Common Stock, including the Warrants, except that the number of shares of Common
Stock outstanding on a Fully Diluted Basis shall not include the number of
shares of Common Stock issuable upon exercise, conversion or exchange of Options
or Convertible Securities that, at the time of determination, are Out of the
Money.
"GAAP" means generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" means any federal, state, municipal or
other government, governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or any political subdivision thereof, or of any other country.
"Holder" means with respect to any Warrant, the holder of such
Warrant as set forth in the Warrant Register.
"Indebtedness" has the meaning given to such term in the
Securities Purchase Agreement.
"IRC" has the meaning given to such term in Section 2.2(b).
"JPMP Holders" means, collectively, ▇.▇. ▇▇▇▇▇▇ Partners (23A
SBIC), LLC or its transferees who hold Warrants or Warrant Shares.
"Liquid Securities" means equity securities that are:
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(i) Publicly Traded,
(ii) registered under the Securities Act,
(iii) not subject to any transfer restrictions other than
restrictions imposed by Rule 145 under the Securities Act, and
(iv) issued by an issuer whose aggregate market value of
voting stock held by non-affiliates of such issuer is at least $500
million (as of the date of the consummation of the Sale of the
Company).
"Market Price" means, for any security as of any date of
determination:
(a) if such security is Publicly Traded as of the date of
determination, the price determined by computing the average, over a period
consisting of the most recent twenty-one (21) Business Days occurring on or
prior to the date of determination, of the applicable price set forth below (but
excluding any trades or quotations that are not bona fide, arm's length
transactions):
(i) the average of the closing prices for such security
on such Business Day on all domestic securities exchanges on which
such security may be listed, or
(ii) if there have been no sales on any such exchange on
such Business Day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such Business Day, or
(iii) if on any Business Day such security is not so
listed, the average of the representative bid and asked prices quoted
on the Nasdaq National Market or Nasdaq Small-Cap Market as of 4:00
P.M., New York time, on such Business Day, or
(iv) if on any Business Day such security is not quoted in
the Nasdaq National Market or Nasdaq Small-Cap Market, the average of
the highest bid and lowest asked prices on such Business Day in the
domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization.
(b) if such security is not Publicly Traded as of the date of
determination, (i) in the case of the Common Stock, the Market Value Per Share,
determined in accordance with the Valuation Procedure, and (ii) in the case of
any other security, the fair market value of one share or other applicable unit
of such security, determined in accordance with the Valuation Procedure, except
that if the Market Price of the Common Stock is being determined for purposes of
Section 4.3(c), such determination shall be made in good faith by the Board
exercising reasonable business judgment.
"Market Value" means the highest price that would be paid for the
entire common equity interest in the Company on a going-concern basis in a
single arm's-length transaction between a willing buyer and a willing seller
(neither acting under compulsion), using valuation
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techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. For the purposes of determining the Market Value, (i)
the exercise price of Options to acquire Common Stock that are not Out of the
Money shall be deemed to have been received by the Company and (ii) the
liquidation preference or indebtedness, as the case may be, represented by
Convertible Securities that are not Out of the Money shall be deemed to have
been eliminated or cancelled.
"Market Value Per Share" means the price per share of Common
Stock obtained by dividing (A) the Market Value by (B) the number of shares of
Common Stock outstanding (on a Fully-Diluted Basis) at the time of
determination.
"MassMutual Holders" means, collectively, Massachusetts Mutual
Life Insurance Company, MassMutual Corporate Investors, MassMutual Participation
Investors, MassMutual Corporate Value Partners Limited or any of their
respective transferees who hold Warrants or Warrant Shares.
"Notes" has the meaning given to such term in the Preamble.
"Options" has the meaning given to such term in Section
5.3(b)(i).
"Organizational Documents" means, with respect to any Person,
each instrument or other document that (a) defines the existence of such Person,
including its articles or certificate of incorporation, as filed or recorded
with an applicable Governmental Authority, or (b) governs the internal affairs
of such Person, including its by-laws, in each case as amended, supplemented or
restated.
"Other Equity Documents" means the Team Agreement dated as of
February 23, 1998 by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Out of the Money" means, at any date of determination (a) in the
case of an Option, that the aggregate fair market value as of such date of the
shares of Common Stock issuable upon the exercise of such Option is less than
the aggregate exercise price payable upon such exercise and (b) in the case of a
Convertible Security, that the quotient resulting from dividing the fair market
value as of such date of such Convertible Security by the number of shares
issuable as of such date upon conversion or exchange of such Convertible
Security is greater than the fair market value of a share of Common Stock.
"Person" shall be construed as broadly as possible and includes
natural person, corporation, limited liability company, partnership, joint
venture, trust, unincorporated association or other organization and a
Governmental Authority.
"Proportionate Percentage" means, with respect to any Holder at
any time, the quotient obtained by dividing (a) the aggregate number of Warrant
Shares then held by such Holder by (b) the total number of shares of Common
Stock then outstanding (on a Fully-Diluted Basis).
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"Publicly Traded" means, with respect to any security, that such
security is (a) listed on a domestic securities exchange, (b) quoted on Nasdaq
National Market or Nasdaq Small-Cap Market or (c) traded in the domestic
over-the-counter market, which trades are reported by the National Quotation
Bureau, Incorporated.
"Public Offering" means an offering of Common Stock under an
effective registration statement under the Securities Act.
"Refused Securities" has the meaning given to such term in
Section 6.2(c).
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of September 20, 1999, as supplemented by the Acknowledgement
thereto, dated as of the Closing Date.
"Requisite Holders" means, as of any date of determination,
Holders holding Warrants or Warrant Shares representing at least 75% of the
Warrant Shares (i) previously issued or (ii) issuable upon exercise of Warrants
then outstanding.
"Sale of the Company" means (i) the bona fide arms length sale or
transfer of all or substantially all of the Company's assets to a Person or a
group of Persons acting in concert, (ii) the bona fide arms length sale or
transfer of all or substantially all of the outstanding capital stock of the
Company to a Person or a group of Persons acting in concert or (iii) the bona
fide arms length merger or consolidation of the Company with or into another
Person; in each case in which the holders of the outstanding capital stock of
the Company receive cash or Liquid Securities for their capital stock on the
date of the consummation of such transaction.
"Sale Process" means (i) the Company has contractually agreed
(either via a letter of intent or otherwise) to a Sale of the Company (subject
to conditions precedent to closing that are customary for transactions of such
type) or (ii) a tender offer that would result in the Sale of the Company has
been initiated (subject to conditions precedent to closing that are customary
for transactions of such type).
"Section 6.2 Notice of Acceptance" has the meaning given to such
term in Section 6.2.
"Section 6.2 Offer" has the meaning given to such term in Section
6.2.
"Section 6.2 Offer Notice" has the meaning given to such term in
Section 6.2.
"Section 6.2 Securities" has the meaning given to such term in
Section 6.2(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" has the meaning given to such
term in the Preamble.
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"Senior Debt" has the meaning given to such term in the
Securities Purchase Agreement.
"Spell Group" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Subsidiary" means, with respect to any Person, any other Person
of which more than fifty percent (50%) of the shares of stock or other interests
entitled to vote in the election of directors or comparable Persons performing
similar functions (excluding shares or other interests entitled to vote only
upon the failure to pay dividends thereon or other contingencies) are at the
time owned or controlled, directly or indirectly through one or more
Subsidiaries, by such Person.
"Termination Date" means, with respect to any Sale Process, the
earlier of (i) the date of the termination or abandonment of such Sale Process
or (ii) December 31, 2004.
"Transfer" means any sale, transfer, assignment, or other
disposition of any interest in, with or without consideration, any security,
including any disposition of any security or of any interest therein which would
constitute a sale thereof within the meaning of the Securities Act.
"Valuation Procedure" means, with respect to the determination of
any amount or value required to be determined in accordance with such procedure
(the "valuation amount"), a determination (which shall be final and binding on
the Company and the Holders) made (i) by agreement among the Company and the
Requisite Holders within thirty (30) days following the event requiring such
determination or (ii) in the absence of such an agreement, by an Appraiser (as
defined below) selected in accordance with the further provisions of this
definition. If the Board and the Requisite Holders are unable to agree upon an
acceptable Appraiser within ten (10) days after the date either party proposed
that one be selected, the Appraiser will be selected by an arbitrator located in
New York City, New York, selected by the American Arbitration Association (or if
such organization ceases to exist, the arbitrator shall be chosen by a court of
competent jurisdiction). The arbitrator shall select the Appraiser (within ten
(10) days of his appointment) from a list, jointly prepared by the Board and the
Requisite Holders, of not more than six Appraisers of national standing in the
United States, of which no more than three may be named by the Board and no more
than three may be named by the Requisite Holders. The arbitrator may consider,
within the ten-day period allotted, arguments from the parties regarding which
Appraiser to choose, but the selection by the arbitrator shall be made in its
sole discretion from the list of six. The Board and the Requisite Holders shall
submit to the Appraiser their respective determinations of the valuation amount,
and any supporting arguments and other data as they may desire, within ten (10)
days of the appointment of the Appraiser, and the Appraiser shall as soon as
practicable thereafter make its own determination of the valuation amount. The
final valuation amount for purposes hereof shall be the average of the two
valuation amounts closest together, as determined by the Appraiser, from among
the valuation amounts submitted by the Board and the Requisite Holders and the
valuation amount calculated by the Appraiser. The Company shall pay the fees and
expenses of the Appraiser and arbitrator (if any) used to determine the
valuation amount. If required by any Appraiser or arbitrator, the Company shall
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execute a retainer and engagement letter containing reasonable terms and
conditions, including, without limitation, customary provisions concerning the
rights of indemnification and contribution by the Company in favor of such
Company or arbitrator and its officers, directors, partners, employees, agents
and Affiliates. As used herein, "Appraiser" means (a) with respect to a
determination of Market Value or the fair market value of any security, an
investment banking firm and (b) with respect to a determination of other
valuation required hereunder, a firm of the type generally considered to be
qualified in making determinations of the type required.
"Warrant" has the meaning given to such term in Section 3.1(a).
"Warrant Register" has the meaning given to such term in Section
3.1(b).
"Warrant Shares" means (a) the shares of Common Stock issued or
issuable upon exercise of a Warrant in accordance with Section 4.1 or upon
exchange of a Warrant in accordance with Section 4.2, (b) all other securities
or other property issued or issuable upon any such exercise or exchange in
accordance with this Agreement and (c) any securities of the Company distributed
with respect to the securities referred to in the preceding clauses (a) and (b).
As used in this Agreement, the phrase "Warrant Shares then held" by any Holder
or Holders means Warrant Shares held at the time of determination by such Holder
or Holders and Warrant Shares issuable upon exercise of Warrants held at the
time of determination by such Holder or Holders.
1.2 ACCOUNTING TERMS AND DETERMINATIONS.
Except as otherwise may be expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Holders hereunder and under the Warrants shall be prepared, in accordance with
GAAP. All calculations made for the purposes of determining compliance with the
terms of this Agreement and the Warrants shall (except as otherwise may be
expressly provided herein) be made by application of GAAP.
ARTICLE II
PURCHASE AND SALE OF WARRANTS
2.1 AUTHORIZATION AND ISSUANCE OF SHARES AND WARRANTS.
The Company has authorized (i) the issuance of the Warrants to the
Initial Holders pursuant to this Agreement and (ii) the issuance of such number
of shares of Common Stock as shall be necessary to permit the Company to comply
with its obligations, as of the date hereof, to issue Warrant Shares pursuant to
the Warrants.
2.2 ISSUANCE OF THE WARRANTS.
(a) Issuance. On the Closing Date, the Company shall (i) issue
to each Initial
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Holder Warrants representing the right to acquire the number of shares of Common
Stock set forth opposite such Initial Holder's name on Schedule I hereto, (ii)
deliver to each Initial Holder a single certificate for the Warrants to be
acquired by such Initial Holder hereunder, registered in the name of such
Initial Holder, except that, if an Initial Holder shall notify the Company in
writing prior to such issuance that it desires certificates for Warrants to be
issued in other denominations or registered in the name or names of any
Affiliate, nominee or nominees of such Initial Holder for its or their benefit,
then the certificates for Warrants for such Initial Holder shall be issued to
such Initial Holder in the denominations and registered in the name or names
specified in such notice, (iii) deliver to each Initial Holder a legal opinion
from counsel to the Company in form and substance satisfactory to the Initial
Holders and (iv) deliver to each Initial Holder the additional documents
contemplated by the "Effectiveness" section of the Amendment.
(b) Tax Value. The Initial Holders and the Company hereby
acknowledge and agree that the value of the Warrants is $5,000.00. The Initial
Holders and the Company hereby agree to use the foregoing valuation for all
income tax purposes with respect to this transaction.
2.3 REPRESENTATIONS BY INITIAL HOLDERS.
Each Initial Holder, annually a to itself only, represents and
warrants to the Company as follows:
(a) Purchase for its Own Account. Such Initial Holder is
purchasing the Warrants for its own account, without a view to the distribution
thereof in violation of the Securities Act, all without prejudice, however, to
the right of such Initial Holder at any time, in accordance with this Agreement
or the Registration Rights Agreement, lawfully to sell or otherwise to dispose
of all or any part of the Warrants or the Warrant Shares held by it.
(b) Accredited Investor. Such Initial Holder is an "accredited
investor" within the meaning of Regulation D under the Securities Act.
(c) Authority, Etc. Such Initial Holder has the power and
authority to enter into and perform this Warrant Agreement and the execution and
performance hereof have been duly authorized by all proper and necessary action;
this Warrant Agreement constitutes the valid and legally binding obligation of
such Initial Holder, enforceable against it in accordance with its terms, except
as limited by bankruptcy, insolvency or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights and the application of
equitable principles.
(d) Securities Act Compliance. Such Initial Holder understands
that the Company has not registered the Warrants or the Warrant Shares under the
Securities Act, and each Initial Holder agrees that neither the Warrants nor the
Warrant Shares shall be sold or transferred or offered for sale or transfer by
it without registration under the Securities Act or the availability of an
exemption therefrom, all as more fully provided in Section 3.3.
2.4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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As a material inducement to the Initial Holders to accept the Warrants
as additional consideration therefor, the Company represents and warrants as
follows:
(a) Existence; Qualification. Each of the Company and the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. Each of the
Company and the Subsidiaries is duly qualified, licensed or admitted to do
business and is in good standing as a foreign corporation in every jurisdiction
where the failure to be so qualified would have a material adverse effect on the
business, financial condition, operations, assets, liabilities or capitalization
of the Company and the Subsidiaries taken as a whole and has all requisite
corporate power and authority to transact its business in all such
jurisdictions.
(b) No Breach. The execution, delivery and performance of this
Agreement, the Warrants and the Registration Rights Agreement by the Company and
the consummation by it of the transactions contemplated hereby and thereby will
not (a) violate the articles of incorporation or by-laws of the Company, (b)
violate, or result in a breach of or default under, any other instrument or
agreement to which the Company is a party or is bound, (c) violate any judgment,
order, injunction, decree or award against or binding upon the Company, (d)
result in the creation of any Lien upon any of the properties or assets of the
Company, or (e) violate any law, rule or regulation relating to the Company.
(c) Corporate Action. The Company has all necessary corporate
power and authority to execute, deliver and perform its obligations under this
Agreement, the Warrants and the Registration Rights Agreement; the execution,
delivery and performance by the Company of this Agreement, the Warrants and the
Registration Rights Agreement have been duly authorized by all necessary
corporate action (including any stockholder action) on the part of the Company;
this Agreement, the Warrants and the Registration Rights Agreement have been
duly executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms subject to the effects of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(regardless of whether enforcement is sought in equity or at law); the shares of
Common Stock constituting the Warrant Shares initially covered by the Warrants
have been duly and validly authorized and reserved for issuance and will, when
paid for and issued and delivered in accordance with the Warrants, be duly and
validly issued, fully paid and nonassessable and free and clear of any Liens;
and none of the Warrant Shares issued pursuant to the terms hereof will be in
violation of any preemptive or similar rights of any Person.
(d) Approvals. Except in connection with the registration of the
Warrant Shares pursuant to the Registration Rights Agreement and relevant
securities law filings, no authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority or any other Person
are necessary for the execution, delivery or performance by the Company of this
Agreement, the Warrants or the Registration Rights Agreement or for the validity
or enforceability thereof. Any such action required to be taken as a condition
to the execution and delivery of this Agreement and the Registration Rights
Agreement, or the
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execution, issuance and delivery of the Warrants, has been duly (or will be)
taken by all such Governmental Authorities or other Persons, as the case may be.
(e) Investment Company Act. The Company is not an "investment
company," or a company "controlled by" an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(f) Public Utility Holding Company Act. The Company is not a
"holding company," or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(g) Capitalization.
(i) Schedule 2.4(g) hereto correctly sets forth the
authorized, issued and outstanding capital stock of the Company. Upon
the issuance of the Warrants under this Agreement, other than (x) the
Warrants to be issued pursuant to this Agreement, and (y) as described
on Schedule 2.4(g), the Company shall not have outstanding any
Convertible Securities or Options or any warrants, options, other
securities or other rights exercisable or convertible into or
exchangeable for any shares of capital stock of the Company, nor shall
it have outstanding any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, any capital stock or any warrants, options,
other securities or other rights exercisable or convertible into or
exchangeable for any capital stock of the Company.
(ii) Except as set forth on Schedule 2.4(g), there is not
in effect on the date hereof any agreement by the Company pursuant to
which any holders of securities of the Company have a right to cause
the Company to register such securities under the Securities Act,
other than the Registration Rights Agreement, or any agreement to
which the Company or (to its knowledge) any of its stockholders is a
party relating to the voting, transfer or sale of such securities.
(h) Private Offering. Assuming the truth and accuracy of each
Initial Holder's representations and warranties contained in Section 2.3 hereof,
the issuance of the Warrants to such Initial Holder hereunder are exempt from
the registration and prospectus delivery requirements of the Securities Act. The
Company agrees that neither the Company nor any Person acting on its behalf has
offered or will offer the Warrants or Warrant Shares or any part thereof or any
similar securities for issuance or sale to, or has solicited or will solicit any
offer to acquire any of the same from, any Person so as to bring the issuance
and sale of the Warrants or Warrant Shares within the provisions of the
registration and prospectus delivery requirements of the Securities Act.
(i) No Litigation. There is no action, suit, proceeding or
investigation pending or, to the best of the Company's knowledge after due
inquiry, threatened against the Company or any of its Subsidiaries before any
Governmental Authority with respect to or seeking to enjoin the transactions
contemplated by this Agreement, the Warrants or the Registration Rights
Agreement.
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ARTICLE III
FORM; REGISTER; EXCHANGE FOR WARRANTS; TRANSFER
3.1 FORM OF WARRANT; REGISTER.
(a) Form. Each Warrant issued hereunder shall be in the form of
Exhibit B (each, a "Warrant") and shall be executed on behalf of the Company by
its Chairman or its Chief Executive Officer and by its Chief Financial Officer,
its Secretary, its Assistant Secretary, its Treasurer or its Assistant
Treasurer, except that a Warrant need not bear any legend appearing on the first
page of such form from and after such time as all the restrictions to which such
legend relates no longer apply. Upon initial issuance, each Warrant shall be
dated as of the date of signature thereof by the Company.
(b) Register. Each Warrant issued, exchanged or transferred
hereunder shall be registered in a warrant register (the "Warrant Register").
The Warrant Register shall set forth the number of each Warrant, the name and
address of the Holder thereof and the original number of Warrant Shares
purchasable upon the exercise thereof. The Warrant Register will be maintained
by the Company and will be available for inspection by any Holder at the
principal office of the Company or such other location as the Company may
designate to the Holders in the manner set forth in Section 8.1. The Company
shall be entitled to treat the Holder of any Warrant as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other Person.
3.2 EXCHANGE OF WARRANTS FOR WARRANTS.
(a) Exchange. The Holder may exchange any Warrant or Warrants
issued hereunder for another Warrant or Warrants of like kind and tenor
representing in the aggregate the right to purchase the same number of Warrant
Shares that could be purchased pursuant to the Warrant or Warrants being so
exchanged. In order to effect an exchange permitted by this Section 3.2, the
Holder shall deliver to the Company such Warrant or Warrants accompanied by a
written request signed by the Holder thereof specifying the number and
denominations of Warrants to be issued in such exchange and the names in which
such Warrants are to be issued. As promptly as practicable but in any event
within ten (10) Business Days of receipt of such a request, the Company shall,
without charge, issue, register and deliver to the Holder thereof each Warrant
to be issued in such exchange.
(b) Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Holder being satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any Warrant, and
in the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company (if the Holder is a financial institution
or other institutional investor, its own agreement being satisfactory) or, in
the case of any such mutilation, upon surrender of such Warrant, the Company
shall, without charge, issue register and deliver in lieu of such Warrant a new
Warrant of like kind representing the same rights represented by and dated the
date of such lost, stolen, destroyed or mutilated Warrant. Any such new Warrant
shall constitute an original contractual obligation of the Company,
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whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by any Person.
(c) Expenses. The Company shall pay all expenses and taxes
(other than any applicable income or similar taxes payable by a Holder of a
Warrant) attributable to an exchange of a Warrant pursuant to this Section 3.2;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance of any
Warrant in a name other than that of the Holder of the Warrant being exchanged.
3.3 TRANSFER OF WARRANT.
(a) Transfer. Subject to the further provisions of this Section
3.3 (which are intended to ensure compliance with the Securities Act), each
Warrant may be transferred, in whole or in part, by the Holder thereof by
delivering to the Company such Warrant accompanied by a properly completed, duly
executed, Assignment Form. As promptly as practicable but in any event within
ten (10) Business Days of receipt of such Assignment Form, the Company shall,
without charge, issue, register and deliver to the Holder thereof a new Warrant
or Warrants of like kind and tenor representing in the aggregate the right to
purchase the same number of Warrant Shares that could be purchased pursuant to
the Warrant being transferred. In all cases of transfer by an attorney, the
original power of attorney, duly approved, or a copy thereof, duly certified,
shall be deposited and remain with the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced and may be required
to be deposited and remain with the Company in its discretion. The Company shall
not be liable for complying with a request by a fiduciary or nominee of a
fiduciary to register a transfer of any Warrant which is registered in the name
of such fiduciary or nominee, unless made with the actual knowledge that such
fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with knowledge of such facts that the Company's
participation therein amounts to bad faith.
(b) Legend. Each certificate for Warrants or Warrant Shares
shall (unless otherwise permitted by the further provisions of this Section 3.3)
be stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM. IN ADDITION, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN SECTION 3.3 OF THE WARRANT AGREEMENT DATED AS OF
SEPTEMBER 20, 1999, AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AMONG THE
ISSUER OF THESE SECURITIES AND THE INITIAL HOLDERS NAMED THEREIN. NO TRANSFER OF
THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. A COPY OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT
THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS CERTIFICATE, BY
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ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE
WARRANT AGREEMENT."
(c) Opinion. Each Holder shall, prior to any Transfer of any
Warrants or Warrant Shares, give written notice to the Company of such Holder's
intention to effect such Transfer and to comply in all other respects with the
provisions of this Section in making such proposed Transfer. Each such notice
shall describe the manner and circumstances of the proposed Transfer. Upon
request by the Company, the Holder delivering such notice shall deliver a
written opinion, addressed to the Company, of counsel for such Holder (which may
be one of its internal counsels), stating that in the opinion of such counsel
(which opinion shall be reasonably satisfactory to the Company) such proposed
Transfer does not involve a transaction requiring registration of such Warrants
or Warrant Shares under the Securities Act. Such Holder shall thereupon be
entitled to Transfer Warrants or Warrant Shares, as the case may be, in
accordance with the terms of the notice delivered to the Company, if the Company
does not reasonably object to such Transfer and request such opinion, within ten
(10) days after delivery of such notice or, if the Company does request such
opinion, upon its receipt thereof. Each certificate or other instrument
evidencing the securities issued upon the Transfer of any Warrants or Warrant
Shares (and each certificate or other instrument evidencing any untransferred
balance of such Warrants or Warrant Shares) shall bear the legend set forth in
Section 3.3(b) above unless (i) such opinion of counsel is to the effect that
registration of any future Transfer is not required by the applicable provisions
of the Securities Act or (ii) the Company shall have waived the requirement of
such legend.
(d) Removal of Restrictions. Notwithstanding the foregoing
provisions of this Section 3.3, the restrictions imposed by this Section 3.3
upon the transferability of any Warrants or Warrant Shares shall cease and
terminate when (i) any such Warrants or Warrant Shares are sold or otherwise
disposed of pursuant to an effective registration statement under the Securities
Act or as otherwise contemplated by paragraph (c) above in a manner that does
not require that the Warrants or Warrant Shares so transferred continue to bear
the legend set forth in Section 3.3(b) above or (ii) the holder of such Warrants
or Warrant Shares has met the requirements for Transfer of such Warrants or
Warrant Shares under Rule 144(k). Whenever the restrictions imposed by this
Section shall terminate, upon the written request of the holder of any Warrants
or Warrant Shares as to which such restrictions have terminated, as promptly as
practicable but in any event within ten (10) Business Days of receipt of such
request, the Company shall, without charge, issue, register and deliver a new
certificate not bearing the restrictive legend set forth in Section 3.3(b) above
and not containing any other reference to the restrictions imposed by this
Section.
(e) Financial Information. The Company shall provide (and
authorize any Holder to provide) any readily-available financial and other
information concerning the Company to any prospective purchaser of the Warrants
or Warrant Shares owned by such Holder as such purchaser may reasonably request;
provided that, upon request of the Company, such purchaser shall enter into a
confidentiality agreement, in a form reasonably requested by the Company, with
respect to any such information that is non-public.
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ARTICLE IV
EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES
4.1 EXERCISE OF WARRANTS.
On any Business Day on or after the Exercisability Date but on or
prior to the Expiration Time, a Holder may exercise a Warrant, in whole or in
part, by delivering to the Company such Warrant accompanied by a properly
completed Exercise Form and a check or wire transfer in an aggregate amount
equal to the product obtained by multiplying (a) the Exercise Price times (b)
the number of Warrant Shares being purchased. Any partial exercise of a Warrant
shall be for a whole number of Warrant Shares only.
4.2 EXCHANGE FOR WARRANT SHARES.
On any Business Day on or after the Exercisability Date but on or
prior to the Expiration Time, a Holder may exchange a Warrant, in whole or in
part, for Warrant Shares by delivering to the Company such Warrant accompanied
by a properly completed Exchange Form. The number of shares of Common Stock to
be received by a Holder upon such exchange shall be equal to (a) the number of
Warrant Shares allocable to the portion of the Warrant being exchanged (the
"Allocable Number"), as specified by such Holder in the Exchange Form less (b)
the number of shares equal to the quotient obtained by dividing (i) the product
obtained by multiplying (A) the Exercise Price times (B) the Allocable Number by
(ii) the Market Price as of the Delivery Date (as defined below). The Allocable
Number need not be a whole number, but in the case of any partial exchange of a
Warrant under this Section 4.2, the Allocable Number shall be determined so that
the number of Warrant Shares to be issued in such exchange shall be a whole
number only.
4.3 ISSUANCE OF COMMON STOCK.
(a) Issuance of Common Stock. As promptly as practicable but in
any event within ten (10) Business Days following the delivery date (the
"Delivery Date") of (i) an Exercise Form or Exchange Form in accordance with
Section 4.1 or 4.2, (ii) the related Warrant and (iii) any required payment of
the Exercise Price, the Company shall, without charge, issue, register and
deliver one or more stock certificates representing the aggregate number of
shares of Common Stock to which the Holder of such Warrant is entitled and
transfer to such Holder appropriate evidence of ownership of other securities or
property (including any cash) to which such Holder is entitled, in such
denominations, and registered or otherwise placed in, or payable to the order
of, such name or names, as may be directed in writing by such Holder. The
Company shall deliver such stock certificates, evidence of ownership and any
other securities or property (including any cash) to the Person or Persons
entitled to receive the same, together with an amount in cash in lieu of any
fraction of a share (or fractional interest in any other security), as
hereinafter provided.
(b) Partial Exercise or Exchange. If a Holder shall exercise or
exchange a Warrant for less than all of the Warrant Shares that could be
purchased or received thereunder,
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the Company shall issue, register and deliver to the Holder, as promptly as
practicable but in any event within ten (10) Business Days of the Delivery Date,
a new Warrant evidencing the right to purchase the remaining Warrant Shares. In
the case of an exchange pursuant to Section 4.2, the number of remaining Warrant
Shares shall be the original number of Warrant Shares subject to the Warrant so
exchanged reduced by the Allocable Number. Each Warrant surrendered pursuant to
Section 4.1 or 4.2 shall be canceled.
(c) Fractional Shares. The Company shall not be required to
issue fractional shares of Common Stock or fractional units of any other
security upon the exercise or exchange of a Warrant. If any fraction of a share
of Common Stock or fractional unit of any other security would be issuable on
the exercise or exchange of any Warrant, the Company may, in lieu of issuing
such fractional share or unit, pay to such Holder for any such fraction an
amount in cash equal to the product obtained by multiplying (i) such fraction
times (ii) the Market Price for the Common Stock or for a unit of such other
security, as the case may be, as of the Delivery Date.
(d) Expenses. The Company shall pay all expenses and taxes
(other than any applicable income or similar taxes payable by a Holder of a
Warrant) attributable to the initial issuance of Warrant Shares upon the
exercise or exchange of a Warrant; provided, however, that the Company shall not
be required to pay any tax that may be payable in respect of any transfer
involved in the issuance of any Warrant or any certificate for, or any other
evidence of ownership of, Warrant Shares in a name other than that of the Holder
of the Warrant being exercised or exchanged.
(e) Record Ownership. To the extent permitted by Applicable Law,
the Person in whose name any certificate for shares of Common Stock or other
evidence of ownership of any other security is issued upon exercise or exchange
of a Warrant shall for all purposes be deemed to have become the holder of
record of such shares or other security on the Delivery Date, irrespective of
the date of delivery of such certificate or other evidence of ownership
(subject, in the case of any exercise to which Section 4.3(g) applies, to the
consummation of a transaction upon which such exercise is conditioned),
notwithstanding that the transfer books of the Company shall then be closed or
that such certificates or other evidence of ownership shall not then actually
have been delivered to such Person.
(f) Approvals. If any securities constituting Warrant Shares or
any portion thereof to be issued upon exercise or exchange of a Warrant require
registration or approval under any Applicable Law, or require listing on any
national securities exchange or national market system before such securities
may be so issued, the Company will as expeditiously as possible cause such
securities to be registered, approved or listed, as applicable. The Company may
suspend the exercise of any Warrant so affected for the period during which such
registration, approval or listing is required but not in effect.
(g) Conditional Exercise or Exchange. Any Exercise Form or
Exchange Form delivered under Section 4.1 or 4.2 may condition the exercise or
exchange of any Warrant on the consummation of a transaction being undertaken by
the Company or the Holder of such Warrant, and such exercise or exchange shall
not be deemed to have occurred except concurrently with the consummation of such
transaction, except that, for purposes of determining whether such
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exercise or exchange is timely it shall be deemed to have occurred on the
Delivery Date. If any exercise of a Warrant is so conditioned, then, subject to
delivery of the items required by Section 4.3(a), the Company shall deliver the
certificates and other evidence of ownership of other securities or other
property in such manner as such Holder shall direct as required in connection
with the consummation such transaction upon which the exercise is conditioned.
At any time that such Holder shall give notice to the Company that such
transaction has been abandoned or such Holder has withdrawn from participation
in such transaction, the Company shall return the items delivered pursuant to
Section 4.3(a), and such Holder's election to exercise such Warrant shall be
deemed rescinded.
(h) Regulatory Problem. No Holder shall exercise or exchange any
Warrant for shares of Common Stock if after giving effect to such Holder
reasonably determines that such exercise would cause such Holder and its
Affiliates to have a Regulatory Problem (as defined in the Compliance
Sideletter).
ARTICLE V
ADJUSTMENT OF EXERCISE PRICE AND SHARES.
5.1 GENERAL.
The Exercise Price and the number and kind of Warrant Shares issuable
upon exercise of each Warrant shall be subject to adjustment from time to time
in accordance with this Article V.
5.2 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS.
If, at any time after the Closing Date, the Company shall:
(i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock; or
(ii) subdivide, split or reclassify its outstanding shares
of Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then (A) the number of Warrant Shares issuable upon exercise of each Warrant
shall be adjusted so as to equal the number of Warrant Shares that the Holder of
such Warrant would have held immediately after the occurrence of such event if
the Holder had exercised such Warrant immediately prior to the occurrence of
such event and (B) the Exercise Price shall be adjusted to be equal to (x) the
Exercise Price immediately prior to the occurrence of such event multiplied by
(y) a fraction (1) the numerator of which is the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to the adjustment in
clause (A) and (2) the denominator of which is the number of Warrant Shares
issuable upon exercise of this Warrant immediately after the adjustment in
clause (A). An adjustment made pursuant to this Section 5.2
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shall become effective immediately after the occurrence of such event
retroactive to the record date, if any, for such event.
5.3 ISSUANCE OF COMMON STOCK.
(a) General. If, at any time after the Closing Date, the Company
shall issue or sell (or, in accordance with Section 5.3(b), shall be deemed to
have issued or sold) any shares of Common Stock without consideration or for a
consideration per share less than the Market Price for the Common Stock
determined as of the date of such issuance or sale, then, effective immediately
upon such issuance or sale, the Exercise Price and the number Warrant Shares
issuable upon exercise of each Warrant shall be adjusted as follows:
(i) The Exercise Price shall be reduced to an amount
equal to the product obtained by multiplying (A) the Exercise Price in
effect immediately prior to such issuance or sale times (B) a
fraction, (I) the numerator of which shall be the sum of (x) the
product of (1) the number of shares of Common Stock outstanding (on a
Fully-Diluted Basis) immediately prior to such issuance or sale times
(2) the Market Price for the Common Stock as of the date of such
issuance or sale plus (y) the consideration, if any, received by the
Company upon such issuance or sale, and (II) the denominator of which
shall be the product of (x) the number of shares of Common Stock
outstanding (on a Fully-Diluted Basis) immediately after such issuance
or sale times (y) such Market Price.
(ii) The number of Warrant Shares issuable upon exercise
of such Warrant shall be increased to the number of shares determined
by multiplying (A) the number of Warrant Shares issuable upon exercise
of such Warrant immediately prior to such issuance or sale by (B) a
fraction, (1) the numerator of which shall be the Exercise Price in
effect immediately prior to the adjustment in clause (i) of this
Section 5.3(a), and (2) the denominator of which shall be the Exercise
Price in effect immediately after such adjustment.
(b) Issuance of Options or Convertible Securities. The issuance
or sale of Options or Convertible Securities shall be deemed, in accordance with
this Section 5.3(b), to be the issuance of Common Stock.
(i) Definitions. For the purposes of this Section 5.3(b),
the term "Options" means any warrants, options or other rights to
subscribe for or to purchase (A) Common Stock or (B) Convertible
Securities, and the term "Convertible Securities" means any capital
stock, evidence of indebtedness or other securities or rights
convertible into or exchangeable for Common Stock.
(ii) Issuance of Options. If the Company in any manner
issues or grants any Options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such Options (or upon
conversion or exchange of the total maximum amount of Convertible
Securities issuable upon the exercise of such Options) shall be
deemed, for purposes of Section 5.3(a), to be outstanding and to have
been issued and
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sold by the Company. For purposes of Section 5.3(a), the Common Stock
issuable upon exercise of Options or upon conversion or exchange of
Convertible Securities issuable upon exercise of Options for
Convertible Securities shall be deemed to have been issued and sold at
a price per share equal to (A) the sum of (x) the total amount, if
any, received or receivable by the Company as consideration for the
issuance or granting of such Options plus (y) the minimum aggregate
amount of additional consideration payable to the Company upon the
exercise of all such Options plus (z) in the case of such Options for
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon issuance or sale of
such Convertible Securities and the conversion or exchange thereof
divided by (B) the total maximum number of shares of Common Stock
issuable upon exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise
of such Options.
(iii) Issuance of Convertible Securities. If the Company in
any manner issues or sells any Convertible Securities, then the
maximum number of shares of Common Stock issuable upon the conversion
or exchange of such Convertible Securities shall be deemed, for
purposes of Section 5.3(a) to be outstanding and to have been issued
and sold by the Company. For purposes of Section 5.3(a), the Common
Stock issuable upon conversion or exchange of Convertible Securities
shall be deemed to have been issued and sold at a price per share
equal to (A) the sum of (x) the total amount received or receivable by
the Company as consideration for the issuance or sale of such
Convertible Securities plus (y) the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof divided by (B) the total maximum number
of shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities.
(iv) Superseding Adjustment. If, at any time after any
adjustment of the Exercise Price and the number of Warrant Shares
issuable upon exercise of the Warrants shall have been made pursuant
to Section 5.3(a) as a result of the issuance of Options or
Convertible Securities, or after any new adjustment of the Exercise
Price and the number of Warrant Shares shall have been made pursuant
to this Section 5.3(b)(iv) (each of the foregoing, a "previous
adjustment"):
(A) such Options or the right of conversion or
exchange of such Convertible Securities shall expire, or be
terminated or surrendered, and all or a portion of such Options or
the right of conversion or exchange with respect to all or a portion
of such Convertible Securities, as the case may be, shall not have
been exercised or treated as having been exercised or otherwise
canceled or acquired by the Company in connection with any
settlement, including any cash settlement, of such Options or the
rights of conversion or exchange of such Convertible Securities; or
(B) there has been any change in the number of shares
of Common Stock issuable upon the exercise of such Options or upon
the conversion or exchange of such Convertible Securities (including
as a result of a change in the number of
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Convertible Securities issuable upon the exercise of such Options or
the operation of antidilution provisions applicable thereto); or
(C) the consideration per share for which shares of
Common Stock are issuable upon the exercise of such Options or upon
the conversion or exchange of such Convertible Securities, or the
maturity of such Convertible Securities, shall be changed;
then the previous adjustment shall be rescinded and annulled and the shares of
Common Stock which were deemed to have been issued and that gave rise to the
previous adjustment shall no longer be deemed to have been issued. Thereupon, a
recomputation shall be made of the adjustment, if any, of the Exercise Price and
the number of Warrant Shares issuable upon exercise of the Warrants as a
consequence of such Options or Convertible Securities on the basis of:
(D) treating the number of shares of Common Stock, if
any, theretofore actually issued or issuable pursuant to the
previous exercise of such Options or such right of conversion or
exchange (including Options or rights treated as exercised,
otherwise cancelled or acquired in connection with any settlement),
as having been issued on the date or dates of such issuance as
determined for purposes of the previous adjustment and for the total
amount of consideration actually received and receivable therefor
(determined in the manner described in Section 5.3(b)(ii) or (iii),
as the case may be);
(E) treating the maximum number of shares of Common
Stock (1) issuable upon the exercise (or upon the conversion or
exchange of Convertible Securities issuable upon the exercise) of
all Options which then remain outstanding and (2) issuable upon the
conversion or exchange of all Convertible Securities which then
remain outstanding, as having been issued; and
(F) making the computations called for in Section
5.3(a) hereof on the basis of the revised terms of such outstanding
Options or Convertible Securities, as the case may be, as if they
were newly issued at the time of such revision.
Any adjustment of the Exercise Price and the number of Warrant Shares
issuable upon exercise of the Warrants resulting from such
recomputation shall supersede the previous adjustment.
(v) No Further Adjustments. Any adjustment of the Exercise Price
or the number of Warrant Shares issuable upon the exercise of Warrants
to be made pursuant to this Section 5.3 with respect to the issuance
of (A) any Options (whether for Common Stock or Convertible
Securities), (B) any Convertible Securities issuable upon the exercise
of such Options or (C) any shares of Common Stock issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities shall be made effective upon the issuance of
such Options. Any adjustment of the Exercise Price or the number of
Warrant Shares issuable upon the exercise of Warrants to be
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made pursuant to this Section 5.3 with respect to the issuance of (x)
any Convertible Securities (other than Convertible Securities issuable
upon the exercise of Options) or (y) any shares of Common Stock
issuable upon the conversion or exchange of such Convertible
Securities shall be made effective upon the issuance of such
Convertible Securities. No further adjustment of the Exercise Price or
the number of Warrant Shares issuable upon the exercise of Warrants
shall be made upon the actual issuance of Common Stock or of
Convertible Securities upon the exercise of such Options or upon the
actual issuance of Common Stock upon conversion or exchange of
Convertible Securities.
5.4 ISSUANCE OF OTHER EQUITY SECURITIES.
If, at any time after the Closing Date, the Company shall issue or
sell any of its equity securities other than any class or series of Common
Stock, Convertible Securities or Options ("Other Securities") without
consideration or for a consideration per share (or other similar unit) of such
Other Securities that is less than the Market Price per share (or other similar
unit) of such Other Securities determined as of the date of such issuance or
sale, then, effective immediately upon such issuance or sale, the Exercise Price
and the number of Warrant Shares issuable upon exercise of each Warrant shall be
adjusted as follows:
(i) The Exercise Price shall be reduced to an amount
equal to the product of (A) the Exercise Price in effect immediately
prior to such issuance or sale times (B) a fraction (I) the numerator
of which shall be the (x) the product obtained by multiplying (1) the
number of shares of Common Stock outstanding (on a Fully-Diluted
Basis) on the date of such issuance or sale times (2) the Market Price
for the Common Stock as of the date of such issuance or sale less (y)
the amount by which (1) the aggregate Market Price for the total
number of such Other Securities sold or issued exceeds (2) the
aggregate consideration received by the Company for the total number
of such Other Securities sold or issued, and (II) the denominator of
which shall be the product obtained by multiplying (x) the number of
shares of Common Stock outstanding (on a Fully-Diluted Basis) on the
date of such issuance or sale, by (y) such Market Price.
(ii) The number of Warrant Shares issuable upon exercise
of such Warrant shall be increased to the number of shares determined
by multiplying (A) the number of Warrant Shares issuable upon exercise
of such Warrant immediately prior to such issuance or sale of Other
Securities times (B) a fraction (1) the numerator of which shall be
the Exercise Price in effect immediately prior to the adjustment in
clause (i) of this Section 5.4 and (2) the denominator of which shall
be the Exercise Price in effect immediately after such adjustment.
5.5 CAPITAL REORGANIZATION, CAPITAL RECLASSIFICATIONS, MERGER, ETC.
If, at any time after the Closing Date, there shall be any capital
reorganization or any reclassification of the capital stock of the Company
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares to which Section 5.2 applies) or the Company
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shall consolidate with, merge with or into, or sell all or substantially all of
its assets or property to, another Person, then in each case the Company shall
cause effective provision to be made so that each Warrant shall, effective as of
the effective date of such event retroactive to the record date, if any, of such
event, be exercisable for the kind and number of shares of stock, other
securities, cash or other property to which a holder of the number of Warrant
Shares issuable upon exercise of such Warrant would have been entitled upon such
event. In any such case, if necessary, the provisions of this Agreement and the
Warrants with respect to the rights and interests thereafter of the Holders of
the Warrants shall be appropriately adjusted so as to be applicable, as nearly
as may reasonably be, to any shares of stock, other securities, cash or other
property thereafter deliverable upon the exercise of the Warrants.
5.6 OTHER ACTIONS AFFECTING COMMON STOCK.
(a) Equitable Equivalent. If at any time or from time to time
the Company shall take any action affecting its Common Stock, other than any
action otherwise described in this Article V, then the number of Warrant Shares
issuable upon exercise of each Warrant shall be adjusted in such manner and at
such time as the Board shall in good faith determine (such determination to be
reasonably acceptable to the Majority Holders) to be equitable in the
circumstances, but no such adjustment shall decrease the number of Warrant
Shares issuable upon exercise of this Warrant.
(b) No Avoidance. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company. The Company
shall at all times in good faith assist in the carrying out of all the
provisions of this Article V and in the taking of all such action as may be
necessary or appropriate in order to protect the exercise rights of the Holders
against impairment.
5.7 MISCELLANEOUS
(a) Calculation of Consideration Received. If any Common Stock,
Options, Convertible Securities or Other Securities are issued or sold or deemed
to have been issued or sold for cash, then the consideration received therefor
shall be deemed to be the net amount received by the Company therefor. If any
Common Stock, Options, Convertible Securities or Other Securities are issued or
sold for consideration other than cash, then the amount of the consideration
other than cash received by the Company shall be the fair market value of such
consideration, as of the date of receipt, determined in accordance with the
Valuation Procedure.
(b) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issuance of Common Stock.
(c) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in
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Common Stock, Options or Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issuance or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be. If the Company shall take
any such record of the holders of its Common Stock and shall, thereafter and
before the taking of the action for which such record was taken, legally abandon
its plan to take much action, then thereafter no adjustment shall be required by
reason of the taking of such record and any such adjustment previously made in
respect thereof shall be rescinded and annulled.
(d) Deferral of Issuance. In any case in which this Article V
shall require that any adjustment in the number of Warrant Shares purchasable
hereunder or in the Exercise Price be made effective as of immediately after a
record date for a specified event, the Company may elect to defer, until the
occurrence of such event, the issuing to the Holder of any Warrant exercised
after such record date of the shares of Common Stock and other capital stock of
the Company, if any, issuable upon such exercise over and above the number of
shares of Common Stock and other capital stock of the Company, if any, that
would have been issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment. In such case, the Company shall deliver to
the Holder a due ▇▇▇▇ or other appropriate instrument evidencing the Holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(e) Notice; Adjustment Rules. Whenever the Exercise Price and
the number of Warrant Shares shall be adjusted as provided in this Article V,
the Company shall provide to each Holder a statement, signed by the Chairman,
the President or the Chief Financial Officer of the Company, describing in
detail the facts requiring such adjustment and setting forth a calculation of
the Exercise Price and the number of Warrant Shares applicable to each Warrant
after giving effect to such adjustment. All calculations under this Article V
shall be made to the nearest one hundredth of a cent ($.0001) or to the nearest
one-tenth of a share, as the case may be. Adjustments pursuant to this Article V
shall apply to successive events or transactions of the types covered thereby.
Notwithstanding any other provision of this Article V, no adjustment shall be
made to the number of shares of Common Stock or to the Exercise Price if such
adjustment represents less than 1% of the number of shares previously required
to be so delivered, but any lesser adjustment shall be carried forward and shall
be made at the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to 1% or more of
the number of shares to be so delivered.
(f) Certain Adjustments. The Company may make such reductions in
the Exercise Price or increase in the number of Warrant Shares to be received by
any Holder upon the exercise or exchange of a Warrant, in addition to those
adjustments required by this Article V, as it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Common Stock, or any issuance wholly for cash of any shares of Common Stock, or
any issuance wholly for cash of shares of Common Stock or Convertible
Securities, or any stock dividend, or any issuance of Options hereinafter made
by the Company to the holders of its Common Stock shall not be taxable to such
holders.
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(g) Excluded Issuances. Notwithstanding any other provision of
this Article V, no adjustment shall be made pursuant to this Article V in
respect of (a) the issuance of Common Stock or Options to purchase Common Stock
issued to employees, officers or directors of the Company or any Subsidiary, or
the issuance of Common Stock upon the exercise of any such Options, provided,
however, that the aggregate amount of all such Common Stock or Common Stock
which may be acquired upon the exercise of such Options shall not exceed an
aggregate of 5% of the Common Stock outstanding on the date of the issuance of
such Common Stock or Options, as the case may be, (b) the issuance from time to
time of shares of Common Stock upon the exercise of any of the Warrants, (c) the
issuance of Common Stock obtained upon conversion of the Class B Common Stock
and (d) securities issued upon exercise of conversion or exchange rights,
options or subscription calls, warrants, commitments or claims, provided that
the foregoing are issued and outstanding on the date hereof and are listed on
Schedule 2.4(g).
(h) Par Value. The Company shall not increase the par value of
any shares of Common Stock or other securities issuable upon the exercise of the
Warrants to an amount that exceeds the Exercise Price. Before taking any action
that would cause an adjustment pursuant to this Article V that would reduce the
Exercise Price below the par value per share of the Common Stock, the Company
shall be required to take any corporate action which may be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares at the Exercise Price as so adjusted.
ARTICLE VI
CERTAIN OTHER RIGHTS
6.1 PAYMENTS IN RESPECT OF DIVIDENDS AND DISTRIBUTIONS.
If, at any time prior to the Expiration Date, the Company pays any
dividend or makes any distribution (whether in cash, property or securities of
the Company) on its capital stock which does not result in an adjustment under
Article V, then the Company shall simultaneously pay to the Holder of each
Warrant, the dividend or distribution which would have been paid to such Holder
on the Warrant Shares receivable upon the exercise in full of such Warrant had
such Warrant been fully exercised immediately prior to the record date for such
dividend or distribution or, if no record is taken, the date as of which the
record holders of Warrant Shares entitled to such dividend or distribution are
to be determined.
6.2 RIGHT OF FIRST OFFER.
(a) Offer. The Company shall not issue, sell or exchange, agree
to issue, sell or exchange, any (i) Common Stock, (ii) any Options or (iii) any
Convertible Securities unless, in each case, the Company shall have first
offered (the "Section 6.2 Offer") to sell to each Holder its Proportionate
Percentage of such securities (the "Section 6.2 Securities"), at a price and on
such other terms as shall have been specified by the Company in a written notice
(the "Section 6.2 Offer Notice") delivered to such Holder. Each Section 6.2
Offer by its terms shall remain open and irrevocable for a period of twenty (20)
Business Days from the date it is delivered by
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the Company to the Holders.
(b) Acceptance Procedure. Notice of each Holder's intention to
accept, in whole or in part, a Section 6.2 Offer shall be evidenced by a writing
signed by such Holder and delivered to the Company prior to the end of the 20 -
Business - Day period of such Section 6.2 Offer, setting forth such portion of
the Section 6.2 Offered Securities as such Holder elects to purchase (the
"Section 6.2 Notice of Acceptance").
(c) Sale of Refused Securities. In the event that Section 6.2
Notices of Acceptance are not given by the Holders in respect of all the Section
6.2 Securities offered to the Holders pursuant to Section 6.2(a), the Company
shall have ninety (90) days from the expiration of the offer and reoffer process
described in Section 6.2(b), to sell all or any part of such Section 6.2
Securities as to which Section 6.2 Notices of Acceptance have not been given by
the Holders (the "Refused Securities") to any other Person or Persons, but only
upon terms and conditions in all respects, including, without limitation, unit
price and interest rates, which are no more favorable, in the aggregate, to such
other Person or Persons or less favorable to the Company than those set forth in
the Section 6.2 Offer. Upon the closing of the sale of the Section 6.2
Securities, the Holders shall purchase from the Company, and the Company shall
sell to the Holders, the Section 6.2 Securities in respect of which Section 6.2
Notices of Acceptance were delivered to the Company, at the terms specified in
the Section 6.2 Offer.
(d) Exclusions. The provisions of this Section 6.2 shall not
apply to the issuance or sale of Excluded Securities.
6.3 TAG-ALONG RIGHTS.
(a) Right to Sell. With respect to any proposed Transfer of
Common Stock by any member of the Spell Group (including, without limitation,
(i) any Transfer by a majority-controlled Affiliate of any such Person or any
member of such Person's Family Group and (ii) any Transfer to the Company or any
of its Subsidiaries but in each case excluding any Excluded Transaction), such
member of the Spell Group (or such majority-controlled Affiliate or Family Group
member, as the case may be) shall have the obligation, and each Holder shall
have the right, to require the proposed Transferee to offer to purchase from
such Holder, at the same price per share (less, in the case of a purchase of
Warrants, the Exercise Price) and upon the same terms and conditions of sale
offered to such member of the Spell Group (or such majority-controlled Affiliate
or Family Group member, as the case may be), up to a number of Warrant Shares
(issued or represented by outstanding Warrants) equal to the product (rounded to
the nearest whole number) obtained by multiplying (i) a fraction, the numerator
of which is the number of shares of Common Stock proposed to be transferred by
such member of the Spell Group (or such majority-controlled Affiliate or Family
Group member, as the case may be) and the denominator of which is the total
number of shares of Common Stock held by such member of the Spell Group (or such
majority-controlled Affiliate or Family Group member, as the case may be) by
(ii) the aggregate number of Warrant Shares then (issued or represented by
outstanding Warrants) held by such Holder. At least twenty (20) Business Days
prior to any Transfer of Common Stock (other than an Excluded Transaction) by
any member of the Spell Group (or a majority-controlled Affiliate or Family
Group member of any Spell Group member,
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as the case may be), such member of the Spell Group (or such majority-controlled
Affiliate or Family Group member, as the case may be) shall provide notice to
each Holder specifying (A) the maximum number of shares of Common Stock to be
transferred, (B) the name and address of the proposed transferee, (C) the form
of consideration and terms and conditions thereof, (D) the number of shares
which such Holder may require the proposed purchaser to purchase from it in
accordance with this Section 6.3 and (E) a representation and warranty by such
member of the Spell Group (or such majority-controlled Affiliate or Family Group
member, as the case may be) that the proposed transferee has been informed of
the "tag-along" rights provided herein and that such member of the Spell Group
(or such majority-controlled Affiliate or Family Group member, as the case may
be) will not Transfer shares unless such transferee has agreed to purchase all
shares required to be purchased from Holders hereunder. Any Transfer of Common
Stock by any member of the Spell Group ( a majority-controlled Affiliate or
Family Group member of such Spell Group Member, as the case may be) shall not be
consummated until (and shall be void ab initio unless) the provisions of this
Section 6.3 shall have been complied with.
(b) Exercise. Any Holder may exercise its rights under Section
6.3(a) by delivering at least 5 Business Days prior to the end of such
20-Business-Day period, a written notice to such member of the Spell Group
indicating the desire of such Holder to exercise its rights under this Section
6.3 and the number of shares such Holder wishes to Transfer, if less than the
number which the Holder is entitled to Transfer under Section 6.3(a). The rights
of a Holder under this Section 6.3 in connection with any proposed Transfer
shall not be adversely affected by a Holder's failure to exercise such rights in
connection with any prior proposed Transfer.
(c) Additional Sales. If at any time prior to a proposed
Transfer such member of the Spell Group wishes to Transfer a greater number of
shares than that originally proposed, such member of the Spell Group shall
notify each Holder immediately of the additional number of shares being proposed
for Transfer. Each Holder may require the proposed transferee to purchase from
such Holder a number of additional Warrant Shares (issued or represented by
outstanding Warrants) determined in accordance with 6.3(a) above but based upon
the number of additional shares the proposed transferee desires to purchase. The
additional tag-along rights provided by this Section 6.3(c) shall be exercised
by any Holder within ten (10) Business Days following the date of the giving of
the supplementary notice by such member of the Spell Group by delivery of
written notice indicating its desire to exercise its additional rights under
this Section 6.3(c) and the number of shares such Holder wishes to Transfer, if
less than the number which such Holder is entitled to Transfer under Section
6.3(a) and this Section 6.3(c).
(d) Closing. At the closing of any purchase of shares pursuant
to this Section 6.3, each participating Holder shall deliver certificates
representing the Warrant Shares (or Warrants) being purchased by the transferee,
duly endorsed for transfer. At such closing, all of the parties to the
transaction shall execute such customary documentation as may reasonably be
requested by the parties thereto; provided, however, that any Holder may
withdraw from such transaction if the documentation is not in form and substance
satisfactory to such Holder.
6.4 [INTENTIONALLY DELETED].
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ARTICLE VII
COVENANTS OF THE COMPANY
7.1 NOTICES OF CERTAIN ACTIONS.
(a) Corporate Events. In the event that the Company:
(i) shall authorize issuance to all holders of Common
Stock of rights or warrants to subscribe for or purchase capital stock
of the Company or of any other subscription rights or warrants; or
(ii) shall authorize a dividend or other distribution to
all holders of Common Stock of evidences of its indebtedness, cash or
other property or assets; or
(iii) proposes to become a party to any consolidation or
merger for which approval of any stockholders of the Company will be
required, or to a conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any capital
reorganization or reclassification or change of the Common Stock
(other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination); or
(iv) commences a voluntary or involuntary dissolution,
liquidation or winding up; or
(v) proposes to take any other action which would require
an adjustment pursuant to Article V;
then the Company shall provide a written notice to each Holder stating (i) the
date as of which the holders of record of Common Stock to be entitled to receive
any such rights, warrants or distribution are to be determined, (ii) the
material terms of any such consolidation or merger and the expected effective
date thereof, or (iii) the material terms of any such conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of record of Common Stock will be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, conveyance, transfer, dissolution,
liquidation or winding up. Such notice shall be given not later than twenty (20)
Business Days prior to the effective date (or the applicable record date, if
earlier) of such event. The failure to give the notice required by this Section
7.1 or any defect therein shall not affect the legality or validity of any
distribution, right, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any action.
(b) Change of Control. To the extent possible not less than 70
days prior to any Change of Control, but in no event later than the third
Business Day following the Company becoming aware thereof, notice of the
occurrence of such Change of Control, together with a brief description thereof.
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7.2 FINANCIAL STATEMENTS AND REPORTS.
The Company shall furnish to each Holder:
(a) Annual Financial Statements. As soon as available but in any
event within ninety (90) days after the end of each Fiscal Year, consolidated
balance sheets, income statements and cash flow statements of the Company and
its Subsidiaries, showing its financial condition as of the close of such Fiscal
Year and the results of its operations during such year, all the foregoing
financial statements to be audited by independent accountants of
nationally-recognized standing and prepared in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as available but in
any event within forty-five (45) days after the end of each Fiscal Quarter, the
unaudited consolidated balance sheets, income statements and cash flow
statements, showing the financial condition and results of operations of the
Company, as at the end of each such Fiscal Quarter and for the then elapsed
portion of the Fiscal Year, in each case prepared in accordance with GAAP; and
(c) SEC Filings. Promptly upon their becoming available, copies
of any statements, reports and other communications, if any, which the Company
shall have provided to its stockholders or filed with the Securities and
Exchange Commission or any national securities exchange.
(d) Special Information Rights. So long as the Initial Holders
or any of their respective Affiliates shall hold any Warrants or Warrant Shares,
to such Holders only, all other information required to be provided under
Section 7.7 of the Securities Purchase Agreement as in effect on the date hereof
(whether or not the same shall remain in effect).
7.3 INFORMATION RIGHTS.
The Company will, and will cause the Subsidiaries to, permit, upon
reasonable notice to the chief executive officer or any other designated
representative of the Company, officers and designated representatives of any
Holder designated by the Requisite Holders to visit and inspect any of the
properties or assets of the Company and any of the Subsidiaries in whomsoever's
possession, and to examine the books of accounts of the Company and any of its
Subsidiaries and discuss the affairs, finances and accounts of the Company and
of any of its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company), all at such reasonable times and intervals and to such reasonable
extent as the Holders may desire. The Company will give one representative of
each of the JPMP Holders and the MassMutual Holders designated in writing by
such Holder (x) concurrently with the members of the Board at the same time and
in the same manner but in no event less than ten Business Days prior written
notice of each regular meeting of the Board and such prior notice of each
special meeting of the Board as is reasonable under the circumstances and (y) in
each case, the opportunity for each such representative to attend (or
participate by telephone in the case of a telephonic meeting), at the expense of
the Company, as a guest, each such meeting. Such representative shall be
provided with copies of all materials distributed to the members of the
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Board including, without limitation, any materials distributed in connection
with such meeting and any documents intended to effect written action by the
Board and any related materials distributed in connection therewith at the same
time that they are distributed to the Board.
7.4 TRANSACTIONS WITH AFFILIATES.
Except as expressly permitted by Section 8.3 of the Securities
Purchase Agreement, the Company shall not, and shall not permit any of the
Subsidiaries to, enter into any transaction with any Affiliate of the Company
(including without limitation, any member of the Spell Group), except in the
ordinary course of business on terms no less favorable to the Company or such
Subsidiary than would obtain in a comparable arm's-length transaction with an
unrelated third party.
7.5 MERGER OR CONSOLIDATION OF THE COMPANY.
The Company will not merge or consolidate with or into, or sell,
transfer or lease all or substantially all of its property to, any other entity
unless the successor or purchasing entity, as the case may be (if not the
Company), is organized under the laws of the United States of America or any
state or political subdivision thereof and shall expressly agree to provide to
each Holder the securities, cash or property required by Section 5.5 hereof upon
the exercise or exchange of Warrants and expressly assumes, by supplemental
agreement reasonably satisfactory in form and substance to each Holder, the due
and punctual performance and observance of each and every covenant and condition
of this Agreement to be performed and observed by the Company; provided,
however, that the initial obligation of such successor with respect to the
exercise or exchange of Warrants shall be only as set forth in Section 5.5.
7.6 Reservation of Shares, Etc.
The Company will at all times have authorized, and reserve and keep
available, free from preemptive or similar rights, for the purpose of enabling
it to satisfy any obligation to issue Warrant Shares upon the exercise or
exchange of each Warrant, the number of authorized but unissued Warrant Shares
issuable upon exercise or exchange of all outstanding Warrants. The Company
shall as promptly as necessary take all actions necessary to ensure that Warrant
Shares shall be duly authorized and, when issued upon exercise or exchange of
any Warrant in accordance with the terms hereof, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except to the extent of
any applicable provisions set forth in this Agreement and the Registration
Rights Agreement) and free and clear of all preemptive or similar rights.
7.7 REDEMPTIONS, ETC.
The Company shall not, nor shall it permit any Subsidiary to, declare
or make at any time any dividends (in cash, property or obligations) on, or
other payments or distributions on account of, or the setting apart of money for
a sinking or other analogous fund for, or the purchase, redemption, retirement
or other acquisition of, any shares of any class of capital stock of the Company
or of any warrants, options or other rights to acquire the same (or to make any
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payments to any Person, such as "phantom stock" payments, where the amount
thereof is calculated with reference to the fair market or equity value of the
Company or any of its Subsidiaries), except for:
(i) the payment of dividends by any Subsidiary to the
Company or to any other Obligor;
(ii) the payment of dividends by the Company to the extent
the requirements of Section 6.1 are satisfied in connection therewith;
and
(iii) the redemption or repurchase of the Company's capital
stock from officers, employees and directors (or their estates) of the
Company or any Subsidiary upon the death, permanent disability,
retirement or termination of employment of any such Person or
otherwise in accordance with any shareholder agreement, stock option
plan or any employee stock ownership plan, provided that (x) no
Default or Event of Default under the Securities Purchase Agreement is
then in existence or would arise therefrom, and (y) the aggregate
amount of all cash paid in respect of all such shares so redeemed or
repurchased in any calendar year does not exceed the sum of (A)
$2,000,000 plus (B) all amounts obtained by the Company from the sale
of such stock (or a substantially concurrent issuance of the Company's
capital stock) to other officers, employees and directors.
7.8 RESTRICTIONS ON PERFORMANCE.
The Company shall not at any time enter into, or permit to exist, an
agreement or other instrument restricting its ability to perform its obligations
under this Agreement, the Registration Rights Agreement or the Warrants, or
making such performance or the issuance of shares of Common Stock upon the
exercise of any Warrant a default under any such agreement or instrument other
than (x) the Senior Credit Agreement (as defined in the Securities Purchase
Agreement) and (y) the Securities Purchase Agreement.
7.9 MODIFICATION OF OTHER EQUITY DOCUMENTS.
The Company shall not amend or consent to any modification, supplement
or waiver of any provision of any Other Equity Documents in any manner which
would have an adverse effect on the Holders without the prior written consent of
the Requisite Holders.
ARTICLE VIII
MISCELLANEOUS
8.1 NOTICES.
All notices, demands and requests of any kind to be delivered to any
party hereto in connection with this Agreement shall be in writing (i) delivered
personally, (ii) sent by nationally-recognized overnight courier, (iii) sent by
first class, registered or certified mail,
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return receipt requested or (iv) sent by facsimile, in each case to such party
at its address as follows:
(a) if to the Company, to:
PW Eagle, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
1100 International Centre
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: K. ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to any Holder, to such Holder's address as set forth on
Schedule I hereto.
Any notice, demand or request so delivered shall constitute valid notice under
this Agreement and shall be deemed to have been received (i) on the day of
actual delivery in the case of personal delivery, if delivered on a Business Day
(otherwise on the next Business Day), (ii) on the next Business Day after the
date when sent in the case of delivery by nationally-recognized overnight
courier, (iii) on the fifth Business Day after the date of deposit in the U.S.
mail in the case of mailing or (iv) upon receipt in the case of a facsimile
transmission. Any party hereto may from time to time by notice in writing served
upon the other as aforesaid designate a different mailing address or a different
Person to which all such notices, demands or requests thereafter are to be
addressed.
8.2 EXPENSES, ETC.
The Company agrees to pay or reimburse the Holders for: (a) all
reasonable out-of-pocket costs and expenses of each Holder (including the
reasonable fees and expenses of counsel to each Holder), in connection with (i)
the negotiation, preparation, execution and delivery of this Agreement and the
Registration Rights Agreement and the issuance of Warrants hereunder, and (ii)
any amendment, modification or waiver of (or consents in respect of) any of the
terms of this Agreement, the Registration Rights Agreement or the Warrants; and
(b) all reasonable costs and expenses of the Holders (including reasonable legal
fees and expenses of each Holder) in connection with (i) any default by the
Company hereunder or under the Warrants or the
-32-
Registration Rights Agreement or any enforcement proceedings resulting
therefrom, and (ii) the enforcement of this Section 8.2.
8.3 NO VOTING RIGHTS; LIMITATIONS OF LIABILITY.
No Warrant shall entitle the holder thereof to any voting rights or,
except as otherwise provided herein, other rights of a stockholder of the
Company, as such. No provision hereof, in the absence of affirmative action by
the Holder to purchase Warrant Shares, and no enumeration herein of the rights
or privileges of the Holder shall give rise to any liability of such Holder for
the Exercise Price of Warrant Shares acquirable by exercise hereof or as a
stockholder of the Company.
8.4 [INTENTIONALLY DELETED].
8.5 AMENDMENTS AND WAIVERS.
(a) Written Document. Any provision of this Agreement may be
amended or waived, but only pursuant to a written agreement signed by the
Company and the Requisite Holders, provided that no such amendment or
modification shall without the written consent of each Holder affected thereby
(i) shorten the Expiration Date of any Warrant, (ii) increase the Exercise Price
of any Warrant, (iii) change any of the provisions of this Section 8.5(a) or the
definition of "Requisite Holders" or any other provision hereof specifying the
number or percentage of Holders required to waive, amend, or modify any rights
hereunder or make any determination or grant any consent hereunder or otherwise
act with respect to this Agreement or any Warrants or (iv) increase the
obligations of any Holder or otherwise disproportionately adversely affect the
rights and benefits of any Holder under this Agreement.
(b) No Waiver; Cumulative Remedies. No failure on the part of
any Holder to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement, the Warrants or
the Registration Rights Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege under this
Agreement, the Warrant or the Registration Rights Agreement preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
8.6 SPECIFIC PERFORMANCE.
Each Holder shall have the right to specific performance by the
Company of the provisions of this Agreement, in addition to any other remedies
it may have at law or in equity. The Company hereby irrevocably waives, to the
extent that it may do so under applicable law, any defense based on the adequacy
of a remedy at law which may be asserted as a bar to the remedy of specific
performance in any action brought against the Company for specific performance
of this Agreement by the Holders of the Warrants or Warrant Shares.
8.7 BINDING EFFECT.
-33-
This Agreement shall be binding upon and inure to the benefit of the
Company, each Holder and their respective successors and permitted assigns.
8.8 COUNTERPARTS.
This Agreement may be executed in two or more counterparts each of
which shall constitute an original but all of which when taken together shall
constitute but one agreement.
8.9 GOVERNING LAW.
This Agreement and each Warrant shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to
principles of conflicts of laws), except to the extent that the New York
conflicts of laws principles would apply the Minnesota Business Corporation Act
to matters relating to corporations organized thereunder
8.10 BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company and each Holder of a Warrant or a Warrant Share any legal
or equitable right, remedy or claim hereunder.
8.11 HEADINGS.
Section headings in this Agreement have been inserted for convenience
of reference only and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
* * * *
-34-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their authorized officers, all as of the date
and year first above written.
PW EAGLE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: CEO
▇.▇. ▇▇▇▇▇▇ PARTNERS (23A SBIC), LLC
By: ▇.▇. ▇▇▇▇▇▇ PARTNERS (23A SBIC
MANAGER), INC., its Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & COMPANY INC. as
as Investment Advisor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MASSMUTUAL CORPORATE INVESTORS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
The foregoing is executed on behalf of
MassMutual Corporate Investors,
organized under a Declaration of Trust,
dated September 13, 1985, as amended
from time to time. The obligations of
such Trust are not personally binding
upon, nor shall resort to be had to the
property of, any of the Trustees,
shareholders, officers, employees or
agents of such Trust, but the Trust's
property only shall be bound.
MASSMUTUAL PARTICIPATION
INVESTORS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
The foregoing is executed on behalf of
MassMutual Participation Investors,
organized under a Declaration of Trust,
dated April 7, 1988, as amended from
time to time. The obligations of such
Trust are not binding upon, nor shall
resort be had to the property of, any of
the Trustees, shareholders, officers,
employees or agents of such Trust
individually, but the Trust's assets and
property only shall be bound.
MASSMUTUAL CORPORATE VALUE
PARTNERS LIMITED
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company Inc. under
delegated authority from
Massachusetts Mutual Life Insurance
Company, as Investment Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SCHEDULE I
INITIAL HOLDERS
NUMBER OF SHARES OF
INVESTOR COMMON STOCK
▇.▇. ▇▇▇▇▇▇ PARTNERS (23A SBIC), 242,308
LLC
c/o ▇.▇. ▇▇▇▇▇▇ Partners, LLC
1221 Avenue of the Americas
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Massachusetts Mutual Life Insurance 34,462
Company (LTP)
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Securities Investment Division
Payments
All payments on account of the Warrant
shall be made by crediting in the form
of bank wire transfer of Federal or
other immediately available funds,
(identifying each payment as __________,
interest and principal), to:
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA No. ▇▇▇▇▇▇▇▇▇
For MassMutual Long-Term Pool
Account No. 4067-3488
Re: Description of security, principal
and interest split
With telephone advise of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇
Notices
All notices and communications to be
addressed as first provided above,
except notices with respect to payments
to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No.: ▇▇-▇▇▇▇▇▇▇
Massachusetts Mutual Life Insurance 8,615
Company (IFM)
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Securities Investment Division
Payments
All payments on account of the Warrant
shall be made by crediting in the form
of bank wire transfer of Federal or
other immediately available funds,
(identifying each payment as [insert
name of issuer and description of
Warrant] interest and principal), to:
Chase Manhattan Bank, N.A.
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA No. ▇▇▇▇▇▇▇▇▇
For MassMutual IFM Non-Traditional
Account No. 910-▇▇▇▇▇▇▇
Re: Description of security, principal
and interest split
With telephone advise of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇
Notices
All notices and communications to be
addressed as first provided above,
except notices with respect to payments
to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. ▇▇-▇▇▇▇▇▇▇
MassMutual Corporate Investors 35,538
c/o Massachusetts Mutual Life Insurance
Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Securities Investment Division
Payments
All payments on account of the Warrant
shall be made by crediting in the form
of bank wire transfer of Federal or
other immediately available funds,
(identifying each payment as [insert
name of issuer and description of
Warrant], interest and principal) to:
Chase/NYC/Cust
ABA No. ▇▇▇▇▇▇▇▇▇
A/C *▇▇▇-▇-▇▇▇▇▇▇ for F/C/T
MassMutual Corporate
Investors
A/C #G06109
Attn: Bond Interest
Re: Description of security (principal
and interest split, if applicable)
With telephone advise of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇
Instruction for mailing checks
Mass Mutual Corporate Investors
(or ▇▇▇▇ & Co., if securities are
registered in the nominee name)
c/o Chase Manhattan Bank, N.A.
Attn: Income Processing, ▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Please include a/c #G06109 on the check
Instructions for delivery of securities
All securities should be delivered to
the following address:
Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Re: #G06109
Notices
All notices and communications to be
addressed as first provided above,
except notices with respect to payments
to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. ▇▇-▇▇▇▇▇▇▇
MassMutual Participation Investors 18,308
c/o Massachusetts Mutual Life Insurance
Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Securities Investment Division
Payments
All payments on account of the Warrant
shall be made by crediting in the form
of bank wire transfer of Federal or
other immediately available funds,
(identifying each payment as [insert
name of issuer and description of
Warrant], interest and principal), to:
Chase/NYC/Cust
ABA No. ▇▇▇▇▇▇▇▇▇
A/C #▇▇▇-▇-▇▇▇▇▇▇ for F/C/T MassMutual
Participation Investors
A/C #G06110
Attn: Bond Interest
Re: Description of security (principal
and interest split, if applicable)
With telephone advice of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇
Instructions for mailing checks
MassMutual Participation Investors
(or ▇▇▇▇ & Co., if the securities are
registered in nominee name)
c/o Chase Manhattan Bank, N.A.
Attn: Income Processing, ▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Please include a/c #G06110 on the check.
Instructions for delivery of securities
All securities should be delivered to
the following address:
Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Re: #G06110
Notices
All notices and communications to be
addressed as first provided above,
except notices with respect to payments
to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. ▇▇-▇▇▇▇▇▇▇
MassMutual Corporate Value Partners 10,769
Limited
c/o Bank of America Trust and Banking
Corporation (Cayman) Limited
P.O. Box 1092
▇▇▇▇▇▇ Town
Grand Cayman
Cayman Island, B.W.I.
Payments
All payments on account of the Warrant
shall be made by crediting in the form
of bank wire transfer of Federal or
other immediately available funds,
(identifying each payment as [insert
name of issuer and description of
Warrant], interest and principal), to:
▇▇▇▇▇▇▇ & Co.
c/o Citibank, N.A.
ABA Number ▇▇▇▇▇▇▇▇▇
Concentration Account ▇▇▇▇▇▇▇▇
Re: MassMutual Corporate Value Partners
Limited
Name of Security/CUSIP
With telephone advice of payment to the
Securities Custody and Collection
Document of Massachusetts Mutual Life
Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇
Registration of Securities
All securities should be registered in
Citibank's nominee name of ▇▇▇▇▇▇▇ & Co.
and sent to the following address:
Citibank
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Acct. #794309
Notices
All notices and communications to be
addressed as first provided above.
with a copy to the Investment Manager
at:
Massachusetts Mutual Life Insurance
Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBIT A
[INTENTIONALLY DELETED]
EXHIBIT B
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. IN
ADDITION, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS
SPECIFIED IN SECTION 3.3 OF THE WARRANT AGREEMENT DATED AS OF MARCH 14, 2003
AMONG THE ISSUER OF THESE SECURITIES AND THE INITIAL HOLDERS NAMED THEREIN. NO
TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED. A COPY OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE
PROVISIONS OF THE WARRANT AGREEMENT.
PW EAGLE, INC.
No. W Warrant to Purchase
____ Shares
of Common Stock
_________, ____
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, [Insert name of holder]
(the "Holder"), or assigns, is entitled to purchase from PW Eagle, Inc., a
Minnesota corporation (the "Company"), ___ shares of the [Class B] Common Stock,
$.01 par value (the "Common Stock"), of the Company, at the price (the "Exercise
Price") of $9.50 per share, at any time or from time to time during the period
commencing on the Exercisability Date and ending on the Expiration Time.
This Warrant has been issued pursuant to the Warrant Agreement
(as amended or supplemented from time to time, the "Warrant Agreement") dated as
of March 14, 2003, between the Company and the Initial Holders named therein,
and is subject to the terms and conditions, and the Holder is entitled to the
benefits, thereof, including without limitation provisions (i) for adjusting the
number of Warrant Shares issuable upon the exercise hereof and the Exercise
Price to be paid upon such exercise, (ii) providing for certain rights of first
offer upon the sale or other issuance by the Company of equity securities, (iii)
providing for certain "tag-along" rights and (iv) providing certain information
and other rights. A copy of the Warrant Agreement is on file and may be
inspected at the principal executive office of the Company. The Holder of this
certificate, by acceptance of this certificate, agrees to be bound by the
provisions of the Warrant Agreement. Capitalized terms used but not defined
herein shall have the meanings given to them in the Warrant Agreement.
SECTION 1. Exercise of Warrant. On any Business Day on or after the
Exercisability Date but on or prior to the Expiration Time, the Holder may
exercise this Warrant, in whole or in part, by delivering to the Company this
Warrant accompanied by a properly completed Exercise Form in the form of Annex A
and a check in an aggregate amount equal to the product obtained by multiplying
(a) the Exercise Price by (b) the number of Warrant Shares being purchased. Any
partial exercise of a Warrant shall be for a whole number of Warrant Shares
only.
SECTION 2. Exercise Price. The Exercise Price is subject to adjustment
from time to time as provided in the Warrant Agreement.
SECTION 3. Exchange of Warrant. On any Business Day on or after the
Exercisability Date but on or prior to the Expiration Time, the Holder may
exchange this Warrant, in whole or in part, for Warrant Shares by delivering to
the Company this Warrant accompanied by a properly completed Exchange Form in
the form of Annex B. The number of shares of Common Stock to be received by the
Holder upon such exchange shall be determined as provided in Section 4.2 of the
Warrant Agreement.
SECTION 4. Transfer. Subject to the limitations set forth in the
Warrant Agreement, this Warrant may be transferred by the Holder by delivery to
the Company of this Warrant accompanied by a properly completed Assignment Form
in the form of Annex C.
SECTION 5. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company will issue a new
Warrant of like denomination and tenor upon compliance with the provisions set
forth in the Warrant Agreement.
SECTION 6. No Stockholder Rights. This Warrant shall not entitle the
holder hereof to any voting rights or, except as otherwise provided in the
Warrant Agreement, other rights of a stockholder of the Company, as such.
SECTION 7. Successors. All of the provisions of this Warrant by or for
the benefit of the Company or the Holder shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 8. Headings. Section headings in this Warrant have been
inserted for convenience of reference only and shall not affect the construction
of, or be taken into consideration in interpreting, this Warrant.
SECTION 9. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to principles of conflicts of laws), except to the extent that the New
York conflicts of laws principles would apply the Minnesota Business Corporation
Act to matters relating to corporations organized thereunder
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers and this Warrant to be dated as of the date
first set forth above.
PW EAGLE, INC.
By:
--------------------------------------------
Name:
Title: [Chairman or Chief Executive Officer]
ATTEST:
By:
---------------------------
Name:
Title: [Chief Financial Officer, Secretary, Assistant Secretary, Treasurer or
Assistant Treasurer]
ANNEX A
EXERCISE FORM
[TO BE SIGNED UPON EXERCISE OF WARRANT]
TO PW EAGLE, INC.
The undersigned, being the Holder of the within Warrant, hereby elects
to exercise the purchase right represented by such Warrant for, and to purchase
thereunder _________ shares of, the [Common Stock] [Class B Common Stock] of PW
EAGLE, INC. and requests that the certificates for such shares be issued in the
name of, and be delivered to, _________________________, whose address is
____________________________________.
The foregoing exercise is (check one):
______ Irrevocable
______ conditioned upon the consummation of the transaction
described briefly below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Dated:
------------------------------
(Signature)
------------------------------
(Address)
ANNEX B
EXCHANGE FORM
[TO BE SIGNED UPON EXERCISE OF WARRANT]
TO PW EAGLE, INC.
The undersigned, being the Holder of the within Warrant, hereby
irrevocably elects to exchange, pursuant to Section 4.2 of the Warrant Agreement
referred to in such Warrant, the portion of such Warrant representing the right
to purchase _________ shares of [Common Stock] [Class B Common Stock] of PW
EAGLE, INC. The undersigned hereby requests that the certificates for the number
of shares of [Common Stock] [Class B Common Stock] issuable in such exchange
pursuant to such Section 4.2 be issued in the name of, and be delivered to,
_____________, whose address is ________________________________________.
The foregoing exchange is (check one):
______ Irrevocable
______ conditioned upon the consummation of the transaction
described briefly below:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Dated:
------------------------------
(Signature)
------------------------------
(Address)
ANNEX C
ASSIGNMENT FORM
[TO BE SIGNED ONLY UPON TRANSFER OF WARRANT]
For value received, the undersigned hereby sells, assigns and
transfers unto _________________________, all of the rights represented by the
within Warrant to purchase shares of Common Stock and Class B Common Stock of PW
EAGLE, INC. (the "Company"), to which such Warrant relates, and appoints
________________________ Attorney to transfer such Warrant on the books of the
Company, with full power of substitution in the premises.
Dated:
-------------------------------------------
(Signature)
-------------------------------------------
(Address)